Help your Customers cope with Choices

We struggle with choices. Some say it is good to have options but in several instances, we have so many choices that many among us postpone, avoid or even delegate decision-making.
This struggle is costly to the consumers and the businesses. “50% of consumers spend 75% or more of their total shopping time conducting online research…as the current state of online and mobile shopping yields a time-consuming, inefficient experience.”[1] Things do not get better after purchase either. Buyer’s remorse creates negative emotions at the post-purchase stage – a poor way to complete the customer journey, risking customer retention.
Behavioral research offers a tactical solution. Based on the concept of emotional closure, customers who make the physical act of ‘closing off a choice’ report satisfaction.[2] For example, it would be better to make customers close and return a menu booklet than to have them leave menu cards on the table. The human being’s thinking activities operate pretty well on an “out of sight, out of mind” basis.
The tactical solution benefits user experience but it does not steer the decision-making process, especially in big purchases or those of long-term consequences e.g. insurance contracts.
Motivational psychology research offers a fundamental solution. Given that intrinsic motivations are recurrent and generally stable in nature, businesses can not only help customers make decisions by recommending products and services which are in sync with their intrinsic motivations, but also can predict their future behavior and customer lifecycle. American psychologist, Steven Reiss, outlined 16 universal motivations which are empirically validated across more than 60,000 individuals over 4 continents – Asia, Australia, North America and Europe[3].
This intrinsic solution may well be one of the critical keys to overcome the respect issues customers report to have with financial services. A Harvard Business Review article commissioned an annual Customer Quotient study[4] to measure “how people feel about companies and the experiences they provide”. In particular, it investigated how much people feel they are respected and understood by the companies. Although two firms from the financial services industry were listed among the top 20 companies customers feel most respected by, financial services ranked low on the list of industries.
By uncovering customers’ intrinsic and personal traits, the insights would benefit businesses which apply the understanding to help customers trust them and feel understood. Customers may not be able to articulate the exact form of the product they want but they can express their personal values. These values drive the intention behind the behaviour, consciously or unconsciously.
When customers’ intrinsic preferences and personal traits are actively utilised, three dominant benefits are apparent. The conversion rate increases as customers feel more confident about their choice. This confidence about own choice is important especially on self-directed journeys. Sales efficiency increases as time spent on ‘window shopping’ reduces significantly. Customer value increases – sticky relationships develop over time as the business ‘gets’ the customer.
Businesses today invest in data mining tools to obtain customer insights – but it is not certain if the impact has predictive validity and reliability over the customer lifetime. Such insights are really based on observed behaviour in the context pre-set by the firm’s business and operating model. The insights offer no ‘what-if’ scenarios and even if these scenarios are simulated, their relevance is not engineered to tap on what truly matters to the individual customer.
How then can businesses uncover their customers’ intrinsic motivations? As with many instances in life, the best way is to ask. Ask the customers the right questions. Ask them to engage them. Ask them to give them back value. However as with many instances in life, the fear to ask looms over businesses.
—————————————————————————————————————————————————————————————-

[1]
Natale, J. (2014, April 23). IBM Watson Group to transform the consumer shopping experience. Retrieved from http://phys.org/news/2014-04-ibm-watson-group-consumer.html
[2] http://www.neurosciencemarketing.com/blog/articles/buyers-remorse.htm
[3] Reiss, S. (2000). Who Am I? The 16 basic desires that motivate our actions and define our personalities. New York: Tarcher/Putnum
[4] Trevail, C., Austin, M., Schlack, J.W. & Lerman, K. (2016). The Brands that make Customers feel respected. Harvard Business Review.

See the big Picture

Albert (a fictional character) took a mandatory risk profiling questionnaire with his banker. He was profiled as someone with very high willingness and ability to take risks. He also had substantial investing experience. Accordingly, he was deemed suitable to take on very aggressive portfolios.

If you are Albert’s banker, what would you do?

  1. Follow the questionnaire results and recommend him very aggressive portfolios
  2. Have further interaction with him to understand his natural behaviour

Realistically, we expect most people to choose option 1. It is after all a compliant process. Option 2 may even be viewed as unproductive for sales.

However, let’s say you now spend more time to interact with Albert before recommending any portfolios. You uncover more personal information about Albert.

It turns out that Albert values independence very much. He likes to travel alone because he does not like to follow others’ plans. Of his own accord, he is a freelancer.

Does this new piece of information change your investment recommendation for him?

Albert assures you that he is a very decisive person. In his words, he does not like to over-analyse and believe that in life, one should “just do it”.

Would you still stick to the aggressive portfolio recommendation?

It takes an astute advisor to caution Albert of his multiple blind spots in his investments and recommends preventive measures. Being independent, he is self-confident of his own judgement and insists on his own way. Not a fan of deliberation, he tends to act (almost) instantly. In stressful times such as a stock market crash, he can be expected to become too impulsive and stubborn for his own good.

We have made some very important assumptions in this story. We assume that you ask Albert the right questions to elicit relevant insights about him. We also assume that you have managed to piece the clues together to form the big picture. Lastly, we assume that you have the gut instincts and/or experience to realise the investment implications.

Without these assumptions, you would still be a compliant banker for Albert by choosing option 1.

However, a systematic tool-supported process to uncover Albert’s intrinsic values would have helped you fulfil our assumptions with confidence to deliver value to him.