Eight Psychology Experiments for Marketers

Speaker: Welcome back to the Digital Marketing Podcast, brought to you by target internet.com. And in this episode, we're exploring eight psychology experiments for marketers.

Speaker 2: Okay, so in this episode we are going to be talking behavioral science. And I'm very excited that I've been joined by Phil anew of the Nudge Podcast. And if you know Nudge, you'll know it's one of the leading marketing podcasts globally. He talks to lots of different interesting people about behavioral science, and his own expertise on the subject is really, really exciting to listen to. Uh, and he has some fantastic examples. So Phil is gonna take us through eight theories and experiments that he has run himself and look at how we might apply those to our digital marketing. So over to the interview. riverside_daniel_rowles_raw-audio_digital_marketing p_0218: Okay, so I'm here with Phil. Phil, why don't you just introduce yourself, tell people what you do, and, um we've just discovered that we thought we knew each other via our podcasts. But actually it turns out we go years back and we met back in Brighter, but we'll get into that later. So tell people who you are. riverside_phill_raw-audio_digital_marketing p_0219: Hi everyone. Thank you so much for having me on. I guess we're rivals is probably how you'd describe this marketing podcast, rivals. Oh, part, oh, pardon. That's a much better way of framing it. riverside_daniel_rowles_raw-audio_digital_marketing p_0218: building the whole podcast industry. riverside_phill_raw-audio_digital_marketing p_0219: Exactly. Let me reframe it in my mind. So I also host a marketing podcast. My podcast is called Nudge. It is about behavioral science. So this is really my background, my area of expertise. I essentially. Try to understand how and why the human brain makes decisions and help marketers use that understanding of the human brain to improve their marketing. riverside_daniel_rowles_raw-audio_digital_marketing p_0218: We've kind of geared up some questions that we thought would be a good one to answer for the audience, so we'll kind of go through those and then we'll riff around 'em a little bit. But let's come back some of the basic principles. It's the first thing we quite often think about in kind of online digital psychologists, things like social proof. So is social proof that a key principle people should worry about? Does it still work? riverside_phill_raw-audio_digital_marketing p_0219: Well. It definitely still works, but I think people misunderstand it. So, is it worth me sharing, you know, there's a classic bit of evidence behind social proof from Robert Cialdini. Would that be worth sharing, Daniel to riverside_daniel_rowles_raw-audio_digital_marketing p_0218: Yeah, please, that'd be riverside_phill_raw-audio_digital_marketing p_0219: Yeah. So some of your listeners will have heard this before. They will have read Robert Cialdini's book, influence. Very popular. But in his book, he writes about six weapons of influence. He actually wanted to call the book Six Weapons of Influence but was told not to because it sounded a bit too aggressive. Anyway, one of his weapons was social proof. And social proof is very simple. We all experience it when we are walking down a, the seafront in Jersey, perhaps Daniel. And you see a restaurant. No one's in it, or there's one table full the rest of the tables are empty. There's a sort of needy looking waiter in there, desperate for you to come in, and then the restaurant next door packed, queue out the door. People heaving and are desperate to get inside. We all, every single one of us feels the urge to go into the full restaurant. We feel this urge not because of any rational reason. We haven't looked at the menu. We don't know about the quality of the food, we dunno about the price. We are simply driven by the actions of others. When we see something is popular, when we see other people doing something we have this urge to do the same thing. Typically, not all the time, but typically hereditary trait, something we developed over millennial. As human beings, we follow the actions of others sensible to do. Robert Cialdini proved this in an a quite amazing study in a hotel room in Arizona is such an important one 'cause it's still followed today. In all of the studies I talk about, there are these randomized control trials, so you can really tell. When you have a variant, what the impact is. So the control, the norm, essentially in his study is a piece of paper in the hotel room, which is asking people to reuse their towels. We will have all seen this piece of paper before it simply says, please reuse your towels. Help us save the environment. Classic environmental. Robert Cialdini creates a variant which removes all of that environmental plea and just says, most people in this hotel room or most people in this hotel reuse their towel. Nothing about the environment. If you ask people. In a survey or focus group, which do you think would be more effective? Everyone will say the environmental plea. They'll say no. I'm persuaded by environmental pleas. Thank you very much. I'm not influenced by other people. It's not the case at all. They measure the Tower reus usage in the room, which is quite easy to do. 37% of people reuse their tower with the environmental plea goes up to 45%. When you say most people in this hotel room, 45%. When you say most people in this hotel, 49%. When you say most people in this hotel room, which suggests that social proof is even more effective when it becomes more specific, but my problem with social proof is that it's often used too, literally. We, we just say stuff like McDonald's famously had this, had the sign on there on their stores saying 65 billion burgers sold. And tix caramel wafers say 7 million, bought and sold every year. It's a very literal way of applying social proof, and we don't like being sold to as consumers. We don't like it when someone comes up to us on the street and tries to tell, sell us something. We feel this need to restore our autonomy. So a much better way of applying social proof is not by actually telling people. But by implying you are popular. Great example of this to highlight it. It's from Sam Tatum, the Late Great Sam Tatum, his wonderful book, evolutionary Ideas. He gives this example of a cafe in Sydney. Cafe wants to tell people it's really popular, but it doesn't want to just say, we're the most popular cafe in Sydney. So what they do behind the baristas, they stick every single loyalty card that has been completed on the back of their wall. Now they are a very popular cafe, so this wall is covered with completed loyalty cards. So if you are new to Sydney, you've never been to this cafe before. You walk in the door, you see in an instant that this is an extremely popular place. Hundreds and hundreds of customers come here regularly. It must be good, and they don't even have to tell you, and that's a more effective way of using social proof. riverside_daniel_rowles_raw-audio_digital_marketing p_0218: I love it. So you've got some kind of practical examples from digital marketers kind of using this as well. So kind of like Reddit and email and those kind of things. riverside_phill_raw-audio_digital_marketing p_0219: Yeah, definitely. I mean, I've tested this myself. I've created Reddit ads, which ask people to listen to my podcast. Some just show my podcast logo. Another one will say. Nudge is a top marketing podcast, X amount of downloads and then show some of my five star reviews. When I do that, I showcase that it is popular. I I showcase it. More people are likely to click on the ad. I think the click-through rate goes up by 22%. My example and I've tested this on Reddit as well. I think the maybe more interesting way that this is applied online is again, by not showing specifically. You are the most popular. It's by trying to imply it in interesting ways. So, you know, an example here would be when I was working at Buffer. Buffer was the sort of last job I had before I went full-time on the podcast. We had these very, everybody listening to this who runs a website, especially if you and B2B will have done this as well. Very classic social proof banner. Sort of just below the fold on the page. Great. Out logos of companies that we all admire. Adobe Whisks past there's Amazon, you know, riverside_daniel_rowles_raw-audio_digital_marketing p_0218: got one on my website, I'm riverside_phill_raw-audio_digital_marketing p_0219: Yeah. That, yeah, exactly. We all have it. Right. Buffer. We tested everything and I was very keen to run. Sort of more tests on the social proof page. 'cause I thought we could get more effective. I thought we could get effective by getting more specific, which is what Cialdini taught us with the hotel room example. You know, you say most people in this room, we use the towel. That becomes more effective. And I thought we could get more effective by not just. Telling people, but showing the impact as well. So we removed these great out logos and instead we put buffer's. Whole concept, by the way, it's a social media scheduling tool. The idea behind why you would use Buffer is to grow on social. That was the number one use case. So we would highlight people's real people's accounts on this little banner. Say, you know, we are used to buy Crocs, for example. I think they were a customer and we would say. Here's how many followers they had across their platforms when they joined Buffer. Here's how many followers they have now. And then that would specifically call out what, how they're growing. Now, this is showcasing our social proof. We're still saying Crocs use us, but we're saying it in a slightly different way, which doesn't feel like we're just selling, we're actually providing a bit of value and we're being specific. I can't remember the difference in the control and the variant in that scenario, but that is still on the site today. And the reason why is because it worked and it was effective. So that's a good example about how to apply this digital marketing. riverside_daniel_rowles_raw-audio_digital_marketing p_0218: Love it. You mentioned loyalty cards a moment ago in the kind of coffee shop example. How do you think behavioral science can drive that loyalty? How does that play a role in this? riverside_phill_raw-audio_digital_marketing p_0219: Yeah. Simplest way to drive law is a very simple experiment. Yeah. From 2006, it's from Dres and Nunes. And it was with a car wash, but you can apply this online as well. Very easy to apply this online. And the car wash had a simple loyalty card, same sort of loyalty card any Brit would've ever got in Cafe Nero over the past 10 years. Picture that loyalty card in your head essentially. One group of participants, again, it's a randomized control trial. So one group of participants gets a loyalty card with nine stamps they need to fill out before they get their free item. So imagine that free latte from Cafe Nero, for instance. Another group gets a loyalty card with only seven stamps they need to collect, except those who get the nine stamp variant. When the barista or the car wash person hands over that loyalty card, they plug in. So they stamp the first two. Now, an economist would look at this and say, these two loyalty cards are identical in both scenarios. The customer needs to buy seven products in order to get. The next one for free. However, behavioral scientists would look at this and say no. These two things couldn't be more different. There is something about having a loyalty card where you feel like you're getting something for free. Something about the power of reciprocity, wanting to return the favor, and something about this idea of endowed progress. When a task has already begun, we're more likely to finish it. And they find that those who are given the loyalty card with the first two stamps plugged in are 82% more likely to keep going back and getting that final coffee for free. There is a benefit in giving your customers something for free at the start of their journey with you. There is a benefit in getting them started on their own. Very literal ways you can apply. This is when people are filling out their profile. We'll have all seen this. Start filling out the profile for them with information you can already gather. They'll be more likely to finish it. Wonderful quote from Umes Ernest Hemingway who said he never finished a knight's writing at the end of a sentence because he knew if he ends the sentence, it's harder to start the next day. So he ends mid-sentence. And then I would, I was about to say he loads up his computer the next day, but I don't think he was doing that. I dunno, whatever typewriter, I guess he gets, sits down with this typewriter the next day and he could just continues where he left off. It's far easier for his brain to engage again. Same thing happens for us. It's far easier for us to drop back into a customer experience journey with a company, if. We feel the progress is ongoing. You know, classic example, if you're, whatever you're selling, loyalty card wise, make sure that every time they're engaging with your product, they feel like they're making progress towards a certain reward, whatever that might be. riverside_daniel_rowles_raw-audio_digital_marketing p_0218: So I love this 'cause I've used almost exactly the same example. And it really does spur some thinking in people, particularly in digital. Today in terms of when we're building education platforms or we're building anything, it's like, actually, why are we not gamifying this? Why are we not encouraging people to kind of work towards something as well? Give us another example then. So we looked at what's a common marketing mistake? riverside_phill_raw-audio_digital_marketing p_0219: You don't really wanna throw marketers under the bus. We're all trying, we're all trying to achieve the same thing. And you know, the evidence I'm sharing today, it has worked in the scenarios I'm talking about. It's not guaranteed to work for everyone. You should still test it yourself. It's probably better than going on your gut instinct. But it still requires a test that said. Marketers. I studied marketing at university. I actually asked this at the marketing meetup conference last week. I told people, put your hands up if you studied. This is a conference about marketing for marketers. About 10% of the people in the room put their hands up when I said, if you studied riverside_daniel_rowles_raw-audio_digital_marketing p_0218: that doesn't surprise me. riverside_phill_raw-audio_digital_marketing p_0219: So it's, and I think that's a good thing, by the way, because I think a lot of what you learn at university. Not at Imperial, obviously, Daniel where you are lecturing. riverside_daniel_rowles_raw-audio_digital_marketing p_0218: Or Aston or a few others we are connected to as well. riverside_phill_raw-audio_digital_marketing p_0219: There are fantastic universities, but a lot of what you learn isn't directly applicable to the sort of first tactical jobs you'll get as a marketer. For example I was taught to always talk about the benefits, talk about benefits when you're talking about your product, say to things people will gain. If they use your product. And yet there is a lot of evidence from the world of behavioral science that gains are not as powerful in terms of persuading us as losses. So this is from Amos Dki and Daniel Kahneman's. Fantastic work on loss aversion, which for those of you who have had the patience to sit down and read, thinking fast and slow, and believe me, it takes patience. That is a man who makes a point and then repeats it about 25 times. And anyway, he makes the point that losses are twice as painful as equivalent gains. And the best way to frame this is if a listener, if your boss tells you, at the end of the day today we're gonna give you 20 pounds more in your monthly. Wage, you'll feel okay, feel pretty good. But if they say we are gonna be taking 20 pounds away from your wage to pay for the teas and coffees, whatever else it might be, you are gonna be fuming. You'll hate that, and it will feel twice as worse. As the equivalent 20 pound game would feel, finding 20 pounds on the floor in a car park feels okay. Losing 20 pounds on your way back to your car feels really painful and smart marketers can use this loss framing to. Make their message more appealing. Elliot Aronson, fantastic researcher, did a bunch of studies on this back in the seventies, and one of the studies which applies directly to marketing asked homeowners 404 homeowners they gathered, sent them materials to their homes and said. I tried to persuade them to install insulation. Some received a message that was framed as what they would gain so you could save 75 cents a day by installing insulation in your house. The rest received a message about what they would lose. About what they are losing. So it said you are losing 75 cents a day because you do not have insulation in your house. They find that when you use the loss framing message, I think it was an 82% uplift in terms of the amount of people who would then go and install insulation simply by framing things as a loss. Marketers struggle to apply this really good example back in the day was credit card surcharges. So you used to get charged a surcharge for using your credit card. Awful way of applying this. Instead, they should raise the prices and you should get a discount for using using cash. That would've been a much better way to do it. So you don't focus on the loss 'cause people feel that pain by loss. Focus on the game. Same thing. We saw this, I don't think this has been introduced, but there were pubs I think a couple of years ago who attempted to introduce dynamic pricing. I think it was Green King, and they said we, in London especially, we will charge. 10% more during a peak period. Awful way of applying this 'cause people feel the loss. Instead they should say, if you come at off peak, we give you a discount. What an amazing way to make you far more likely to go to the pub and you can imagine how this applies online as well. You should frame things not always by what you gain, but also by what you lose. Amazon Prime do this brilliantly. If anybody listening has tried to unsubscribe from Amazon Prime, you will have felt viscerally the losses. That you would experience. They don't just say you'll lose out on Amazon Prime. They don't just say you, you'll lose out on Amazon tv. They don't just say, you'll lose out on Amazon Music and the rest of it. They calculate the exact amount you have saved in delivery fees over the X amount of years you've had Prime and say, if you continue to use this at the same rate, you will lose and it'll be an astonishingly high number. Unfortunately, it'll be in the hundreds, and that feels very visceral. It's a very effective way, according to Richard Chataway and his book Behavioral Business, that one message alone from Amazon that specifically called out how much people would lose if they stopped using their prime service. That one message alone, which they tested reduced churn for Amazon Prime by 42 percent's an incredible way to apply this online. riverside_daniel_rowles_raw-audio_digital_marketing p_0218: It is, and I think it's really interesting because getting that messaging right, getting the subject line right, getting the title right, all those kind of things. Has such a massive impact, yet we're so obsessed with the latest shiny thing and getting on and doing things of AI and so on. And actually going back to some of these principles I think is so important. The big thing at the moment, or has been phrases, I guess is, you know, we have to be authentic. It's really important to create authentic content. And it leads me nicely into this kind of question that you've got a kind of a reference for, which is, does showing your flaws make people like you more? And I think there's something at the kinda heart of this. riverside_phill_raw-audio_digital_marketing p_0219: Yeah. Have you heard of the Pratt Full effect, Daniel riverside_daniel_rowles_raw-audio_digital_marketing p_0218: not. riverside_phill_raw-audio_digital_marketing p_0219: Full effect, I mean, hilarious effect, isn't it? It's like literally has Pratt in the name. How? How memorable is that? And it is. It's basically from this 1960s study, incredible study again by Elliot Aon. I referenced him earlier with the loss aversion. And in the study, Aronson recorded, it was a tape recording at the time, 'cause video recordings weren't very commonplace. A tape recording of what participants thought was a quiz, contestant correctly answering a bunch of very hard questions perfectly. So the contestant is asked, what's the. 70th Prime number and the quiz contestant, he knew the answer. What's the capital of Oo? Quiz? Contestant knows the answer Things. You and I, you actually might know both of those things. Daniel. riverside_daniel_rowles_raw-audio_digital_marketing p_0218: No, not at all. riverside_phill_raw-audio_digital_marketing p_0219: You might tell me. I actually think I know the capital of ou. I think it's f Anyway. I'm not sure that you, this guy knew the answer, not like. Anyway, gets 93% of these questions correct at the end of re the, towards the end of recording the quiz host takes 'em off stage. You sort of the, you can hear the tape player continues recording. You hear the quiz, contestant go off stage, pick up a cup of coffee, take a sip, and then spill that coffee all down their white t-shirt a white shirt. And they say to themselves, oh, I can't believe that I've spilled all this coffee down myself in this recording. Aronson does two things. Now I should say the quiz contestant is asto, by the way. It's not a real person, but that's always the case for if a psychologist ever asks you to engage with someone, just bear in mind it's an actor anyway, Aronson creates two versions of the recording with the quiz contestant one, where it is cut right after he answers the last question so you don't hear the coffee being spill. Another where he keeps it playing for a bit longer and you hear him spill coffee down himself. He then plays those recordings to two groups of people. And remember, the only difference is one time he spills coffee down himself and he finds surprisingly that people consider the quiz contestant considerably more likable, considerably more. When he spills coffee down himself. Now I like my friends, but I also don't like getting third degree burns. So it's a surprise, right? That people would prefer that they find someone more likable if they're a bit more clumsy. And what Aaronson has had essentially found is that if you showcase a flaw alongside a strength, so remember this guy's a smart guy, showcase a flaw of the strength. It makes people more likely to like you. He repeats the experiment again, this time where the quiz contestant does not get all of the questions right. Doesn't know the capital of TU or the 17th prime number. Suddenly he is seen as less likable when he spills coffee down himself rather than when he doesn't. Now, brands intuitively notice many brands intuitively notice they highlight some of their flaws because it actually makes 'em seem more likable. Classic example of this. Was KFC when they ran out of chicken in the uk. This very simple ad where they apologized, said FCK, we've run out of chicken. They highlight the fact that they had a flaw, they didn't avert it and that made them seem more likable, made people, you know, won awards. That ad same with Marmite. You either love it or you hate it. Avis say, we're second so we try harder. Buckley's the mouthwash, say the taste you hate twice a week. There's all sorts of examples. Guinness, you know, good things come to those who wait. Waiting for a pint is not a positive. It is a negative, especially if you're with your mates, and yet they highlight it and it almost turns it into a flaw. I tested this myself. Now this is a tongue in cheek check test, but I ran two Reddit ads, one where I said, here are five reasons why you should listen to Nudge. And it was, I mean, it's dull copy, but it was, you'll get evidence backed insights into how to improve your marketing. You'll hear from industry experts like Uri Sutherland, that sort of thing. And I published this, I posted this ad on when people were on thread's like, forward slash marketing places where people would listen to marketing podcasts. And I created a totally different variant, which went to the same. Type of audience, different people, but same type of audience that said five reasons why you shouldn't listen to Nudge. And I gave a bunch of tongue in cheek reasons, stuff like you'll get so many ideas within just 20 minutes that you will you'll ruin the rest of you a week 'cause you won't know what to do with it. That sort of thing. It was all tongue in cheek. I think one of them was, you'll piss off your colleagues of all your knowledge. It was quite, you know, quite a big headed thing to say, to be honest. Anyway. I called out the reasons why you shouldn't listen to Nudge, and that message, albeit the first message, wasn't that impressive. That message had a four times higher click-through rate than the original message. So a really significant one, even though the original message wasn't that great, and I think it's simply, it's two reasons there. One is the Pral effect. We do like it when people showcase a floor, but two, it also, when you are, when you do showcase a floor, you actually stand out compared to every other ad out there. Listeners, many listeners will remember an ad for a random ski chalet in, I think it was Denver, Colorado, and the ad, it went viral online and it was a two page ad. For this ski shell, a ski resort and it, or sorry, ski slope, I should say. And the ad just had a review out of five stars and it said, one star, this ski resort is too complicated. I wasn't able to ski down it and a picture of someone falling down to ski and it went viral because it was promoting. The ski slope, right? And in saying it was too complicated for a beginner, they became more viral. Famous ad for the Bible app, which is from pictured in New York Subways. It says Bible app rated one star by Satan. He doesn't like it, that sort of thing. So you can find these fun ways to apply this effect. riverside_daniel_rowles_raw-audio_digital_marketing p_0218: Yeah, I've seen it quite a lot when people have taken their most negative reviews and are posting those to kind of show, oh look, it's not for people like this. It's really for people like you, but we kind of get that. So I love that, that kind of distinctiveness, I mean, it leads us into the next thing as well. It's like, how relevant is distinctiveness in a world where it is increasingly hard to stand out and there are more and more voices out there? How much of a kind of benefit is that? riverside_phill_raw-audio_digital_marketing p_0219: I would argue it's probably become more important in the last two years than it was in the last 10 years, and that's probably due to ai. So what you've seen with ai, large language models, they learn off the average. It's harder to get distinct content out of ai than generic content. And also it's very easy to get generic content and so the internet is flooded with generic content rather than distinct content. And yet the evidence seemed to suggest that being distinct does help you and your brand. This harks right back to her. Sort of infamous study in the 1930s by a wonderful researcher who fled from persecution from the Nazis. And her whole thing was she was obsessed with figuring out if distinct things were more memorable in the brain. Have you heard about this, Daniel? It's the v Soff effect got quite a riverside_daniel_rowles_raw-audio_digital_marketing p_0218: know this one. This is very good. Yeah. riverside_phill_raw-audio_digital_marketing p_0219: Yeah. So the idea behind her study, and it was run way back in the 1930s, was she gave participants four combinations of different, four different letters. So SERT or QBNU, and you had to remember as many combinations as possible. It's quite hard to do to remember many. So you get given this list, 30 minutes, come back. How many do you remember except within the list of the combinations of letters she included just one. Combination of digits 7, 3, 2, 1. What she finds is that the digits are 30 times more memorable than the letters. The idea being, 'cause they're distinct within the comparison set, they're more likely to stand out, more likely to be remembered. You might say, well Phil, that's because digits are easy to remember. After all, my pin number is a digit. Well hedge work from ov, she repeats the experiment. Now it's all digits. You have to remember, and there's only one combination of letters. Suddenly the letters are 30 times more memorable. That was back in the thirties, 1930s, been repeated by the brilliant Richard Shotten. He talks about this in his book, the Choice Factory. He gives participants brands they need to remember, brands from you know, all types of brands. In one of the scenarios. They're all brands from an automotive category, Nissan, Toyota Hyundai, Honda. But there is one brand from the fast food category, burger King in there again. Try to remember as many possible go away for 30 minutes. Come back. How many do you remember? Burger King is four times more memorable in his scenario. Then the automotive brands repeats it. It's all fast food brands, subway, pizza Hut, et cetera, et cetera, et cetera. And now Hyundai, which is the one-off distinctive brand within the category set, it's more likely to be remembered. So distinctiveness really pays off, and yet it is commonplace. To copy competitors. We, I really experienced this in sort of SaaS software, which many of the listeners who are listening were in B B2B software. I was director of product marketing at these companies and I was in charge often of working on the website, creating content for the website. And what we found within our space was. All of the websites from all of us and all of our competitors looked incredibly similar. Now, there is some benefit from looking similar to competitors in that you've got an easy to navigate page and you immediately fit into the category set, and yet at the same time. That lack of distinctiveness probably means, especially for challenger brands, you're far less memorable and you don't stand out. And so what we would try and do, the companies I would work at is try and find ways to be a little bit more distinct rather than using the classic cartoons that everyone was using. Create, get some real world pictures that are different rather than using social proof in the way that we spoke about earlier. Change that. So it's something a bit, a little bit more different. We had, I worked at a company called Hotjar where we put a live demo on our site so people could log in and immediately see a heat map of the website, which is a really fun way of displaying what we did and was a bit different from the others. So it's really important to find ways to find ways to stand out, to be distinct. And if you want the best example of this. This is a really cracking one for any heavy metal fans out there. Google the com. Google the rock metal band party. Cannon spelled party cannon just as you as expect in a and then look at them when they are placed. In a festival poster promoting them alongside lots of other heavy metal band brands. They knew when they compared to the competitors, they needed to stand out. So rather than looking at like every other gothic styled heavy metal brand band logo, they created a logo that essentially looks like the toys Are US logo essentially looks like a logo you would expect from a soft play center in South London. And it guarantee, I guarantee it when people look at a heavy Beman festival and they see 50 different bands on there. Party Canon will stick out in their minds 'cause it is so distinct. riverside_daniel_rowles_raw-audio_digital_marketing p_0218: We will put it into the show notes as well. So target internet.com/podcast. Let's let's look at a few more of these as well. How does anchoring shape perception? I was, I read into this one a little, but this is a, this is great. riverside_phill_raw-audio_digital_marketing p_0219: Yeah. So, again, we've all experienced this, right? We go to a restaurant. We look at the wine list and let's say in one restaurant the number one wine on the list costs 50 pounds. You go down a bit and you find a wine on there for 30 pounds, you think, okay, 30 pounds, there's an okay deal. Maybe we'll go for that one. You go to a different restaurant. Perhaps the first bottle of wine is 15 pounds on the list. You look down the list, you find one for 30, suddenly 30. That's a rip off. How dare they charge that much? You are anchored by the initial piece of information. You see anchoring effects in all sorts of ways. There's these amazing studies where people were shown. Newspaper headlines without the newspaper attached. So headlines like climate change built cost 500 million. And they were asked, that was all the context they would get, and they were asked to rate how positively or negatively they viewed that headline. And then some of the individuals compared to the baseline who didn't see any logos, some of the individuals were shown a publisher headline. Some were shown a tabloid like the sun. So saying the sun. Climate change build costs 500 million. Another was shown a sort of broad sheet like the financial times climate change build costs 500 million. They ask Brits, which, you know, do you think this message is positive or negative? When it's anchored by the tabloid, they think it's incredibly negative. Oh my God, I can't believe it's gonna cost 500 million. What a waste of taxpayer money when it's anchored by the, you know, maybe more respectable or maybe more. Diligently researched financial times. Suddenly people think, oh yeah, 500 million is probably quite a good quite a good price. So, you know, anchored by that initial piece of information, you can apply this online all the time. There's some evidence to say that if you've got tiers of pricing, it's better to start with the most expensive tier. You should anchor. For example, comparing your Price. Steve Jobs did a great example of this when he launched the iPod. The iPod was significantly more expensive than CD players, significantly more expensive than MP three players. So he set a new anchor in people's mind. He didn't just show them the price, he showed them the cost per song. And the cost per song, because the iPod could fit a thousand songs in your pocket, was significantly cheaper than obviously a cd and actually significantly cheaper than an MP three player as well. So he used that as the anchor that made his pricing seem more appealing. In fact, the best example I've found, I, I've studied Steve Jobs quite a lot actually for his keynotes behavioral science, gold dust. He really understood the power of influence and he did this best when he launched the iPad. Man, many of us listening will remember that feeling. When the iPad came out, it's back in 2010. Nobody really knew what the iPad was for. We already had the iPhone that was quite successful. Many of us had laptops and MacBook the iPad was well, why would I use. It's just a bigger iPhone. Lots of journalists debated how much it should cost on the background of sort of this debate, most of them said this really should be quite cheap. It's gonna need to be cheap in order to attract the market 'cause there's no need for it. They estimated it should cost around $300 at most. Still quite expensive, really. One or two. Said, it's a really big screen from the, from what we're seeing from the leaks, this touch screen is bigger than anything we've ever seen before. Based on the cost. If we extrapolate the cost of the iPhone, , it might cost a thousand dollars. Steve Jobs saw this. And he thought, great. I've got my anchor. Because he then goes into his keynote and he is speaking in the room to all of the journalists that have essentially all predicted that it will cost $300. You can watch this summit. It's 2010 Keynote Summit Apple, and on screen behind him when he gets to the part of the presentation, when he introduces the price of the iPad. Presses a button and the price, dollar sign nine. Nine nine appears appears behind him. $999 and he says, some of you in this room. Have predicted that the iPad will cost this much. He says, that's quite a fair prediction. The iPad has next generation technology, large screen, yada yada. Remember only a couple of 'em actually predicted that, but he builds that as his anchor. And then he says, I'm so, so proud. Today. So proud because I am able to not charge this amount for the iPad Presses a button on his clicker. The 9 9 9 smashes into a million pieces, and the real price of 4 9 9 is revealed. He says, I'm so proud. I've been able to get the price down to 4 9 9. The journalists in the room who remember had predicted it would cost around $300. They're whooping. They're cheering. Oh my God, Steve Jobs has done it again. What a mastermind. He's got this amazing product down to 4 9 9 simply because he's. He's anchored them to a higher price before he shows the royal price. riverside_daniel_rowles_raw-audio_digital_marketing p_0218: I love it. I think that's a, it is a great example. Right? There's, I wanna go two more of these. And I think the I really enjoyed this. So why do people judge experiences by the peak and the end? riverside_phill_raw-audio_digital_marketing p_0219: Ooh, riverside_daniel_rowles_raw-audio_digital_marketing p_0218: a, this was great. riverside_phill_raw-audio_digital_marketing p_0219: I've just had on Nudge, I've had Will Gadara. He's the author of the brilliant book, unreasonable Hospitality. He essentially created the world's number one restaurant in 2017. He's not a chef. He did it by applying behavioral science, and he's spoke to me a lot about the peak end rule. Peak end rule again is Daniel Kahneman's work, so the author of Thinking Fast and Slow, noble Laureate. He ran, it's quite harsh studies. I feel a bit sorry for the students in these study and they always ask students 'cause they've cash strapped and need something to do. He got these students to put both of their hands into cold, but not three. And cold water. The water was about 13 degrees Celsius. So. Quite painful, but not sort of horrible. Just you don't wanna keep your hands in the water for that long anyway. He gets them to leave their hands in the water. And then after 60 seconds says, you can take your hands out. And then he gets another group of people and put says, put your hands in that water for 60 seconds. But then for the remaining 30 seconds, he asks them to quickly take their hands out and then put them in another pool of cold water. But it's slightly warmer. It's 14 degrees of 15 degrees. Now, most people in this study who hear about this study would say if they were asked, which of these two options is better? They would say, well, it's the first option. They only have to put their hands in the water for 60 seconds, 30 more seconds in still uncomfortable water is obviously worse. And yet when he asks the individuals in the study, would you know, would you like to repeat this que experiment? How much would you need to be paid to repeat it again? How enjoyable did he find it? He finds consistently that those who had the slightly more pleasant ending. Enjoyed the experience more, we're more likely to do it again, asked for less money when they're asked for it. And the finding there is really simple. The final experience we have it has an asymmetric, an out weighted impact on our perception of the whole experience will g this amazing restaurateur. Knew all about the peak end rule when he was running 11 Madison Park applied this to two different areas of the restaurant and if it's all right, I'd love to talk about both of them. I think you can riverside_daniel_rowles_raw-audio_digital_marketing p_0218: please do. Yeah. Yeah, it's great. riverside_phill_raw-audio_digital_marketing p_0219: digital as well. So the first is when you give the bill Now fine dining restaurant, very hard. To give customers the bill. If you give the bill too early, customers feel like they're being rushed. That's awful. If the customer has to ask the waiter for the bill, they feel that sense of agitation. Oh, where's the waiter? I can't get their attention. We've all felt that, right? So what do you do if you're a fine dine restaurant? You don't wanna give it too soon. You don't wanna give it too late. They came up with a solution, which involved essentially giving something away for free, but easing that pain of payment. They had brewed their own cognac. In bottles quite cheaply, but they basically use that and they would go to the table right after they finished their meal, put the bottle of cognac down a couple of glasses and say, we're so grateful for you dining with us today. As a token of our gratitude, please help yourself to our home brew cognac. Have as much as you like and I'll also just drop the bill down there as well. And whenever you're ready to pay, just get one of our attentions, but builds with you already. What a wonderful reframing of something that was previously quite fra. Quite painful. Rather than, you get the bill, you see the price. Oh my god, it's a lot of money. I can't believe we've just spent this much, you are enjoying a bit more of the experience with a Glasss con, probably enjoying a bit too much and it's so reframed in that end experience rather than being a negative is a positive. And then he went even further in winter. He said the experience, the actual last experience with the restaurant in winter specifically was trying to get your coat back from the cloak room. So you'd give your coat into the cloak room, you'd have these little tickets. And he essentially found that people lost these tickets. It was a sort of clumsy experience trying to get through all your pockets. Someone's lost theirs. Is it in my bag? Did I take them or did you take them? It's just not the end, nicest ended experience. And we know even Don Kahneman at the end is almost as important as any part of the meal. And so Wil Gadara dev devised this thing called the Ticketless Coat Check, and what he essentially had was in the back of the restaurant. There was a big room which had piles where people could leave coats, which linked exactly to the tables they were on. So you would give your coat to the matri d. Matri D would take it to this big room or hand, hand it to someone, take it to room, and they would put your coat on a table, which literally said this links to the table nine. And then this is this seat, this is this seat, this is this seat. The matri D would be circling the room. And whenever a customer is sort of getting ready. To leave, they would fetch their coats from the bigger room and then have them on hand with a number of different waiters ready to give to each individual person. So they're walking up to the front of the restaurant, they're looking for their ticket. 'cause everybody is used to having a ticket. They don't have the coat on them. They must have got a ticket. They can't find it. And suddenly someone hands you your exact coat without you handing 'em a ticket. It's magic. What an amazing last experience. And that's how. This restaurant, which let's face it, would've had incredible food. But that is one of the reasons why they became the best restaurant in the world because they focused on things that others dismissed. Others didn't bother to think about the ticket because it was not important to them. The food was important. They focused on that because they understood things like the P andrel. They understood that the last experience you have with a service is gonna be one of the most memorable, so you better make it as good as possible. riverside_daniel_rowles_raw-audio_digital_marketing p_0218: I love this 'cause I'd read this before and I was thinking about, I had this whole series of lectures with my students at Imperial and it's gotta be pretty hard going. There's a lot of content, you know, these are smart students. We've gotta do some really tough stuff. And then we always do this thing where the final lecture is this really fun, kind of gamified you know, upbeat, we end with a big selfie photo and this kind of stuff. And everyone's like, yeah, those lectures are so much fun. It's like, actually there were seven of them that were really hard work for you. But actually you do end on that lovely hire as well, which is great. So, yeah, it does work. It's very interesting. So, okay, let's just do one more. Why does Visible effort increase value? I love this. riverside_phill_raw-audio_digital_marketing p_0219: If I could. Only talk about one bias for a whole podcast episode. It would be this one. It's my favorite one. CO covers a lot of different names, input bias, IKEA effect, labor illusion. But essentially the idea is if you put more effort into something or if you see somebody else putting a lot of effort into something, you will value that thing more so. Cracking example of this IKEA effect. This is done on by Mike Norton, studies with IKEA products. If you build your flat pack furniture yourself, you will value your creation more. 63% more. You'll ask for 63% more if somebody wants to buy that off you. Then an expert built version, which you've also been given. We like the things we've created. If you look on all of us, probably now, if we go and look on our fridge, we'll have a drawing probably by a partner or a daughter. And we love it because it's something that they created and we saw the effort that went into it. Same as if you ever go to an art exhibition, you start to see this a lot more at the moment. An artist that has a bit of a TV screen or an iPad, which actually shows a time lapse of them creating the art will almost always have a queue of people wanting to buy that art. 'cause when you see the effort that goes into something, you value it more. Ryan Burell ran studies on this. He calls it operational transparency, and he finds that in the canteen in Harvard where they ran these experiments. If people who are dining at the restaurant can see the chefs cooking their food, they think the food is tastier. I think it's better quality and actually the chefs create better food as well. Him and his colleague Mike Norton applied this to websites. They did this amazing study. It's back in 2011 with kayak.com. You know, kayak is sort of not as popular anymore, but it's where you go, sort of an online travel agent sort of thing. And they, at the time it's 2011, they had quite a long loading wheel, so it took quite a long time. Goes to a white page loads and then you get your results. He said. If we show what is loading, what Kayak is doing, people might enjoy that weight more. So they created this variant where instead of seeing a white page and a loading wheel, you would see a loading wheel, and then behind the loading wheel, kayak searching through Delta, United, British Airways, all the different airlines and all the different hotels, then all the different countries, all these things going on behind, and then you get your results. That version took longer. Because it takes a website longer to load a page, which makes it look like the page is voting right. And even though that took longer to load, people were far more likely to stay on the site. Because they could see the work going into it and then far more likely to actually buy a hotel off the end of it. And we've seen the exact same thing. You think that's the study from 2010? The exact same thing happened with AI and LLMs over the riverside_daniel_rowles_raw-audio_digital_marketing p_0218: was just gonna say exactly that. riverside_phill_raw-audio_digital_marketing p_0219: You remember it, right? LLMs? When we first used Chat gt, it was just a loading wheel. Now chat, GT or Claude, whatever you use, will tell you exactly where it's searching, what it's doing, what it's working on. Especially if you use deep research, it'll actually show it. Looking at all these different web pages. It doesn't have to. That uses more energy than if it just did it by itself. It is a purely psychological play to make that weight feel less stressful. Uber is essentially only successful because of this whole policy, right? Uber only beats taxi drivers, not because they offer a better service. A lot of people say they don't. If you use a taxi in London, for example, Uber's much slower. Can't use bus lanes, for instance. The only thing that separates Uber. It makes the weight more enjoyable. 'cause you can see the work going into it. You can see it searching for your taxi. You can see it finding your taxi. You can see the taxi driver driving towards you and you value that effort more. So my plea to marketers, look at your website, look at the content you're creating. Have a think about, oh, is there a way I could showcase my effort more A bit. When I ask people to sign up for my newsletter, I don't say sign up to my newsletter. I say, I've spent, I spent around 18 hours a week reading, researching behavioral science. I translate the best insights into behavioral science tip every Friday. What a great way of showcasing the effort it goes into it. But as just to link it right back to what we said at the start, it's one thing to say you've put a lot of effort into. It's another thing just to show it. It's more powerful if you don't even have to say it. So when I gave a talk last year in the south coast of the UK in a place called Pool, I did a talk on the psychology of effort. But I wanted to prove that it worked with the attendees. I wanted them to really feel this themselves. So I thought, I need to put a lot of effort into this talk to make them feel and actually experience this psychology of effort. I thought about all these things. I thought maybe I'll write them handwritten notes. Maybe I'll draw them something and put it beneath their seats, trying to come up with all these ideas. And I thought, no, I'll put a lot of effort into getting to the event. And so I decided this was such a dumb idea. I decided I would hike 61 kilometers. On the day before the event. That's a marathon and then another half marathon. By the way, I'd hiked to the event, got to the event, and basically said to everyone, psychology of effort means you value more things when you put the see the effort going into it. And by the way, here's all the effort I took to get here. And then shared some stories about the effort I took to get there. And look. I mean, I don't want to say it was the best talk of the day, but people seem to really enjoy that talk because they could see the effort that went into it as well. So think about ways to highlight your effort. riverside_daniel_rowles_raw-audio_digital_marketing p_0218: I love it. I'm walking to all my conferences for now. That's, uh, I'm gonna, I'm gonna do it. riverside_phill_raw-audio_digital_marketing p_0219: I mean, be might be a little hard from Jersey maybe. Maybe you need a canoe as well. riverside_daniel_rowles_raw-audio_digital_marketing p_0218: There might be a bit of swimming involved. Phil, thank you so much. I think it's been an absolute masterclass and I think there's so much in there that we can apply to all the work that we're doing every day. Tell the audience a bit more about Nudge and the other stuff that you do as well, so they can kind of follow and connect there. riverside_phill_raw-audio_digital_marketing p_0219: thanks Daniel. Look, you folks are listening to a podcast. You're listening to a very good podcast. There aren't many good podcasts like this one out there, but I like to think that nudge is good as well. So when you're done listening to this, if you wanna learn more about the sort of things I do, you can search for Nudge, you'll find an orange logo. You'll see my name and just listen to a, an episode that captures your attention. If you scroll down a bit, you'll probably find one about Will Gadara and the Peak End Rule, which we spoke about earlier. So that might be a good one to get you started, but go to Nudge, check it out, and listen to the show. riverside_daniel_rowles_raw-audio_digital_marketing p_0218: And we'll put the link through to all those episodes in the normal show notes as well. So target intech.com/podcast and we'll link through. And Phil, thank you so much for joining us. I've really enjoyed it. And as you say, there are, there's a lot of podcasts out there. They're not all great, but yours is one of the great ones. So thank you for being here. riverside_phill_raw-audio_digital_marketing p_0219: Thank you so much for having me on. It's been an honor.