[THEME MUSIC]
DAN MONHEIT: Welcome to the first episode
of "Exploring the Messy Middle," where over the next 15 minutes,
we're going to discover how behavioral economics can help
your brand show up in the right place at the right time
to boost sales, conversions, and brand love.
I'm Dan Monheit, co-founder and strategy director at Hardhat.
And joining me from Google Australia and New Zealand
are two consumer behavior specialists.
First up, we've got head of consumer market research
Rachael Powell.
RACHAEL POWELL: Hey, everyone.
DAN MONHEIT: Hey, Rach.
And joining her we've got head of strategy
and insights Kristin Sutter.
KRISTIN SUTTER: Hello.
DAN MONHEIT: Hey, Kristin.
So first off, guys, I've got to say,
as a certified behavioral economics enthusiast,
I've got to say I am super excited to be talking with you
guys about this concept and also all the research you
guys have been doing.
KRISTIN SUTTER: [CHUCKLES] Well, that's good to hear.
Then you will fit right in with us, Dan.
So research is definitely mine and Rachael's jam.
RACHAEL POWELL: And we've actually
got some really interesting stuff to share out
with everyone today.
DAN MONHEIT: Amazing.
So if I believe what it says on the tin,
we are going to be talking about the messy middle.
My first questions are, what on earth is that?
Where do we even begin?
KRISTIN SUTTER: So I hopefully can
answer that a little bit with a story about a purchase I made.
So bear with me through this.
I promise it'll pay off.
But I live in Sydney.
And my husband and I, last year, decided
that we were going to go down to the Australian Open
because my husband's a huge tennis fan.
And I did not do a very good job getting him a good Christmas
gift.
So I had some ground to make up.
So I wanted to look for a good hotel.
I did a quick search online.
But I go to Melbourne quite often for work.
And there's a Grand Hyatt that is literally
across the street from our office.
I'm all about a short commute, and rolling out of bed,
and potentially cartwheeling to work.
So that's almost always where I stay.
DAN MONHEIT: For sure.
KRISTIN SUTTER: Yeah.
So I'm also a member of their loyalty program.
So I checked up prices, looked at locations,
tried to see what was near to the tennis,
but assumed that I would stay at a Hyatt because,
remember, got to rack up those loyalty points.
DAN MONHEIT: Kind of get them points.
KRISTIN SUTTER: Yes.
So but then I came across a new hotel.
They had great reviews, the same number of stars as that Hyatt.
And the thing was, they were offering me a free breakfast
with our booking.
DAN MONHEIT: Ah.
KRISTIN SUTTER: Yeah, yeah.
DAN MONHEIT: We know how this is going to end.
KRISTIN SUTTER: Yeah.
Yep, the way to my heart is offering me free food.
The ridiculous part was, though, we didn't even
end up using the breakfast, because both mornings,
we wound up going straight out to the tennis.
DAN MONHEIT: I mean, I can totally see how that happens.
Cool story and all.
What does this have to do with the messy middle.
KRISTIN SUTTER: Yeah, so I promise--
DAN MONHEIT: Come on.
Come on.
KRISTIN SUTTER: I'm about to tie it in, Dan.
It's OK.
But the messy middle really came through and came to life
in my research for that hotel.
So from a general marketing lens,
if you're just looking at me on paper, you'd assume,
OK, she needs a hotel, she's going to book with Hyatt
because she's a loyalty member and aware of their brand,
and I've often used it before.
But we all know that that's not actually what happened.
So what mattered to me in that moment was getting more value,
albeit in the form of a free avo toast.
And in that moment, my loyalty to Hyatt didn't matter at all.
The decision I made was an emotional one, not
a rational one.
So when we started thinking about the research,
it turns out that I am not alone in this.
There are a lot of irrational emotional behaviors
that come into play when people make purchase decisions.
And that is the space that we're calling the messy middle.
And that is also what we're going
to try to help marketers untangle in this series,
right, Rach?
RACHAEL POWELL: Yeah, that's exactly right.
And the way I like to think about the messy middle
is it's everything the consumer is thinking, seeing, doing,
researching, and being influenced
by in between that point in time when she thinks, hmm,
I need to buy something, and actually
making the purchase itself.
DAN MONHEIT: Wow.
OK, so if this is everything the consumer is thinking, feeling,
seeing, doing, researching, this sounds
like it's going to get pretty complicated pretty quick.
[KRISTIN AND RACHAEL CHUCKLE]
RACHAEL POWELL: Yeah, look, it is quite complex.
And untangling it has been a real challenge.
And that's why Google has been researching it globally
over the past 24 months.
DAN MONHEIT: And I guess if there's
one thing we all know that Google loves,
it is a bit of academic research.
[KRISTIN AND RACHAEL CHUCKLE]
KRISTIN SUTTER: Yes.
RACHAEL POWELL: Yes, apparently we
get out of bed for two things-- a free breakfast and research.
But look, we're hugely passionate about it.
And understanding consumer decision-making is really
important, both for Google so that we
can build better experiences and products for our users,
and also to help our advertiser and agency
partners deliver some fabulous marketing across our platforms.
DAN MONHEIT: Awesome.
And that is what this four-part series is all about.
So Rachael, Kristin, let the learning begin.
KRISTIN SUTTER: OK, so bear with me again.
To understand the messy middle, you're
going to need to come with me on a journey back to about 1997.
[MUSIC PLAYING]
Let's say a time when jeans are extremely baggy.
DAN MONHEIT: Guilty.
KRISTIN SUTTER: And in the '90s, a typical brand selling those
gigantic jeans is splitting their marketing between two key
areas--
the brand marketing, which is typically used
as broadcast media and to build that long-term impact or brand
awareness, and then performance marketing,
which is used as more of a direct response media
and for short-term impact in sales.
DAN MONHEIT: So I guess what we'd
refer to today as awareness and action, right?
KRISTIN SUTTER: Yes, correct.
So me, as a consumer, I'm seeing those baggy jeans
on the street-- and apparently still on you, Dan.
DAN MONHEIT: They look good.
Come on.
[ALL CHUCKLE]
They're going to be back any minute now.
I swear to you.
KRISTIN SUTTER: I mean, I'll hope so for your sake.
But I see those jeans out and on the street.
And I see an advertisement, then.
And that's the nudge I need to walk into a store and buy it.
DAN MONHEIT: Right.
And here are your gigantic jeans, ma'am.
KRISTIN SUTTER: Yes.
Bag those up.
But now you cut forward two-and-a-bit decades,
and both the style of jeans-- thankfully--
and the way we buy them has completely changed.
So now I can go online, and browse, compare,
and rank any product or service from any brand, globally
and instantly.
I can ask my friends what they think.
I can find out what Ryan Gosling or the latest celebrity thinks.
I can go in and out of 20 shops on my coffee break,
or in and out of that exact same shop
over and over without it feeling super awkward.
And I can even shop in my pajamas,
which I have been known to do.
RACHAEL POWELL: I love shopping in pajamas.
KRISTIN SUTTER: Absolutely.
It's one of the perks.
And by the time I've purchased something,
I've usually bought something completely different from what
I was looking for initially through all
of these different moments of research.
So the way that we shop for products and services today
is completely different and fundamentally changed.
DAN MONHEIT: Right.
There's no question about that.
And so I guess it also makes complete sense
that the way we market needs to catch up with that.
KRISTIN SUTTER: Yes.
It's no longer this linear path from awareness to purchase,
although sometimes it's easier for us to plan that way.
But we really need to untangle what's going on in the middle
there so that our marketing can actually
meet people and consumers where they are,
rather than where we want them to be.
DAN MONHEIT: All right, Rachael, I'm
going to turn to you for this bit.
How do we even begin to get a grasp on consumer behavior
in this level of complexity?
RACHAEL POWELL: Yeah Kristin and I
have a saying, which is, when in doubt, science is your friend.
KRISTIN SUTTER: [CHUCKLES]
DAN MONHEIT: That's a real saying?
RACHAEL POWELL: Yeah, you are on a series with two researchers.
So this is about as cool as it gets.
DAN MONHEIT: I can't wait for the Christmas party
with you guys.
It's going to be awesome.
RACHAEL POWELL: So we've actually
been poring over behavioral science literature, where
experts in this field have been studying consumers
and the way people make decisions for decades.
And in that time, they've uncovered
more than 300 principles that underpin how we behave.
It's actually worth noting that these are universal principles.
So they should hold true whether you're on the '90s high street
buying hugely ugly jeans--
DAN MONHEIT: They weren't ugly.
No, baggy-- hugely baggy jeans.
[KRISTIN AND RACHAEL CHUCKLE]
Rach, please.
RACHAEL POWELL: --or on the iconic dotcom today.
What's really interesting for us is
more on how these principles are manifesting
in the digital space.
DAN MONHEIT: Right.
So if we're talking about 300 different principles,
there's a lot of research that needs to get done here.
Surely that is a lot for you and Kristin
to take on between the two of you.
RACHAEL POWELL: Yeah.
We reached out to a wonderful research agency, the Behavioral
Architects, who are global experts in this space.
And together we narrowed down those 300 principles
into the special seven that are most
relevant for how consumers make decisions in that messy middle.
DAN MONHEIT: Right.
And I guess those seven is what form the basis for the research
project, right?
RACHAEL POWELL: Yeah.
And we're going to take you guys through these principles
in detail, and the research as well, throughout the course
of this series.
DAN MONHEIT: OK, awesome.
I cannot wait to get [INAUDIBLE] into that.
But I guess an early question I've got is, what on earth
did this research look like?
I mean, it must have been gigantic,
like a pair of '90s jeans gigantic.
[KRISTIN AND RACHAEL CHUCKLE]
RACHAEL POWELL: Yeah, look, it was huge.
We actually gained permission from hundreds and hundreds
of shoppers across a huge number of categories
to follow them on their path of purchase.
So we captured both video and audio
so that we could see what they were doing,
and also they could talk us through it as they
were doing it.
And this gave us thousands of hours of data to observe.
We then looked at that data through the lens
of behavioral principles.
And that put us in a great position
to really update our model of consumer decision-making.
DAN MONHEIT: Ah, OK.
And that updated model of consumer decision-making,
I guess that's what we're referring
to as the messy middle, right?
RACHAEL POWELL: Yeah, that's right.
DAN MONHEIT: Yes.
I'm with you guys.
And what did we find out?
RACHAEL POWELL: So before we get to the new model,
we're actually going to pause here.
And I'm going to talk to you a little bit about an astronaut
riding a dinosaur.
DAN MONHEIT: Ah, right.
Of course you are, right?
You guys are scientists.
So this is a completely normal thing to do.
KRISTIN SUTTER: [CHUCKLES]
RACHAEL POWELL: Stay with me here.
This is actually a really critical foundation
for the study.
[THUNDEROUS FOOTFALLS]
So here we have--
or think about an astronaut, highly intelligent,
really rational, riding a huge dinosaur, who,
as a wild animal, is going to be a little bit more
unpredictable.
Right now, the astronaut is in control--
go forwards, go backwards, left, right.
Everything's fine.
DAN MONHEIT: Ah, but hang on a sec.
What's going on now?
[RAPID FOOTFALLS]
RACHAEL POWELL: So now we're getting a slightly different
vibe.
The astronaut, despite her intelligence,
is not going to be able to stop several tons of dinosaur
from taking a bath if it wants to.
The astronaut in this example represents our rational mind.
The dinosaur is our emotional mind, the one
driven by implicit biases.
We all like to think we're rational creatures.
And sure enough, our astronaut is often in charge,
but only when the dinosaur doesn't
have desires of its own.
We've actually looked at study after study,
and the thing that we found is humans
are driven not by rational processing of information
but by emotional implicit biases.
DAN MONHEIT: That's right.
And I guess, while these emotional implicit irrational
behaviors are really important to recognize,
it's the fact that they are predictably irrational,
to borrow a term from the great Dan Ariely, that
makes them so useful to us.
KRISTIN SUTTER: Yes, absolutely.
And I know that I am consistently
guilty of making the same sorts of irrational choices.
Like me choosing a hotel based on a breakfast
that I never ended up having?
I would totally do that again.
DAN MONHEIT: Yeah.
It's like we just won't learn, right?
So we've all been there.
And it is this predictability that
makes these behaviors really useful and interesting to us
as marketers.
Because once we know what they are,
we can start using it to our advantage.
And I guess that's why sometimes I
like to think about behavioral economics
as knowing the cheat codes for the game of sales.
KRISTIN SUTTER: [CHUCKLES]
RACHAEL POWELL: Yes.
Look, that's actually a really great way to put it.
And we're going to focus on what those cheat
codes are in the next episode.
And I think it's that balance between understanding
the role of the rational versus the emotional drivers
is what makes it so critical when you start
to untangle that messy middle.
KRISTIN SUTTER: Yes.
And I like to think about it in terms of sort
of that left and right brain.
So that left is the astro brain, the right, dino brain.
And some real-world examples that I'm sure we've all been in
are the astro brain is the one that sets the alarm,
the dino brain is the one that snoozes the alarm.
The astro brain commits to a diet,
and then the dino brain decides that that 3:00 PM piece
of cheesecake is a great idea.
The astro brain knows that two cereals on the shelf
probably taste the exact same, but the dinosaur brain
is willing to pay more for the branded cereal anyway.
DAN MONHEIT: Oh, dino brain.
RACHAEL POWELL: Yeah.
There's sadly no escaping that dino brain.
But actually understanding it is what this research sets out
to do.
Those kind of more emotional aspects
of how we make decisions don't show up
in things like brand tracking or surveys.
Because at the end of the day, we all
like to justify our decisions as being really rational.
A good example for me is I have a complete love
affair with shoes.
And the other evening, I got home
after buying my eighth pair of black high-heel shoes.
My husband kind of looked at me.
And I quickly said--
I know-- I quickly said, oh, oh, but they're
a completely different shade of black to my other seven
black pairs.
KRISTIN SUTTER: [CHUCKLES]
DAN MONHEIT: Of course they are.
RACHAEL POWELL: [CHUCKLES] So it's
a little bit of a challenge when we're trying to uncover these.
But these irrational behaviors do show up
when we start to use controlled experiments.
And that's how we've begun to map that messy middle.
DAN MONHEIT: Awesome.
All right, Rachael, Kristin, we're
going to have to leave it there for today.
But what is coming up in the next episode?
KRISTIN SUTTER: Ooh, so get excited,
because we are going to talk about our new model of consumer
decision-making.
We've drawn it based off of the evidence
that we just uncovered.
And we'll also start digging into those seven
behavioral principles that are driving consumer behavior
that Rach just mentioned.
So in other words, how do we help understand and talk
to that dino brain.
DAN MONHEIT: Awesome.
All right, well, my dino brain and my astro brain
are both very, very excited about episode two
of "The Messy Middle."
So stay tuned.
We'll be posting it on the Australia and New Zealand Think
with Google page, which can be found
at thinkwithgoogle.com/aunz.
Thank you guys so much for joining us.
RACHAEL POWELL: Cool.
Thank you.
KRISTIN SUTTER: Thanks, Dan.
DAN MONHEIT: See you next time.
RACHAEL POWELL: Bye.
KRISTIN SUTTER: Bye.
[THEME MUSIC]