“Customers make decisions based on emotions not on logic or rational arguments.”

“Customers make decisions based on emotions not on logic or rational arguments.”

Highlights of the talk

  • Applying Neuro-science in marketing
  • Conducting customer research the right way
  • Why experimenting is crucial
  • Emotion driven buying

Tell us about the highs and lows of your career.

I worked as an engineer my way up through the corporation into project and product management, which got me into marketing and finally into corporate strategy and thereafter I became an entrepreneur and co-founded a direct marketing company. 

So I've really seen all aspects of marketing over the years and about probably 15 years or so ago, I saw two areas coming together- neuroscience and marketing and that had always intrigued me since my college days. I've been interested in marketing psychology and seeing how some early pioneers were applying the tools of neuroscience to marketing which I found fascinating. I started writing about it. I wrote my neuromarketing blog and over time I wrote my first book Brainfluence.

I was focused on sort of the pure tools of neuroscience, but what I found was that looking at behavioral science tools was a lot more practical for smaller companies and even for big companies that couldn't spend tens of thousands of dollars to analyze a particular problem because behavioral science can tell us how people will react to predict without actually testing that particular thing.

My most recent book is Friction and that is an evolution really in looking at how people make decisions. I had focused initially a lot on motivation, the tools of behavioral science to motivate people like discounts and advertising.

But I found that reducing effort could be as powerful as motivating in many cases. And that's been a key disruptive strategy by many companies in recent years like Amazon.

According to you, what’s the role of a marketer in a company?

The marketer in an organization should be the voice of the customer and should be participating not just in outbound marketing decisions but in knowing how do we sell this product to the customer. But, also bring those customer insights into the company showing through market research or through understanding of the customer. But really everything that touches the customer is a part of the marketing realm.

The chief marketing officer needs to have that really big picture in mind. The marketer should be all encompassing looking at every aspect of the customer journey- the customer experience, and even it isn't necessarily the specific role of the marketer but employee experience can be also a determining factor in customer experience.

Management guru, Tom Peters said on my podcast that your customers can never be happier than your employees. It's such a simple concept but so many companies view those as totally separate spheres.

The marketer may not be responsible for the employee experience, but he needs to be aware of it and provide input on that as well.

Tell us how you perceive the role of web marketing or direct marketing in today’s world.

Direct channels offer brands the best customer insights. When you're using indirect channels, going through distribution and retail or other types of sales channels, the voice of the customer gets diluted. So I think the direct channel, whether it's the sole channel a company uses, or whether it's one of several channels, offers the greatest opportunity to understand what the customer wants.

I get those key insights into what they want in terms of the product, how they need to be marketed to, how they're using the product, to improve the product, to improve the marketing and make sure that even the marketing itself addresses those needs.

We've certainly seen marketing campaigns in which we initially thought the customers were looking for one characteristic per product. But in fact various customers were looking for different things from the product. So to me, that's the importance of the direct channel. 

How crucial is personalization in marketing for you?

You have to have that engagement, whether it's a direct contact with the company through a salesperson or whether it's through market research techniques, or even neuro-marketing techniques, understanding what the customer wants is really important, understanding how the brand is perceived is really important.

For example, I just stayed in a hotel and the survey that they gave me (must've been 15 different questions)with complex ratings and whatnot. They did not necessarily ask about the things that I wanted to tell them about. So really it was bad from a couple of perspectives.

I see this all the time. I just interacted with a chat support function on a major consumer electronics brand, one of the biggest in the world and the same thing happened.

Companies make these very simple mistakes. If they watched customers interact with what they were trying to do, I think one could see where these mistakes are happening.

You've got to match whatever you're doing with the customers. 

How do you drive traffic to a particular website, what would be a major source and how do you make it work?

I have always relied on organic search engine optimization (SEO) to drive traffic. That in many cases is a great path. If you want very quick results, or if you are trying to drive traffic for a particular promotion, then various kinds of paid traffic may work best using search ads or social media ads.

Another effective way is different types of content marketing. I've always focused on long-term traffic building. First of all, it's important to have great content on your website not only Google will like, but the humans will like, because Google is getting better and better.

You can't build content for search engines anymore but for customers so that are rewarded with good search rankings. 

Can you share some tips or tricks to convert the traffic into potential paid customers? 

The problem with most websites is they have inbound traffic and only a tiny percentage actually convert into customers. It depends on the website. If it's primarily a content website, people are coming for the content.

There are a few things to be made sure such as the customers should be able to navigate and take the right action on the website.

One of the most common things I've seen is that people are not converting enough. We need to employ your knowledge of behavioral science or neuro-marketing to convert more customers.

It's not that they need sophisticated behavioral science interventions. They need to just simply make it obvious what the customer is supposed to do, remove distracting elements, make sure that the path to the next step is clear in every case so the customer sees what they're supposed to do if they want to act on the company's message.

  • In market research, it was observed that customers drop out where the steps were too complicated or there were too many questions to be answered.
  • One of the things that I see is that despite the fact that auto-complete tags have been around for probably 10 years now in Chrome, probably half the websites that I visit do not properly implement auto-complete. So if you have a customer that needs to fill out a form, they may have to fill out some or even all of the fields manually.

How do you find out new marketing tools and techniques?

I make sure that I stay up with thought leaders in marketing space. I probably find most of my things through people I interact with on Twitter or LinkedIn and a marketing community that I've developed over the years.

I'll follow some marketing thought leaders, see who they're interacting with and connect with people. You'll be able to get an idea of what's going on and obviously there are publications too. 

We've talked about direct marketing, there's DM news and a whole variety of periodicals that are now fully digital and in many cases free to consume. Those are all great, great resources, but I think over time you will develop a feel for which resources are best for you.

You'll find a few people that always seem to be on top of what's happening next in your field, because it's very domain specific. 

Have you ever participated in a marketing campaign that failed? What was the thing that went wrong and how did you correct that? What are the elements a marketing campaign needs to be successful? 

Back in my corporate days, we were working with an advertising agency that also did some market research and they asked customers what the most important things were in their decision-making for an industrial metal product. And they found that price was like number six on the list after quality, after availability, after technical support and all these other things, price was at the very bottom of the list.

So they advised the CEO of the company to focus on these other aspects and increase margins a little bit by raising the price. Some of the people who had been with the company suggested that's not going to work because price really is important to the customers, but the ad agency pointed out that they had research that showed that it was way down the list.

They made a small price increase, only a few percent, but of course in many products, just a few percent increase can make a big difference in profit.

These other aspects were emphasized but what happened was the company's customers got affected, they lost about half its market share within a month. The sales stopped. Suddenly even that very small price increase caused customers to completely stop buying.

So I think understanding how to conduct market research and then interpreting those results is really important. The way we fixed that was we went back to competitive pricing with everybody else. And most of that market share was regained in another month because we actually did have a high quality product, and we had great availability. It is one of my favorite examples of how you can do what appears to be rigorous market research and come to a totally incorrect conclusion.

The important thing here is metrics. So what metrics do you think are most important to track?

I think that everything is important and what is most important is going to vary in a particular situation.

  • If traffic is the problem, then monitoring those various metrics that are affecting traffic, whether it's click-throughs on paid ads, whether it's the price of paid ads, price per clicks, whether it's search engine optimization results, how you're ranking, how people are clicking through you know, that may be the most important thing.
  • If you've got plenty of traffic, but if you're not converting then looking at those metrics and in particular drilling down beyond bounce rate. Analyze - why they're leaving, were they satisfied, were they simply looking for information or were they're looking to buy something and did not see what they wanted to buy, or they saw what they wanted to buy.
  • Looking at the sort of broad sweep of metrics, but then drilling down and focusing on where you think that you're going to have the biggest impact.
  • You've got plenty of traffic but it’s not converting, then, why are we not converting? Are people dropping out at a particular step? Are they bouncing immediately? Are they getting through step two, but not step three of the order process? And so on.

I think that all of these metrics are going to vary depending on where your problem is. Then you can address if you find that people are bouncing right away. You need to add some motivation to the customer. This is applied by just about every website that I visit these days: “We're going to give you a discount, just click here and use this code or something, or click here.”

By testing you can determine what you need to do to fix the problem that you see that you have. Let me just re-emphasize the importance of testing, one thing that's great about the digital world is that you can test almost anything.

Any advice for budding marketers?

"Logic and rational arguments are not the way to sell to your customers. Their decisions are driven by emotions. They're driven by cognitive biases. All too often as marketers, we focus on the specific characteristics of our product." 

You really need to focus on those non-conscious aspects of customer decision-making. According to a research by Harvard, 95% of our brain's decision-making processes are non-conscious. If you're only focused on logic and rational arguments, you're only addressing a very small part of your customer's decision-making.