Associate Professor of Marketing at Emory University’s Goizueta Business School and the co-author of The Intuitive Customer, Dr. Ryan Hamilton’s research investigates shopper decision-making: how brands, prices and choice architecture influence decision making at the point of purchase. His findings have been published in some of the most prestigious peer-reviewed journals in marketing and management.
His research findings have also found an audience in the popular press, having been covered in The New York Times, The Wall Street Journal, Time, USA Today, The Financial Times and CNN Headline News. Dr. Hamilton’s research and teaching are focused on identifying some of the surprising ways firms can use psychology to better understand and serve their customers.
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Learn more about Ryan Hamilton at: http://mindingmarketing.com/
The latest trend in Customer Experience is the growing interest in behavioral analytics and why customers buy. If companies could only look inside of a crystal ball and see into the minds of customers, perhaps they will finally have that highly sought after “magic formula”. If you know how your customers think, you can stay in sync with what they want, rising expectations, and ultimately why they make decisions.
Ryan Hamilton, co-author of The Intuitive Customer, shares some of the benefits of knowing how your customers think, the importance of holding onto the basics of customer engagement, customer rationality and intuition, making experiences intuitive, creating memories, and how we are motivated to make decisions.
While podcasting with Dr. Hamilton, here are some insights he shared with us on customer decisions:
1. Observe your customers
Experience your products or services as your customers do. Have your friends, family, or neighbors be your secret shoppers and give you honest feedback on what the experience was like for them.
2. Listen to customer feedback surveys
Are you listening to your customer feedback surveys? Don’t sit on the data; use it. Customers may not be able to tell you exactly what’s driving their decisions, but use it as a place to start for further research.
3. Intuition and Reasoning in decision-making
One way to understand the role of intuition in decision-making is based on a model championed by Daniel Kahneman, Thinking, Fast and Slow, that says we have more than one way of thinking about things: rational and intuitive. To anticipate how someone is going to react to things, as a general rule you have to decide whether it’s going to be a more rational or intuitive decision. Most companies lean towards the rational side. It’s a mistake to believe that there’s no intuitive influence.
For example, buying a house is a rational decision, but any real estate agent will tell you the importance of staging a house or baking cookies prior to showing the house. The house is infused with the aroma of fresh baked cookies. You can imagine living in a home that’s full of furniture. These aren’t rational, but intuitive influences. Don’t abandon the intuitive influences.
4. Careful not to overwhelm your customers
It is surprisingly easy to overwhelm your customer. It sounds counter intuitive. If you ask your customers if they want more choices, they’ll say more is better. However, over and over again we’ve studied and found out that giving customers a lot of options causes them to become easily overwhelmed. They can actually be more likely not to make a decision. Scrolling through Netflix can become overwhelming because there are so many choices.
Give them an easier way to sort through options. The Coke Freestyle machines do a good job of this. You are able to select if you want a fruit flavored drink, caffeine free, diet, etc. Categorize your offers to simplify customer decision-making.
5. Understand what’s driving your customers’ decisions
Some of your customers’ decisions are driven by intuition, some by habits, and some by other things entirely. If we’re looking specifically at habit and intuition, these are both easy ways of making decisions. They both take minimal engagement; you don’t have to think much about it.
The difference is habits are learned behaviors triggered by specific cues. You can’t teach customers a habit. You can, however, appeal to their intuition. For instance, I fly Delta and I find their app to be useful. When you select your seat, the button to click out of it is in the upper right-hand corner. Every form that I’ve filled out, you click the button in the bottom right hand corner to exit. It’s become intuitive for customers to go to the bottom right. Why Delta’s web developers are fighting intuition, I don’t know. It doesn’t affect my decision, but it’s always a good thing to do what’s intuitive for your customers. Are you paying attention to customer intuition?
Habits are more complex. You can ask what the environmental or situational cues are that will start a habitual behavior. For instance, in grocery stores you’re entering the toothpaste aisle and your brain goes, “Ah, I know where I’m supposed to go and pick [what I want].” That’s a habit and it’s intuitive.
6. Are your customers loyal?
Why are your customers buying from you? It’s great that they are, but is it out of loyalty or habit? They come with a different set of motivations. If I’m buying because I love your offer, there’s a whole set of associations and meanings that go along with it. I’m more likely to tell others and forgive you if you somehow screw up. If I move away, I’m more likely to seek you out. With habitual behavior, none of that is true. If anything changes [service, location], the cues are removed and I’ll stop going. I won’t seek you out.
Loyalty programs are good as long as the customer doesn’t interpret it as bribery. In other words, they aren’t that good so they have to bribe me to buy from them. It could be undermining loyalty. I wouldn’t say it’s a mistake to have programs because they drive business. I do think it’s a mistake to believe it’s loyalty.
7. Causing memories in experiences
Often times things that are great in experiences are the same things that form memories. There’s alignment there. Kahneman and others distinguishes the differences between the experience and the memory of the experience. There’s something called the peak-end rule that drives memory formation. What happens at the peak and end of an experience is what we remember most.
You can either focus on making the overall experience better and/or make the peak and end experience greater. Science suggests you should probably focus on the peak and on the end of the experience to drive behavior.
8. Do the basics better
There are great tools and technology that’s constantly coming available. It’s great to have new tools, but they are an opportunity. The firms that do it well recognize that these new opportunities are ways of doing the basics better. What worries me is when I see firms out there going, “Oh, this is a new tool… Customers are going to behave totally differently because of this new platform or new app.”
So many times, when I talk to companies it turns out that they haven’t done the basics. They haven’t figured out who their customer segments are and what those customers really value. Instead they’re chasing a new app and not asking whether their customers are there and if they want them there. Find out what’s cool and new. It can give you new opportunities. Use them to do the basics better.