The Business of Choice
For a brand or business to be successful, it needs people to choose it, so it is important to understand how people choose.
- We are all faced throughout our lives with agonizing decisions. Moral choices. Some are on a grand scale. Most of these choices are on lesser points. But! We define ourselves by the choices we have made. We are in fact the sum total of our choices.
- —Professor Louis Levy
Before you go looking for the “Collected Works of Professor Louis Levy,” I should explain that Levy is a character in Woody Allen’s film Crime and Misdemeanors, and this quote is part of a monologue about human destiny, love, and our choices that draws the movie to a close.
It might seem almost insultingly obvious that we are in fact the sum total of our choices, as Levy says. If I hadn’t chosen to accept a job with an advertising agency nearly 30 years ago, I wouldn’t have been in San Francisco 20 years later working on a new business pitch for a client that offered its customers a dizzying array of choices. If I hadn’t been working on that pitch, I wouldn’t have decided to contact Barry Schwartz, Professor of Social Theory and Social Action at Swarthmore College and author of the excellent book, The Paradox of Choice. He wouldn’t have suggested I attend the Society of Judgment and Decision Making Conference, and I wouldn’t have had the experience outlined in the preface that led to my writing this book.
Yet, if our choices define us, as Woody Allen via his mouthpiece Professor Levy suggests, if they determine to a large extent whether we will be happy, how comfortable our retirement will turn out, and even how healthy we will be, then it is amazing that while we spend huge amounts of time pondering the outcomes of our choices, we spend so little time thinking about how we make the choices we make. (Now don’t feel bad about that—there are very good reasons why we think so little about how we make our choices that we’ll explore in Chapter 4, “Shortcuts Versus Analysis—Ignoring is Decisional Bliss.”)
Perhaps more surprising is how little time and money marketers, whose paycheck, bonuses, job security, and promotion prospects are dependent on influencing the choices of others, spend seeking to understand how humans choose. The success of businesses depends on ensuring people choose the “right” way: be it the procurement team at an airline wrestling with the decision to spend billions on Airbus or Boeing; a shopper in a supermarket choosing between Crest, Colgate, Aquafresh, or store brand toothpaste; a middle-aged man opting to try on a pair of slightly more fitted jeans for the first time; or a homeowner deciding to install energy-efficient light bulbs. The outcomes of these choices, and hundreds of billions like them every day, can edge marketing teams closer to or further away from their goals and lead companies to post a bullish or a bearish outlook for the next quarter. Every business is dependent on how people choose, and marketing is simply how businesses influence choices to contribute to their objectives.
Businesses fail or succeed based on products or services being chosen; marketing is at the sharp end of this—it is the business of choice. And marketers spend a lot of time, effort, and money learning about things that may affect that choice—understanding purchase paths and decision journeys, where their brand sits in culture, how their brand is perceived or how likely people say they are to purchase it. But, for how important choice is, businesses spend little time thinking about how our choices are actually made, and how they are guided by the instinctual aspects of human behavior.
When I interviewed Robert Cialdini, one of the world’s authorities on what actually influences people to act, at the 2010 Behavior, Energy and Climate Change conference, he noted this discrepancy:
- I think marketers study things that are related to behavior. They study attitudes, they study beliefs, they study perceptions, they’ll study memories of brands and the relationships people have with them. But it seems to me that these are all under investigation in the service of predicting behavior. Why don’t we just cut to the chase? Why do we examine those things that are bridges and links of an imperfect sort to behavior when we can study behavior itself?
Funding isn’t an excuse for this oversight. We are in an era where marketers spend more on research every year. We are awash with data: dashboards with real-time sales data; brand equity studies tracking changes on how brands are perceived; web metrics revealing what potential choosers are researching, liking, recommending, buying, and even what they are discarding from their shopping baskets at the last moment; and face-to-face discussions to understand at a deeper level how people seem to feel about brands and how marketing approaches might resonate with them.
Not surprisingly, the market research industry is doing pretty well. According to business intelligence publisher, IBISWorld, the industry has achieved annual growth rates over the last five years of more than three percent and global revenues of $21 billion last year.
However, a huge gap exists in this research, as Cialdini suggested.
You might disagree, and argue that you and your team are very familiar with the decision-making process when it comes to buying cars, insurance, pet food, or whatever line of business you are in.
You also might argue that you understand how people use different channels and can even give a very accurate estimate for return on marketing investment for activity in these channels. The point I want to make is not so much about how marketers understand decision-making in their specific category, but more about how little attention we pay to understanding how humans generally make decisions. The car buyer, the insurance buyer, and the pet food buyer are not different species (even if the end consumer in the latter example is). Although the choices may differ, they are made by the same overall decision-making system, which has been evolving in its current form for around six million years. It is, of course, the human brain. Although most successful marketers are pretty good at understanding the proximate nature of choices, we don’t consider the importance of the decision-making system that drives them, the overall anatomy of how we make choices.
If we were doctors, we would be very good at understanding the personal and specific nature of our patients’ ailments, but not how the body operates as a whole. Let’s say our patient Mrs. Smith suffers from coccyx pain, for example. Our understanding of Mrs. Smith’s problem would be based on that small piece of bone, rather than how it fits overall in the body, how it moves with the body in different environments, how it might be affected when the weather turns colder, or even how our evolutionary history might be relevant in understanding tailbone function and problems. (The bone’s common name, tailbone, is a bit of a giveaway here—the coccyx is the remnant of a vestigial tail in humans and other tailless primates.)
Understanding the broader picture is vital to understanding how people arrive at their decisions. If marketing is about influencing choice, then it seems critical to learn about not just product or category insights but also about the more universal aspects of human decision-making. We should understand how humans are naturally effective decision-makers and where we fall short; how different circumstances affect our choices; and the nature of choice, rather than just its consequences.
For a business preoccupied with insights, not seeking to understand everything about how decisions are made is a pretty massive oversight. Marketing is obsessed with being consumer-centric. I think the opportunity is for it to become more decision-centric.
By decision-centric, I mean using an understanding of how humans choose as the starting point for developing marketing. It seems to be common sense that this will lead to more efficient and effective marketing. Perhaps this is what Cialdini meant when he said, “just cut to the chase.” If your starting point for developing marketing comes from understanding how humans choose, then it seems a reasonable bet that your marketing will be more efficient and effective.
Starting from an understanding of how people choose, and taking a decision-centric approach could be important for another reason. Choice has become a bigger and more time-consuming aspect of people’s lives. An excellent 2010 article in The Economist titled “You Choose” quantified just how consuming choice has become:
- ...the average American supermarket now carries 48,750 items, according to the Food Marketing Institute, more than five times the number in 1975. Britain’s Tesco stocks 91 different shampoos, 93 varieties of toothpaste and 115 of household cleaner.
In this environment, spending some time understanding how people choose—not, as Keith Weed says, as “a pair of armpits in search of deodorant or a head of hair in search of hair benefits,” but as humans making thousands of choices everyday—could be one of the best investments a marketer can make.
Choice isn’t just tough for those trying to choose what brands to buy. Deciding what approach to take has become really difficult for marketers as well. A few years ago, an infographic made the rounds in marketing and advertising circles. It illustrated the frightening complexity that technology has brought to the landscape of choices marketers need to make. The revised version for 2014, by Scott Brinker,1 is even scarier, showing 947 different companies (he acknowledges this is a conservative number) classified into 42 different groups. When I started in advertising, there were six different groups: TV, radio, print, outdoor, direct mail, and point-of-sale.
Marketing is increasingly complex, and even in this age of advanced data analytics where a sea of data comes in waves across your desk, it is still really hard for most companies—particularly those that don’t do most of their business direct to the public—to pin down what is working and what is not. The old adage “half of my advertising is working, I just don’t know which half”2 still rings true. While speaking at an Advertising Research Foundation conference on Big Data in 2014, I made an off-the-cuff comment that the modern version of this quip may be “half my data analytics is wasted, I just don’t know which half.” I was surprised that many of the attendees, who knew far more about data and analytics than me, agreed.
Beyond the sheer number of choices, another thing has made it more difficult for marketers to get their brands chosen. Brands—with a few glorious exceptions—are becoming less powerful. In his 2008 book The Brand Bubble,3 John Gerzema analyzes data from his company’s BrandAsset Valuator, a very robust dataset that covers many hundreds of brands. It shows that consumers feel that brands in general have become significantly less trusted, liked, and respected, as well as less salient over the 14-year period from 1996–2008. While I wouldn’t discourage any marketers from taking measures to increase their brand strength in these areas, I think we should all be concerned that the issue may not be about making brands stronger, but might be about choosers using “brand” less as a no-questions-asked shortcut in their decision-making. For years, focusing on just checking the boxes about how a brand delivered emotional and functional benefits, and managing it for consistency, was a guarantee of a reasonable level of success. Blind brand belief may have made us complacent as marketers and overly reliant on the gravitational pull of our brands to attract people to choose them.
But that, clearly, is no longer enough. I think the remedy to the decline that Gerzema notes should not be just to strengthen your brand in the traditional way, but to think of it from a different perspective.
Everything I have learned about how people make decisions points to how powerful brands can be. When brands work best they dovetail beautifully with how we make choices. They are in tune with how we store memories and trigger us to create vivid and lasting ones. They are active at the right times and places to recall those memories as compelling feelings and emotions. They work beautifully with how the mind filters information to enable it to make fast and efficient choices. Brands are the ultimate man-made decision short cuts. At their best, they enable us to make quick, easy choices that feel right. In doing so, brands are perfectly aligned with how our brain’s decision-making systems have evolved; this, I believe is the real power of brands. To make the most of the relationship between brands and our decision-making systems, brands need to become more “brain centric.” In an episode of a recent TV series called “Thinking Money,” produced in conjunction with Maryland Public Television, noted Stanford neuroeconomist Baba Shiv (who I think makes the science of decision-making and how it relates to marketing more approachable than almost anyone else) was asked why saving money is so difficult, when it clearly makes sense at a rational level. Shiv’s reply was
- The rational brain simply rationalizes what the emotional brain has already decided to do. The only long-term solution for this is to make saving more sexy...for the brain.
Asking how to make your brand and approach to marketing more “sexy” for the brain is a great idea. We all know the saying, “sex sells” (and it does). But making your brand and marketing sexy for the brain may take this concept to a whole new level.
This approach requires a different way of thinking. Very often with marketing we think about our user or chooser’s needs from the category, we think about what is compelling about our brand equity and create a cocktail of persuasion, and point it at our (I know I said I wouldn’t use this word) target. I call this a “brand in” approach. To be “sexy for the brain” means you need to form an understanding of what the brain wants. What are the things the brain just can’t ignore? What works with how the brain guides the choices we make? How can the stimulus you provide align with the speed and efficiency of the brain? Instead of starting from your brand, this means starting from the brain. I call this a “brain out” approach.
In all of the research I’ve read, brilliant people I have spoken with, and practical experience I have accumulated, I have seen plenty of complexity. Complexity is inevitable. Humans are complex beings whose behavior is driven by a brain, that even though inside our heads, contains as much scientific mystery as the universe does outside. Despite this complexity, I have reached one simple conclusion. From a cognitive and behavioral perspective, marketing has an impact in only three ways:
- It can create, through emotional associations, long-lasting memories of a brand. These memories are implicit, in that we attribute them to the brand at a non-conscious level. The real power of a brand is the amount of people with whom it has created strong, positive, and implicit memories.
- It can act as a trigger to recall those memories. The Apple logo or the Nike swoosh are nothing without our memories of the feelings we have had about those brands—either through experience or the suggestion of marketing and advertising. After those associations are made, they are constantly hovering in the background, ready to color any decision that may involve that brand.
- It can make choices intuitive, or instinctive, in effect making them “no-brainers.” The first two points relate to memories and come from what we have experienced and thus learned as individuals. This third impact has a different source—it is baked into how our brain works. It is our cognitive inheritance or the hand that human nature has in our choices.
In this book I touch on all three of these potential roles for marketing, but the emphasis is on the third. From what I have observed, understanding how human nature and the workings of our brain affect our choices hardly figures in the daily workings of most marketers.
The takeaways from this chapter are
- Think about your “consumer” not just as someone choosing products within your category, or as “a pair of armpits in search of deodorant or a head of hair in search of hair benefits.” Think about how the choices they make, whether buying a car, a pair of jeans, or shampoo, emanate from the same decision-making system.
- Don’t just rely on the magnetic pull of your brand. Understand how to make your brand “sexy for the brain.” Think “brain out” rather than “brand in.” Keep this in mind as you read the remaining chapters of this book.
- Consider allocating a percentage of your insights/research budget to understanding the innate behaviors that may be relevant to getting your brand chosen.
What stood out for other people in this chapter:
- “Marketers beginning not with what their brand wants, but with what the brain wants is a potent new approach to reaching today’s decision-fatigued consumer.”
- “It’s clear we need to move beyond marketing insights that look at surface behavior to cognitive insights that drive choice deep within us. This is where the real advantage lies.”