Behavior Based Marketing

1. BEHAVIOURAL
BASED
MARKETING
B Y STEPHEN PATON, MANAGER RESEARCH & INSIGHTS, AGL
A PRESENTATION
FOR

2. Libraries of the future ??????

3. Transformation is hard
> Behavioural Marketing
> Stephen Paton
> 29th October, 2015
But transformation is constant

4. Failure is not an option
Jobs that didn’t last the distance
> Behavioural Marketing
> Stephen Paton
> 29th October, 2015

5. AGL is constantly transforming
> Behavioural Marketing
> Stephen Paton
> 29th October, 2015

6. AGL is constantly transforming
> Behavioural Marketing
> Stephen Paton
> 29th October, 2015

7. AGL is constantly transforming
> Behavioural Marketing
> Stephen Paton
> 29th October, 2015

8. AGL is constantly transforming
> Behavioural Marketing
> Stephen Paton
> 29th October, 2015

9. AGL is constantly transforming
> Behavioural Marketing
> Stephen Paton
> 29th October, 2015

10. AGL is constantly transforming
> Behavioural Marketing
> Stephen Paton
> 29th October, 2015

11. AGL is constantly transforming
> Behavioural Marketing
> Stephen Paton
> 29th October, 2015

12. Research is transforming
Focus groups & in depth interviews
Telephone>online>mobile>app based
Observational & ethnography
Co creation & social listening
Text & Big Data analytics
Gamification & crowdsourcing
Neuroscience, Facial Analysis & Bio metric
response (implicit methods)
Behavioural Economics
> Behavioural Marketing
> Stephen Paton
> 29th October, 2015

13. We live in the information age
> Behavioural Marketing
> Stephen Paton
> 29th October, 2015
So it’s easy and great for us?

14. … but the growing volume of data can be overwhelming
> Behavioural Marketing
> Stephen Paton
> 29th October, 2015
… 90% of data from the Internet of Things not collected.

15. Getting to the people behind the data
Big Data = Behavioural based marketing?
A glimpse – but people are programmed
to see patterns,
So research can fill in the gaps,
While behavioural economics can get
behind the truth.
> Behavioural Marketing
> Stephen Paton
> 29th October, 2015

16. Decision tree
> Behavioural Marketing
> Stephen Paton
> 29th October, 2015
So how do people decide?
We use satisficing and heuristics
why?
Our Brains process 11 million Bits of info
per second.
yet…
We can consciously process 15-16 bps

17. People make surprising decisions
People are more likely to buy jam when they're presented with 6 flavors than 24.
After inspecting a house, real estate agents thought it was $14,000 more valuable
when the seller listed it at $149,900 than $119,900.
When children play a fun game and then get rewarded for it, they lose interest in
playing the game once the rewards are gone.
People conserve more energy when they see their neighbors' consumption rates.
If you flip a coin six times, people think Heads-Heads-Heads-Tails-Tails-Tails is less
likely than Heads-Tails-Tails-Heads-Heads-Tails, even though the two are equally
likely.
> Behavioural Marketing
> Stephen Paton
> 29th October, 2015

18. How about you?
candy, sugar, bitter, good, taste,
tooth, nice, honey, soda, chocolate,
heart, cake, eat, pie
> Behavioural Marketing
> Stephen Paton
> 29th October, 2015

19. Which words did you just see?
taste, point, sweet,
> Behavioural Marketing
> Stephen Paton
> 29th October, 2015

20. > Behavioural Marketing
> Stephen Paton
> 29th October, 2015
Thinking fast & slow – Daniel Kahneman
“We are to thinking as
cats are to swimming.
We can do it if we have
to”

21. System one thinking System two thinking
Fast, automatic, frequent, emotional, stereotypic, subconscious, Slow, effortful, infrequent, logical, calculating, conscious,
Effortless Takes effort
Share with animals Defines us a human
Examples:
• Calculate 2+2
• Walk at normal pace
• Complete the phrase “fish & ..”
• Drive on an empty road
• Detect hostility in a voice
Examples:
• Calculate 7x24
• Walk at faster pace than normal
• Compare two ovens for value
• Focus on one voice in a crowded room
In control Acts when called upon
not under voluntary control (mostly) ...and easily
swayed by emotions and can be as easily be wrong as
be right.
You can force yourself to engage but painfully slow, is
distracted and hard to engage.
Require attention and are disrupted when attention is drawn
away.
Who we are Who we think we are
> Behavioural Marketing
> Stephen Paton
> 29th October, 2015
How we think -
system one and system two

22. > Behavioural Marketing
> Stephen Paton
> 29th October, 2015
System 2 in action

23. > Behavioural Marketing
> Stephen Paton
> 29th October, 2015
Key principles of behavioural economics
#3. We are hugely
influenced by the
context around us
and use anchors,
shortcuts and rules
of thumb to navigate
this context and
make decisions
#1. Much of what
influences our
behaviour is
subconscious /
below the surface
#4. We are
subject to a mass
of cognitive
biases, such as
loss aversion,
scarcity bias, the
herd instinct…
#2. We have different
modes of thinking –
System One which is
intuitive, emotional
and System Two
which is more
effortful, deliberate,
reasoned

24. > Behavioural Marketing
> Stephen Paton
> 29th October, 2015
Biases can be grouped around a simple matrix
Peak end
rule
Paradox of
choice
Optimism
bias
Availability
bias
Loss
aversion
Status
quo bias
Discounting
the future
Decision Making Biases
Probability/Belief Biases Social Biases
Memory Biases
In group
bias
Herd
instinct
Fundamental
Attribution Bias
Chunking
Hindsight
bias
Priming

25. > Behavioural Marketing
> Stephen Paton
> 29th October, 2015
An ever growing list
Scarcity bias
Overconfidence effect
Herd mentality & conformity
Egocentric biasChoice-Supportive Bias
anchoring framing the power of the default
validity illusion Normalcy Bias Ambiguity Effect
Pseudo Certainty effect Distinction Bias Attention Bias
Availability Heuristic Restraint Bias Negative Bias
Social Proof Focusing Effect Information Bias
Reciprocity Bias Ulysses effect IKEA effectOmission Bias
Optimism Bias
Attribution Error
Loss aversion
Endowment effect Hedonic Adaptation
Mental Accounting Hyperbolic Discounting
Projection Bias Relative consumption & satisfaction (herd)
Distinction Bias
Confirmation/ Expectancy Bias
Reactance
Consistency BiasPrimary/ Recency EffectProjection Bias
Peak End MemoryPower of now nudging

26. > Behavioural Marketing
> Stephen Paton
> 29th October, 2015
Current thinking

27. > Behavioural Marketing
> Stephen Paton
> 29th October, 2015
Current thinking

28. 1. Staff training and workshops
2. Research
> Behavioural Marketing
> Stephen Paton
> 29th October, 2015
BE in action at AGL
TRADITIONAL INSIGHTS
What is the
behavioral
challenge?
Which BE
concepts
could be
involved?
Select
appropriate
response

29. > Behavioural Marketing
> Stephen Paton
> 29th October, 2015
In product design

30. > Behavioural Marketing
> Stephen Paton
> 29th October, 2015
In communications

31. > Behavioural Marketing
> Stephen Paton
> 29th October, 2015
Identifying triggers and barriers
Barrier: No
signatory,
reduces
Authority and
behavioural
motivation.
Trigger: Layout initiates
much more Cognitive
Ease than the existing
letter – good spacing,
chunking and bolding.
Barrier: Current
Framing of
questions could
negatively Prime
customer to
thinking
payments will
change.
E.g. “Could my
payments
change?”
Trigger: The use of
colour has been
proven to be a
powerful Priming
tool.
Barrier: MY
AGL IQ lacks
Salience and
is Cognitively
Straining.
Trigger: The
personalisation
increases behavioural
motivation - Egocentric
Bias.
Trigger: Good signposting
for expected behaviour.
I.e. Is there anything else
to do?
Primary: Read
/ no action.
Secondary:
log in / register
on the website.
Barrier: The
behavioural narrative
isn’t clear, which
message do I read
first?
Behavioural
Objectives

32. > Behavioural Marketing
> Stephen Paton
> 29th October, 2015
Using nudges
Social Norms & Reciprocity Bias
Leverage Social Norms to congratulate
customers on their clever choice. E.g.
“8 out of 10 customers report better monthly
bill budgeting when using Bill Smoothing” Well
done on a great choice.”
Framing and Anchoring
Re-frame questions to
statements that Anchor
payments to usage E.g.
From: “Could my payment
amount change?”
To: “Payments will reflect
your usage”
From: “How can I make sure
my payments are on track”
To: “Monitor your usage”
Authority Bias
Include an Authority
figure as a signatory.
Scientific experiments
have shown significant
increases in behavioural
effectiveness with the
right Authority.
Heuristics (Shortcuts)
Use numbers or arrows to give
people mental shortcuts as to the
desired behavioural flow of the
communication.

33. > Behavioural Marketing
> Stephen Paton
> 29th October, 2015
Simple rules for applying BE concepts
The east concept
EASY
SOCIAL
TIMELYATTRACTIVE

34. BEHAVIOURAL
BASED
MARKETING
B Y STEPHEN PATON, MANAGER RESEARCH & INSIGHTS, AGL
A PRESENTATION
FOR
Thank you
@stephengpaton