Behavioral Engineering and the Design of Influential Experiences: Example - Influencing Sustainable Behavior

Let me start this important topic with a few points that should be intuitively obvious:

• The benefits associated with delivering an outstanding customer experience accrue from influencing customer behavior
• Customers either deliberately or incidentally change what they do when they experience something that makes them feel or think differently
• In most competitive markets, there are straightforward financial benefits associated with changing customer behavior. These positive changes in customer behavior lead to increased retention, wallet share, referral rates, etc…
• The levers for changing customer behavior generally involve finding ways to understand and influence customers’ perceptions of the value they receive

Moving beyond these obvious points, things get much more interesting when the objective is design experiences that influence behavior towards more altruistic ends.  For example, many regulated utilities are launching energy conservation and demand response programs.  The objective of these programs is to shift customer behavior related to energy consumption and conservation.  While there might be marginal direct benefits (e.g., reduced rates, etc…) experienced by the customer as a result of changing their behavior, there are also environmental and social benefits the customer may not easily perceive. 

As we’ve been engaged with clients working on this problem, it’s become clear that there’s a lot that any company can learn from this more challenging experience design problem.  For example, the airlines have done a good job of influencing customer behavior regarding online check-in and the use of kiosks rather than agents, despite initial customer tentativeness and resistance.

What Comes First:  Attitudes or Behavior?

While it seems natural to assume that customers’ beliefs and attitudes are precursors to their behavior, practical experience supported by numerous academic studies have demonstrated that the linkage is highly complex.  For example, many people have attitudes and beliefs consistent with environmental conservation yet do not exhibit any significant conservative behavior.  A person’s expressed beliefs and attitudes about environmental issues are not a strong indicator of how that person will act relative to those issues.  In fact, you can’t even assume that a person who identifies themselves as an environmentalist will necessarily have either a solid understanding of the issues or be any more willing to modify their behavior to make it more environmentally friendly.  

As discussed in Doug McKenzie-Mohr’s and William Smith’s book, “Fostering Sustainable Behavior,” a few illustrative examples include:

• “Participants in an intensive 3 hour energy conservation workshop indicated greater awareness of energy issues, more appreciation for what could be done in their homes to reduce energy use, and a willingness to implement changes. However, based on follow up visits, actual behavior did not change. The only difference in behavior between participants and non-participants is that eight of the forty participants had installed the low-flow shower head they were given for free at the workshop.” Geller, E.S. “Evaluating Energy Conservation Programs: Is Verbal Report Enough?” Journal of Consumer Research, 8, 331-335
• “Individuals who hold attitudes that are strongly supportive of energy conservation were found to be no more likely to conserve energy.” Archer, D., Pettigrew, T., Constanzo, M., Iritani, B., Walker, I. & White, L. “Energy Conservation and Public Policy: The Mediation of Individual Behavior” Energy Efficiency: Perspectives on Individual Behavior, 69-92.
• “500 people were interviewed and asked about personal responsibility for picking up litter, 94% indicated that individuals have a responsibility for picking up litter. However, when leaving the interview, only 2% actually picked up the litter that had been “planted” by the researcher.” Bickman, L “Environmental Attitudes and Actions” Journal of Social Pscyhology, 87, 323-324.
• “An investigation of the differences between recyclers and non-recyclers found that they did not differ in their attitudes towards recycling.” DeYoung, R. “Exploring the Difference Between Recyclers and Non-Recyclers: The Role of Information” Journal of Environmental Systems, 18, 341-351.

There are several factors that contribute to a disconnect between a person’s attitudes and their behavior.  Each of the following reasons influence whether or not a person engages in any new behavior, despite their attitudes towards that behavior:

1. Lack of Knowledge.  Inconsistency between a person’s expressed attitudes and their behavior might be partially attributable to a lack of understanding of what to do or a lack of understand the implications of their actions.  While numerous studies show that information or education alone has little or no effect on behavior, it is still a critical enabler.

2. Perceived Barriers.  External barriers and constraints set limits on what can be accomplished by just changing a person’s attitudes.  The higher the barriers, including expense, inconvenience, and technical difficulties, the less the effect attitudes will have on a person’s behavior.

3. Perceived Benefits.  A person may have to incur immediate and well-defined inconvenience, uncertainty, and monetary costs in exchange for longer term benefits experienced by the broader population rather than the individual themselves.  This is related to Hardin’s metaphor of the Tragedy of the Commons.

In general, behavior competes with behavior.  People consciously or automatically make choices between alternative behaviors.  When they do, people naturally gravitate to behaviors that have high perceived benefits and few perceived barriers or costs.  In general, people also naturally pay the most attention to short-term benefits and costs.  While perceived benefits and barriers / costs vary dramatically by individual, there are usually common elements shared by customers within a given customer “personae.”

As a result, a behavioral engineering approach is often most effective.  It is generally more cost effective to try to change behavior directly than to do so via a change in attitudes across a large population.  We have found that attitudes are just as likely to be a consequence of behavior than the cause of behavior.  Or, as we like to say, you often “act your way into a new way of thinking, rather than thinking your way into a new way of acting.” 

As McKenzie-Mohr and Smith summarize, much of the practice involves influencing behavior in specific ways by:

• Increasing the customers’ perceived benefits of the desired behavior
• Decreasing the customers’ perceived barriers to the desired behavior
• Decreasing the customers’ perceived benefits of the current or competing behavior(s)
• Increasing the customers’ perceived barriers of the current or competing behaviors(s)

The high level steps include:

1. Identifying Specific Perceived Barriers and Benefits.  This requires field-based observation and elicitation research (See:  Observation and Elicitation: We Like to Watch!) focused on surfacing:  What makes the desired behavior difficult/easy?  What are the perceived positives and negatives?  Who wants you to do it and who doesn’t care?  This qualitative research is used to clearly identify the ways that  customers experience the barriers and benefits.
2. Clustering Perceived Barriers and Benefits by Personae.  The initial observation and elicitation research is generally followed by a more quantitative study that clusters and prioritizes barriers and benefits for different customer personae.  (See:  Personae-Driven Customer Experience Design)
3. Designing Behavior Change Programs by Personae.  In general, program design starts by targeting the most “influencable” personae first.  Characteristics of effective program design typically include the following elements (See:  Influential Experiences and the Psychology of Escalating Commitment):
   • “Easy to get started” initiating actions and reinforcement
   • Gaining visible commitment (e.g. written commitments)
   • Creating meaningful incentives and penalties
   • Emphasizing personal contact
   • Encouraging development social norms and leveraging social pressure
   • Designing prompts / reminders for new behaviors.  Helping people remember - making it difficult for them to forget.
   • Measuring and reporting progress against individual and community goals.
4. Piloting and Refining Behavior Change Programs.  It is very important that any programs be tested and refined in the field.  This can be done with a sample or segment of customers.  The purpose of this pilot is not just to evaluate the design but to improve it with observation and feedback gained from the participating customers.
5. Rollout and Evaluate Results.

Here are a few situation-specific lessons learned:

• Efforts to encourage people to conserve energy must provide information that can help them understand what the effects of specific changes in behavior will be. For example, the information on a typical electric bill is not detailed enough. These bills typically summarize overall usages. This doesn’t give consumers any clue as to the relative effect of various resource-conserving actions. As a result, misconceptions about the impact of various actions persist despite educational efforts to change them (e.g., the impact of turning off lights vs. making less frequent use of the clothes dryer).
• Providing incentives can be effective. However, if incentives are significant, many people come to believe they are acting only for the incentives. They may begin to require larger incentives to do things that they might previously have done only with small incentives. In these situations, the behaviors often stop as soon as the incentives are removed. In general, people tend to sustain changes in behavior when they have chosen those behaviors without the influence of significant incentives or penalties.
• Attitudes about specific threats are more predictive of behavior related to those threats than general concerns about the environment are predictive of general environmentally friendly behavior. For example, attitudes towards recycling are more predictive of recycling behavior than are general concern about the environment.
• Stronger commitments yield more persistent behavior. A commitment accompanied by an agreement to promote target behavior among neighbors has more behavioral influence than just the expression of commitment by itself. Encouraging customers to commit to a more specific goal is more effective than more general goals to conserve energy.
• Aligning consequences to behavior is critical. For example, having customers pay for trash pickup based on the amount of trash they produce is more effective than impassioned pleas to reduce trash.
• While publishing typical customer behaviors can generate peer pressure, it is a double edged sword. It can encourage people who are already doing both better and worse than average regress to the norm. Publishing exemplary behavior is an alternative to publishing average behavior.

This is a topic we’ll continue to explore as we progress in our work with utilities on the design of more influential programs and experiences.

Whose Experience is it Anyway?

I’d like to emphasize a point I’ve made in earlier posts.  Your company does not have a customer experience… only your customers do.  Although it might seem like this is splitting hairs, we’ve come to realize that the distinction is critical.  The moment you start talking about “our company’s customer experience” attention gets focused on what we do rather than how customers experience things. 

Our working definition of experience is:  How people think and feel as they follow an end-to-end process intended to accomplish goals and satisfy needs that are important to them.

There are a couple of very important implications of this definition:

• Understanding the customer experience requires an understanding of how customers conceive of what they’re trying to accomplish and what’s important to them.  There is almost always a significant disconnect between the customers’ perspective on their goals and a provider’s beliefs about the customers’ goals.  For example:
  • An automobile insurer might assume that customers buy insurance to “transfer risk in exchange for a premium.” However, the customer may really feel that the goal is to have the insurance company “erase an unexpected mishap.” As a result, the insurance company might do a brilliant job of transferring risk… but fall far short of meeting the customers’ emotional needs regarding erasing a mishap.
  • A jewelry retailer might assume that their customers are interested in an effective jewelry buying experience, while the customer might see their goals as “giving a gift that represents a positive and mutually satisfying investment in a relationship that I care about.” As a result, the retailer might do a great job of selling jewelry but miss the opportunity to really innovate a great experience around what the customer is trying to accomplish.
  • A moving company might believe the customers’ goals are to move their belongings from one place to another. The customer sees their goal as reducing the stress and uncertainty of relocating his family.

• The customers experience does not just happen at a providers touchpoints.  This point was covered in detail in a previous post.  However, the short story is that the customer may have to navigate and integrate a wide range of activities in order to satisfy his or her needs.  Only some of these activities involve any contact with a given provider.  A provider that just focuses on their touchpoints with the customer is generally only able to make incremental improvements in the quality of the customers’ experience.  The more significant opportunity to innovate a significantly better experience comes from a deeper understanding of the customers’ experience at the non-touchpoints.

• The actually customer experience is “how the customer thinks and feels” as they navigate their process in an attempt to address their goals.  An overwhelmingly important part of this is how the customer feels.  As Buck Rogers, VP Marketing for IBM between 1974 and 1984 observed, “People buy emotionally and justify with logic.”  If you want to understand the customers’ experience, think about how your business makes them feel.  How they feel has an overwhelming impact on what the customer ends up thinking and, ultimately, how they end up behaving

Outstanding experiences have much more to do with the transference of emotion than the exchange of rational value!!!

• Finally, you can’t design the customers’ experience.  You can only design what you do in a way that positive and highly effective customer experiences emerge.  One of the best ways to think about designing for emergence is captured in the work of the visionary architect, Chris Alexander, who in his book “A Pattern Language” describes how an effective architect organizes physical space in a way that generates specific compelling experiences. For example, how an architect can create a town square specifically designed for the emergence of a “Dancing in the Street” experience or a compelling “Sidewalk Café” experience.  Similarly, the open design of platforms like Second Life, Facebook, and MySpace were effective because they created the conditions that allow for the emergence of positive and engaging customer experiences.

This can be summed up in one major point:

Creating the conditions for outstanding experiences results from… designing from the mental model of the experiencer… not the mental model of the provider!

Influential Experiences and the Psychology of Escalating Commitment

Would you decide to just go out and spend $15,000 on tools to do a little work around the house?  Are the improvements to your backyard worth the $12,000 you ended up spending?  Would you decide to invest $3,000 on repairs to your old, unreliable car, even though it was only worth about $4,000 in the first place?  Or, is your prize collection of beanie babies, figurines, watches, or ­­­­­________­­­­___ (fill in the blank) really worth the thousands you’ve spent on it over the years?

If these were single, rationally considered decisions, you probably wouldn’t have made them.  However, as psychologist Robert Cialdini observed, a person’s commitment to a particular course of action sometimes “grow legs.”   Once we become clearly committed, we have a strong tendency to gradually increase our level of commitment to that course of action.  In doing so, we often lose sight of the original reasons and justification for choosing that course of action in the first place.

For example, it’s not unusual for the owner of an old car keep incrementally spending money on repairs as things break down… first the brakes… then the muffler… then the transmission… etc… hoping that each of these repairs will be the last.  As the bills mount, the owner often becomes even more determined, “I’ve already spent more than $2,000 repairing this thing.  I’m not going to back down and, in effect, throw that money away.”

This very common pattern is called irrational escalation and describes situations in which people make seemingly irrational decisions in order to justify the decisions they’ve already made or the actions they’ve already taken.  Irrational escalation shows up in a wide variety of situations including:   bidding wars that occur during auctions or corporate takeovers; military strategy (consider the Vietnam and Gulf wars); corporate or market investments that wind up “throwing good money after bad;” “collector” behavior; or the escalating cycle of retribution and punishment that occurs when a husband and wife become locked into a contentious divorce.  In addition, clever salespeople or fundraisers often employ “foot in the door” techniques that take advantage of people’s tendency towards irrational escalation as small initial commitments eventually build towards large commitments.

Although much of the research on commitment has focused on this negative behavioral cycle, the escalation of commitment is not always negative!   Whenever we commit our time, energy, hearts, and minds to a worthy cause, it can have a very positive influence on our identity and our future behavior.  Over time, under the right conditions, we eventually have a hard time letting go; our positive behavior becomes less about “what we do” and more about “who we are.”  The positive escalation of commitment can describe how people adopt healthy behaviors like getting regular exercise or engaging in wellness programs… or become involved charity work and community service.

Recently, I’ve been studying the process people go through as they increasingly commit to energy conservation behaviors or “green” causes.  It seems that people typically adopt a conservative or green attitude in baby steps.  As they take each step, it reinforces their focus and awareness, as well as, their sense of identification with an aligned set of underlying values and beliefs.

Many utility companies are starting to more actively promote energy conservation or demand management (shifting use to off peak times) programs.  The effectiveness of these programs is highly dependent on the careful design of offerings, communications, and feedback mechanisms that get a “foot in the door” and build customer commitment incrementally from there.  Effective programs make it easy for customers to get started and then carefully reinforce a gradually increasing level of association with being a conservative, ecologically and economically minded consumer.  These programs can amplify customers’ commitment by providing positive feedback and by making the customer’s commitment publicly and socially visible. 

Effective design of influential energy conservation and demand response programs is highly customer personae dependent.   Obviously, not every customer has the same beliefs, attitudes, priorities, and behaviors related to energy use, conservation, the environment, and social responsibility.  In many ways, the adoption of energy conservation programs is similar to the adoption of wellness programs.  Some people readily adopt these programs because they fit with the way they already think.  For example, some customers have an “independently healthy” or “naturalist” personae related to their health.  On the other hand, some customers will never engage in a wellness program; they might have more of an “avoider” personae regarding their health.  However, there are several personae that are more influenceable.  The most effective programs must be designed to resonate with the mental model of these customer personae.

Cognitive Dissonance… Driving the Escalation of Commitment

One of the factors that drives the escalation of commitment is cognitive dissonance.  Cognitive dissonance was first identified in the 1950s by psychologist, Leon Festinger (see:  The Theory of Cognitive Dissonance and When Prophecy Fails).  Since that time, it has grown to become one of the central theories of social psychology.  A great, more recent book on the topic is Carol Tavris‘ and Elliot Aronson’s Mistakes Were Made (But Not by Me):  Why We Justify Foolish Beliefs, Bad Decisions, and Hurtful Acts.

Cognitive dissonance is a state of tension that occurs whenever a person simultaneously holds conflicting ideas or beliefs.  Because holding two conflicting ideas or beliefs creates an unpleasant tension, people are naturally motivated to reduce it.  Dissonance reducing behavior is ego-defensive; by reducing dissonance, a person gets to maintain their positive self-image; an image that depicts them as a good or smart person.   Cognitive dissonance often produces behavior that is apparently irrational; although, to the person, it may seem very sensible.

Understanding and leveraging cognitive dissonance is a powerful tool for designing customer or employee experiences that positively influence a person’s thinking and behavior… and drive the escalation of commitment:

• Justification and Filtering. Following a decision, especially either a difficult one or one that involves a significant amount of time, effort, or money, customers almost always experience dissonance. Did they do the right thing? The chosen alternative is seldom entirely positive, and the rejected alternatives including the “do nothing alternative” are seldom totally negative. After a significant decision, customers typically seek reinforcement that their decisions were good ones by seeking information that is reassuring. If at all possible, they try to convince themselves and others that it was a logical and reasonable thing to do. They avoid thinking about either the negative aspects of the choice they’ve made or the positive aspects of the un-chosen alternatives. In designing customer or employee experiences, it is important to arm customers with the story they’ll tell themselves and others. In many cases, it makes sense to continue marketing after the sale in a way that provides people with the ammunition they need to justify the decision they’ve made.
• Responsibility. Dissonance effects are greatest when (1) people feel personally responsible for their actions and (2) their actions have serious consequences. If there is a significant amount of external reinforcement or incentives, we may not “own” the decision. For example, offering rewards to individuals for performing even the most pleasant activities decreases the intrinsic value of those activities and reduces the individual’s responsibility for having done it. This is why “incentive programs” not only don’t build permanent behavior, but may undermine it in some cases.
• Consistency and Escalation. In the absence of strong conflicting signals, dissonance reduction will reinforce actions consistent with earlier commitments and behavior. In addition, once a small commitment is made, it sets the stage for ever-increasing commitments. The behavior needs to be justified, so attitudes are changed; this change in attitudes influences future decisions and behavior. When customers commit themselves in a small way, the likelihood they will commitment themselves further in that direction is increased. This process of using small commitments to encourage people to accede to larger commitments has been dubbed the “foot in the door” technique. It is effective because having done the smaller favor sets up pressures toward agreeing to do the larger favor; in effect, it provides justification in advance for complying with the large requests.
• Irrevocability and Inevitability. Two of the most important characteristics that effect cognitive dissonance are the relative irrevocability and inevitability of the decision. Irrevocable decisions always increase not only the dissonance but the motivation to reduce it. Once we’ve committed ourselves to an irrevocable course of action, it’s in our best interests to justify the decision we made and avoid conflicting information. In addition, research shows that a person’s dissonance is reduced with choices they see as inevitable.

In summary, designing influential experiences requires an understanding of cognitive dissonance and, in particular, how cognitive dissonance drives the escalation of commitment.   More on this in future posts.

BSG Concours Launches Innovative Customer Experience Research Program

Customer Experience Concours is a unique research and development program dedicated to enabling major corporations to improve business performance by delivering a differentiated customer experience. The program will allow a select group of corporations to collaborate with the award winning BSG Concours research team (a division of BSG Alliance) along with:

• Lou Carbone, a pioneer in leveraging customer experience as a differentiated business strategy and author of the book Clued In;
• Don Tapscott, best selling author of Wikinomics, The Naked Corporation, Growing Up Digital, and Paradigm Shift and a leading authority on strategic business trends

The Customer Experience Concours program will officially launch in June 2008 and organizations that join prior to the launch will have the opportunity to participate in a major research project titled “Leveraging Integrated Customer Analytics” that kicks off in March 2008.

Each year, the program will include the following features:

• Two major Research Projects focused on developing actionable insight, approaches, and tools that improve your ability to acquire customers and develop extended and mutually profitable relationships with them. Members will have the opportunity to shape the direction of the research and enjoy privileged access to findings, recommendations, and new management techniques as they develop. Each project will be documented in a concise research report, executive summary, and presentation deck.

Note:  The first major Customer Experience Concours research project will be focused on “Moving to Next Generation Experience”

• Two 2-day Research Summits held in easily accessible locations, often academic conference centers. Each summit incorporates:
  • 1 day of discussion and application of the research project being completed
  • 1/2 day of discussion of member-generated topics related to customer experience
  • 1/2 day of discussion to shape the next topic for research
• Invitation for senior executives to attend an additional Senior Executive Summit hosted by BSG Concours.
• Access to an exclusive Collaboration Hub, a mechanism for information exchange among the community of participants and a repository of leading-edge intellectual capital.
• Six Teleconferences/Webcasts for discussion of special topics related to customer experience.
• 2 days of Individualized Support which could include guidance on customer experience-related initiatives, on-site executive briefings, or targeted research on organization-specific issues.
• Given sufficient interest, Special Interest Groups to discuss industry-specific or technique-specific customer experience issues and share experience and best practices.
• The program’s ongoing work will include development of a Field Guide to Customer Experience covering the most essential tools and approaches.

For more information on this innovative program, see the Customer Experience Concours Brochure.

Customer Experience and the “Element of Surprise”

How do you get your customers to talk about the experiences they’ve had with you?   Over the past week, I’ve had a few conversations with executives about improving their organization’s Net Promoter Score (NPS).  While there are certainly differences of opinion on the importance of NPS as a central metric for an organization’s performance with customers (see Randy Brandt’s Core Customer Metric blog), it goes without saying that…. customers telling other prospective customers great things about your business is…  well… a great thing.  Each of the people I spoke with have invested a considerable amount of money making incremental improvements in their products and services and are frustrated by their inability to move their NPS.

What motivates people to proactively tell stories about their customer experiences?  What is it about an experience that makes it a story worth telling?  What are the social and psychological benefits of telling these stories?  Telling stories is one of the ways that we connect with and relate to each other.   It’s a way that we blow off steam when we’ve had something frustrating happen to us.  It’s also a way that we re-live the positive experiences we’ve had… or even a compelling way to share a story about “the next cool thing” we’ve found.

One of the most important drivers of both positive and negative word of mouth is the element of surprise.  This can be a single big surprise or a steady stream of small surprises that build over time.  If you have an experience that surprises you in some way, it creates an orienting response… you pay attention to it.  It might be something small, like a salesperson that is friendlier than expected.   Or something more significant, like Delta Airlines knowing it was my birthday and giving me a bottle of Champagne as an unexpected surprise.  This happened 8 years ago and I still talk about it.   The same thing happens with negative surprises.  We’ve all had them… and we’ve all told lots of people about them.

Some industries, like the airline industry, seem to be highly skewed towards lots of negative surprises.  Delays, cancellations, change fees, lost luggage, inconsistent service from gate agents and flight attendants, etc…   On the positive side, every once and a while a flight attendant or gate agent might be surprisingly pleasant or helpful, or you might get an unexpected upgrade, or something like that.  However, it’s difficult to have these small, infrequent positives ever outweigh the big, relatively consistent, negatives.   Other industries, like consumer banking, seem to be devoid of positive surprises with a smattering of negative surprises like late fees, transaction charges, etc…

Psychologist John Gottman has done some very interesting research on “Why Marriages Succeed or Fail” that seems like it might apply to other long-term relationships.   Based on his analysis of 700 relationships, Gottman found that a central predictor in the success and failure of these relationships was the balance of positive and negative interactions.   These were the interactions where there was something surprising, however small.  These could be small expressions of love, humor, and small recognitions, as well as, negative surprises like sarcasm, annoyance, sniping, or complaints.  He found that there is magic ratio of 5 positive surprises to every 1 negative surprise.  If the positive-to-negative ratio dipped below 5 to 1, the relationship began to spiral downwards.  If the ratio of positive-to-negative surprise ratio rose above 5 to 1, the relationship became stronger.

I would suggest that a similar logic applies to customer relationships.  If you want to build higher levels of customer loyalty and get to the point that customers start generating positive word of mouth, I think creating a drumbeat of small positive surprises is important.  There are always going to be times when the customer has a negative surprise but having a balance of positive surprises should offset this.  I would also suggest that these positive surprises can’t be programmatic and predictable, otherwise they’re not surprises.  They also can’t be delivered in a way that becomes perceived by the customer as an entitlement.  This is how structured “loyalty programs” lose their effect over time.

Most of the design work that we do with our clients is focused on creating a concise set of “signature experience” elements that:  get the customers attention, reinforce the brand story, and are perceived by customers as a difference in kind (surprisingly different) rather than a difference in degree (better sameness).  

So, what’s the balance of positive to negative surprises you deliver to your customers?

Neuroeconomics Overview: Understanding “The Mind of the Market”

The ways we think about money and make financial decisions are typically far from rational.   We get upset when we find out that another person is getting a better deal, despite the fact that we were perfectly happy a minute ago.  We spend more for well-known brands that have no difference in real quality.  We invest in punishing others for perceived “violations in justice” despite the fact that there are only negative consequences for ourselves.  We spend a lot of money on things we want that, in the end, don’t make any difference in our level of happiness.

Despite the considerable evidence that we think and act irrationally with money, most of this irrationality makes much more sense when you look at our behavior from the perspective of our long history as small bands of hunter-gatherers operating in an environment of limited resources and high risk.   We just haven’t fully adapted to the relatively recent development of our consumer-trader society.

If you’re looking for a good introduction to behavioral and evolutionary economics leading up to the emerging field of neuroeconomics, check out Michael Shermer’s The Mind of the Market.  The Mind of the Market is an easy to read summary of some of the work of many of the brilliant contributors to this field including:  Daniel Kahneman and Amos Tversky’s  groundbreaking work in behavioral economics,  Leon Festinger’s study of cognitive dissonance,  John Nash on the Nash Equilibrium,  Read Montague’s work on decision making,  Daniel Gilbert’s  study of happiness and the problem of affective forecasting, and more…

For a short teaser, read Shermer’s recent essay:  Why People Believe Weird Things About Money

Most business leaders make the assumption that their customers are rational decision makers.  As a result, they make investments in developing products and services that have rational benefits.  Much of our work with clients involves helping them understand how to influence more powerful customers experiences by designing what they do from the seemingly irrational “mental model of the customer.”   If you’re interested in more perspective on this, check out the following Customer Innovations blog posts:

• Designing for Customers’ Reactive, Deliberative, and Reflective Experiences
• Optimizing the Most Critical Elements of the Customer Experience:  Customer Choices
• Novelty Seeking and the Design of Differentiated Customer Experiences
• Cognitive Ergonomics: How Customers React to Violations of Justice
• Cognitive Ergonomics: Designing “Socially Influential” Experiences
• Cognitive Ergonomics: Framing and Priming the Customer Experience
• Miswanting and the Pursuit of Unhappiness

Cognitive Ergonomics: Framing and Priming the Customer Experience

I’ve gotten accustomed to taking my car to the Jiffy Lube near my house.  Over the 30 years that I’ve been driving, I’ve had the full range of good and bad experiences with auto service shops.  However, this Jiffy Lube has a distinctive and effective way of interacting with me regarding the cost of my service.  At the end of each visit, they bring me over to a terminal that we can look at together - side by side; they walk me through each of the service elements that were performed along with the cost of each service; then they apply a series of discounts to the individual services, as well as, loyalty discounts that consistently bring my total cost down to about 60-70% of sum of the individually itemized costs.   I have always walked out of that particular Jiffy Lube feeling like I’ve saved money and that they appreciate my business.    I’ve also always walked out feeling like many of the companies I advise could learn a lot from that relatively simply but very well designed and deliberate interaction.

This interaction is an example of category of experiential design levers called framing effects.  Rather than just presenting the price, Jiffy Lube framed it in a way that highly influenced my experience of saving money.  There are a wide set of framing effects that influence how people interpret and evaluate their experiences.  For example, consider the following two scenarios:

1. You live around the corner from an electronics store that carries the new computer speakers you’ve been looking at for $100.  You also learn that a discounter, located ten miles from your house, has a special on the same speakers for half price: $50. Do you drive the 10 miles?
2. You live near an electronics store that carries the new computer you’ve wanted for $2000. Ten miles from your house, another store is carrying the same computer for $1950… a savings of $50.  Do you drive the 10 miles?

As you might guess, research has shown that many customers who would make the drive for scenario 1 might not for scenario 2.  On a rational level, this makes little sense since the value of the drive is identical:  $50.  However, a $50 savings on a $100 item is framed differently than a $50 savings on the much more expensive item.

If you consider how we process the experiences we have, it’s easy to see that it’s far from rational or logical.  Our experiences are highly influenced by subconscious shortcuts that have an enormous influence on how we think, feel, and act.  Many of these shortcuts lead to apparent contradictions with what you’d expect from a more rational decision maker.  This post will cover some of the tools for positively influencing both the quality and profitability of the customers’ experience.

Pioneering behavioral economists Daniel Kahneman and Amos Tversky conducted extensive research into framing effects.  One of the other frames they studied involves loss aversion.  For example, if you were offered a gamble with a 10% chance of winning $95 and a 90% chance of losing $5… would you take it?  Most people would not.  Now suppose you were offered the chance to buy a $5 lottery ticket for a 10% chance of winning $100.  Many of the people that rejected the first alternative would accept the second despite the fact that the expected value of each alternative is exactly the same:  $5.  However, the alternative that involves voluntarily paying $5 rather than taking a chance of “losing” $5 is framed differently.

Loss-aversion framing also contributes to the fact that many customers do not make purely rational decisions regarding insurance.  For example, the expected value of many insurance policies is generally in the neighborhood of 50-60%.  You might compare this to the return on putting your money into a slot machine… an expected value of 90%.  In general, the most economically rational decision is to self-insure to the extent possible and only buy insurance as necessary to cover catastrophic events.

In addition to framing effects, another influence lever in the design of the customer experience is priming.  Priming involves activating an association in memory just before a person completes an action or task.  In an interesting experiment, also conducted by Kahneman and Tversky, subjects were asked to provide the last four digits of their social security number.  They were then asked to estimate the number of doctors in Manhattan.  Very surprisingly, the estimates that subjects gave were positively correlated with the last four digits of their social security number; people with high social security numbers gave higher estimates and people with lower social security numbers gave lower estimates. 

In a similar experiment, subjects were asked the last two digits of their social security number and then asked what they would be willing to pay for a consumer product (e.g., bottle of wine, wireless computer keyboard, video game).  Similarly, the price customers were willing to pay was positively correlated with the (random) digits of the customers’ social security number.  For example, subjects with social security numbers in the bottom 20% priced a bottle of Cotes du Rhone wine at $8.64 versus subjects with social security numbers in the top 20% who priced the same bottle at $27.91.  (See: “Tom Sawyer and the Construction of Value” by Dan Ariely, George Lowenstein, and Drazen Prelec).

Good sales people understand how priming creates an “anchor point” that affects a customer’s subsequent decisions.  If I’m selling men’s suits, the first suit I’ll show a customer will be well above the price I’d expect the customer to pay.  As I show the customer that suit, I’ll make sure the customer knows that I’ll find something that meets their needs, so as not to scare them away.  However, in most cases, the higher the price of the first item I show, the higher the customer will end up paying for the item they eventually choose.

In working with a leading retailer, we looked at the impact of signage on drawing customers into the store and influencing their eventual purchase.  We found that signs signaling a lower price at the store entrance would draw customers into the store while progressively higher priced signs as the customer moved further into the store increased the chances that customers would be willing to pay for higher priced items.

Several years ago, I had the chance to work with Christine Boskoff, who was one of the most successful high-altitude mountain climbers in the world and the owner of the leading outdoor adventure travel company named Mountain Madness.  Her question was how to improve word of mouth about Mountain Madness in order to attract new clients.  The recommendation I developed with her was that, on the last day of each trip, there should be a final celebration involving a ceremonial round of “storytelling.”  In this storytelling ceremony, each participant would have a chance to share the personal story of their adventure, what it meant to them, and what their most positive takeaways were.  The act of telling their own story, in addition to listening to the stories of others, has a powerful effect to prime and prepare clients with the “personal legends” they’ll share with others when they get home.  In the course of telling and retelling these legendary stories the most compelling aspects are typically “sharpened” while any of the less positive or inconsistent aspects are “leveled” in order to fit with a more compact storyline.

Framing and priming effects operate at a predominantly subconscious, reactive level and can have a significant impact on the perceived quality and actual profitability of the customer experience.  For more information on how customer process the experiences they have see:   Designing for Customers’ Reactive, Deliberative, and Reflective Experiences.

Before I go, I’ll leave you with one final priming example:

You have exactly five seconds, not a second more, to multiply:

2 x 3 x 4 x 5 x 6 x 7 x 8

Write down your answer.  Now, ask a friend to multiply, again in exactly five seconds:

8 x 7 x 6 x 5 x 4 x 3 x 2 

Now, compare the two answers.  Besides the fact that you both got the answer wrong (the answer is 40,320), you should notice that your answer is smaller than your friends.  If you’re like most people, you started out multiplying 2 x 3 x 4 to get 24… x 5 to get 120… then ran out of time and had to quickly estimate the rest… but didn’t multiply by enough.  Your estimate was primed by the 120.  On the other hand, your friend probably started multiplying 8 x 7 to get 65… x 6 to get 390… before running out of time and having to quickly estimate the rest… but he too didn’t multiply by enough.  His estimate was primed by the 390.

Cognitive Ergonomics: Designing “Socially Influential” Experiences

Years ago, P&G ran a promotional campaign in which customers could win prizes for writing the best essay about why they loved one of P&G’s products.  In response to this promotion, tens of thousands of customers voluntarily submitted short essays for the chance of winning.  This brilliantly influential campaign leveraged one of the same techniques used by the North Korean military to influence prisoners of war during the Korean conflict.  Prisoners were given the opportunity to describe, in writing, increasingly anti-American positions as a means of receiving better treatment. It turns out that people have a strong naturally tendency to believe and behave in ways that are consistent with positions they’ve taken in writing or in any other public setting.  The more these positions are taken voluntarily, the stronger the effect.   For P&G, having customers volunteer to take a public position on why they loved one of the products was profoundly influential; obviously the most glowing essays had the greatest chance of winning.

(Note:  Want to try this out; ask a few colleagues or other people that are important to your career if they’d be willing to post a positive recommendation of you on Linked In).

Virtually every experience we have takes place in a social environment that exerts a powerful influence on the way we think and the way we behave.  In this post, I’ll describe a couple of the social forces that shape how people think, feel, and act.  I will also illustrate some ways that organizations can create experiences that positively influence their customers and/or employees and that remove the barriers to profitable, effective behavior.  These experiences can be described as socially influential. 

First let me rewind a bit… about a hundred thousand years into the past.  For 90% of human history, people lived as hunter-gathers in small nomadic groups.  In this environment, where food and other resources were in short supply, an individual’s survival and the survival of their offspring was highly dependent on collaborating effectively with others while establishing and reinforcing their position within their social group.  Virtually all exchanges took place within the context of close, ongoing relationships.

Over this extended period, natural selection reinforced a set of hardwired “mental programs” that contributed to our success in this hunter-gather environment.  These mental programs naturally and, in many ways, subconsciously lead us to: associate with people or groups that strengthen our identity; behave in a way that is consistent with that identity; worry about what others think of us; engage in reciprocal “I’ll scratch your back, you’ll scratch mine” exchanges; keep tabs on our relative levels of indebtedness with others; react in empathetic, altruistic and, in some cases, self-sacrificing ways; become envious or angry at inequities; vigorously attempt to level or punish perceived injustices; as well as, be wary of and prejudiced against strangers from outside our group.

It’s only been over the last 10,000 years, that small nomadic bands have given way to larger tribes, states, and nations.   Much of todays even more complex social environment, integrating global trade, governments, legal systems, corporations, schools, online communities, etc…, have only developed very recently.  As a result, many of our subconscious “mental programs” don’t quite fit the modern social environment… so completely different than the environment within which these programs evolved.  This leads to a wide range of behaviors that are seemingly irrational in our modern age, such as:

• We still have a strong tendency to define the “in-groups” we’re part of while circling the wagons and behaving antagonistically towards members of our perceived “out-groups.”
• We tend to pay substantially more for popular brands while rationally realizing there may little or no difference in quality.
• We acquire massive amounts of stuff and then need larger and larger homes to keep all our stuff in.
• We become angry when we learn that people who don’t appear to be more capable than us are making more money.
• Make incur personal costs to punish “cheaters” we don’t know and may never see again. This can include getting angry at another driver who cut you off in traffic and attempting to “get back at” that driver by tailgating or other aggressive driving. It can also include becoming irate at shoppers who skip in front of you in line.
• We have a tendency to be drawn towards hearing stories about the demise of successful people we don’t know.

Identity and Belonging.  In any social environment, people tend to behave in a way that is consistent with their identity.  Outstanding customer experiences reinforce brand values that the customer can identify with or create opportunities to display that identity to others.  The most powerful customer experiences don’t focus on what the customer feels about the company; the most powerful customer experiences are focused on what the customer feels about themselves.  How do you want your customers to feel about themselves when they do business with you?   Some companies have this down:  REI (Recreational Equipment Inc) is delivers a strong identification experience; for customers that are or aspire to be hikers, climbers, campers, and outdoorsmen.  Other strong identification experiences include:  Body for Life, USAA, Apple, Nike, etc… 

The groups that customers belong to, or aspire to, shape their identity.  For many customer segments, it is important to give your customer something to belong to.  This has nothing to do with blatantly self-serving loyalty programs.  Many of the strongest and most successful experiences have found ways of providing something that the customer feels good about joining.  USAA and American Express (Card Membership) are two examples.

Consistency.   A powerful part of managing our social self involves consciously and subconsciously maintaining the consistency of our beliefs and our behavior.  Most people subconsciously try to justify and act consistently with their earlier commitments and behavior.  This is a powerful tool for influencing customers.  When any individual announces through their behavior, verbally, or in writing that they are taking a position on any belief, they will tend to strongly defend that belief regardless of its accuracy even in the face of overwhelming evidence to the contrary.  After many significant purchases, customers will feel compelled to act consistently in subsequent purchases or in explaining these purchases to others.

Customers will naturally feel a stronger emotional connection with experiences that reflect choices they’ve made themselves.  People tend to accept inner responsibility for behaviors or commitments when they think they’ve chosen to perform them in the absence of strong outside pressure or economic incentives.  Outstanding experiences reinforce the choices that customers have made… thank you for choosing us…

Reciprocity.  Most people feel obligated to repay the genuine favors, gifts and invitations they have received.  This is particularly true when these favors are not part of an obviously institutionalized marketing or service campaign.  An authentically offered thank you call; genuine customer recognition (not programmatic); rewarding the best customers with little extras; etc…  Spontaneity and authenticity is key.  It can’t feel like it’s a programmatic thing.  While structured loyalty or rewards programs tend to drive rational repeat purchase behavior but not necessarily higher levels of satisfaction.  People habituate to rewards quickly when the rewards are relatively predictable.  However, people respond much more positively to rewards when those rewards come across as gifts that are novel, unexpected, and authentic.

Robert Cialdini, in his classic marketing book, “Influence: The Psychology of Persuasion“, reinforces the value of giving before you ask to receive.  In general, people are more compliant with requests from those who have given them something… anything, even the gesture of a gift. For example, the American Disabled Veterans organization, mailed out a donations request to its list with an 18% success rate; and, when they split tested this with a “personalized” address sticker campaign–they nearly doubled their success rate to 35%.

Customers often also feel obligated to accept things that are offered to them as long as they feel that these do not create obvious indebtedness.  But when customers do accept gifts that are authentically and individually offered, there is often a subtle, yet unshakable, feeling of indebtedness that encourages customers to return the favor.

Cialdini also describes reciprocal concessions.  Customers often feel obligated to make concessions to someone who has made concessions to us.  Asking the customer to make a very substantial commitment and then “conceding” to accept a shorter term, smaller scale or lower commitment can take advantage of this effect.  Suppose I call you up and ask if you’re willing to donate a weekend of your time to a charitable cause and then, when you say you can’t spare the time, request you make a $50 donation.  The response rate for this request is substantially higher than if I just call and ask for the $50 donation.  The request for a large commitment creates stress.  My suggestion that you make the donation in stead lets you off the hook.

Social Justice.  Customers will be frustrated if they feel that others are receiving better service, preferential treatment, or lower pricing.  This happens all the time when stores, banks or toll plaza’s open new lanes.  This also shows up as customers who demand that they wait in two or more lanes simultaneously.  Service and pricing in the airline industry tends to undermine the customer experience in this area.  (See: Cognitive Ergonomics: How Customers’ React to Violations of Justice)

Social Proof.  Most customers will tend to look at what other people do or think is appropriate and act accordingly.  Show your customers and prospects that others are agreeing to and using the products and services you offer.  We tend to find socially acceptable reasons to justify our actions and motivation.  It is important to provide customers with the story they will tell others about their choices and experience.

Conformity.  Most people tend to agree to proposals, products, or services that will be perceived as acceptable by the majority of other people or a majority of an individual’s peer group.  One of the most powerful elements of an influential customer experience includes ways of showing the customer that “everyone’s doing it.”  This ranges from including “Top 10 lists” on websites to promoting the market leadership position of a product or service. 

One of the other ways of demonstrating the popularity of a product or service is to promote its scarcity.  In general, we tend to see opportunities as more valuable to us when their availability may be limited.  The feeling of limited availability has always been used as motivator in the sales experience.

Authority.  Many people find it difficult to defy the wishes of someone in authority telling them what to do.  Titles, stature, clothes and trappings that may signify authority of an influencer in the purchase decision frequently condition this.  Messages are more influential when their source is perceived to be expert and trustworthy.  Influence is increased if the message apparently opposes the source’s self-interest or if the source does not seem to be trying to influence.

Liking.  We generally prefer to comply with requests from or associated with someone we know and like.  This is frequently influenced by physical attractiveness, similarity, compliments, familiarity, contacts and cooperation.

This has been a quick summary of the social influence levers that can be pulled in an experience design.  I’m looking forward to exploring these in a more comprehensive way in future posts.  Cheers.

A World Class Hospitality Experience: Four Seasons Aviara

Last month, I had the opportunity to do a keynote speech at a Maritz Customer Experience Conference.   One of the highlights of this event was a behind the scenes tour of the beautiful Four Seasons Aviara Resort.    I took copious notes and wanted to share a few of the salient elements that contribute to the world-class hospitality experience delivered by this resort.  Across the clients we’ve worked with, there has been an increasing recognition that No Matter What Business You’re In… You’re in the Hospitality Business; it doesn’t matter if its a hotel, restaurant, bank, auto dealer, healthcare provider, or an insurance company.

The central thread that ran through the entire tour was the high level of excitement and engagement of the associates in each area of the operation.  Each person we spoke with emphasized the Four Seasons management model:  Teach Lead Coach Counsel Consistently (TLCCC Model).

A strong employee experience focus is consistent across the Four Seasons brand.  Hiring is critical; based on the observation that an individual’s desire to serve is innate; there to be discovered not taught by the organization.  As Four Seasons founder Isadore Sharpe has emphasized, “We hire for attitude.  We want people who like other people and are, therefore, more motivated to serve them.  Competence we can teach.  Attitude is ingrained.”  For more information see the following publications:

• The Power of Personal Service by Barbara Talbott, EVP, Marketing Four Seasons Hotels and Resorts
• The Four Seasons Approach:  The “Golden Rule” and a Global Strategy 

(Both of these documents are available through the Cornell University School of Hotel Administration:  Center for Hospitality Research)

Every aspect of the facilities, services, and personnel are carefully designed and orchestrated in a way that is consistent with their mission:

Four Seasons is dedicated to perfecting the travel experience through continuous innovation and the highest standards of hospitality. From elegant surroundings of the finest quality, to caring, highly personalised 24-hour service, Four Seasons embodies a true home away from home for those who know and appreciate the best. The deeply instilled Four Seasons culture is personified in its employees - people who share a single focus and are inspired to offer great service.”

Here are a few of the highlights of the tour:            

Housekeeping.  The Four Seasons has highly detailed housekeeping standards that dictate the exact condition and location of every item in the room.  For example, the two desk chairs are always pulled out from the desk at a 45 degree angle to make it easier for a guest to sit down.  There are always four magazines carefully arranged on a magazine rack, placed in the same sequence, staggered with a one inch margin between magazines.  The body wash, shampoo, and conditioner are always placed in the exact same location in the shower. 

Each new housekeeping attendant is given 2 weeks of training.  In addition to learning the housekeeping standards, attendants are expected to be able to answer questions and handle a wide range of guest requests.  Housekeeping attendants are assigned 12 rooms per person with the assumption that caring for each room will take 45 minutes per day.  Attendants are expected to know each of their guests’ names. 

With the exception of the evening turndown service, there are no carts in the hallway to obstruct guests’ passage.  In order to make this possible, the Four Seasons specially designed roller bags for carrying supplies and a vacuum.  Attendants hand carry linens back and forth to the linen closets.

Guests traveling with small children are provided with toys, as well as, milk and cookies at bedtime.  The housekeeping staff places letter sponges with the letters of each child’s name in the bathtub before the guest checks in.  In addition, housekeeping provides child-sized bathrobes, cribs, step stools in the bathrooms, and child proofing.

The Four Seasons allows guests to stay with small pets.  If a guest is traveling with a pet, the hotel provides dog beds and dishes.  The carpets are cleaned after any guest has stayed with a pet.

The Perfect Room Program.  Although housekeeping evaluates the condition of each room on a daily basis, every room is taken out of service and refreshed every six months.  This process takes 1-2 days per room and is based on an 82 point checklist involving every aspect of the rooms décor, furniture, and equipment.  If there is ever a “Guest Activated Problem” (a.k.a., GAP), the standard for responding is no more than 15 minutes.

Concierge.  The concierge desk is a focal point for guest requests from simple restaurant reservations to more complex guest requests.  For example, one guest indicated they were bored and wanted something exciting to do for the day; the concierge arranged a helicopter day trip to the Napa Valley.  Each person on the Four Seasons concierge staff is either a member of or working towards membership in Les Clefs d’Or (pronounced lay clay door; meaning “keys of gold” in French), the international association of professional concierges.

It’s the bellman’s responsibility to learn about the guests preferences when greeting the guest either in the lobby or in their room.   Four Seasons bellmen consider themselves detectives; they have to watch for subtle clues.  Bellmen are given a lot of latitude to correct problems as they occur rather than having to get approval from management.  For example, one couple checked in to the hotel to decompress for the weekend and were given a room overlooking the pool.  As the bellman was escorting the couple into the room, he noticed the wife’s very slight reaction; she’s wasn’t excited about being above the pool.  The bellman immediately looked into the availability of another room.  The only available room was the Presidential Suite.  The bellman arranged to have the couple moved to this suite for the same rate as their regular room.  When the couple checked out, the husband said the following about the bellman, “I’ve never met someone who loves their job as much as he does!”

Facilities.  Everything about the lobby and the grounds are designed to signal “relaxation.”  This includes the muted color scheme, lobby layout, and beautiful fresh floral arrangements.  Employees with a passion for landscaping pay acute attention to detail in caring for the grounds.  Daily cleaning, trimming, and painting are done during times of the night and day with minimal customer traffic.  In addition, they make very limited use of power equipment in order to reduce noise.  The facilities and golf course staff at this property has surprisingly low turnover; they’ve only hired 5 new people over the past 4 years.

Overall, it was an impressive tour; enlightening to see the kind of effort that goes on behind the scenes in order to deliver a superior hospitality experience.  The challenge for leaders across industries is to figure out how to deliver compelling and authentic hospitality in your business.  Ultimately, it’s knowing how you want the customer to feel about themselves… not how you want the customer to feel about your business that will guide your way.

Helping Customers Lose Wait

I’m so tired… tired of waiting… tired of waiting for you…   Oh… sorry…  I’m just sitting here singing to myself as I wait on hold for the reservation agent to pick up.  I might as well do something productive… like write a post about waiting.

I know, we all have to wait.  Every day we wait for the next available agent; we wait in traffic; we wait at the airport; we wait for meetings; we wait at the bank, the hospital, the checkout lane, the lunch counter, the post office, the doctor,  etc… etc… etc…   It’s not unreasonable to estimate that the average person spends between 30 to 60 minutes of every day waiting.  If that estimate is true for you, over the course of your life, you will spend more than 2 full years waiting.   As one of the earliest FedEx ads said, “Waiting is frustrating, demoralizing, agonizing, aggravating, annoying, time consuming, and incredibly expensive.”

It’s hard to overestimate the impact of waiting on your customers’ experience.  Across the research we’ve conducted, some of the most dramatic customer defections occur because of bad waiting experiences.  I’m sure you can all remember the times you’ve had those experiences.  Years ago, I arranged a special dinner with family members who had traveled in from out of town.  I’d made a reservation at one of the upscale restaurants that I’d been going to pretty regularly.  Unfortunately, when our party of six arrived, we were told we would have to wait a bit for our table to be ready.   As it turned out, we were kept waiting for more than an hour.  Each time we checked with the hostess, we were told that our table would be ready soon.  When we were finally seated, everyone in the party was upset and frustrated.  However, no one from the restaurant provided any sort of explanation or apology.  In fact, they avoided us because they knew we were upset.  The outcome: I’ve not been back to that restaurant and I’ve told plenty of others about my frustrating service experience.  The good news is that the restaurant, in essence, fixed their customers’ waiting problem; they’re just not busy any more.

As the pace of the people’s lives has increased, people are more and more aware of the costs of waiting and are less tolerant of providers that make them wait.  As a busy professional, time is my most limited resource.  I’ve become keenly aware of the costs I incur when providers keep me waiting.  For example, in 2007, I spent $51,740.87 on 47 Delta tickets.  Based on my back of the envelope calculation, I also lost approximately $29,000 in personal productivity due to delayed or cancelled flights over the same time period.  Part of my sensitivity to this amount results from the contrast compared to other situations in my life.  For example, if the guy who cuts my lawn for $40 keeps me waiting for a few minutes, he’s all over me with apologies.  However, when I spend $1,500 on a round trip ticket and the company keeps you waiting for a couple of extra hours there’s not even the slightest hint of an authentic apology.

Okay… sorry… I’ll stop belly-aching!  You can help customers “lose wait” two ways: 1) reduce the actual waiting time and 2) design a better waiting experience; one that is more pleasurable or at least less frustrating.

1)  Reducing the Actual Waiting Time.  Waiting generally occurs at times when customer demand exceeds resource supply.  Queueing theory is the mathematical study of waiting lines.  Queueing theory can be used to reduce wait time by optimizing the scheduling of service resources and/or changing the queueing discipline. 

Another way to reduce actual wait time is Demand Management.  Demand management including things like: finding ways to shift demand to less peak times or reducing demand without reducing profitability.  Companies frequently “inventory” demand by scheduling appointments or taking reservations.  A company might also reduce the price of service at off-peak times and/or increase prices at peak times.  More creatively, companies can provide information on anticipated wait times in a way that influences the customers’ decision to get in line.  For example, a service organization (e.g., department of motor vehicles, auto service center, call center, etc…) can provide information about wait times or queue length at their facility, on their voice response system, or on their website.  A service organization might also find ways to alert customers to the fact that there is currently little or no wait.  This is the kind of thing quick lube businesses do; they’ll put someone out on the street with a flag calling attention to the fact that there is currently “no line no waiting.”

2)  Designing a Better Waiting Experience.   Beyond reducing actual wait time, there are a wide range of things that can be done to improve the customers’ waiting experience.  In fact, in most situations customers’ perceptions of waiting time are not strongly connected with the actual wait time.   David Maister (See: The Psychology of Waiting Lines“) has made several very interesting observations regarding customers’ perceptions of waiting.  These are discussed below along with several ideas for how to address these perceptions:

• Unoccupied time feels longer than occupied time.   William James observed, “Boredom results from being attentive to the passage of time itself.”   Customers perceive waits to be shorter if they are given something to do.  Ideally that something should be beneficial and relevant to the service encounter.  For example, this might be giving customers that are waiting for a table a menu to peruse and a light appetizer or soft drink.  This can also include providing news or entertainment to customers while waiting.
• Pre-process waits feel much longer then in-process waits.  In general, people want to get started.  For example, 10 minutes waiting to board a plane generally seems longer than 10 minutes waiting to take off after you’re seated.  Outstanding experience designs replace pre-process waiting with in-process waiting.  For example, at Disney World, the wait experience is designed to not only occupy the customers’ attention but it is actually part of the attraction.  Also, in a hospital or medical clinic, having patients greeted and triaged immediately generally leads to a shorter perceived wait time.
• Anxiety makes waits feel longer.  Customers are anxious when they don’t know whether they’ve been forgotten, whether they’ve chosen the right line (note Erma Bombeck’s Law:  The other line always moves faster”), and whether they’ll be done in time for your next appointment.  Customers boarding an airplane often worry about finding space for their luggage dramatically reducing the quality of the overall experience.  Also, customers in a long line for a movie may not be sure they’re waiting in the right line or be able to judge to what extent the number of people in front of them will fill up the available seats.  As a result, customers experience anxiety about whether they’ll be able to sit with rest of their party or whether they’ll be stuck sitting in the first row.  Effective experience designs find ways to proactively remove what customers are worried about.   This can include reassurance that they’re in the right line, that they’ll get in, have room for their bags… whatever it is.
• Uncertain waits are longer than known, finite waits.  A lot of anxiety is derived from not knowing how long the wait will be.  Customers generally perceive waits to be shorter if they are given an accurate estimate of the length of the wait.  Again Disney does a good job of estimating the length of the wait.  Generally, it works best to overestimate rather than underestimate the wait.  Restaurants have learned that, if you tell customers it’ll be 30 minutes and it works out to be 20, they’ll be pleasantly surprised and start their dining experience in a more positive frame of mind than if it actually turns out to be 40 minutes.  For some reason, airlines haven’t learned this yet.  As you probably know, airlines repeated announce incrementally longer delays… reinforcing customers’ beliefs that they are not being dealt with honestly.
• Unexplained waits are longer than explained waits.  Customers have more patience if they understand the causes for the delay.  This explanation might not let the provider off the hook, but it’s better than no explanation at all.  If customers don’t know about the cause for a delay, it adds to their anxiety about the length of the wait.  Waiting in ignorance makes customers feel like they have no control.  Another element of unexplained waiting involves long lines of customers who observe service representatives on break or doing other work rather than serving customers.  This happens all the time; one or more agents will be helping customers while others will be just typing away on their terminals.  Customers waiting in line find this subconsciously difficult to deal with.  Most fast food restaurants have figured this out enough to have policies about not doing non-customer work or taking breaks in front of customers.  On the other hand, most banks and airlines haven’t figured this out yet.
• Unfair waits are longer than equitable waits.  One of the most stressful and irritating aspects of waiting is feeling that somebody has gotten ahead of you in line.  MIT Professor, Dick Larson, makes a strong case that customers’ perceptions of their wait are highly influenced by perceptions of social injustice (See “Perspectives on Queues:  Social Justice and the Psychology of Queueing.”)  Effective experiences are carefully designed to ensure that the waiting experience is perceived as fair.   In general, first come first served is perceived to be the most socially just.  As a result, the Wendy’s style single queue is perceived by customers to be faster than the McDonald’s style parallel queue structure.  When there are long lines of customers at checkouts and a new register is opened, do the people at the front of the line or the end of the line get served first?  At the Whole Foods store near my home, a new cashier will generally approach a customer already in line at another register, ask “Can I help you over here?” and then lead the customer to the newly opened register.  Another example of social injustice occurs when service reps answer the phone while serving customers who are waiting in line.  Customers in line naturally feel that a caller has just cut in front of them and that they have been assigned a lower priority than the random caller.
• The more valuable a service, the longer the time people are willing to wait.  Customers are generally more tolerant of waiting for high-demand or high-value products and services (e.g., concert tickets, popular restaurants, limited supply products, etc…).  Traditionally, it’s been assumed that shoppers with a large basket of groceries are more tolerant of waiting than customers with a few items.  However, as customers have become accustomed to being “valued” based on the dollar amount of their purchases, we’ve noticed that customers with high total dollar purchases are starting to expect to be served with a higher priority.
• Solo waits feel longer than group waits.  The ability to commiserate with others in line tends to shorten the perception of wait time.  Often a natural, ad hoc sense of community develops amongst people waiting in line together.  Effective waiting experiences create opportunities for customers in line to interact with each other.  For example, when I was recently waiting to enter a popular concert club with my son, the front door attendants were asking customers trivia questions that required you to talk with your neighbors in line.  My son and I met an interesting couple ahead of us in line and the wait didn’t seem so long.

While the cost of reducing the actual wait can be significant, it’s often just a matter of creative, customer-centric thinking to find ways to improve the customers wait experience.  We’ve observed that, when the waiting experience is very negative, it tends to strongly and negatively effect the customer’s perceptions of the overall experience.  This post has just scratched the surface on a topic that has not gotten anywhere near the attention it needs.

Wesabe: A Collaborative, Next Gen Financial Experience

I’ve spent a lot of time working with a handful of leading financial services organizations on the design of their customer experience.  One of the biggest challenges is that executives at these organizations have a natural tendency to think about the business in terms of the traditional industry boundaries.  In a recent post, I talked about a customer-personae driven experience design approach that starts by considering the broader set of needs that different kinds of customers have… how they make money, how they spend money, how they save and invest, etc…   This post referenced a couple of innovative banks:  Umpqua and AMPLIFY.

Another very interesting example is Wesabe, a social networking platform for people dealing with financial problems that has gotten very significant positive press.

From their website: 

“We want to help you get rid of credit card debt and start saving for college for your kids. We are tired of getting stung by stupid fees from banks and credit cards. We believe pooling information on where we all spend can help you make better financial decisions and ultimately take control of your money to reach financial goals. 

Founded in December 2005, Wesabe is in San Francisco, California. Our easy-to-use, Web-based software gives members a better understanding of how they spend money. The Wesabe community shares tips and advice to help each other make better financial decisions. If you have questions, don’t hesitate to talk to Jason, our ceo.”

What I find striking is that an innovative bank could really be offering something like this… designed around the needs of a significant cross-section of customers.   This would involve balancing the tension that might result from proactively helping customers avoid the kind of bank charges that tend to accumulate with customers that are persistently or temporarily living on the edge. 

I sat next to a gentleman on my flight home the other night.  He is a biomedical engineer working for an innovative cardiac device company.  He told me the story of his experience with insufficient funds situations while finishing college a few years earlier.  Obviously the situation has changed… but his memory of how a particular bank “mistreated” him lives on.   Today he’s the kind of customer that would be the ideal mass affluent prospect.

Based on our research, there is a significant portion of the population that, due to a combination of their situation or their behavior, have respectable income but little or no financial assets.  These are high potential customers with needs that go beyond the services offered by the traditional bank.  The opportunity for a differentiated, out of the box customer experience design is enormous.

Roadmap to the Customer Innovations Blog

I’ve received several requests to put together a “roadmap” to the Customer Innovations blog posts I’ve done.   Here is an organized path through the material I’ve posted so far.  I haven’t tried to be all inclusive but have just the most substantial posts.   Grab a venti dark roast and enjoy!

Customer Experience 101:

• Customer Experience and Why It’s Important?
• Characteristics of an Outstanding Customer Experience
• Your Company Doesn’t Have Customer Experiences, Only Your Customers Do
• Why Customer Experience Initiatives Fail?
• Experience Management Maturity: Moving from “Experience by Default” to “Experience on Demand”
• CE Specification: I Got a Song it Ain’t Got No Melody… I’m Gonna Sing it to My Friends
• The Customer Experience Does Not Happen at Your Touchpoints
• Centers of Gravity: Levers for Shifting the Customer Experience
• Most Efforts to Improve Customer Relationships are Misdirected
• Optimizing the Business to Business to Customer Experience

Personae-Driven Experience Design: