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Supercharge Your Growth With Psychology by Alex Chahin (Lyft)

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Growth Hacking World Forum, San Francisco, 2019

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Supercharge Your Growth With Psychology by Alex Chahin (Lyft)

  1. 1. SUPERCHARGE YOUR GROWTH WITH PSYCHOLOGY Alex Chahin | alex.chahin@gmail.com Fmr. Head of Core Rider Product Marketing, Lyft Lessons from behavioral economics and what goes viral
  2. 2. We are rational.
  3. 3. What’s the best way to get to work?
  4. 4. What’s the best school for our kids?
  5. 5. Which rideshare app should I use right now?
  6. 6. QUICK POLL Who would agree that they’re pretty rational?
  7. 7. Imagine it’s date night...
  8. 8. Wait time is about 1-2 hours. What else could we do?
  9. 9. Shake Shack Quick search for burgers nearby
  10. 10. What would you do?
  11. 11. QUEENS, NY SEOUL, KOREA PALO ALTO, CA TOKYO, JAPAN PHILADELPHIA, PA AUSTIN, TX
  12. 12. And no, this isn’t a special case.
  13. 13. Saru Sushi 4.7 stars on Google (429 ratings) Usually ~2 hour wait on weekends Hamano Sushi 4.3 stars on Google (165 ratings) Rarely a long wait on weekends
  14. 14. 71% of Americans are not saving enough money for retirement Source: Rodney Brooks; Sinan Ozel, “71 percent of Americans aren’t saving enough for retirement” (September 2016) 46% have less savings than they expected they would five years ago
  15. 15. Similar time Similar time Okay, let’s keep looking OH NO! ALMOST GONE!
  16. 16. “ We find that scarcity messages are valuable. The average Expedia message increases the expected utility of an unsophisticated traveler [...] by 4.34 percent. Source: Pascal Courty; Sinan Ozel, “The Value of Online Scarcity Signals” (October 2016)
  17. 17. So...are we rational?
  18. 18. We can use this to shape behavior
  19. 19. 2X
  20. 20. TOPICS The problem 3 steps to supercharge Case studies Applying it
  21. 21. 95% Source: Marc Emmer, “95 Percent of New Products Fail. Here Are 6 Steps to Make Sure Yours Don't” (July 2018) of new products fail
  22. 22. Market research UX research Competitive analysis 1 2 3
  23. 23. But people forget to start with people
  24. 24. Imagine a world where... your growth tactics were more effective you didn’t dilute the brand with over- discounting you didn’t need incremental budget to scale
  25. 25. THE 3 STEPS TO SUPERCHARGE WITH PSYCHOLOGY
  26. 26. 1 2 3 Nudge them Design the behavioral environment deliberately Persuade them Increase the chance they get to “yes” Get them talking Get people to authentically advertise for you
  27. 27. STEP 1 Nudge them
  28. 28. Consider a cafeteria trying to get students to eat more healthy food
  29. 29. Restrictions Product unavailability, bans, regulation Money Discounts, taxes, subsidies Information Advertising, PSAs, disclosures
  30. 30. Restrictions Remove all junk food from cafeteria Money Healthy food discount or junk food tax Information Posters in the cafeteria
  31. 31. Restrictions Remove all junk food from cafeteria Money Healthy food discount or junk food tax Information Posters in the cafeteria Anger over removal Anger over higher prices Likely to be missed
  32. 32. Or we could nudge them in the right direction
  33. 33. Put on higher shelves and behind the counter Put right next to the cash register
  34. 34. QUICK POLL How much do you think this could increase healthy items sold?
  35. 35. 78%more healthy items sold in a similar experiment Source: Floor Kroese; David Marchiori; Denise de Ridder, “Nudging healthy food choices: a field experiment at the train station” (July 2015)
  36. 36. KEY IDEA Choice architecture Shape behavior by considering what the default action is
  37. 37. Imagine you’re shopping on two electronics sites
  38. 38. $150 on product page $145 on product page $5 at checkout for shipping
  39. 39. Psychological Value Loss Gain Losses are felt more than gains Diminishing effect Source: Daniel Kahneman; Amos Tversky, “Prospect Theory: An Analysis of Decision under Risk” (March 1979)
  40. 40. Psychological Value Loss Gain -$150 -$5-$145
  41. 41. Psychological Value Loss Gain -$150 -$145 -$5
  42. 42. Psychological Value Loss Gain+$5 +$10 +$5
  43. 43. KEY IDEA Prospect theory Make sure to group pain and separate gain
  44. 44. Imagine two groups, one given mugs and the other nothing
  45. 45. Sellers How much would you sell the mug for? Buyers How much would you buy the mug for? $7.12 $2.87 Source: Daniel Kahneman; Jack Knetsch; Richard Thaler, “Experimental Tests of the Endowment Effect and the Coase Theorem” (December 1990)
  46. 46. KEY IDEA Endowment effect People value what they already own
  47. 47. Imagine a carwash with a rewards program
  48. 48. 8-punch card No free progress 10-punch card 2 punches free ✔ ✔
  49. 49. QUICK POLL What was the percentage increase in punchcard completion?
  50. 50. 79%more people completed the card with free progress Source: Joseph Nunes; Xavier Drèze, “The Endowed Progress Effect: How Artificial Advancement Increases Effort” (March 2006)
  51. 51. KEY IDEA Endowed progress Use free progress to motivate people more
  52. 52. Imagine a cafe that sells 3 sizes of coffee
  53. 53. 16 oz 8 oz 12 oz Best seller Source: Itamar Simonson, “Choice Based on Reasons: The Case of Attraction and Compromise Effects” (September 1989)
  54. 54. Source: Itamar Simonson, “Choice Based on Reasons: The Case of Attraction and Compromise Effects” (September 1989) 16 oz 20 oz 12 oz Best seller Best seller
  55. 55. KEY IDEA Compromise effect With limited info, people pick the middle option
  56. 56. RECAP: KEY BEHAVIORAL PHENOMENA 1 Choice architecture 2 Prospect theory 3 Endowment effect 4 Endowed Progress 5 Compromise effect 6 Anchoring
  57. 57. STEP 2 Persuade them
  58. 58. CIALDINI’S 6 PRINCIPLES FOR PERSUASION 1 Reciprocation 2 Commitment & Consistency 3 Social Proof 4 Liking 5 Authority 6 Scarcity Source: Robert Cialdini, “Influence: Science and Practice” (August 2008)
  59. 59. CIALDINI’S 6 PRINCIPLES FOR PERSUASION 1 Reciprocation 2 Commitment & Consistency 3 Social Proof 4 Liking 5 Authority 6 Scarcity Source: Robert Cialdini, “Influence: Science and Practice” (August 2008)
  60. 60. For years, J. Crew exclusively sold the Nike Killshot 2 in limited batches
  61. 61. Similar time Similar time Okay, let’s keep looking OH NO! ALMOST GONE!
  62. 62. “ The Killshot 2 is white-hot: Since early 2016, it’s sold out every time it’s hit jcrew.com [....] But the influx of eyeballs on J.Crew's site every time it restocks the Killshot 2 has likely led guys to stick around and pick up some of the brand's bread-and-butter products like chinos and oxford-cloth shirts. Source: Jake Woolf, “The Sneaker That Turns J.Crew Fans into Hypebeasts” (August 2017)
  63. 63. KEY IDEA Scarcity Limited supply makes us want to buy
  64. 64. KEY IDEA Social proof We look to others’ behavior to inform our own
  65. 65. Consider crossing the street when it’s not your light
  66. 66. 3.5Xmore people went into the red-light road when the confederate wore a suit Source: Robert Cialdini, “Influence: Science and Practice” (August 2008)
  67. 67. KEY IDEA Authority People are more likely to act when an authority figure adds credibility
  68. 68. Imagine you just finished eating at a restaurant
  69. 69. Control 1 mint with the bill 2 mints with the bill 1 mint + waiter gives more Source: Robert Cialdini, “Influence: Science and Practice” (August 2008)
  70. 70. Control 1 mint with the bill 2 mints with the bill 1 mint + waiter gives more +3% tips +14% tips +23% tips Source: Robert Cialdini, “Influence: Science and Practice” (August 2008)
  71. 71. KEY IDEA Reciprocity Give something to get something
  72. 72. RECAP: CIALDINI’S 6 PRINCIPLES FOR PERSUASION 1 Reciprocation 2 Commitment & Consistency 3 Social Proof 4 Liking 5 Authority 6 Scarcity Source: Robert Cialdini, “Influence: Science and Practice” (August 2008)
  73. 73. STEP 3 Get them talking
  74. 74. BERGER’S 6 PRINCIPLES FOR WORD OF MOUTH 1 Social Currency 2 3 Emotion 4 Public 5 Practical Value 6 Stories Source: Jonah Berger, “Contagious: Why Things Catch On” (March 2013) Triggers
  75. 75. BERGER’S 6 PRINCIPLES FOR WORD OF MOUTH 1 Social Currency 2 3 Emotion 4 Public 5 Practical Value 6 Stories Source: Jonah Berger, “Contagious: Why Things Catch On” (March 2013) Triggers
  76. 76. #fashion 744.4M posts #travel 453.8M posts VOLUME OF INSTAGRAM HASHTAGS #workout 149.3M posts #foodie 137.0M posts #lazy 11.3M posts #late 6.2M posts #errands 388.9K posts #binging 67.2K posts But we spend 8+ hours a week watching Netflix
  77. 77. KEY IDEA Social currency People talk about what makes them look good
  78. 78. ?peanut butter & jelly
  79. 79. KITKAT + COFFEE After 12 months, the campaign caused sales to increase 30%+ and eventually brought the brand from doing $300M annually to $500M. Source: Jonah Berger, “Contagious: Why Things Catch On” (March 2013)
  80. 80. Sales increased when they changed the trigger HOLIDAYS WEEKENDS Source: Jonah Berger, “Contagious: Why Things Catch On” (March 2013)
  81. 81. Interest over time (Google Trends) Source: Jonah Berger, “Contagious: Why Things Catch On” (March 2013) What are those repeated spikes?
  82. 82. KEY IDEA Triggers People talk about what’s top of mind
  83. 83. Source: Jonah Berger, “Contagious: Why Things Catch On” (March 2013) High Arousal Low Arousal Positive Awe Excitement Amusement (Humor) Contentment Negative Anger Anxiety Disgust Sadness
  84. 84. Source: Jonah Berger, “Contagious: Why Things Catch On” (March 2013) High Arousal Low Arousal Positive Awe Excitement Amusement (Humor) Contentment Negative Anger Anxiety Disgust Sadness
  85. 85. KEY IDEA Emotion People talk about what fires them up
  86. 86. RECAP: BERGER’S 6 PRINCIPLES FOR WORD OF MOUTH 1 Social Currency 2 3 Emotion 4 Public 5 Practical Value 6 Stories Source: Jonah Berger, “Contagious: Why Things Catch On” (March 2013) Triggers
  87. 87. CASE STUDY Shared rides savings
  88. 88. Endowed progress Active choice Goal gradient theory
  89. 89. Shared rides↑ Monthly active riders↑ CAMPAIGN RESULTS
  90. 90. INSIGHT Use psychology to change behavior for free
  91. 91. CASE STUDY Selling ride passes Subject: 93% of passes sold! Last chance to score $5 rides.
  92. 92. INSIGHT Short supply makes people want to buy Subject: 93% of passes sold! Last chance to score $5 rides.
  93. 93. SUPERCHARGE WITH PSYCHOLOGY SCORECARD
  94. 94. Factors to evaluate (each cell is worth ½ pt) Max Score Your Score Nudge them Choice Architecture Prospect Theory Endowment Effect Endowed Progress Compromise Effect Anchoring 3 pts X pts Persuade them Reciprocation Commitment & consistency Social Proof Liking Authority Scarcity 3 pts X pts Get them talking Social Currency Triggers Emotion Public Practical Value Stories 3 pts X pts Completion Have you evaluated each cell in the 3 rows above? ½ pt X pt Execution Have you identified one tactic per row you can implement? ½ pt X pt 10 pts X pts
  95. 95. Factors to evaluate (each cell is worth ½ pt) Max Score Your Score Nudge them Choice Architecture Prospect Theory Endowment Effect Endowed Progress Compromise Effect Anchoring 3 pts X pts Persuade them Reciprocation Commitment & consistency Social Proof Liking Authority Scarcity 3 pts X pts Get them talking Social Currency Triggers Emotion Public Practical Value Stories 3 pts X pts Completion Have you evaluated each cell in the 3 rows above? ½ pt X pt Execution Have you identified one tactic per row you can implement? ½ pt X pt 10 pts X pts
  96. 96. Factors to evaluate (each cell is worth ½ pt) Max Score Your Score Nudge them Choice Architecture Prospect Theory Endowment Effect Endowed Progress Compromise Effect Anchoring 3 pts X pts Persuade them Reciprocation Commitment & consistency Social Proof Liking Authority Scarcity 3 pts X pts Get them talking Social Currency Triggers Emotion Public Practical Value Stories 3 pts X pts Completion Have you evaluated each cell in the 3 rows above? ½ pt X pt Execution Have you identified one tactic per row you can implement? ½ pt X pt 10 pts X pts
  97. 97. Factors to evaluate (each cell is worth ½ pt) Max Score Your Score Nudge them Choice Architecture Prospect Theory Endowment Effect Endowed Progress Compromise Effect Anchoring 3 pts X pts Persuade them Reciprocation Commitment & consistency Social Proof Liking Authority Scarcity 3 pts X pts Get them talking Social Currency Triggers Emotion Public Practical Value Stories 3 pts X pts Completion Have you evaluated each cell in the 3 rows above? ½ pt X pt Execution Have you identified one tactic per row you can implement? ½ pt X pt 10 pts X pts
  98. 98. Factors to evaluate (each cell is worth ½ pt) Max Score Your Score Nudge them Choice Architecture Prospect Theory Endowment Effect Endowed Progress Compromise Effect Anchoring 3 pts X pts Persuade them Reciprocation Commitment & consistency Social Proof Liking Authority Scarcity 3 pts X pts Get them talking Social Currency Triggers Emotion Public Practical Value Stories 3 pts X pts Completion Have you evaluated each cell in the 3 rows above? ½ pt X pt Execution Have you identified one tactic per row you can implement? ½ pt X pt 10 pts X pts
  99. 99. LAST POLL Did you learn something you can use on a current or future project?
  100. 100. You now have the tools to... make your growth tactics more effective grow while protecting your brand from discount dilution grow without always needing more budget
  101. 101. And the next time you...
  102. 102. IF YOU ONLY REMEMBER 1 THING When you start with the mind, growth won’t be far behind.
  103. 103. THANK YOU alexchahin.com alex.chahin@gmail.com linkedin.com/in/alexchahin/

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