This was the argument put forward by Ogilvy Group vice-chairman Rory Sutherland and Geometry Global UK CEO Sarah Todd, as they introduced a new book by behavioural scientist Dr Dilip Soman.
The book, entitled The Last Mile: Creating Social and Economic Value from Behavioural Insights, aims to take a fresh look at nudge theory and suggest ways in which brands might increase their conversion rates with a bit of strategic reframing. It’s all about winning over the course of that ‘last mile’ of the customer journey by prompting, rather than persuading.
Counterintuitive things work because so much human behaviour is driven by subconscious motives
Sutherland posited that this is often achieved with counterintuitive tactics, such as reducing choice, rather than increasing it. While this flies in the face of conventional economic theory, it is a concept that no doubt rings true to numerous experienced and successful marketers. People don’t really know what they want, so taking away the stress of deciding, while simultaneously reducing the risk of a ‘wrong’ decision, is almost always going to be a conquering move. Counterintuitive things work because so much human behaviour is driven by subconscious motives.
There’s no escaping the fact that this isn’t the sexiest end of the marketing business. It’s much more tempting to talk about innovation, purpose and emotion than conversion rates, but the fact remains that – no matter how popular it may be in the theoretical mind of the consumer – a brand with products that aren’t selling is not fulfilling its raison d’etre.
So, how do brands find a winning strategy for the last mile? Here are five key lessons from Soman, Sutherland and Todd.
Make people feel good and guiltless
Making people feel good at the point of purchase is more than half of the battle, according to Sutherland, who extolled the virtues of acquisition utility (the pleasure derived from a purchase) versus transaction utility (the sense that you’ve got a good deal). Essentially, guiltless enjoyment is of more value to consumers than getting something at the ‘right’ price.
He argued for "corporate extravagance", saying that giving employees and clients experiences that they would like to pay for, but would feel remorseful about were they to actually part with their own hard-earned cash, is a great way to win friends and influence people. The Boots Advantage Card was cited as an example of the power of ‘acquisition utility’ in marketing practice. Members of the loyalty scheme will more often than not save up their points to buy a treat, for example, expensive perfume over something more practical like cold and flu drugs, despite the fact that it makes no difference what those points are spent on.
People always pick the medium coffee
According to Soman, 74% of all cups of coffee sold worldwide are medium. This suggests that when presented with three or more size options, coffee-shop customers will almost always opt for the middle choice, regardless of what that means in terms of actual volume. When asked, people assume that this is because the medium is an average size for the average coffee drinker; while really thirsty drinkers will order large, those wanting a short and sharp drink will go small. However, Soman conducted a study that found no matter how much liquid people will actually be consuming, the rate at which they pick the medium cup stays exactly the same. Of course, this doesn’t apply only to coffee. In general, people have no clue about what influences their choices. Soman argued that this is why traditional market research, in other words asking people what they want, is almost useless; observation is the only true way to test their decision-making process.
Bring down walls
One recurring theme from all three speakers was the idea of reducing barriers to purchase. People are prone to laziness and procrastination. Therefore, anything that makes the path to purchase simple to process, but difficult to linger over, should be implemented. As Soman put it, "bring down walls at the last mile". Amazon’s one-click ordering is the perfect example of this. In physical retail, a serious nudge should come at the "moment of truth" – the point of touching the product. In fashion, consumers are 4.5 times more likely to buy clothes once they’ve felt the fabric. This is when a sales assistant should ask whether the customer needs any help, on the basis that this is also when the shopper is looking to increase their product knowledge.
Avoid catastrophe
In the choice-saturated, hectic lives of modern consumers, risk-aversion is high on their list of priorities. Most people simply don’t have time to make a mistake, let alone an expensive one. This, the speakers argued, was why modern marketing should pay twice as much attention to reducing negatives, as focusing on positives. Sutherland made the bold statement that, for this reason, McDonald’s is the "world’s best restaurant". It may not have the finest food or the most inspiring ambience, but customers are also guaranteed that it won’t be terrible or make them sick. It is a place you can go to "avoid catastrophe". Making the least catastrophic choice is more important to people than making the best possible one.
A penny saved is not a penny earned
The old adage "a penny saved is a penny earned", is, according to Soman, a fallacy. When it comes to money and how to spend it, people are driven more by context and perception than real value. For example, if someone earns a salary, tips and bonus, they are most likely to spend the salary on practical outgoings, such as housing and the weekly shop; tips will go on having a good time; and the bonus will be devoted to treats. This idea of perception and context altering purchasing decisions also comes into play when thinking about ‘payment transparency’. People are far more likely to spend when they can’t physically see the money. For this reason, average spend via card payments is higher than for cash. Mobile payments have the potential to boost this further still, as people won’t even have to get their wallets out to make a purchase.
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