[THEME MUSIC]
DAN MONHEIT: Welcome to episode three
of "Exploring the Messy Middle," where we use behavioral science
to help marketers better understand their consumers
and how they make decisions.
I'm Dan Monheit, co-founder and strategy director at Hardhat.
With me from Google Australia and New Zealand
today, we have head of consumer market research Rachel Powell.
RACHAEL POWELL: Hey, guys.
DAN MONHEIT: Hey, Rach.
And head of strategy and insights Kristin Sutter.
KRISTIN SUTTER: Hey there.
DAN MONHEIT: Rach, Kristin, welcome back.
KRISTIN SUTTER: Thank you.
Good to be here.
DAN MONHEIT: Awesome.
All right, so in the last episode,
we talked about a new model of consumer decision-making,
and how consumers end up in what sometimes
feels like a never-ending loop of exploration and evaluation.
We also talked about the seven behavioral principles
that tap into the irrational part of every consumer's dino
brain, and how we can use them to nudge the shopper out
of the loop and hopefully into a purchase.
Now, is it just me, or did you guys also
find yourselves being caught up by some of these principles
since our last chat?
KRISTIN SUTTER: Yes.
Oh my gosh.
All of a sudden, I see them everywhere.
This last weekend, we went car shopping.
And while we weren't aware of the biases coming into play
in the moment-- which, actually now that I think about it,
would have been incredibly helpful--
my husband and I did start analyzing our behavior
after visiting a dealership, and realized we totally fell victim
to a couple of them.
One in particular was pretty hilarious.
We saw my friend at one of the dealerships,
because she was also looking for a car.
and told us she was interested in SUVs
because she likes to sit up high.
She likes to see more of the road.
All the sudden, I became convinced
that we needed an SUV.
We needed to sit up high to see more of the road.
And we actually even test drove an SUV,
even though we had never even considered one,
or thought about it, or talked about it before that moment.
DAN MONHEIT: Yeah, stuff is real, guys.
Social proof in action.
We are not messing around.
All right, so tell me, what are we exploring in this episode--
Science and Simulation?
RACHAEL POWELL: So today we're going
to deep-dive into the results from our actual research
study, which was a huge number of controlled experiments,
where we started to test and validate the impact
the seven behavioral principles have on brand preference.
KRISTIN SUTTER: Yeah.
And this is really important for us as marketers, remember,
because it helps us see that dino brain in action.
And remember how we talked about, previously,
that consumers can't be trusted because they'll rationalize
their behavior post-purchase, similar to how Rachael
did with her seventh pair of black shoes
that we talked about.
So we really needed to isolate, in the research,
those dino brain behaviors to see what's
driving those consumer choices.
DAN MONHEIT: Shots fired, Kristin, seriously.
We spoke about the shoes last episode.
We agreed there were--
RACHAEL POWELL: They weren't the right shoes.
DAN MONHEIT: --different shades to the other black pairs,
right?
We're just going to leave that alone.
KRISTIN SUTTER: OK, fair.
DAN MONHEIT: Now, Rach, I'm looking at you.
I know you could spend the rest of this episode just talking
about the research methodology, which would be awesome,
but unfortunately is not what this show is about.
RACHAEL POWELL: Aw.
DAN MONHEIT: Maybe you could just give us the highlights,
talk to us a little about the setup for the research.
RACHAEL POWELL: Yep.
Very fair.
Look, to start with, it was more than a quarter of a million
purchase simulations.
DAN MONHEIT: Woo, so that's like, what, 250,000.
That is a lot.
KRISTIN SUTTER: Did you just do that mental math in your head?
DAN MONHEIT: I literally just did that right now.
KRISTIN SUTTER: OK.
Wow, that is impressive.
RACHAEL POWELL: And then, to recap,
the research was looking into those seven behavioral biases
and principles that we talked about earlier.
DAN MONHEIT: All right, should we fly through them?
RACHAEL POWELL: Yeah, absolutely.
So the first one is being present.
DAN MONHEIT: Here.
Yeah, so you nailed that one.
RACHAEL POWELL: Category heuristic.
DAN MONHEIT: So they're the rules of thumb.
RACHAEL POWELL: Social norms.
DAN MONHEIT: Monkey see, monkey do, especially
in car dealerships.
KRISTIN SUTTER: Absolutely.
RACHAEL POWELL: Authority bias.
DAN MONHEIT: The power of the lab coat.
RACHAEL POWELL: The power of now.
DAN MONHEIT: Get it while you can.
RACHAEL POWELL: Scarcity bias.
DAN MONHEIT: [SIGHS] The great toilet paper fiasco of 2020.
RACHAEL POWELL: [CHUCKLES] And lastly, the power of free.
DAN MONHEIT: Ooh, did you say free?
Everybody loves free.
KRISTIN SUTTER: Yes.
And we all know that I love a free brekkie,
even if it's one that I don't actually end up eating.
RACHAEL POWELL: [CHUCKLES]
KRISTIN SUTTER: So also, before the simulation began,
we asked each shopper for their favorite
and their second-favorite brand in a given category.
And remember, we sampled people who
were intending to buy that particular product or service.
So this was likely very top-of-mind for them.
RACHAEL POWELL: Then once we knew
what their first and second brand preferences were,
we showed them side by side and started
to test the impact of each of those biases
in terms of how shoppers are making decisions.
KRISTIN SUTTER: Yeah.
And this is actually kind of complex to talk about
as a concept.
So, Rach, what do you think?
Maybe we should talk through one of our examples?
RACHAEL POWELL: Yeah, let's start with skin care
moisturizers.
DAN MONHEIT: Ooh, that would have been my first choice too.
RACHAEL POWELL: [CHUCKLING] That's why I picked it, Dan.
DAN MONHEIT: Let's do it.
RACHAEL POWELL: That's why I picked it.
So here we have two skincare brands.
On the left is the consumer's favorite brand,
and on the right, their second-favorite brand.
DAN MONHEIT: OK, so nothing fancy yet.
We've just got the two brands side by side.
What happened next?
RACHAEL POWELL: So at this stage,
we're only comparing the effect of the second-favorite brand
being present.
Everything else-- all potential triggers,
what the brand's offering-- are being held exactly the same.
And at this point, we say, which one would you choose?
DAN MONHEIT: And?
RACHAEL POWELL: And look at this outcome.
Straightaway, one in three shoppers
have switched what they've previously
said was a favorite brand and have
chosen their second-favorite brand just
because it was there.
DAN MONHEIT: I mean, this is crazy.
Kristin said earlier, you can't trust people
because they lie all the time.
And this is nuts.
Like, you just told us what your favorite brand was.
And then we put it next to your second-favorite brand.
And a third of you chose your second-favorite brand
just because it was there.
KRISTIN SUTTER: Yeah.
DAN MONHEIT: This is kind of crazy.
KRISTIN SUTTER: We were incredibly surprised by this
too.
But it really speaks to the power of brand presence.
So this is basically like you show up at a store,
you see your first-choice brand and your second-choice brand
both sitting there on the shelf.
And all things being equal, you still
pick that second-choice brand a third of the time
just because it's there.
Or probably more similar to today's world,
you're researching for those products online.
You do a search, and voila, there
is your first-choice brand, second-choice brand
on the page.
And one in three customers go with that second choice.
DAN MONHEIT: I guess, I mean, it kind of makes sense.
Just because it's my favorite brand
doesn't mean I'm going to pick it every single time.
But I can't pick my second-favorite
unless it turns up.
RACHAEL POWELL: [CHUCKLES] That's right.
And then we start to play with each of the behavioral biases.
So for our second-choice brand, we
start to activate these, and give them
propositions, or communications, or some kind of trigger that
plays into each of these biases.
We activate or supercharge the second-choice brand
to make it more compelling than our first-choice brand.
DAN MONHEIT: Ah, cool, so you're, like, charging them
up using those principles.
RACHAEL POWELL: Yeah, exactly right.
So if we start with the skincare example,
we're going to take heuristics and the power of free.
So with the power of free, we know
that free Tim Tams are good, but we also
know that free shipping is better.
DAN MONHEIT: Yeah, totally.
Send me the box for free.
I'll buy my own damn Tim Tams.
Thank you very much.
RACHAEL POWELL: [CHUCKLES] That's right.
So we give our second-choice brand free shipping.
And then, for heuristics, we know that, for this category,
natural ingredients is a compelling rule of thumb.
So we called that out for our second-choice brand.
DAN MONHEIT: Right.
And then?
RACHAEL POWELL: So now check out these results.
DAN MONHEIT: OK, so let me get this straight.
So we've got our second-choice brand here.
We activate the power of free and heuristics, and boom,
we are now up to 50% preference share.
And all we've done is turn up and turn
on two of these things.
I know you've got a bunch more you're sitting on.
How high can we go, guys?
RACHAEL POWELL: That's exactly what we wondered.
So now we essentially supercharge
that second-choice brand, we pull out all the stops,
and we activate against all of those behavioral biases
and see what impact that has in terms of how our shopper is
making a decision.
DAN MONHEIT: All right, this sounds epic.
Was this epic?
RACHAEL POWELL: Yeah, it absolutely is.
Hold on to your hats, guys, or in my case, my lab coat.
KRISTIN SUTTER: [CHUCKLES] Yeah, so the first thing we did
was we layered on that authority bias.
And we did that by adding a very official-looking 2019
Cosmopolitan Beauty Award Winner sticker, which
you can see here.
DAN MONHEIT: Ooh, nice sticker.
KRISTIN SUTTER: Mm-hmm.
RACHAEL POWELL: And then we activated the power of now
by offering next-day delivery for our second-choice brand.
DAN MONHEIT: Good.
KRISTIN SUTTER: And then we boosted our second-choice brand
even further with a higher social proof score,
a five-star rating versus the three stars.
DAN MONHEIT: Nice.
But I'm not going to lie.
You guys had me at the sticker.
[LAUGHTER]
RACHAEL POWELL: And then, lastly, we
laid on the effect of scarcity bias.
So telling our shopper there were only two
in stock remaining.
Now, Dan, any guesses on what percentage of customers
then switched across to their second-choice brand?
DAN MONHEIT: Honestly, I have no idea.
But I also know that I have never
wanted moisturizer more in my life than I do right now.
KRISTIN SUTTER: [CHUCKLES]
DAN MONHEIT: Where do we land?
RACHAEL POWELL: It was 81%.
DAN MONHEIT: It was not 81%.
KRISTIN SUTTER: Yes.
Absolutely.
DAN MONHEIT: This is so--
KRISTIN SUTTER: She does not tell a lie.
DAN MONHEIT: Data scientists don't lie.
KRISTIN SUTTER: Rachel is correct.
[LAUGHTER]
Yes.
DAN MONHEIT: Wow.
KRISTIN SUTTER: So to quantify that a little bit for you,
we saw 81% of shoppers now preferencing
that second-choice brand simply as a result of leveraging
those seven behavioral principles and biases.
DAN MONHEIT: Wow, so I hope everybody listening realizes
what we're doing here, because this is effectively
modern-day marketing magic, right?
Because what I love about this is
that activating many of these heuristics in the wild,
so just calling out the ingredients on a product,
or promoting the reviews you've already got,
or highlighting the fact that you're doing free shipping
basically costs nothing and has a huge impact
on the likelihood of somebody choosing your product or brand.
This is wild.
KRISTIN SUTTER: Yeah, it's unbelievable to be honest.
But promise you, it's true.
It's an incredibly strong effect.
So especially if you think about the category
of skincare and moisturizers, it's a very personal product.
It's something you're putting on your skin,
on your face, something you typically
would feel super connected to.
But you may be thinking that a switch
from a first-choice brand to a second-choice brand
isn't really that big of a deal, because, after all, it
is your second-choice brand.
So that's when we decided to try something a little bit more
drastic.
DAN MONHEIT: Ooh, I'm intrigued.
What did you guys do?
KRISTIN SUTTER: [CHUCKLES]
RACHAEL POWELL: So next we introduced
a completely fictitious brand.
DAN MONHEIT: Ah, Google face cream.
Finally.
I want it already.
Where can I buy this?
RACHAEL POWELL: [CHUCKLES] So not quite Google face cream.
It's actually a completely made-up skincare brand
called Maka.
The one thing to note is that it has no established brand
equity in the market because it is not real.
DAN MONHEIT: Yeah, makes sense.
RACHAEL POWELL: Complete sense.
And it has very little brand identity either--
in fact, none outside of what you can see here,
which is simply the logo.
KRISTIN SUTTER: Yeah.
But that was apparently enough to win over Dan.
DAN MONHEIT: Hey, it's a good logo.
KRISTIN SUTTER: Yeah.
[LAUGHTER]
RACHAEL POWELL: And then we supercharged it.
So we took all of our different behavioral biases
and we turned them on.
We activated them just the way we did
for our second-choice brand.
And rather shockingly, almost half of our shoppers
abandoned their favorite brand in favor
of a completely made-up one based purely on leveraging
these behavioral principles.
DAN MONHEIT: Are we really that fickle about something
as serious as face cream?
This is astounding.
KRISTIN SUTTER: So this is probably a little scary
if you're a brand leader in the category,
but could be really promising if you're a market challenger.
But remember, this does not mean that branding and brand
preference don't play a part-- a really important part,
actually-- because you saw over half of consumers
would not go to the made-up brand
from their first-choice brand.
So that itself demonstrates that true power and strength
of branding.
DAN MONHEIT: All right.
Makes sense, guys.
And I totally get it for product.
But I also know that you did a bunch of categories.
And so I'm wondering, can you give me
something else from the other end of the spectrum
to talk through.
And let's see how things played out there.
KRISTIN SUTTER: Sure.
What do you think about health insurance?
DAN MONHEIT: I think health insurance is great.
I would love to hear about health insurance.
Let's dive in.
KRISTIN SUTTER: OK.
So we'll skip ahead a little bit here.
Exactly like skincare, we saw a third
of customers defaulted to the second choice brand
simply by showing up.
But we set the test up with consumers
first and second-choice brand side by side, you'll remember.
And what we found was that even in private health insurance,
by supercharging it with each of those behavioral principles,
85% of consumers chose that second-choice brand.
DAN MONHEIT: OK, let me just make sure I got this right.
So just the two side by side, we had a third defecting.
And once you guys supercharge it up, 85% of Australians
said, oh, yeah, I'm going to go with that second-choice brand,
just because of the principles.
KRISTIN SUTTER: This is actually a similar defection
rate to the one we saw and tested in moisturizer.
And we've seen a similar thing happen
across several categories, from SUVs to booking
international flights.
DAN MONHEIT: All right, now, a little bit scared to ask here.
But did you guys do the fake brand thing
for health insurance as well?
KRISTIN SUTTER: Ah, you know we did.
So here is our fake brand for insurance, AOV Insurance.
And I think it looks pretty convincing.
DAN MONHEIT: Yeah.
KRISTIN SUTTER: So let's see what happens.
DAN MONHEIT: Yeah.
I got to say, if you're going to make up an insurance company,
three nondescript letters jammed together,
it looks very official and it looks very healthy.
KRISTIN SUTTER: Yes.
It inspires confidence.
So despite that, it turns out the research agreed with you.
So we saw 70% of consumers willing to abandon
their preferred brand of health care provider
for AOV Insurance, which, as we mentioned, completely made up.
DAN MONHEIT: Wow.
I mean, honestly, this is quite incredible.
To think that people would trust something
as important as their health to a brand
that they have literally never heard--
because it doesn't even exist--
just based on these behavioral principles.
RACHAEL POWELL: Yeah.
And really interestingly, the effect
on private health insurance was actually more powerful
than it was on moisturizers.
KRISTIN SUTTER: Yeah.
And that was actually not super surprising
when we looked at all of the studies we did,
both in Australia and globally.
Because we saw sometimes that if there was a more commoditized
product, similar to health insurance, financial services,
something that was hard for consumers
to differentiate between, we did see
that there was a higher defection
rate to made-up brands.
DAN MONHEIT: If I'm a challenger brand,
this is all music to my ears.
KRISTIN SUTTER: Yeah.
But it's also important to note that this
is really good for established brands as well.
You can leverage these biases as well
to make sure that your consumers are continuing to choose you.
DAN MONHEIT: Awesome.
So great for challenging brands and great for leading brands
thinking like challenging brands.
Phew.
All right, guys.
Big episode.
I know I learned a lot.
That is all we have time for today.
Thank you guys so much for joining us.
Tell me when we meet again.
Episode four.
Our final four, eh?
Can't believe it's over already.
What are we going to be covering in episode four of "The Messy
Middle"?
KRISTIN SUTTER: Yes.
Hard to believe it's almost over.
But you are not going to want to miss this last episode,
because this is where we're going to break down
exactly what you as marketers can do to take action
on these insights and help elevate your brand to be there
for your consumers in the right way and at the right time.
DAN MONHEIT: All right.
So you do not want to miss episode four.
We'll be posting it to the Australia and New Zealand Think
with Google page at thinkwithgoogle.com/aunz.
Catch you next time.
RACHAEL POWELL: Thanks, Dan.
KRISTIN SUTTER: See you guys soon.
RACHAEL POWELL: Bye.
KRISTIN SUTTER: Bye.
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