The massive flaw in customer-centric marketing CMOs need to know about

Dan Monheit

  • Co-founder, Hardhat
Dan Monheit is cofounder of award-winning Hardhat, Australia's foremost creative agency built around Behavioural Economics. Dan consults to many of the country's largest brands, and has been invited to present on the topic at leading global events including SXSW in Austin Texas. His Bad Decisions podcast regularly features in the 'top podcast' charts and draws listeners from over 90 countries. His Behavioural Economics book, “Terrible Advice for Excellent Marketers” will be released in December, 2020.

Putting the customer at the heart of everything a brand does looks set to continue its reign as the dominant theme for senior marketers well into the New Year.

Deloitte’s 2022 Global Marketing Trends report has been wholly dedicated to ‘thriving through customer centricity’.  The report surveyed 1000 global executives, finding the highest-growing brands, defined as those with 10 per cent or higher annual growth, are moving beyond ‘point’ solutions and instead comprehensively addressing the entire customer experience.

This rush towards customer centricity has been accelerated, like many things, through the pandemic. Surging ecommerce and the maturity of mobile have left customers with more options, increased power and greater expectations than ever before. But, on the flip side, it’s never been easier for brands to wrap themselves around ‘the customer’. Overnight, almost every different version of ‘the customer’ merged into one; someone at home, online, with their credit card at the ready.

With ever-higher expectations and seemingly infinite competition, listening to what customers want then shaping our organisations around delivering it sounds like a surefire path to success. Or does it?

Behavioural Science and the 70-plus years of research it’s built upon would suggest otherwise. While as customers we have no issue telling brands what we think we want, in reality, we’re all strangers to ourselves, moving through life with no real idea of why we do many of the things we do.

Worse still, we think we know. Our gigantic human brains include a section upfront called the prefrontal cortex. This area, comprising 12-15 per cent of our total brain mass, sits just behind our forehead and spends its days concocting logical, rational stories that confidently explain to the world who we are and what we do.

Our prefrontal cortex proclaims the virtue of ‘Australian made’, acknowledges the importance of a good night’s sleep and maintains our ‘fiercely independent thinking’. Back in the real world, we save a dollar where we can, binge Netflix into the wee hours and wear the same jeans brand as everybody else at the office.

And herein lies the problem. Asking customers what they (think they) want can be a surefire recipe for disaster. Sitting just below our conscious thoughts are a collection of biases that shape our decision making, often resulting in us choosing things that make no logical, rational sense at all.

For example, Projection Bias causes us to assume our current tastes, priorities and preferences will also be our future tastes, priorities and preferences. In reality, this isn’t true at all. 

Changing tastes

In a simple experiment, Professor Dan Gilbert asked people how much they would pay to go to a concert featuring their favourite band from 10 years ago. On average, respondents were willing to spend $80. He then asked them how much they would be willing to pay to see their favourite band today in concert 10 years from now. Here, the average response was $129.  

Rationally, this makes no sense. We acknowledge our tastes have changed in 10 years, hence the lower willingness to pay. But at the same time, we don’t think our tastes will change anywhere near that much 10 years from now. Of course, they will.

Projection Bias also caused many of us to declare boldly, mid-pandemic, that offices, business travel, conferences, cruise ships and shopping centres were all dead. It felt right in the moment, but moments tend to pass. 

We also massively underestimate how much others influence us. Our prefrontal cortex has plenty of good explanations for why we stand outside full restaurants, watch the same TV shows as everyone else and start to wonder if now is the right time to get into crypto. Our primal fear of being excluded from the group is something we’d seldom admit - even to ourselves - but it’s a factor that has proven to be highly motivating.

Psychologist Professor Robert Caldini, author of Influence, the Psychology of Persuasion, demonstrated the concept of Social Proof in a study that tried to encourage people to reuse their towels in hotel rooms. Guests who stayed at the hotel were randomly assigned to have one of three different cards placed in their room: The first type of card read ‘please reuse your towels, it's good for the environment. The second read ‘, please reuse your towels; that's what other people do’. The third read, ‘please reuse your towels, that's what most people who stay in this room do’. 

Social Proof

In a stunning display of Social Proof at work, the second and third versions beat the pants off the environmental message. Recipients of card two were 26 per cent more likely to reuse their towels than recipients of card one. For recipients of card three, the likelihood increased to 33 per cent.

Interestingly, another group of participants were shown all three cards and asked which they would find most motivating. Naturally, the majority of people were adamant what other people did had little bearing on their choices and that the environmental message was the one that would be most influential. But, of course, this is in direct contrast to the study’s actual results.

How do brands maintain customer centricity while simultaneously investing in customer research? While it’s important to invest in customer research, overlay insights from the world of Behavioural Science. Phenomena like Social Proof and Projection Bias are well documented and especially relevant when asked people to imagine what they would do in a hypothetical situation. 

In addition, marketers should look to do away with hypotheticals altogether. For example, suppose you're a customer-centric brand, but you don’t know whether your customers are more motivated by your environmental credentials or your fast delivery. Either way, you plan on shaping yourself around it. 

Sure, you could ask customers, but I think we all know how that will go. So instead, you could snap off a tiny but meaningful budget to run Google ads with different headlines, social media ads with different messaging or an EDM campaign with different subject lines and see which version gets more real clicks from more real people. But, again, this will tell you what’s motivating, not what should be.

If the answer ends up being fast shipping, it’s not to say that environmental credentials aren’t necessary; it’s just that they’re not the only thing (or even the most significant thing) to focus on when ‘wrapping ourselves around our customers’.  

As we gear up for our biggest year of customer centricity yet, let’s continue to ask customers directly what they want. But at the same time, remember that being a great brand can be a little like being a great parent. Just because they ask for something, doesn’t mean it’s the right thing for them.

Tags: brand strategy, consumer engagement, behavioural science

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