Hi, my name's Paul Baines, I'm Professor of Political Marketing at Cranfield School of Management...
...Cranfield University and co-author of "Marketing" by Oxford University Press.
In this next sequence, we speak to Orlando Wood...
...the Managing Director of Brainjuicer Labs and in this sequence...
...he discusses a unique piece of behavioural economics research which seeks to understand...
...how financial services consumers...
...specifically of MasterCard, MasterCard consumers, behave and how that behaviour can be altered.
So I am Orlando Wood and I am Managing Director of Brainjuicer Labs...
...which is the research and development team - the research and development division -
...of research agency, Brainjuicer and Brainjuicer's mission, its goal if you like...
...is to reinvent market research...
...and to make it something that is exciting and inspiring for clients...
...and we do that by taking the latest thinking, the latest understanding, if you like...
...of how people really make decisions...
...from the behavioural sciences and the social sciences...
...and translating that into research approaches that better understand...
...and better predict behaviour.
And that's kind of the research and development team, Brainjuicer Labs' role...
...and that's my sort of mission if you like.
So, MasterCard came to us with a problem, a challenge.
They wanted to know more about how people are using newer payment types...
...e-wallets, frictionless payment like PayPal or iTunes, that kind of thing...
...and how they can make those sorts of purchases better, faster and quicker.
And so they wanted to know particularly about how people were using...
...credit cards and all sorts of other payment types online...
...and so we put a programme of work in place to help them see what's happening -
...to show them, you know, how people in the UK are paying for things online...
...and how they feel about them, so that we can make those experiences better.
So it was an exploratory piece of research and what we did was we had two sources of data...
...if you like.
...on their PCs, and we did that by teaming up with a company called Wakoopa.
...about 1000 people's computers that monitored their website usage - so where they went...
...where they'd been before, where they'd gone afterwards so we got this really rich data set...
...of millions of rows of URL links...
...so we know exactly where our sort of 1000 or so people have been to...
...during a course of a month.
In addition to that, we had some, I suppose more traditional, survey data...
...that we could marry up with that big set of big data almost...
...and the survey data worked like this.
For certain websites that we're interested in, like John Lewis for instance...
...we popped up a short survey asking about five or six questions...
...what they actually achieved on their visit...
...what they - whether they bought something and how they paid for it.
And so we got this sort of sub-set of data that were quite detailed data...
...on number of sites that we can marry up with this bigger picture data.
So the findings were really quite fascinating.
First of all, it transpired that not many people are using these modern frictionless payment types...
...you know, sort of MasterCard Pay Pass or you know, the Google Checkout...
...these sorts of things, they're pretty- under 1%...
...so it's early days for these sorts of purchases online.
What we found that was really interesting and very helpful for MasterCard was...
...about their website experience and things like spend...
...the amount of time that they spend on the website...
...and whether they come back, and how often they come back.
So what we found was that people who spend longer on retail sites are actually happier...
...so there's this relationship between happiness and length of time on a website.
There's this relationship between whether you've actually bought something or not and happiness...
...so if you buy something, you end up feeling happy at the end of your experience...
...much happier than if you've just been browsing.
If you don't manage to buy what you set out to, to buy...
...sad, upset, which so obviously something that retailers will want to prevent...
...not only because they didn't get a sale but because it leaves people feeling...
...pretty bad about their experience.
And we also found that if you feel happy and you, you know...
...made a purchase, then you, you've actually spent a lot more...
...than if you've made a purchase and you leave feeling neutral about the whole thing.
So all of this points to the importance of the payment process, if you like...
...and MasterCard's role in making that retail experience a good one...
...because if they can leave people feeling good about it...
...then it helps to build the brand, it helps to make a sale and it...
...generally helps to, to sort of, I suppose...
...get people to come back again and again and again...
...less happy are less likely to come back and people who feel really good on their first visit...
...come back a lot.
...so they can go to the likes of Amazon or Tesco or whoever else...
..."we need to work on your payment processing part of the site, we need to make it quicker, easier...
...because the way people feel as they leave the site, is really important for their future behaviour...
...and how much they actually spend on this one, one occasion."
Well, it's different in that much market research is...
...based on historical models of behaviour that actually are looking a little bit out of date these days.
If you look at the work of psychologists, the pre-eminent psychologists of our day...
...Daniel Carnaman, Nobel Prize winner...
...he talks about there being two systems of thinking and the ways of making decisions.
There's System 1 which is intuitive and impulsive and emotional...
...and there's System 2, which is analytical, deliberative, slow - not as fast as System 1.
And the thing is, we make most of our decisions it seems, we're learning...
...through System 1, so we make a lot of decisions guided by emotion...
...talk- you know, thinking implicitly and intuitively.
Most market research and most marketing and most models of...
...so the predominant model of advertising is rooted in System 2 thinking...
...that you need to persuade someone of something, you give them a long list of benefits...
...a long message that cuts through to this System 2 way of thinking.
Now what we are doing at Brainjuicer is promoting this new way of thinking...
...System 1 way of thinking, for a whole suite of System 1 products, research products.
So we measure advertising not by you know, how well people understand the message...
...but how it makes them feel because if you can make people feel good about you know, a brand...
So emotional measurement of brands and emotional measurement of advertising...
...is absolutely sort of central to the sort of System 1 idea.
We also have approaches in PAC testing for instance...
...where we put people under time pressure.
By putting people under time pressure, you make them make that quick...
...instinctive, System 1 decisions, just as they do in-store...
...when we're in a rush or we're distracted.
That kind of approach is very different from a traditional way of doing PAC testing...
...and it mimics real life much better than the traditional ways of doing things...
...asking purchase attention and so on.
The other thing that we're doing and that I'm actually involved in myself...
...and I head up, is the behavioural activation unit.
So this is applying behavioural economic sort of theories and principles...
...to, to client problems, whether it be retailers or, or brand owners...
...behavioural economics, we're applying the same principles to client problems.
So it's an exciting time for Brainjuicer because these are all new sort of ideas...
...and new things, but an exciting time - I think - for the industry as well because it's moving...
...it's switching slowly but gradually and we're at the forefront of this, I like to think...
...towards a sort of behavioural understanding framework...
...rather than asking people simply about their attitudes and past behaviours...
...it's, it's nudging behaviour.
So behavioural economics, if I were to simplify it...
...it would be that we think much less than we think we think.
So we love to believe that we make logical, analytical, deliberative decisions...
...but actually we don't, we use this System 1 way of thinking all the time.
And System 1 permeates the, the sort of broad discipline of behavioural economics.
And behavioural economics is a lovely set of anecdotes and stories about...
...quirky human behaviour and the funny decisions that we make...
...to apply it, to make it sort of tangible and memorable for clients and customers.
So what we've done at Brainjuicer is create a behavioural model...
...which is really a distillation of the ideas that run all the way through behavioural economics...
...with System 1 thinking at its heart...
...because the thing about System 1 thinking is that it's very susceptible to influence from the environment...
...so the way the tables and chairs are laid out in this room...
...the people around us so you know, people who we interact with every day...
...and also just the way we feel inside, so whether we're hungry, in a hot state...
So environmental influence, social influence, personal influence -
...they're the three broad themes I think in behavioural economics...
...and if we can learn how to change the environment or learn how to use social influence...
...or learn how to work with internal kind of influences, hot states or whatever...
...then we can start to influence decision making, and that's what behavioural economics really is.