Customers are irrational stop fighting it

Customers are irrational:
Stop fighting it!

Colin Shaw
Founder and CEO,
Beyond Philosophy

www.beyondphilosophy.com
@ColinShaw_CX
#BeyPhil

Two countries separated by a common language
– Winston Churchill

Beyond Philosophy © 2001-2012
beyondphilosophy.com #BeyPhil
All rights reserved.

85% of senior business leaders say that just differentiating
on the rational is no longer sustainable…

Source: Marketing forum original
research


Traditional way of looking at Customers…


The results of this view

5

Anticipating my needs?


?


The transactional experience transfers into
social media…


Process or Experience?


Why do we
design rational
experiences
when people are
irrational?


Label on stroller…
“Remove child before folding”

Label on blanket…
“Not to be used as protection
from tornado”.

Instructions on pack of Peanuts:
“Open packet, eat nuts”
Or
“This packet may contain nuts”

Customer Experience definition

A Customer Experience is an interaction between
an organization and a customer as perceived
through a Customers conscious and subconscious
mind. It is a blend of an organization’s rational
performance, the senses stimulated and emotions
evoked and intuitively measured against customer
expectations across all moments of contact.


Rational and Conscious

Emotional and Subconscious

The emotional
Customer Experience


Show me the money!

25

Credit card company


Emotional profile - the level of emotional engagement


Credit card company example…

1 Getting a Card 2 Using my Card 3 Servicing my Account

4 Extending my Relationship 5 Having Financial Difficulty 6 Ending my Relationship


The subconscious
experience


The key to unlock the Customer brain

Experience Psychology

Sometimes we don‟t know about the things that influence
us, we just subconsciously perceive them…

5:1
I am acting in a certain way, but not sure why…..

Subconscious signals effect our behaviour and we
don‟t know why…

Attributes of the brand
Speed
Power
Aggressiveness
Risk-taking

Professors S. Adam Brasel and
James Gips of the Boston College
Carroll School of Management


Peak End
Rule

Prospect Asymmetric
Theory Dominance

Memory Goals

Experience
Psychology

Cognitive
Sub goals
Dissonance

Ambience Moods


Cognitive Dissonance
Leon Festinger, American Social psychologist 1950‟s.

A discomfort caused by holding conflicting cognitions
simultaneously. In a state of dissonance, people may feel
surprise, dread, guilt, anger, or embarrassment. The theory of
cognitive dissonance in social psychology proposes that people
have a motivational drive to reduce dissonance by altering
existing cognitions or adding new ones to create consistency


How we make decisions
- what are the subconscious signals?


We reference our memory to give this experience meaning


Peak end rule – Daniel Kahnemam

The „peak end rule‟ states we judge our past
experiences on how we felt about them, our „peak‟
emotions (positive or negative) and the end
emotion. Irrelevant of how long the experience
lasted.


Goals and Sub goals
Goals – Ortony, Clore & Collins - 2007
Three aspects of the world to which people can react
emotionally. People can react to events of concern to
them, to the actions of those they consider responsible for
such events, and to objects.
What the customer seeks - the main objective of
the experience
“Low-level goals are short range and in the service of higher-level
goals which involve maintaining general well-being.“

Sub goals - Lazarus
A series of smaller objectives with in the experience
“Emotion becomes the result of appraising events that promote or
obstruct consumer well-being. Actual behaviour is a response to
an emotional state in conjunction with the particular initiating event
- Emotions and Adaptations, R. Lazarus, 1992


Why did you sit where
you did for this
session?


Prospect theory - Kahneman and Tversky - 1979
One of the foundations of Behaviour economics
If a decision is taken to avoid a loss it will be a bolder more
aggressive, than one to achieve a gain.
We want to hold onto the things we have, we are protective, we
want to keep our standard of living. We will gamble more to do
that than to INCREASE our standard of living.
Kahneman: “People hate losing more than they like winning by
a factor or 2 or 3 - The emotional tail wags the rational dog”


Practical examples


What customers What drives
say they desire business value


Middle East Telecommunications Company

Product quality versus
emotional engagement


Priority Order of the Attributes (Combined desirability and
current value) – Premium Consumers Desired by Customer Effect on Value
Top Ten

- 0 +

Experience Psychology
• Understanding emotional state/mood – Excited and anxious
• Recognition this is the end of the experience - Peak end rule
• Reinforce good decision – Cognitive Dissonance
• Offered three different TV‟s – Asymmetric Dominance
• Drivers dressed well, respectful tone, expert installer, Cloth wipe down -
Milgram, Body Language
• Selling insurance for TV – Prospect theory
• Memory of previous visits

Mapping the Credit Card Journey
Getting the card Evaluation of offer No
Recommended by a •Web search Still Exit
Application Wait for confirmation interested?
Awareness friend/ direct mail •Conversation with the
agent
Getting the card Yes
Cross sold by an agent

Yes Yes

Yes Fill in enrollment forms Do you need
Are you Are you No
or call Company your DD and Did you Receipt of call /
just about aware of the Receipt of
•PP supp cards miss it? e-mail
to ? waiting time? No Welcome pack
•Benefit 2 Partners transferred? confirmation
•Direct Debit
No
Yes No

Is it all clear Call to authorise
Chase: Receive to you i.e. Yes Call to book /
Receive someone to act
• Benefit 1 Wait Benefit 1 & DD set up tickets
Statement on my behalf
• Benefit 2 Benefit 2 Cards etc?

No

Call XXX to check Call Benefit 1 to ask Receive DD Download 3rd
Call to chase the 2nd call to chase PA to call to
status of Benefit 1 about membership cancellation party
DD the DD book on CM’s
card number letter authorisation
behalf
form online

Wait 10 days for Fill in & Acct 2nd call to
2nd Call to XXX to Send signed Apply for a
Call Benefit 1 to Receipt of a response from Disclosure & authorise
check status of PP form via post or supplementary
check status of card Supp card XXX via the Authorisation someone to act
card fax card online
post form on my behalf

55

Cognitive
Experience Psychology Points Dissonance

agent
Getting the card Yes Cognitive
Cross sold by an agent Dissonance
Yes Yes

Are you Are you No
Peak End •Direct Debit Prospect
No
Rule Theory
Yes No


No

behalf
form online



Cognitive
Positive emotions points Dissonance

agent
Yes Yes

Are you Are you No
No
Rule Theory
Yes No


No

behalf
form online



Cognitive
Negative Emotion Points Dissonance

agent
Yes Yes

Are you Are you No
No
Rule Theory
Yes No


No

behalf
form online



Mapping the „To Be‟ Journey

Key
= changes identified by BP that will
improve the Customer Journey

Awareness friend •Conversation with the
agent timed out online
Capture preference data i.e.
Getting the card where do you normally to;
Watch short video explaining “next Yes
Cross sold by an XXX where do you stay; do you
steps” (ie supp cards applications)
agent have any hobbies and
and about the main benefits
Yes Yes interests?. Ask about 3rd
Party Authorisation need.
Fill in enrollment forms Do you need Receipt of
Call to Activate Benefit No
onlinecallcall XXX
or or XXX your DD and Welcome pack Did you Receipt of call /
2 Cards; Receipt of Receipt of
•PP supp cards with Benefit 1 miss it? e-mail
No Welcome pack welcome call
•Benefit 2 Partners transferred? and Benefit 2 confirmation
Set up Direct Debit
•Direct Debit cards included

Log in to see
special offers

Is it all clear Call XXX to
Informed with the statement that feeling prestige
to you i.e. Yes Call MTS/ to Receive fast
authorise
upon logging in to your MYCA Receive and special
DD set up book / tickets someone to act
track vouchers
account online you can see offers Statement thanks to XXX
etc? on my behalf
made available specially for you.
No

Source of the problem i.e. reading the handwriting is
Receive DD Download 3rd
Call ES found “first contact resolution”chase
to chase the 2nd call to PA to call to
Get a room
eliminated. Chances ofcancellation reduced by at least
mistakes are party
DD
should be a priority area for XXX the DD book on CM’s
letter
50%. authorisation upgrade upon
behalf
form online arrival

Naive to Natural assessment
Wait 10days for a
Wait 5 days for a Apply for a Program system reminders in the accountnd call to XXX to
Fill in XXX & Acct 2 of the rep who
response from XXX
showed booking to i.e. havinghotel/rent-a-car
Source of the need for the Customer
a two someone
made the hotel/rent-a-carthe&problemchaseauthorise forms of
supplementary card Disclosure
authorisation for different departments is eliminated
agency andExperience Ownership to prevent
via the post
via e-mail online Authorisation formupgrade 3 days prior to their
secure the CM’s to act on my behalf
arrival
siloed delivery of the service
59

Moment Mapping Flow chart
Before and after – significant efficiencies gained.

Before After


Maersk Container Shipping Line Case Study

Increase in Net promoter Score: “As a result of its customer
experience efforts, NPS has improved from -10 to +30”
Increases shipping volume. “Maersk correlated a 4 point
increase in Net Promoter Scores with a 1% increase in
additional volume shipped by customers”.
Training improves Net Promoter Scores in local regions.
“Maersk gave regional divisions the option of putting regional
customer experience councils in place. The 55 regions that have
set up local councils also received a three-day training course in
customer experience improvement methods. The firm then did a
study comparing regions with and without a council. The result:
participating local offices score 10 points higher on their NPS
than those offices that opted out”.


Book signing at 3:00pm

beyondphilosophy.com

@ColinShaw_CX


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Editor's Notes