Month: April 2020

Politics has changed drastically these last few decades in so many drastic ways, it’s tempting to pinpoint one or the other as the secret to a candidate’s success or failure: For Obama it was allegedly the use of social networks, for Trump it was supposed to have been his use of spectacle to dominate the media narrative, etc…

One thing that is clear, going back to Teddy Roosevelt’s use of the whistle stop, FDR’s mastery of radio, Kennedy’s understanding of television, great politicians have always met the voters where they are, not where they want the voters to be.

It made sense for Ronald Reagan to spend heavily on television ads in 1984, when voters’ eyeballs were glued to their television screens. Now that more Americans pay for streaming services than pay for cable TV, it makes a lot less sense.

While campaigns in the 1980s, 1990s, and early 2000s were dominated by TV ad spends, massive phone banks with thousands of volunteers and paid callers relentlessly dialing the home phone numbers of every voter, and the battle for newspaper and magazine endorsements, those are no longer attractive places to spend money.

Home phones are an anachronism for many voters, as are newspaper subscriptions. Email addresses and cell phone numbers are hard to come by, and most political emails are automatically filtered as spam, summarily ignored, or quickly prompt the recipient to unsubscribe.

One technique that has been a staple of campaign politics for over a century continues to prove effective, and that is the door knock.

There is something powerful about a candidate or volunteer knocking on your door and asking you for your vote.

They are coming to you, physically, and taking the time to meet you personally and ask for your support. It is impossible to hang up on them (short of slamming the door on them, which almost never happens), or to send their message to the spam folder without hearing them out first.

That is why the days immediately following a door knock are the days when your message is freshest in the mind of voters, and the perfect time to follow up with a handwritten letter.

This is a process that Postalgia can automate for you, so that after you speak with a voter, a letter is written and mailed to them, based on a template, using the data from your CRM, list, or database. It’s a great opportunity to connect on a meaningful level, and you want to make the most of it by employing some of these tips for a powerful follow-up mailing to your voter.

Reference specifics:

Let them know that you’re writing to them after speaking with them, not just mailing them the same thing you mail everyone. Use their name and reference your conversation. Changing “Dear voter, it was a pleasure speaking with you.” to “Dear Karen, it was a pleasure speaking with you at your home on Acheson Ave on Thursday” can be done automatically by pulling details of your door-to-door canvass from your CRM

Change it up based on their support

Did they tell you that they were going to vote for you? Thank them and remind them that their vote is important. Tell them to reach out if they have any questions, or if they’re willing to volunteer or help out with a donation.

Did they tell you they were undecided? Take the opportunity to persuade them. Give them a few words on why they should vote for you.

Did they say that they were not going to support you? Thank them for their time and encourage them to reconsider. Maybe meeting you and getting a nice handwritten note from you will persuade them to stay home.

Whatever they indicated as their level of support, you should be asking for something.

If they’re against you, you’re asking them to reconsider voting for your opponent.

If they’re not sure or would rather not say, you’re asking for their vote.

If they’re voting for you, you’re asking them to take a lawn sign, to volunteer, or to make a donation.

Invite them to reach out

Just as you don’t want your brief conversation at their door to be your last interaction, you don’t want your letter to be the end of the conversation.

You want to turn your undecided voters into supporters, your supporters into enthusiastic endorsers, and your endorsers into activists.

The best way to do that is by inviting them to be in touch, via their preferred method of communication, to answer their questions, and help get them more plugged in to your campaign.

Whether it’s for an answer to a policy question, a ride to the polls, a sign on their lawn, or information on how they can donate to your campaign, you want them to have a way to reach you.

Great campaigns reach voters where they live, metaphorically and literally. For as long as modern campaigning has existed, that has meant reaching them at their doors and in their mailboxes.

The illusion of transparency is one of the most common causes of misunderstandings and missed opportunities  between people, between companies and their customers, between nonprofits and their donors, etc…

The illusion of transparency is on display any time you say or hear thing like “you know what I meant,” or “how could you not understand how I was feeling?”

Here’s one of my favourite games to illustrate the illusion:

Find a partner, and as obviously as you can, but without lip-syncing, hand gestures, or giving anything away, use a pen or your finger to tap out a popular song. It can be twinkle-twinkle little star, or a famous Beatles song.

Before they guess, ask yourself how likely you think it is that they will guess correctly. The average tapper in the original Griffin & Ross experiment (1991) guessed that there was a 50% chance that the listener would guess the song correctly.

The actual rate of success is 2.5% 

That’s the illusion of transparency at work. We think that everyone else can hear the melodies and lyrics in our minds as clearly as we can. Of course, they only hear a series of taps.

The same principle applies when people are giving speeches and think that the audience can see how nervous they are.

Just as others don’t know what’s going on in your head, they don’t know what’s going on in your organization unless you tell them. More importantly, your organization is not top of mind unless you communicate with them regularly.

That may seem completely obvious, but I can assure you that in practice it is not how people, companies, and organizations behave.

They behave as though everyone around them is as preoccupied with their business as they are. We spend every waking minute in our own heads thinking about the things with which we’re preoccupied – our jobs, families, hobbies, favourite sports teams, political happenings and candidates that we’re following – that we erroneously assume that others have had the same level of exposure.

In the political world, that can lead to an unintentional mismanagement of the relationship with voters or donors. The politician feels that they have been working hard between elections, running from closed-door meeting to closed- door meeting, from vote to vote, from reception to stakeholder event. When they’re not physically engaging with those aspects of their job, they are, in their own minds, planning and organizing.

They totally forget that all of those things happen behind closed doors on in the confines of their own thoughts, and are shocked to find, come election time, that voters  feel that they have neither interacted with them nor seen them at work since the last time they were asked for their vote. The illusion of transparency makes them think that they are going to ask for the vote of a voter who is very familiar with all that they’ve been doing for the last 2 – 4 years of their term. In fact, they’re going to ask for the vote of someone who has been impervious to their broadcast messages (be they on twitter or in the local newspaper) and has obviously not been following the goings on taking place in the politician’s head.

To avoid this misalignment of expectations, politicians, like consumer brands, nonprofit fundraisers, and salespeople, should find reasons to be in touch often, even if just to share with their voters the things that they incorrectly assume the voters already know.

At the beginning of the great sports movie Jerry Maguire, the eponymous sports agent, in the throes of a night of inspiration, writes a mission statement, called The Things We Think and Do Not Say, and distributes it to all of his colleagues. In it, he proposes a radical idea: actually caring about their clients.

If for whatever reason, you haven’t seen the movie, do yourself a favour and remedy that. It will have you at “hello.”

Most of the nonprofit fundraisers that I have met claim to understand the importance of relationships.

I do not doubt their sincerity, only their understanding of what a successful fundraiser-donor relationship looks like.

Yes, a transactional relationship is a type of relationship, but I think that that’s neither what they infer when they hear nor what they imply when they say “relationship management.”

If they were in business, it would be obvious to them that they can’t claim to have a “relationship” in the meaningful sense of the word with their customers, if the entirety of their relationship consisted of them offering products, however tailored, and the customer giving them money.

It is no different if your business is nonprofit fundraising. You sell a luxury good – meaning, impact, making a difference; it may be unflattering to think about your work in that way, but it doesn’t change the fact that you’re helping to empower something wonderful in the world, it’s just a helpful reminder that fundamental business principles apply.

One of those principles is that if your relationship is based solely on the transaction, you don’t have a relationship.

So how do you build a relationship with your donors without making it all about their gift? The same way you build a relationship with a friend or colleague:

For starters, you care about what’s going on in their lives. That means that you invest in knowing who they are, what they care about (beyond and including your mission as an organization – they support you; why?).

If you’re telling me that you care about your donors, but you can’t tell me what they do for a living, what their kids and spouses names are, or at least why they chose your nonprofit over any other, then you don’t care about them, you care about their money.

Texas Senator Phil Gramm said that his education policies were based on the idea “that I love my children more than you do.” He often told the story of meeting a woman who insisted that she loved every child – including his children, as much if not more than he did.

“Okay,” he is said to have responded, “what are their names?”

That’s why I tell my clients that birthday cards are as important, if not moreso, than thank-you cards (okay, thank-you cards are “table stakes.” If you’re not going to send those, we are really putting the cart before the horse talking about relationship management).

The best fundraisers I know send condolence cards, because they are plugged in enough to know when their donors lose someone in their lives. The best fundraisers never send anything boilerplate.

You may be thinking that it is a little bit aggressive to focus all of your communication around the individual, and not around your organization; after all, you’re a fundraiser, not their oldest friend.

But there is no reason that you can’t talk about the organization while still keeping the focus on them.

Most importantly, never make an ask without tying it back to the thing that brought that donor through the door in the first place, and kept them there.

It’s an easy thing to lose sight of, but no one donates to your cause because they stumbled across your website and thought you had a nice logo. Donors have nothing but choice; they can give anywhere, everywhere, or no where, based purely on their own discretion.

So find out what brought them through the door in the first place. If you’re fundraising for a hospital foundation, and they donated in the first place because because you gave their child great care in the neonatal ward, tie every ask to that experience, rather than trying to get them to give to the campaign to build out geriatric inpatient care (no less important, but not why they showed up on your radar).

To paraphrase the Senator, I’ll believe that you care about your donors as much as you say that you do when you tell me who they are.

This is part five of an ongoing series about consumer behaviour. You are strongly encouraged to read at least part one here and part two here before reading this post. You can also read part three here and part four here.

System one and system two evolved for reasons that may not appear obvious to us, but are apparently deeply rooted in what it took to survive for most of human history.

System 2 can develop theories around the best way to build a fire, or structure a tribe, or calculate the strength of the sail need to the get to that island over there (though when actually doing sailing, system 1 is probably in control). Think Spock from Star Trek.

System 1 – instinct, intuition, feelings – can tell us from a distant sound that there is danger nearby, or give us a bad feeling about the way that stranger is looking at us, all based on thousands of calculations happening rapidly in our subconscious. We start running away from the danger before we really know what the danger is. Think about Spiderman’s spidey-sense (though at least one Spiderman nerd whom I consulted insists that this is not quite accurate).

Imagine yourself in a setting where you feel comfortable, but there are plenty of other people around. Maybe it’s a restaurant that you like, a busy strip downtown, or a shopping mall in your town.

Suddenly, you sense danger. For anyone who has every been in this situation, you know that you sense danger before you can pinpoint why you sense danger; it’s almost as though you’re in a movie, and the music changes to something ominous. Before there is an obvious indication that there is danger (a crash, a scream, or a menacing figure) there is often a subtle change in the behaviour of those around you. Someone near you has adopted a concerned expression, because someone near them has turned to look over their shoulder, because they picked up on the absence of sound emanating from that now-silent formerly-loud group of teenagers. The reason for that sudden silence is that one of the teenagers saw something across the mall (or intersection or restaurant) and the others noticed a change in their tone and mirrored it. What they saw was someone running away from something. Someone who had seen or heard something that made them run faster than their brain could fully process the fact that what they had seen or heard was dangerous, but who intuited it just the same.

Human beings are social animals, and our brains evolved to enable us to survive in tribes, communities, cities, and civilizations. We are highly attuned to the behaviour of others around us, and often use their behaviour as cues for our own.

That’s why we find it so difficult to be contrarian, even when there is little or no evidence to suggest that there is wisdom in what those around us are doing. System 2 may be the rational of the two, but it is anything but robotic or slavish. System 2 is creative, and thoughtful, and can be contrarian by choice.

Take this awesome 1962 social experiment from candid camera, for example:

So how do you, the clever and enterprising marketer, take advantage of social proof in your handwritten cards & letters, and other direct mail marketing?

Since everyone around me seems to be blogging in list form, I may as well (see what I did there?) Here are the top 4 ways to use social proof in your direct mail marketing:

Use a user testimonial

Particularly if the product that you’re selling or service that you’re marketing is new, novel, or non-intuitive as a value proposition, one of the first things that customers, donors, etc… look for is a testimonial.

They don’t want to be the first one to jump off of the bridge – they want to make sure that at least one person has already jumped, survived, and thrived.

Use the scarcity heuristic to create a fear of missing out

They may not want to be the first one to jump off a bridge, but they certainly don’t want to be the last one. Convey a sense of popularity (social proof) but also a sense of urgency. This is known as the scarcity heuristic, and like the effort heuristic (discussed in the last part of this series here), it persuades people to assign value based on a mental shortcut. Just like consumers ascribe more value to products and services that seem to be a result of more effort, they also ascribe more value to products and services that seem scarce.

LIMITED TIME OFFER may be cliche, but it’s also powerful.

“We don’t want our space to get too crowded, so we are offering only 25 residents of Woodlawn towers premium, unlimited access to our gym and health club, with concierge service, and 21 of your neighbours have already signed up. Jenny, who lives in Woodlawn tower 2, said that she has never had a better spa experience.”

B.Y.O.S.P (Bring your own social proof) 

You may not remember this, now that the platform is so ubiquitous, but Gmail started out as a very limited service, that you had to be invited to by a friend.

Users received 5 invitations that they could give out (there’s that scarcity again), and so every person who signed up for the platform was referred to the platform. Rather than being marketed to, they were invited.

That’s a strong social proof – you are being given one of 5 invitations from a direct friend who uses the product and tells you that they should too.

Think about how you can achieve the same result with your next variable mailing. Some of our non-profit clients achieve this result by having different relationship managers or volunteer canvassers sign solicitations that are going out to people in their network.

Splitting donor lists in that way may be a difficult endeavour, but social proof experiment after experiment proves that it’s worth the effort in the increase in conversion rates.

Make your product exclusive to an existing club

When Facebook started, there was only one way to sign up for an account. Your email address had to end in @harvard.edu. Soon they expanded to other schools, but the principle remained consistent: you had to have an email address ending with the domain of an approved college or university to sign up for an account.

By leveraging an existing social group (@stanford.edu or @fsu.edu) Facebook was able to imply a social proof that may or not have actually been there. Once Facebook is available to @fsu.edu, the inference is that others – maybe almost everybody – at Florida State University is using this product; otherwise, why would the company need to go to the trouble of making a separate facebook access point for FSU?

A better example may be university foundations that create specific campaigns for different subsets of their alumni. Don’t just donate to the school’s endowment, donate as part of the Class of 2015 class gift. Or the Class of 2015 5-year reunion gift.

In fact, my own school told our graduating class that their goal was not to raise a certain amount, but rather to get 100% participation. They were using a few powerful consumer behaviour tactics (not unusual for the business school perhaps most famous for behavioural economics research), amongst them the tactic of increasing social proof – if their goal is 100% participation, I implicitly believe that they have a realistic chance of reaching it, which is to say that almost everyone else in my class is already jumping off that bridge.

United way is a great example of a charity that uses this tactic to ramp up social pressure on a group. Rather than asking every lawyer in Toronto to donate to their annual campaign, for example, they will create mini-campaigns for each law firm, and publicly track the total given by that firm. Without disclosing participation rates, they publicly imply that giving is a widespread phenomenon, across your firm and across your industry.

Increasing social proof is one of the most effective ways to pack a punch in your next handwritten mail campaign. It appeals to something deeply rooted in the human psyche, and it works.

This is part four of an ongoing series about consumer behaviour. You are strongly encouraged to read part one here, part two here, and part three here before reading this post.

Thinking Fast and Slow, the seminal book by Nobel laureate Daniel Kahneman about his work with his late research partner, Amos Tversky, is full of mental tricks, riddles, illusions, and “ah-ha” moments designed to make you question whose side your brain is really on.

In the first chapter, he presents the reader with the Müller-Lyer optical illusion. The two lines in the illusion are actually the same length, but with the added context of the fins on the end of the lines, one appears to be significantly shorter than the other. Even though I am telling you that they’re the same length, and even after you take a ruler and measure them, you still won’t be able to convince your brain that they are the same length, and neither can I.

Kahneman uses the illusion to illustrate the difference between your fast-thinking System 1 and your slow-thinking System 2. You can teach your system 2 that the lines are the same length, but you can’t stop your system 1 from immediately seeing one as shorter than the other.

I wouldn’t be much of a Canadian if I didn’t work Marshall McLuhan into a blog post sooner rather than later. The phrase that McLuhan is probably most famous for is, “the medium is the message.”

That is to say that the way in which the content is delivered is as important, if not more important, than the content itself. This is one of those great ideas that seems obvious, but only once it’s said out loud.

Where Kahneman & Tversky meet McLuhan is in understanding why and how our brains receive the same message differently when it is delivered by two different media; it is for essentially the same reason that we perceive the same line differently when it is contextualized by different directional fins.

There is a reason that fancy restaurants go to the trouble of having a well-groomed maitre d’ bring you a beautifully arranged and colourful piece of lamb while ambient lighting and the faint sound of quiet violins lull you into thinking that what you’re about to taste is really worth a day’s salary before you ever bite into it.

A prepared food critic may be able to train their System 2 to override their initial impressions and objectively, slowly, and methodically deliver a verdict on the food, but most of us are going to be fooled, like the well-heeled guests in this video, that Penn and Teller tricked into thinking that water from a garden hose was worth $7 a bottle.

In the same way, presenting the same value proposition, for the same price, in two different ways, can have drastically different results.

There are a few different ways in which our brain tricks us into mistaking contextual factors for value.

One example of this mental phenomenon at work is the effort heuristic.

The effort heuristic is one of the most immediately recognizable cognitive biases; essentially, the effort heuristic is the mental shortcut that we take whereby we calculate something’s value based on how much effort it required. Calculating the value is hard. Calculating the effort involved is easier – especially when that effort is pointed out to us:

Slow-roasted pork. Barrel-aged whiskey. Hand-made, bespoke tailored suits.

For example, in an experiment establishing the nature of the effort heuristic,  Kruger et al. assigned randomly subjects one of two poems, and told some that the poem had take 18 hours to write, and others that the poem had taken 4 hours to write. The subjects that were told that their randomly assigned poem took 18 hours to write judged their poem to be better, and worthy of more money from a poetry magazine.

That’s precisely why hand-written mail works.

Think about the last donation you made to a non-profit. Maybe it was one that you really believe in, or maybe you had a friend who canvassed you for a non-profit to which they have a personal connection. The average American household gives over $2,500 a year to philanthropic causes, so chances are your donation was more expensive than most products that you regularly buy. It could be considered a luxury purchase – an expensive gift.

A week or two later, you opened your mailbox to find a handwritten thank-you card with some sincerely penned words from someone at the non-profit – a development manager or someone who your gift impacted. You know how much effort goes into writing those cards from your own experience writing them, so you immediately judge the card to be valuable without thinking too much about it. If you were asked, you would probably say that it’s the thought the counts; that you were moved by the words of gratitude.

Now imagine instead that you had received an email message a week or two after the donation was processed, with the identical message. The email is obviously less meaningful an expression of gratitude than the handwritten thank you card, but why?

Because of the effort heuristic, that’s why. Because the medium really is the message. The email was probably automated and very easy to generate and send.

The handwritten card can’t be automated (or so your brain thinks). Our minds trick us into believing that there is an inherent value in something that we believe took a long time to make. Your recipients need never know that you outsourced the hand-cramps to a Postalgia robot.

This is part two of an ongoing series about consumer behaviour. You are strongly encouraged to read part one here and part two here before reading this post.

Let’s recap a few insights:

• We don’t have the mental capacity/energy to focus on doing every task slowly and methodically.
• That’s why we evolved a system for quickly making everyday complicated calculations without overloading our brains.
• That system calculates things inaccurately, but usually within the ballpark.
• Those calculations usually manifest as feelings, biases, gut reactions, or other mental shortcuts.
• We sometimes use those quick and inaccurate calculations to make consumer decisions that maybe we shouldn’t.

I began the last post with what I consider a bit of good advice about marketing: marketing is about so much more than just setting the right price, and finding the customer for whom the value outweighs the price.

It reminds me of what I consider to be very bad (and very ubiquitous) advice about sales: “You should speak to [insert ideal customer here], I bet they would love this product.”

What I’ve learned about sales after 5+ years of trying to sell a new product is that it’s not that simple. You need to find that person’s contact information, get past their gatekeepers, get their attention long enough to articulate your value proposition in a compelling way so that they actually consider it, convince them to get buy-in from their stakeholders, convince them that you’re a better choice than any alternatives that they could purchase or are currently purchasing, and shepherd them through the buying process.

Here’s how business school lecturers strongly imply that sales conversations will go:

Seller: Excuse me, I think I have a product that will add value to your life or business such that it will more than justify the price that I am asking for it

Buyer: You have my undivided and un-skeptical attention

Seller: I have a product that can provide $20 of utility for every $19 that you spend on it

Buyer: Do you take certified checks?

Rationally, we all want products that will provide the most utility for us. Practically, we don’t always act as perfectly rational consumers for a myriad of reasons.

From the perspective a marketer, familiarizing yourself with how the consumer’s mind works is a huge advantage when competing for attention, interest, decision, and action.

Consider the availability heuristic, also known as the availability bias:

The availability bias is the human tendency to overestimate the frequency, prominence, or prevalence of events, people, things, etc… due to recent exposure to them.

For example, suppose you took a survey of 5,000 American adults over the age of 60, and asked them the following question:

In which of the following years did the world experience most airline hijackings?

a) 1990 – 38

b) 2001 – 11

c) 1983 – 35

d) 1993 – 36

Most of them would say 2001, the year of the deadly September 11th terror attack.

In fact, any American over the age of 60 would have likely read or heard about airline hijackings 38 times in 1990, 26 times in 1993,  and 35 times in 1983, compared to only 11 hijackings in 2001.

You may be thinking that this is an unfair test. We’re asking senior citizens to remember the frequency of hijacking headlines from 1983 as easily as they do headlines from 2001 – nearly 20 years later!

Well, let’s simply the question a bit:

In which of the following years did the world experience more airline hijackings?

a) 2001

b) 2000

Again, most people would say 2001. In fact, there were more than double the hijackings in 2000 as opposed to the following the year. 27 in 2000, 11 in 2001.

The reason for this is simple: They can recall the hijackings of 2001 with little mental effort, because it sticks out so vividly in their minds – and with good reason. Though 2001 was a year of relatively few hijackings compared to the 3 decades that preceded it, those hijackings were by far the most fatal, and led directly to 2 wars and drastic changes to the way we fly.

The examples of the availability bias at work are countless, and mostly far less depressing.

Ask someone walking out of a Tom Hanks movie how many Oscars he’s won. They will definitely over-estimate.

If you’re going to pick a fight with your spouse about household chores, do it the day after you do the laundry, meal prep, and wash all the dishes. You may not get a total pass on how often you do household chores, but you can be sure that they will overestimate the frequency.

All of this is to say that your brain doesn’t like to work too hard, scraping your memory and counting (calculating!) the exact number or frequency of these things.

Armed with that knowledge, marketers looking to mail their prospective clients can take advantage of the way the brain works to make their materials more effective in a few different ways:

Quality over quantity – Moneyball your marketing 

Of course, the best way to convince someone that you’re the number one brand in your industry is to be the most ubiquitous advertising presence known to man.

But let’s assume that you don’t have an endless marketing budget.

Take a page from Oakland A’s manager Billy Bean in one of my favourite stories/books/movies and Moneyball the situation by focusing on the metrics that matter.

Check out this post about why creating a few strong mail pieces that really catch attention will be more effective than dozens of pieces that don’t. That’s because of the availability bias.

The brain doesn’t care how many times it’s seen your ad. It doesn’t want to work hard to remember it. The more it stands out, the easier it is to recall. The easier it is to recall, the more the recipient overestimates its impact.

Ask people to rank the realtors in their neighbourhood by houses sold. Odds are their answers are going to be way off, and their list is going to look suspiciously like a list of realtors whose marketing materials they can readily recall.

Priming, Priming, Priming

Answer the following 3 Questions:

Question 1 – describe in detail what you had for breakfast or lunch. Spare no detail

Question 2- guess the average weight of a panda bear

Question 3 – complete the following four-letter word: SO_P

I’m not especially interested in question 1 or 2. The vast majority of people are answering question 3 with the word “SOUP.”

Now, suppose I change the 3 questions to the following:

Question 1 – describe in detail your laundry routine. Spare no detail.

Question 2- guess the average weight of a panda bear.

Question 3 – complete the following four-letter word: SO_P

As you can imagine, this time, the vast majority of people are answering question 3 with the word “SOAP. ”

This is called priming, and it’s a close relative of the availability heuristic. Your brain doesn’t want to work harder than it has to, so it reaches for the closest available association. If I prime you to think about food, you think soup. If I prime you to think about cleaning, you think soap.

If there is a slam-dunk answer to your question that you want your prospect, donor, or client to think about, ask yourself how you can prime them to give it to you.

Timing, Timing, Timing

This one is simply a matter of understanding that your marketing is going to be more effective if your prospect already has your product or industry on their mind.

Save yourself the trouble of priming them, and simply invest in curating a list of recipients who are likely to already be receptive to your message.

Be present in their mailbox. 

For marketers, this is easily the most important insight related to the availability bias. I could have put it first on the list, but I wanted to reward the faith of those who read this far, and punish the quitters who didn’t.

Does sending my client a birthday card or holiday card really change how much benefit they’re getting out of my product or service?

Well, no. But you had better believe that it changes how much benefit they think they’re getting out of your product or service.

Just like they overestimate how many academy awards Tom Hanks has won because they saw two Tom Hanks movies this year, they overestimate how much of an impact you, your product, or your service had based on the number of times they can easily recall you showing up in their mailbox.

So don’t make it any harder for their brain than it needs to be.

This is part two of an ongoing series about consumer behaviour. You are strongly encouraged to read part one here before reading this post.

If all of your customers were perfectly rational, and could instantly calculate with a high degree of accuracy the trade-off between the value you are providing, and the price that you are asking in return, all of marketing would be as simple as the following:

1. Find the people for whom the value is highest
2. Communicate that value to them in clear, economic terms
3. Set the price such that the price plus associated transaction costs equal slightly (if barely) less than the value

Indeed, a lot of traditional business philosophy is based around the idea that that is indeed the crux of marketing (I don’t want to diminish the importance of efficiently finding people for whom your product or service delivers a lot of value, and clearly communicating that value).

But traditional economic models are based on the idea that we make considered, rational purchasing decisions. If a pound of potatoes is selling for $3, and a 5-pound bag of the same potatoes is selling for $14 dollars, Homo Economicus should maximize her self interest and buy the bag of potatoes.

Making that kind of decision may be possible, and even common, when buying just one item at one store.

But when it comes to reality, making daily purchasing decisions end up being a lot more like driving a car than like doing a math problem. You need to consider not just the cost of each pound of potato, but also the cost in energy of lugging that bag of potatoes to your car, the cost to your peace of mind when your children complain that they have to eat potatoes for a fourth time this week, because you need to use up the 5-pound bag before the potatoes go bad, the cost in pantry space, etc…

And that’s just one item on your grocery list of 20 items that you need to buy after a long day of work. You don’t have the mental energy to engage system 2 that much at the end of a long day!

System 2 wants to compare prices across a dozen different stores, quantities, and brands. System 1 wants to get this shopping done quickly and use your mental energy for better things.

So system 1 engages what Tversky and Kahneman call “heuristics” – basically mental shortcuts – like preconceived notions, prejudices, and emotional responses.

For example: “I want cheap groceries. Walmart’s brand is synonymous with inexpensive.”

“I want cheap groceries, I’ll buy the no-name brand.”

“My mom used to buy the 5-pound bag of potatoes. My mom is a smart and savvy shopper. I’ll buy that brand.”

Except for that our purchasing decisions are not even as sophisticated as that, and our mental process is not even as thoughtful as that.

The above thought process manifests itself as “I’m looking for potatoes, I’m at Walmart, I recognize that bag of potatoes from my childhood, potatoes meet shopping cart.”

These heuristics – biases, emotional responses, mental shortcuts, logical fallacies, irrational behaviours – drive so many of our purchase decisions, whether we’re buying a $5 bag of potatoes or a $50,000 car.

We simply don’t have the mental capacity/energy to engage system 2 to slowly and rationally calculate all of the different factors at play, unless we intentionally and purposefully spend the time to do so – and that kind of considered approach to buying is exactly what you should do when making a big purchase.

This isn’t about smart people v.s. dumb people, or educated consumers v.s. irrational consumers. Everyone is subject to these limitations. If you don’t believe that, you should watch the video below:

Understanding why consumer behaviour is such a strong force in purchasing decisions is half the battle. The other half is understanding how to capitalize on consumer behaviour.

While traditional economic models suggest that the competitor with the best price will win the consumer’s business, behavioural economics paints a substantially more complicated picture:

Brand A has a better price, but:

I associate brand B with quality.

I trust the salesperson at brand B to not sneak any hidden costs by me.

I find it easy to talk to the service guy at brand B.

My father drove a car from brand B, and he let me drive it sometimes. I’m familiar with it. I don’t need to learn anything new about what all the buttons and controls do.

If I was making all of those calculations using only my rational, considerate, slow-thinking system 2, I might phrase the argument like this:

“Brand A costs $2,000 less. I value the quality that I associate with brand B at $1,200 in future frustration saved, in extra months and years that I expect to be able to drive the car, and in resale value. I value the trust that I have in the salesperson at brand B at $800 in hidden costs that it’s going to save me. I value the relationship that I have with the service guy at brand B $450 in time that it’s going to save me explaining my problems to him over the next 5 years, and extra bells and whistles that he isn’t going to try to pressure me into buying. I value my comfort with brand B at $150 it’s going to save me in time and mental anguish figuring out those damned buttons over the first few months.”

Therefore, I consider brand B worth $600 more than brand A.

Except all of those calculations are actually made using system 1 – that is to say, very quickly.

If I were to do the math, I may discover that I’m unlikely to incur even $250 of extra expenses over the life of the car by working with a less trusted service professional. But my trust in the service guy? May be worth more to me than a $500 discount, may be worth more than a $5,000 discount, and I can’t tell you why; that’s how I feel, I haven’t slowed down my thinking enough to think about it, and I’m not going to. I have cognitive biases, emotions, and irrational tendencies at play, and I’m doing the math very, very quickly as I go along.

In the next part of this series, we will look at how some of these cognitive biases come in to play when you’re sending mail to your customers, donors, prospects, stakeholders, voters, employees, or guests.

This is part one of an ongoing series about consumer behaviour.

What follows may seem like an esoteric or purely academic post in a blog that is normally about marketing, but nothing could be further from the truth.

Traditional marketing focuses on the customer or client as a self-interested, rational consumer, and expresses value to them strictly in those terms: Goods and Services (Value) in exchange for Money (Price)

Which is why most advertisements are expressed in one of the following ways:

• Buy now! Our price is better than alternatives!
• Buy now! Our value is better than alternatives!
• Buy now! The cost of not receiving this value is greater than the price!

The thrust of these ads are not incorrect, they are simply unsophisticated in their understanding of consumer behaviour.

One of the reasons that the proliferation of behavioural economics has been such a seismic shift in the business world is that for decades, we have been taught to base our models on the idea of consumers as Homo Economicus – the calculating, perfectly rational being that pursues his or her economic interest, whether as a consumer or a purveyor of goods and services.

As Adam Smith writes in The Wealth of Nations, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”

The work done on behavioural economics, in my opinion, is not meant to contradict these models, but rather to complicate and augment them – after all, it’s not by benevolence of the Dean, the steering committee, or the student that the professor expects his tenure!

It is tempting to misrepresent the work of Kahneman and Tversky, or of Dr. Richard Thaler, as promoting the notion that there is rational thought, and there are feelings, emotions, prejudices, and biases, and the two are totally different, competing, and conflicting guiding-forces – like two different pilots reaching for the controls at the same time.

In reality, Kahneman and Tversky describe two systems of thinking – System 1 and System 2.

System 1 is fast, emotional, unconscious – making quick calculations like “2 + 2 = 4” or “that person seems trustworthy.”

System 2 is slow, deliberate, and conscious – making slower calculations like 19 x 7 = 133″ or “I’m going to find waldo in a crowded picture”

When we think fast, it is not necessarily because we are making quick calculations. Oftentimes we engage system 1 to make extremely complicated calculations for which using system 2 would overwhelm our brains.

Think about driving a car – I love going for long drives, because it gives me an opportunity to zone out and think.

Ironically, that’s not because safely operating a speeding ton and a half of metal is an easy calculation; you need to be aware of the pressure of your foot on the gas and how it correlates with your speed, the proper minute movements that your hands need to make on the steering wheel in order to navigate the curves of the road, the changing speeds of the cars in front of you, behind you, and beside you, as evidenced by their headlights, break lights, and positioning on the horizon or in your rear-view mirrors. You need to be aware of speed limits, traffic lights, stop signs, sometimes while controlling the AC, radio, and maybe talking about politics with the passenger in the front seat.

If we gave any of these tasks the same slow, considered attention that we give to the question of “what’s the best movie you’ve seen in the last 5 years?” or “What is 36 plus 2585?” we would never be able to back out of the driveway, let alone make the drive from our homes to our offices in one piece.

Luckily, our brains have evolved to allow us to engage system 2 to approximate these calculations, making quick and dirty decisions to undertake all of these tasks for which being close enough is good enough. You don’t need to start braking at exactly the optimal moment so that you slowly come to a complete stop exactly 2 car lengths behind the car in front of you. If you break a little too early, you can creep forward; if you break a little too late, you can compensate by braking harder.

It’s like answering the question “What is 36 plus 2585” with the answer “somewhere between 2500 and 2700.” It’s correct, and it’s correct enough for the task at hand – as my music teacher at arts camp used to say, “it’s close enough for jazz.”

What behavioural economists have been able to build out on is the notion that we use system 1 to make a lot of decisions for which we should maybe we should be using system 2, and we get a lot of those decisions wrong.

For a demonstration, try answering these questions from Yale SOM’s Dr. Shane Frederick. The answer should immediately come to you (answers at the bottom of the post)*:

1) A bat and a ball cost $1.10 in total. The bat costs $1.00 more than the ball.
How much does the ball cost? _____ cents

2) If it takes 5 machines 5 minutes to make 5 widgets,
how long would it take 100 machines to make 100 widgets? _____ minutes

3) In a lake, there is a patch of lily pads. Every day, the patch doubles in size. If it takes 48 days for the patch to cover the entire lake, how long would it take for the patch to cover half of the lake? _____ days

In the next part of this blog, we will talk about how these 2 systems make decisions in harmony – or disharmony – when consumers buy products and services.

Keep scrolling down for the answers to the above questions

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*The ball costs 5 cents and the bat costs 105 cents for a total of $1.10. It takes 100 machines 5 minutes to make 100 widgets. It takes 47 days for the patch to cover half of the lake. Most people get these questions wrong because their System 1 mistakes them for easy questions, and forcefully shoves the quick and dirty answer down their throat.