Category Archives: Behavior & Psychology

Losing My Google Glass Virginity

Originally published October 17, 2013 in Mediapost’s Search Insider

Rob, I took your advice.

A few columns back, when I said Google’s Glass might not be ready for mass adoption, fellow Search Insider Rob Garner gave me this advice:“Don’t knock it until you try it.”  So, when a fellow presenter at a conference I was at last week brought along his Glass and offered me a chance to try them (Or “it”? Does anyone else find Google’s messing around with plural forms confusing and irritating?), I took him up on it. To say I jumped at it may be overstating the case – let’s just say I enthusiastically ambled to it.

I get Google Glass. I truly do. To be honest, the actual experience of using them came up a little short of my expectations, but not much. It’s impressive technology.

But here’s the problem. I’m a classic early adopter. I always look at what things will be, overlooking the limitations of what currently “is.” I can see the dots of potential extending toward a horizon of unlimited possibility, and don’t sweat the fact that those dots still have to be connected.

On that level, Google Glass is tremendously exciting, for two reasons that I’ll get to in a second. For many technologies, I’ll even connect a few dots myself, willing to trade off pain for gain. That’s what early adopters do. But not everyone is an early adopter. Even given my proclivity for nerdiness, I felt a bit like a jerk standing in a hotel lobby, wearing Glass, staring into space, my hand cupped over the built-in mike, repeating instructions until Glass understood me. I learned there’s a new label for this; for a few minutes I became a “Glasshole.”Screen-Shot-2013-05-19-at-2.09.03-AM

Sorry Rob, I still can’t see the mainstream going down this road in the near future.

But there are two massive reasons why I’m still tremendously bullish on wearable technology as a concept. One, it leverages the importance of use case in a way no previous technology has ever done. And two, it has the potential to overcome what I’ll call “rational lag time.”

The importance of use case in technology can be summed up in one word: iPad. There is absolutely no technological reason why tablets, and iPads in particular, should be as popular as they are. There is nothing in an iPad that did not exist in another form before. It’s a big iPhone, without the phone. The magic of an iPad lies in the fact that it’s a brilliant compromise: the functionality of a smartphone in a form factor that makes it just a little bit more user-friendly. And because of that, it introduced a new use case and became the “lounge” device. Unlike a smartphone, where size limits the user experience in some critical ways (primarily in input and output), tablets offer acceptable functionality in a more enjoyable form. And that is why almost 120 million tablets were sold last year, a number projected (by Gartner) to triple by 2016.

The use case of wearable technology still needs to be refined by the market, but the potential to create an addictive user experiences is exceptional. Even with Glass’ current quirks, it’s a very cool interface. Use case alone leads me to think the recent $19 billion by 2018 estimate of the size of the wearable technology market is, if anything, a bit on the conservative side.

But it’s the “rational lag time” factor that truly makes wearable technology a game changer.  Currently, all our connected technologies can’t keep up with our brains. When we decide to do something, our brains register subconscious activity in about 100 milliseconds, or about one tenth of a second. However, it takes another 500 milliseconds (half a second) before our conscious brain catches up and we become aware of our decision to act. In more complex actions, a further lag happens when we rationalize our decision and think through our possible alternatives. Finally, there’s the action lag, where we have to physically do something to act on our intention. At each stage, our brains can shut down  impulses if it feels like they require too much effort.  Humans are, neurologically speaking, rather lazy (or energy-efficient, depending on how you look at it).

So we have a sequence of potential lags before we act on our intent: Unconscious Stimulation > Conscious Awareness > Rational Deliberation > Possible Action. Our current interactions with technology live at the end of this chain. Even if we have a smartphone in our pocket, it takes several seconds before we’re actively engaging with it. While that might not seem like much, when the brain measures action in split seconds, that’s an eternity of time.

But technology has the potential to work backward along this chain. Let’s move just one step back, to rational deliberation. If we had an “always on” link where we could engage in less than one second, we could utilize technology to help us deliberate. We still have to go through the messiness of framing a request and interpreting results, but it’s a quantum step forward from where we currently are.

The greatest potential (and the greatest fear) lies one step further back – at conscious awareness. Now we’re moving from wearable technology to implantable technology. Imagine if technology could be activated at the speed of conscious thought, so the unconscious stimulation is detected and parsed and by the time our conscious brain kicks into gear, relevant information and potential actions are already gathered and waiting for us. At this point, any artifice of the interface is gone, and technology has eliminated the rational lag. This is the beginning of Kurzweil’s Singularity: the destination on a path that devices like Google Glass are starting down.

As I said, I like to look at the dots. Someone else can worry about how to connect them.

Bounded Rationality in a World of Information

First published October 11, 2013 in Mediapost’s Search Insider.  

Humans are not good data crunchers. In fact, we pretty much suck at it. There are variations to this rule, of course. We all fall somewhere on a bell curve when it comes to our sheer rational processing power. But, in general, we would all fall to the far left of even an underpowered laptop.

Herbert Simon

Herbert Simon

Herbert Simon recognized this more than a half century ago, when he coined the term “bounded rationality.”  In a nutshell, we can only process so much information before we become overloaded, when we fall back on much more human approaches, typically known as emotion and gut instinct.

Even when we think we’re being rational, logic-driven beings, our decision frameworks are built on the foundations of emotion and intuition. This is not bad. Intuition tends to be a masterful way to synthesize inputs quickly and efficiently, allowing us generally to make remarkably good decisions with a minimum of deliberation. Emotion acts to amplify this process, inserting caution where required and accelerating when necessary. Add to this the finely honed pattern recognition instincts we humans have, and it turns out the cogs of our evolutionary machinery work pretty well, allowing us to adequately function in very demanding, often overwhelming environments.

We’re pretty efficient; we’re just not that rational. There is a limit to how much information we can “crunch.”

So when information explodes around us, it raises a question – if we’re not very good at processing data, what happen when we’re inundated with the stuff? Yes, Google is doing its part by helpfully “organizing the world’s information,” allowing us to narrow down our search to the most relevant sources, but still, how much time are we willing to devote to wading through mounds of data? It’s as if we were all born to be dancers, and now we’re stuck being insurance actuaries. Unlike Heisenberg (sorry, couldn’t resist the “Breaking Bad” reference) – we don’t like it, we’re not very good at it, and it doesn’t make us feel alive.

To make things worse, we feel guilty if we don’t use the data. Now, thanks to the Web, we know it’s there. It used to be much easier to feign ignorance and trust our guts. There are few excuses now. For every decision we have to make, we know that there is information which, carefully analyzed, should lead us to a rational, logical conclusion. Or, we could just throw a dart and then go grab a beer. Life is too short as it is.

When Simon coined the term “bounded rationality,” he knew that the “bounds” were not just the limits on the information available but also the limits of our own cognitive processing power and the limits on our available time. Even if you removed the boundaries on the information available (as is now happening) those limits to cognition and time would remain.

I suspect we humans are developing the ability to fool ourselves that we are highly rational. For the decisions that count, we do the research, but often we filter that information through a very irrational web of biases, beliefs and emotions. We cherry-pick information that confirms our views, ignore contradictory data and blunder our way to what we believe is an informed decision.

But, even if we are stuck with the same brain and the same limitations, I have to admit that the explosion of available information has moved us all a couple of notches to the right on Simon’s “satisficing” curve. We may not crunch all the information available, but we are crunching more than we used to, simply because it’s available.  I guess this is a good thing, even if we’re a little delusional about our own logical abilities.

What is this “Online” You Speak Of?

First published September 12, 2013 in Mediapost’s Search Insider.

I was in an airport yesterday, and I was eavesdropping. That’s what I do in airports. It’s much more entertaining than watching the monitors. In this particular case, I was listening to a conversation between a well-dressed elderly gentleman, probably in his late ’80s, and what appeared to be his son. They were waiting for pre-boarding. The son was making that awkward small talk — you know, the conversation you have when you don’t really know your parent well enough anymore to be able to talk about what they’re really interested in, but you still feel the need to fill the silence. In this case, the son was talking to his dad about a magazine: “I used to get a copy every time I flew to London,” he said. “But they don’t publish it anymore. It’s all done online.”

The father, who had the look and appearance of a retired university professor, looked at his son quizzically for a few minutes. It’s as if the son had suddenly switched from English to Swahili midstream in his conversation.

“What’s ‘online’?”

“Online — on the Internet. It’s published electronically. There’s no print version anymore?”

The father grappled with the impact of this statement, then shook his head slowly and sadly. “That’s very sad. I suppose the mail service’s days are numbered too.”

The son replied, “Oh yes, I’m sure. No one mails things anymore.”

“But what will I do? I still buy things from catalogs.” It was as if the entire weight of the last two-and-a-half decades had suddenly settled on the frail gentleman’s shoulders.

At first, I couldn’t believe that anyone still alive didn’t know what “online” was. Isn’t that pretty much equivalent to oxygen or gravity now? Hasn’t it reached the point of ubiquity at which we all just take it for granted, no longer needing to think about it?

But then, because in the big countdown of life, I’m also on the downhill slope, closer to the end than to the beginning, I started thinking about how wrenching technological change has become. If you don’t keep up, the world you know is swept away, to be replaced with a world where your mail carrier’s days are numbered, the catalogs you depend on are within a few years of disappearing, and everything seems to be headed for the mysterious destination known as “online.”

As luck would have it, my seat on the airplane was close enough to this gentleman’s that I was able to continue my eavesdropping (if you see me at an airport, I advise you to move well out of earshot). You might have thought, as I first did, that he was in danger of losing his marbles. I assure you, nothing could be further from the truth. For over four hours, he carried on intelligent, informed conversations on multiple topics, made some amazing sketches in pencil, and generally showed every sign of being the man I hope to be when I’m approaching 90. This was not a man who had lost touch with reality; this was a man who is continually surprised (and, I would assume, somewhat frustrated) to find that reality seems to be a moving target.

We, the innovatively smug, may currently feel secure in our own technophilia, but our ability to keep up with the times may slip a little in the coming years. It’s human to feel secure with the world we grew up and functioned in. Our evolutionary environment was substantially more stable than the one we know today. As we step back from the hectic pace, don’t be surprised if we lose a little ground. Someday, when our children speak to us of the realities of their world, don’t be surprised if some of the terms they use sound a little foreign to our ears.

Beware Confirmation Bias

First published September 5, 2013 in Mediapost’s Search Insider

Most testing of marketing is disproportionately biased towards the positive. We test to find winners. But in the process, we often cut losers off without a second glance. And this can be dangerously myopic.

I’ve talked in the past about taking a Bayesian approach to strategy. The more I explore this idea, the better I like it. But it comes with some challenges – the biggest being that we’re not Bayesian by nature. In fact, there’s a cognitive bias roughly the size of a good-sized cow barn that often leaves us blind to the true state of affairs. In psychological circles, it’s called Confirmation Bias, and in a comprehensive academic review in 1998, Raymond Nickerson stated its potential negative impact, “If one were to attempt to identify a single problematic aspect of human reasoning that deserves attention above all others, the confirmation bias would have to be among the candidates for consideration.”

Here’s the thing. We love to be right. We hate to be wrong. So we will go to extraordinary lengths to make sure that we’re proven correct. And we won’t even know we’re doing it. Our brain, working surreptitiously in the background, doesn’t alert us to how biased we actually are. The many tricks that go along with Confirmation Bias usually play out subconsciously.

If we try to be good little Bayesians, we have to embrace alternative ideas of all shapes and sizes, whether or not they agree with our current view of things. In fact, we should be prepared to rip our current view apart, as it’s in the disproving and rebuilding of hypotheses that the truth is eventually found.

Here’s where things go wrong in most market testing. We usually test to prove our hunches right. We go in with a favored option and try to build a case for it.  We may deny it, but we all do it. That means that the less favored alternatives usually get short shrift. And it’s often in one of these alternatives that the optimal choice may be found. The more that there is at stake in the test, the more susceptible we are to Confirmation Bias.

Here is the rogue’s gallery of typical Confirmation Bias tricks:

Favored Hypothesis Information Seeking and Interpretation – As I said, we tend to seek information that supports our favored hypothesis, and avoid information that would contradict it. In the Bayesian view, this is equivalent to ignoring likelihood ratios.

Preferential Treatment of Evidence Supporting Existing Beliefs – Even if we somehow collect unbiased information, we will tend to focus on the information that supports our favored view. It gets “over-weighted” in analysis.

Looking for Positive Cases – This is the classic trap of testing only for winners and ignoring the losers. Often, the losers can tell us more about the true state of affairs.

The Primacy Effect – We tend to pay more attention to the first information we look at, which can bias analysis of any subsequent information.

Belief Persistence – Even when the evidence mounts that our original hunch is wrong, we can be incredibly inventive in twisting evidentiary frameworks to provide continuing support. Along with this is another bias called the “Sunk Cost Fallacy.”  The more we have invested in our original hunch (i.e. a major multimillion-dollar campaign that was launched based on it) the more tenacious we are in holding on to it.

Going back a few columns to Philip Tetlock’s Hedgehogs and Foxes, he found that Foxes make much better natural Bayesians. They are more open to updating their beliefs. The big takeaway here? Keep an open mind.

Google Glass and the Sixth Dimension of Diffusion

First published August 29, 2013 in Mediapost’s Search Insider

Tech stock analyst and blogger Henry Blodget has declared Google Glass dead on arrival. I’m not going to spend any time talking about whether or not I agree with Mr. Blodget (for the record, I do – Google Glass isn’t an adoptable product as it sits – and I don’t – wearable technology is the next great paradigm shifter) but rather dig into the reason that he feels Google Glasses are stillborn.

They make you look stupid.

The input for Google Glass is your voice, which means you have to walk around saying things like, “Glass, take a video” or “Glass, what is the temperature?” The fact is, to use Google Glass, you either have to accept the fact that you’ll look like a moron or the biggest jerk in the world. Either way, the vast majority of us aren’t ready to step into that particular spotlight.

Last week, I talked about Everett Rogers’ Diffusion of Technology and shared five variables that determine the rate of adoption. There is actually an additional factor that Rogers also mentioned: “the status-conferring aspects of innovations emerged as the sixth dimension predicting rate of adoption.”

If you look at Roger’s Diffusion curve, you’ll find the segmentation of the adoption population is as follows: Innovators (2.5% of the population), Early Adopters (13.5%), Early Majority (34%), Late Majority (34%)  and Laggards (16%).  But there’s another breed that probably hides out somewhere between Innovators and Early Adopters. I call them the PAs (for Pompous Asses). They love gadgets, they love spending way too much for gadgets, and they love being seen in public sporting gadgets that scream “PA.” Previously, they were the ones seen guffawing loudly into Bluetooth headsets while sitting next to you on an airplane, carrying on their conversation long after the flight attendant told them to wrap it up. Today, they’d be the ones wearing Google Glass.

 

This sixth dimension is critical to consider when the balance between the other five is still a little out of whack. Essentially, the first dimension, Relative Advantage, has to overcome the friction of #2, Compatibility, and #3, Complexity (#4, Trialability, and #5, Observability, are more factors of the actual mechanics of diffusion, rather then individual decision criteria). If the advantage of an innovation does not outweigh its complexity or compatibility, it will probably die somewhere on the far left slopes of Rogers’ bell curve. The deciding factor will be the Sixth Dimension.

This is the territory that Google Glass currently finds itself in. While I have no doubt that the advantages of wearable technology (as determined by the user) will eventually far outweigh the corresponding “friction” of adoption, we’re not there yet. And so Google Glass depends on the Sixth Dimension. Does adoption make you look innovative, securely balanced on the leading edge? Or does it make you look like a dork? Does it confer social status or strip it away? After the initial buzz about Glass, social opinion seems to be falling into the second camp.

This brings us to another important factor to consider when trying to cash in on a social adoption wave: timing. Google is falling into the classic Microsoft trap of playing its hand too soon through beta release. New is cool among the early adopter set, which makes timing critical. If you can get strategic distribution and build up required critical mass fast enough, you can lessen the “pariah” factor. It’s one thing to be among a select clique of technological PAs, but you don’t want to be the only idiot in the room. Right now, with only 8,000 pairs distributed, if you’re wearing a pair, you’re probably the one that everyone else is whispering about.

Of course, you might not be able to hear them over the sound of your own voice, as you stand in front of the mirror and ask Google Glass to “take a picture.”

 

The Open and Shut Mind

First published June 13, 2013 in Mediapost’s Search Insider

A few years ago I was invited to a conference on advertising at a major university. The attendees were a fairly illustrious group of advertising professionals, including several senior executives from major agencies. There was also a healthy sprinkling of academics with impeccable credentials. I was in privileged company.

The organizer of the conference asked me to come up with a “dinner topic.” She explained that she wanted to generate a lively discussion at the various tables as we dug in and broke bread. It was okay if it was a “little” controversial. I must have ignored the qualifier, because my suggestion was, “Is advertising evil?” I have never been one for half measures.

As the ad illuminati settled at their tables, I set the stage by providing two opposing points of view:

First, the positive side of advertising. It can be a way to touch the very core of what makes us human, sometimes moving us to greatness. It can unify communities, create bonds and motivate us en masse. Not only can it be a social “lubricant” but, at its best, advertising can be a powerful change agent as well.

Now, the “evil” side: Does advertising take all this power and fritter it away to drive pure avarice?  Does it short-circuit our Darwinian behavioral wiring, chaining us to a hedonistic treadmill where we constantly want something we don’t have? Regular readers will detect a theme here.

It wasn’t difficult to read the mood of the room as I was wrapping up. My dad has a saying that, despite its off-color nature, sums up the atmosphere of this particular gathering better than anything else I can think of: “It went over like a fart in the house of worship.” I cautiously headed back to my table to take part in the planned “lively discussion.”

My tablemates didn’t know where to start. It seemed that it had never crossed their mind that advertising could be anything but the highest of callings. To have a debate, you need to at least have an abstract understanding of the opposing viewpoint, even if you don’t agree with it. At my table the most common question was, “What do you mean, ‘Is advertising evil?’” I had apparently introduced an entirely foreign concept.

I swallowed and forged ahead, sketching out the basis of my hypothesis. I tried to stay in the abstract, hoping to generate a philosophical debate and avoid getting caught in an emotional catfight. It seemed, though, that I had not only hit a hot button, but had taken a sledgehammer and smashed it to smithereens. Advertisers, at least based on this particular sample, seemed unwilling to discuss the philosophical pros and cons (or at least the cons) of their profession. I just wanted the whole evening to end as soon as possible.

My purpose here is not to reopen the debate. I use this story to illustrate an unfortunate human tendency. We live in a world of grays, but we like to think in black and white. I doubt that advertising is totally evil, but I also doubt that advertising is totally good. The truth lies between the two extremes; advertising is most likely a rather dirty gray.  If we’re willing to consider alternatives to our beliefs, perhaps it will move us a little closer to reality. I think advertising would do nothing but benefit from a deeper evaluation of its moral standing.

But we often forego a search for the truth, content to stick with our beliefs, which often bear little resemblance to reality. If those beliefs are attacked, we defend them vociferously, turning a deaf ear to counter-arguments. We don’t listen, because open minds require the burning of a lot of energy.

In a simpler evolutionary environment, beliefs were a heuristic shortcut for survival.  But today, they often polarize us at either end of a moral spectrum, with no middle ground left for discussion. Case in point, the current American political landscape.

I have spent most of my adult life trying to fight this natural tendency. I have tried to keep an open mind and not let my beliefs blind me to an opposing viewpoint — at least, not when it comes to those things I believe to be truly important. Morality, religion and politics are just three arenas where open minds are much harder to find than staunchly held beliefs.

And, apparently, you can add advertising to that list as well.

Climbing the Slippery Slope of Advertising

First published June 6, 2013 in Mediapost’s Search Insider

Google’s Matt Cutts is warning advertisers not to try passing off “native ads” – or advertorials – as legit content. Apparently, the line between advertising and content continues to get blurrier. The reason is that advertisers are still trying to find an ad that works. And they have been for over 300 years.

The first newspaper ads, which seem to mark the dawn of advertising, appeared very early in the 18th century. Because they looked just like the articles surrounding them, they had to be labeled as an “Advertisement.” Sound familiar?

Now, wouldn’t you think that if you’ve been doing something for over 300 years, you would have figured it out? So why does most advertising still suck? Why are we still trying to find some magic formula that works.

We could attribute it to changing technologies, saying that advertising continues to evolve because the marketplace it operates in is in constant flux, along with the delivery channels it uses and the creative possibilities it offers. That would be what an “advertiser” would tell you.

The answer, I think, it a bit simpler than that.  It comes down to a three-century disconnect between the market and the marketers: marketers want advertising, the market doesn’t. At least, we don’t want advertising in the form that it usually takes. Advertisers have been tinkering for all that time to find something the public doesn’t reject outright.

Perhaps, as we often do in the Thursday Search Insider, we can find some clues in the etymology of the word. “Advertisement” comes from the French verb “avertir” – which means to give notice or, more ominously, warning. Ironically, the very word we use to label our industry came from roots that carry a negative connotation. To move it to a more positive light, we could say that the purpose of advertising is to make us aware of something we weren’t previously aware of. That seems rather benign. Helpful, even. And it would be accurate to say that the earliest ads aspired to this purpose.

But somewhere along the line, ads stepped over the line and became something we learned to hate. How did this happen?

Like many of the social issues that plague us today, the roots can be traced back to the Industrial Revolution. Technology enabled scale. Mass production became reality. And, to keep pace, advertising showed us its less benign side.

Prior to mass production, the output of a product was limited to the resources of a producer. Increasing quantity usually had an inverse impact on quality, which relied on the skills of a single craftsperson. One person could only produce so much. The first brands were introduced by these craftspeople to identify their products, differentiating them from inferior competitors.

But with mechanization and the introduction of the assembly line, suddenly scale became virtually unlimited. Uniform products could be produced by the trainload. Profits became tied to scale, and greed became tied to profit. From that point forward, the three moved in lock step.

It was at that point that advertising moved from being a helpful notice to an annoying plea to buy crap we don’t need. And that’s when advertisers had to learn to start pushing the public’s buttons, whether we wanted them pushed or not. Everything started to go off the rails early in the 20th century, and the wreckage really piled up with the introduction of mass communication. Suddenly, unlimited greed had an unlimited capacity to annoy us. Advertising couldn’t stop at informing. It had to start selling.

The twist in all this came right at the end of the “Century of Annoyance.”  In 1998, Goto.com introduced paid search (no, it wasn’t Google). It was an ad with one purpose, to make someone aware of something they weren’t previously aware of. And it was delivered in the perfect context. The market, in the form of a searcher, was looking to become more aware about something by seeking out new information. It gets even better. The searcher could decide whether or not to take the advertiser up on their offer by choosing to click or not.

Of course, with time, we advertisers will figure out a way to screw that up too. The good news, if you’re Matt Cutts, is that it means you’ll have a job for the foreseeable future.

The Stress of Hyper-Success

Last week, I talked about the inflation of expectations. In that case, it was the vendors we deal with that were the victims of that inflation. But we don’t only have inflated expectations about others. Increasingly, we measure ourselves against our own expectations. And that is leading us down a dangerous path.

The problem is that success is a relative thing. We can only judge it by looking at others. This creates a problem, because increasingly, we’re looking at extreme outliers as our baseline for expectations.

Take social media, for instance. Women feel more stressed than satisfied after spending time on Pinterest, according to a recent survey. “Pinterest stress” is the official label for feelings of inadequacy in trying to measure up against the unrealistic examples of domestic perfection shared on the female-dominated social network.

But it’s not just women and Pinterest. One-third of Facebook users feel worse after visiting the site. Why? Because we feel envious after going through the pictures of someone else’s dream vacation. Social media invites comparison. We try to measure ourselves up to the achievements of others in our social circle. There are two problems with that: we are naturally jealous of our neighbors, and our neighbors tend to lie (or at least embellish) when they post of their own accomplishments.

Added to this is the unnatural effect of the Power Law curve. Not all online posts about accomplishments are equally popular. We tend to focus on those that are outstanding — those that are set apart from the average. These online examples, representing the extreme upper limits of success and achievement, take their place at the head of the Power Law curve, drawing a dramatically bigger audience. We ignore the commonplace, which lives somewhere in the Long Tail. Our own quest for the remarkable (humans never gossip about average, everyday topics) leads us to focus on the unrealistic.

So the more access we have to the achievements of others, the more skewed our idea of success becomes. What we don’t realize, however, is that we’re measuring ourselves against the very highest percentile of the human population.

Take salaries, for example. What would be a yearly amount that would make you happy? Economists Angus Deaton and Daniel Kahnemann asked that very question — and it turns out that $75,000 a year is the magic number. Below that number, the day-to-day stress of just getting by leads to chronic unhappiness. But above that number, people seem to feel more fulfilled and are generally in a more positive frame of mind. But after you get past that general threshold for happiness, more money doesn’t seem to always equate to increased happiness. Millionaires and billionaires are not that much happier than the rest of us.

Yet if I asked you how much you wanted to make, I suspect the number would be higher than $75,000. And I doubt that it would have much to do with happiness. It would be because we know of people making more than us — much more. We have no idea if those high wage earners are happy or not, but we do know they pull down a much bigger paycheck than we do. So we believe we should aspire to that standard, whether it’s realistic or not, in the mistaken belief that it will make us happier. It won’t, by the way. We humans are notoriously bad at forecasting our own happiness.

This is one of those strange Darwinian detours that evolution has saddled us with. In our original adaptive environment, doing better than our neighbors was a pretty sure bet for superior gene propagation. We’re hardwired to not just be envious but to strive to compete. That made sense when our target was the person we were competing against for food, shelter or sexual access.  It doesn’t make sense when our competition is a far removed, sometimes fictitious ideal propagated by the media and the viral force of social sharing.

Somewhere, a resetting of expectations is required before we self-destruct because of hyper competitiveness in trying to reach an unreachable goal. To end on a gratuitous pop culture quote, courtesy of Sheryl Crow: “It’s not having what you want, It’s wanting what you got.”

The Straw that Broke the Market’s Back

First published May 9, 2013 in Mediapost’s Search Insider

Customers are fickle — and I suspect they’re getting more fickle.  Perhaps they’re even feeling a little entitled.A recent survey shows that customers tend to bail on a company not because of a big time screw-up, but because of the accumulation of a lot of little annoyances. Soon, their frustration reaches a tipping point and they look elsewhere.

It would be easy to point the finger at the companies and demand that they get their collective acts together. But I suspect there’s more at play here. It would be my guess that customers are getting harder to please.  And I would further guess that the Web is largely to blame. I think it comes down to a constant rise in our collective expectations, while the reality of our experiences fall behind.

The balance between our expectations and the actual experience determines our loyalty to any course of action. If we have low expectations and a poor experience, we aren’t really surprised, which dampens our subsequent disappointment and leaves us more willing to forgive and forget.  If we have low expectations but a good experience, we’re pleasantly surprised, making us more apt to return. If we have high expectations and a good experience, we get a double hit of happiness. First, we enjoy the anticipation, then we appreciate that the experience actually lives up to our expectations. For a vendor, the scariest scenario is the last of the four: high expectations but a poor experience. In this case, we walk away disappointed and frustrated.

Now, balancing expectations and experience wouldn’t be that difficult for any moderately competent company if those expectations were realistic. But I suspect that more and more of us are entering into our respective experiences with unrealistic expectations. We’re setting our vendors up to fail.

Expectations are set partly based on our past experiences, but they’re also set by the experiences of others. We create our expectation set points based, in part, on what we hear from others.

The Web has created an open, accessible market of experiences and hearsay. We hear about the bad, a feedback loop that increasingly is calling out poor customer service. But we also hear about the good.  Correction – we hear about the exceptional. The “good” is not remarkable. It generally falls within our expectations and so goes without comment. But either the very good or the very bad is exceptional, and we are more apt to comment on it online. Not only do we comment, we also embellish, accentuating the plusses and minuses to make it a better story. Therefore, what we hear from others sets either a very low or very high bar. We steer clear of the low bars, but the high bars stick with us, contributing to the setting of future expectations.

The other thing the Web has done is create expectations that overlap domains.  Previously, when our expectations were set based on our own experiences, they tended to stay domain-specific. We had an expectation of what it would be like to buy a car, stay at a hotel, eat at a restaurant or purchase a new pair of shoes. With the Web, cross-pollination between domains is increasingly common. A head marketer for a well-known industrial manufacturer once said to me, “When it comes to online experience, my competitors are not the traditional ones. I’m competing against Amazon and eBay. That type of experience is what people expect.”

This “nudging up” of expectations is done without much rational consideration. We don’t care much for the reality of operational logistics in any particular domain. We just want our expectations to be met, no matter where those expectations might come from. And when they’re not, we pull the plug on that particular vendor, assuming another vendor can do better in meeting our inflated expectations. The Web has also engendered a virulent “grass is always greener” view of the world. We know a competitor is just a click away (whether or not that vendor is any better than the incumbent).

I’ll be the first to call out a bad customer experience, but when it comes to the increasing fickleness of customers, we should remember that there are two sides to this particular story.

Anchoring and Search

First published in Mediapost’s Search Insider – April 25, 2013

A few columns back, I talked about psychological priming and how it could play out in a search environment. In today’s column, I’d like to talk about a related concept: value anchoring.

Given almost every product category, with the exception of those things we buy very frequently (in my case, chocolate bars, beer and books), we don’t really know what the current going price would be. Either we don’t buy them frequently enough, or the price is subject to market volatility. We may have a rough idea of prices, but we need to adjust this price estimate to the current market conditions.

We need a pricing framework because, as consumers, we need to establish in our own minds what a “fair” price would be. This concept of fairness taps into some pretty deep emotional triggers — ones that vendors should be aware of. I’ll explain in a minute how these concepts of fairness can play out in a typical purchase journey.

Remember, our determination of what price is fair is totally arbitrary. It’s not as if we know objectively what the “fair” price for a carton of eggs, a big-screen TV, or a hotel room in San Francisco is. We make these pricing decisions based on comparisons to available information. And it just so happens that the first piece of information that is available to us tends to play a significantly bigger role than any of the subsequent information that we may come upon. That first price we’re exposed to anchors our heuristic comparisons and tends to linger in our subconscious, triggering emotions that drive our perceptions of fairness.

If we have to adjust our pricing expectations upwards, because the first price baseline is too low, we feel frustrated and taken advantage of.  Our brain’s warning signals go off and we suddenly feel anxious and go on the defensive. Our mood takes a turn for the worst.

If, on the other hand, we are able to adjust our pricing expectations downward because we’re finding prices substantially lower than the first price encountered, we’re almost euphoric. The reward center of our brain is telling us we’re getting a great deal and the resulting dopamine hit gives us a buying high.

Once again, these feelings are based on nothing more than us grasping at the first number we see, and then judging all subsequent pricing information against it. But the fact that this is nothing more than a gut call is exactly the point; its lack of rationality does nothing to diminish its emotional punch.

Now, let’s look at how this might play out in search. Remember, there’s a pretty good likelihood that many consumer journeys may start with a search engine. It’s also likely that many search advertisers might advertise the lowest price possible in order to capture the click. Given this, it wouldn’t be surprising to see that the initial benchmark price could be a very low one. There’s nothing wrong with this, as long as the prices the buyer will eventually pay will land in the same ballpark.

But, as is often the case, if prices start rising quickly because of the inevitable “fine print” exclusions, conditions and lack of availability, the advertiser is going to trigger all the wrong emotional reactions in the prospect. Rather than “hooking” them by dangling an unobtainable low price as bait, they instead unleash a wave of negative emotions. Even if they end up still capturing the sale (due to the competition not being able to beat the inflated price) they will not be engendering any brand “love.”

This is yet another example of focusing on the end result without thinking about the journey. If we become myopically focused on conversion rates, for example, to the exclusion of all else, we might be ignorant of the long-term brand damage we might be causing by capturing those clicks through a digital version of the classic bait-and-switch con.

Read more: http://www.mediapost.com/publications/article/198937/anchoring-and-search.html#ixzz2SdvLkwGB