It was standing room only yesterday as Ogilvy’s vice chair Rory Sutherland delivered a fascinating keynote at the Cannes Lions Festival of Creativity. One key takeaway was the importance of context in relation to consumer decision making.
A lot of things that economists think are true, are hugely context dependent.
Generally, paying people for services is good. But if you pay your wife for sex, it doesn’t really act as an incentive.
Giving people gifts is good. Returning a gift isn’t an act of generosity, it’s an insult.
In human behaviour, lots and lots of things have a context dependent meaning which trumps their economic significance.
Simply observe the world and observe it’s anomalies. Find out the strange things that people do.
Advertising and consumer marketing is the Galapagos Islands for understanding consumer behaviour and understanding consumer weirdness.
We noticed something very strange which is that nearly everybody at restaurants ends up drinking wine. And the standard explanation is because it is what people want to drink.
I’m one of the minority people who think wine is a load of bollocks. We have beer and gin and whisky – why would we drink some bottled grape crap?
The strange thing was that I realised that restaurants do everything they can to make you order wine because the mark-up is much higher. You can buy totally crap wine and charge 40 euros for it.
When you go into a restaurant, there are already wine glasses there. Then they bring you a drinks list which isn’t called the drinks list, it’s called the wine list.
The wine list has five pages of wine and only one page of beer and spirits.
And then there’s the even more ingenious nudge which is that they only bring you one wine list. That means that since there’s only one alcoholic drink that you can all share, the person with the wine list ends up turning to the table and going “red or white”?
Once you’ve said “red or white”, it’s game-over for the gin drinkers.
The point is that choice is driven by the context in which we choose. It’s not driven by preference as economists believe, it’s driven by meaning.
Every single pizza company in the world assumes that everybody wants their pizza as soon as possible.
One thing about big data that you have to be really careful of is that all big data comes from the same place: the past.
Everything you know can be rendered complete bollocks by one small change.
One of the problems with big data is that I think it might give people a false sense of certainty. As had happened in the pizza industry because 97 per cent of people asked for their pizza as soon as possible.
I said, “why don’t you try changing the context in which people choose?
“At the moment, you go to the app, what’s the default? ASAP. You go to the website, what’s the default? ASAP. If you ring up, they don’t say, ‘when would you like your pizza?’ They just assume you want it as soon as possible.”
I said “what happens if you change that? And what happens if you call it not ‘duration’, but a ‘time of day’. So the default on the app is 8:45?”
If you can get 45 minutes to an hour to a pizza being ordered and a pizza being delivered, you can put more than one delivery on a bike. You can deliver to three places before a bike returns to base, rather than just one.
This means you reduce carbon emissions and make a stack of money, depending on how right-wing or left-wing the audience is I’m talking to.
What we found was that if we changed the default to a particular time of day, if the person on the phone said, “Is 9:30 ok or would you like it earlier?” nearly everybody was totally happy to order a pizza with as much as an hour’s wait.
Weirder still, we measured customer satisfaction, expecting it to fall a bit. It went up by 50 per cent!
I don’t really know why. One possibility is that waiting for an ASAP pizza is kind of ‘stressy’. You’re spending all your time on tenter hooks.
Whereas if you know your pizza is arriving at 8:45, you can go and have a shower, get ready, relax until about five minutes before it is due to arrive. And then when it arrives two minutes early you’re really impressed.
Context is really important and human evolution has not given us sensory mechanisms which cause us to see the world objectively.
Price all depends on context.
If you had to buy Nespresso coffee in a jar, a large jar would cost about $40 or $50 for the equivalent dosage of caffeine compared to Nescafe or Maxwell House. You probably couldn’t bring yourself to buy that jar: that’s bat shit crazy.
But you don’t know what an individual Nescafe costs so when you put the 49 cent pod in the Nespresso machine, your frame of reference isn’t Nescafe, it’s Starbucks.
You think to yourself, “it’s 49 cents, that would have cost me £2.40 at Starbucks, this machine is basically making me money!”
That’s precisely why Maserati stopped exhibiting their cars at car shows, because they got really expensive. They started exhibiting their cars at yacht and plane shows instead.
At a car show, a 300,000 euro car is expensive. At a plane show, it’s an impulse buy.
What something is depends on how we perceive it because evolution has calibrated our sensory mechanisms to deliver relevant, important meaning, not to deliver an accurate picture of reality.
