Episodes
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Fair Warning: this episode regarding excuses was prompted by recent experiences with tradespeople during Colin’s kitchen renovation.
No one likes excuses, least of all your customers. Lately, Colin has been hearing many amazing excuses about why something can or cannot be done in his kitchen project. It got him thinking about excuses and why people make them. Today’s episode explores the ideas of excuses and what they tell us about human behavior.
Consider examples like long call center wait times blamed on “high call volume” or companies deflecting responsibility for faulty products or order issues by passing the buck to manufacturers. These situations highlight the commonality of excuses in everyday interactions.
It is important to understand the difference between an excuse, which is used to avoid blame, and a reason, which acknowledges the cause of a problem and usually is followed by steps to make it right. Additionally, we explore the psychological motivations behind excuse-making, including our innate desire to see ourselves as right, and how this plays into consumer behavior and decision-making.
One important concept that supports our behavior around blame is Confirmation Bias. When avoiding blame, we tend to favor information that supports our existing beliefs (i.e., that it is not our fault), even in trivial matters.
Additionally, we delve into the concept of Fundamental Attribution Error, where we are more likely to attribute others’ mistakes to their character while excusing our own based on external circumstances. This human tendency to avoid blame and protect our ego is universal. However, the consequences bear a sharp contrast to the benefits of taking responsibility, especially in leadership roles.
A case study from the UK’s Post Office scandal illustrates the severe consequences of excuses on a larger scale, where avoiding responsibility led to widespread harm and even imprisonment. From this, we draw lessons on the importance of honesty and accountability in both personal and professional contexts.
In this episode, we explore the fine line between a reason and an excuse and examine how they function in various Customer Experiences.
In this episode we also discuss:
The psychological need for self-preservation and its impact on excuse-making.
How Confirmation Bias affects our decisions and perceptions in everyday life.
The difference between taking responsibility and deflecting blame in customer service.
Real-world examples of excuses versus reasons in customer experience.
The potential long-term damage of excuses to trust and relationships.
Strategies for handling mistakes and building stronger customer relationships by owning up to errors.
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In this episode, we tackle a thought-provoking question from one of our listeners: Is it ethical to use urgency as a marketing tactic?
This question sparked a deep conversation about the ethics of digital marketing, particularly the use of scarcity to drive sales.
We feature insights from Daniel Bisett, partner and CXO at WeRock DM, and Marketing Professor at UT McCombs, who shares his thoughts after watching "The Social Dilemma" and wrestling with the impact of digital marketing on mental health.
Bisett discusses the ethical concerns of creating false urgency in marketing, comparing it to the stress and pressure felt by consumers during high-stakes purchases, like a kitchen remodel. He argues that manipulating customers with "FOMO" (Fear of Missing Out) can lead to hasty, anxiety-driven decisions, which ultimately harm the customer and the brand’s reputation.
Instead, Bisett advocates for building trust and long-term relationships by offering genuine value rather than pressure-filled transactions.
Bisett’s message and our subsequent discussion challenge marketers to reflect on their tactics and consider the long-term implications of their strategies, not just for their business, but for their customers' well-being.
In this episode, we further explore whether using behavioral science in marketing crosses ethical lines, especially when marketers understand more about customer behavior than the customers themselves. We also delve into the nuances of ethical intent, the role of empathy, and the importance of transparency in marketing practices. We also discuss how companies can ensure they are not just making sales but also treating customers with dignity and respect.
In this episode you will also learn:
The ethical implications of using behavioral science in marketing.
The difference between needs-based selling and manipulative sales tactics.
The role of empathy in ethical marketing decisions.
How intent and transparency can help marketers stay on the ethical side of business.
Real-life examples of ethical and unethical marketing practices.
Strategies for building long-term customer relationships based on trust and value.
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In this episode, we dive deep into the concept of empathy and its significance in Customer Experience Management. We challenge common perceptions of empathy, explore its connection to emotional intelligence, and examine how both concepts can enhance your experience management efforts.
We begin with a discussion on the importance of Emotional Intelligence (EQ), referencing some compelling statistics:
Emotional intelligence influences 58% of job performance.
90% of top performers at work have a high EQ score.
The demand for EQ skills is projected to grow six-fold in the next three to five years.
Employees with empathetic leaders report a 76% increase in engagement and a 61% boost in creativity.
Restaurants managed by individuals with high EQ see a 22% annual profit growth.
EQ interventions in the workplace can reduce employee turnover by 63%.
75% of Fortune 500 companies have utilized EQ training tools.
Our guest, Sandra Thompson, an emotional intelligence coach from Ei Evolution, shares her insights on empathy within the context of EQ. She emphasizes the necessity of using empathy skills, which involve asking questions and truly listening to understand another person’s feelings and interpretations, rather than projecting our own emotions onto their experiences.
We also explore the idea that traditional empathy might be too contextual, as emotions are personal and can lead to misunderstandings if the emotional context differs. Thompson’s concept of “walking in the customer's shoes” is dissected, with the notion that while some shared experiences can foster empathy, unique contexts might still cause disconnects.
We break down empathy in emotional intelligence into three approaches: bad (not caring), good (walking the experience as if you were a customer), and better (experiencing as a customer and asking questions to understand their feelings). This layered approach is essential for effective experience management and creating genuine connections with customers.
In this episode we also explore:
The impact of empathy on job performance and employee engagement.
How empathy and emotional intelligence can reduce employee turnover and increase profitability.
The role of emotional intelligence in leadership and its effect on creativity.
Strategies for developing and implementing emotional intelligence skills in the workplace.
Real-life examples of how empathy and EQ improve customer experiences.
The importance of self-awareness in emotional intelligence and managing personal emotions.
Practical tips for enhancing empathy skills through active listening and inquiry.
Sandra Thompson Contact Details. Website: www.eievolution.com LinkedIn: https://www.linkedin.com/in/cxeisandra/ -
In this episode, we challenge the conventional wisdom of customer-centricity and discuss why firing a customer is sometimes necessary. While it may seem counterintuitive, knowing when to let go of a customer can benefit your business in the long run.
We outline five critical rules to help you determine when it's time to part ways with a customer:
Rule #1: Fire customers if they cost too much. Some customers drain more resources than they generate in revenue. It's crucial to track these costs accurately and address the imbalance. If you can't rectify the situation, it's time to let them go.
Rule #2: Fire customers if they don't align with your brand. Your brand's values should resonate with your customer base. If a customer's values conflict with yours, maintaining the relationship can harm your brand's integrity and alienate your core audience.
Rule #3: Fire customers if they don't fit with your future. As your business grows, some customers might no longer fit your strategic goals. Prioritize resources for future growth by letting go of customers who don't align with your long-term plans.
Rule #4: Fire customers if they are too risky. If a customer's business model or payment practices pose a significant risk, it's safer to part ways. Overcommitting to one client or taking the undue risk can jeopardize your business stability.
Rule #5: Fire customers if they abuse your employees. Support and protect your employees from abusive customers. Ensuring a respectful work environment is critical for employee morale and long-term success.
Understanding these rules will help you make informed decisions about maintaining customer relationships that align with your business goals and values. Sometimes, the best way to move forward is to let go.
In this episode, we also explore:
The importance of knowing your customer cost metrics and tracking them accurately.
How to handle awkward conversations with customers about cost imbalances.
Examples of brand alignment, including the Colin Kaepernick and Nike story.
Strategies for soft-firing customers without abrupt severance.
Recognizing when your growth trajectory requires pruning your customer base.
Identifying and mitigating business risks associated with certain customers.
The impact of customer behavior on employee well-being and company policy.
Insights on post-pandemic changes in customer behavior and their effect on businesses.
The balance between customer-centricity and business sustainability.
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In this episode, we explore the role of AI in customer experiences and whether it will replace human interaction. Ali Cudby, CEO of Alignment Growth Strategies, shares insights on leveraging AI to build customer relationships effectively. We discuss practical AI tools that enhance customer experiences and streamline efficiency.
There are a couple of helpful AI tools Cudby mentions. For example, Synthesia generates AI voiceovers for video scripts, making updates easy and translating content for global audiences. Also, Absorb uses AI to create prompts-based presentations, reducing time and effort. Cudby describes how these tools allow for more accurate customer communication while freeing up time for personalized interactions where it matters most.
Cudby (alicudby, Alignment Growth Strategies), the author of Keep Your Customers, emphasizes that while AI is a valuable tool, it cannot replace genuine, personalized experiences delivered by empathetic humans. Customers must feel seen, heard, and valued to build trust and loyalty.
The episode also highlights the importance of context in customer experiences and how AI can assist without overshadowing human value. We also touch on the potential risks of AI, such as the creation of fake videos, and the importance of verifying authenticity, especially during critical times like elections. Schema matching helps us identify inconsistencies in AI-generated content, ensuring we make better judgments.
The discussion includes the concept of Blue Ocean Strategy, which advises focusing efforts on what drives the most value for customers. By maximizing resources in areas that matter most, businesses can avoid spreading themselves too thin and achieve greatness.
In this episode, we also discuss:
The significance of AI tools in customer education and training.
The balance between AI efficiency and human empathy in customer interactions.
The impact of AI on content accuracy and time management.
Real-life examples of AI and human synergy in customer service.
The role of schema matching in identifying AI-generated fakes.
Strategies for optimizing customer experiences using the Blue Ocean concept.
The importance of context in understanding customer emotions and needs.
How to determine the value AI brings to your customer experience efforts.
The potential pitfalls of over-relying on AI in areas where human touch is crucial.
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Friction occurs when a customer has to work or think hard during an experience. Many times, friction is accidental or the result of organizational apathy. In these instances, friction is a bad thing.
Friction is rarely a good thing in a Customer Experience. However, there are times when it can be beneficial.
For example, when your bank uses two-factor authentication to ensure you are who you say you are. This friction enhances customers’ feelings about an experience.
So, how do you know the difference? It depends on the context.
For example, Disney and Apple have annoyed Colin. Typically, he sings these two brand’s praises, so this friction surprised him.
Both require Colin to make appointments for his experience, which bugs him. Disney has a new program where you book appointments before you arrive to ride an attraction at a certain time. They charge for it, too. Apple requires you to book an appointment in one of their locations rather than turn up with your questions. (But Apple doesn’t charge for this service.)
While Colin is still determining if the Disney program will improve the experience, he is sure this new process will be more hassle than the previous one. Time will tell whether it will be worth it.
Regarding Apple, the friction of booking an appointment has benefited Colin. He isn’t turned away because everyone is “too busy” to deal with him when he arrives at his appointed time.
So, while Colin would rather Apple was always available when he shows up at a retail location, making the appointment—and the friction it introduced—has provided value for him.
In this episode, we delve into friction in Customer Experiences, exploring when it's beneficial and detrimental. We provide examples illustrating how friction can enhance or hinder customer interactions, shedding light on its nuanced role in shaping perceptions and behaviors. By understanding the multifaceted nature of friction, businesses can unlock new opportunities for customer engagement and loyalty.
You will also learn the following:
The advantages of removing friction and making things easier for customers.
The prevalence of accidental friction stems from neglect or apathy rather than deliberate strategy.
Examples of deliberate friction in various industries, from amusement parks to luxury restaurants, and the underlying psychological mechanisms at play.
The importance of finding the right balance between security measures and customer convenience, avoiding excessive friction that may deter or frustrate customers.
Strategies for strategically managing friction to align with broader business goals while prioritizing customer satisfaction and ease of interaction.
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Colin has a bone to pick. No, it's not with cable providers this time. It's with the tradespeople involved in his latest home reno project. They are living up to the poor reputation that precedes them, and he has a list of complaints.
Key problems included inaccurate pricing, disdain for previous workers' efforts, lack of collaboration, excessive use of jargon, and poor time management. The disconnect between different trades, reminiscent of organizational siloes in corporate environments, often exacerbates problems.
These issues often leave customers frustrated and distrustful. Drawing from personal experience with Colin's kitchen renovation, we highlight common problems that contribute to the negative perception of tradespeople and discuss ways to enhance their Customer Experience.
It is important to note that many tradespeople excel in their work and customer service, proving that good practices do exist. It's just that none of those lot are currently working on Colin's project.
A significant issue is information asymmetry—customers often lack the knowledge to assess the necessity of additional work, creating a sense of vulnerability and distrust. Other industries, like customized software solutions, face similar challenges where the contractors' expertise far exceeds that of the clients.
Some tradespeople and firms have addressed these issues effectively. For example, an electrician's memorable and self-aware tagline, "No Malarkey with Mr. Sparky," engaged Colin enough to hire them to fix his electrical mishap. He liked the acknowledgment that sometimes contractors do provide more than their share of malarkey. This example underscores the importance of clear communication and reliability in building customer trust.
In this episode, we not only humor Colin's need to rant, but we also explore why tradespeople have the reputation they do and what they should do about it.
We also look at what you can learn from their mistakes to benefit your organization.
In this episode, you will also learn how to avoid these mistakes with tips like:
Use Effective Communication Strategies: How tradespeople can improve customer interactions by avoiding jargon and clearly explaining their work
Set Realistic Expectations: The importance of accurate initial quotes and timelines to build trust and prevent customer frustration
Employ Collaboration: Strategies for enhancing coordination between different trades (or organizational siloes) to ensure smoother project completion
Develop Customer Education Tactics: Methods for educating customers about the work undertaken to reduce information asymmetry and build confidence
Implement Customer Experience Systems: The value of structured approaches to ensure consistent and positive customer experiences across the trades
Learn from Other Industries: Insights from how software firms handle project management and customer relations to avoid cost and time overages
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Did you ever have an imaginary friend? If so, you already have a leg up on this week’s episode. Chances are you created a mental model of your imaginary friend and could predict with 100 percent accuracy how they might react to a given situation.
A mental model is a detailed creation of an imaginary customer that helps you determine how a real-life customer might react to a given situation. However, unlike the imaginary friend, science and data develop the imaginary customer, not creativity.
As we conclude the Masterclass Series about the intricate world of Customer Experiences and the myriad factors that shape customer behavior from a behavioral science perspective, today’s episode pulls everything together. We discuss why you should create mental models of imaginary customers to understand why your real-life customers do what they do.
Traditionally, advertising professionals crafted detailed fictional personas, like an imaginary friend from childhood. Then, they targeted their messages to these fictional customers to hone their brand messages. Today, marketers continue this practice by segmenting customers into groups with specific characteristics, creating a persona that represents the group, and tailoring messages for each persona.
AI presents an intriguing opportunity to enhance this approach, enabling AI to predict customer responses by accurately simulating real-world behavior. This practical application holds immense promise.
However, relying solely on intuition is inadequate for constructing precise mental models. A wealth of data is necessary to uncover the underlying motivations and psychological triggers of customer behavior.
Understanding the context in which customers make decisions is another critical element of creating effective mental models. Factors such as current emotions, memories of past experiences, and the situational context can significantly influence decision-making. Also, we discuss how Daniel Kahneman’s two-system model from "Thinking, Fast and Slow" explains the interplay between rational and intuitive decision-making processes.
This final installment of our Masterclass Series underscores the significance of customer personas or mental models in comprehending and anticipating customer reactions to diverse marketing strategies. Our discussion emphasizes the criticality of incorporating comprehensive data into these models to ensure accurate predictions of customer reactions, particularly in the context of incentives. The discussion also highlights the challenges of integrating such data into AI models.
In this episode, you will also learn:
The historical development of customer personas in advertising
The potential future role of AI in creating and predicting customer personas
The limitations of relying solely on intuition for customer behavior predictions
The significance of memories and emotional drivers in customer decision-making
Why nutrition labels did little to encourage obese people to make better food choices
The impact of situational context on customer choices
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You know that friction in a Customer Experience is a problem that needs fixing. However, do you have that same perception of workplace friction?
If you feel the friction at work, you probably do. But if you don't, you likely think little of it, if at all. Doing work for money requires a certain amount of friction, right?
However, if the friction impacts employees and decreases employee morale, it can be a significant problem. One might even say it is a problem worth fixing.
In this episode, we delve into workplace friction and its impact on employee productivity and morale with Christophe Martel, founder and CEO of FOUNT. Martel, an expert in eliminating workplace friction, shares his insights on how reducing friction can transform employee experience, leading to happier and more productive teams.
We define workplace friction as anything that makes it harder for employees to do their jobs. This friction manifests in various ways, such as messy interactions, poor intra-company team collaboration, lack of established rules, and inadequate systems for settling disagreements. While most companies recognize friction in Customer Experience is detrimental, many organizations overlook its impact on employees.
Martel explains that workplace friction is an evolving concept that varies from person to person. Unlike organizational friction, which slows down processes company-wide, work friction is more acute and usually affects frontline employees. It often arises unintentionally from policies or changes designed to meet departmental goals, complicating interactions for customer-facing staff.
FOUNT addresses structural friction by identifying and resolving issues through data collection and analysis. By understanding employees' specific tasks, FOUNT helps organizations implement solutions that improve productivity and morale. Martel emphasizes that solving work friction leads to happier employees and yields operational benefits, making the company more efficient and profitable.
One key takeaway is that productive employees are long-term employees. Contrary to the popular belief that people leave managers, Martel argues that they leave because of work friction. Managers often absorb friction for their teams but lack the authority to make systemic changes. As a result, friction becomes ingrained in company processes, persisting even when everyone acknowledges it doesn't work.
Martel advocates for open communication between frontline employees and senior managers to identify and address work friction. He also highlights the potential role of AI in reducing friction, though its effectiveness depends on user adoption. AI tools can help when properly deployed based on insights from work friction data.
We discuss why addressing work friction requires a clear understanding of its causes and a commitment to making systemic changes. We also hear about how Martel's approach with FOUNT demonstrates that reducing friction can significantly improve employee satisfaction, productivity, and overall company performance.
Listeners will also learn:
How to identify different types of workplace friction
The importance of data in understanding and resolving friction
Examples of structural friction and how to address them
The role of managers in mitigating or exacerbating friction
The potential impact of AI tools on workplace productivity
Practical steps for fostering open communication and gathering actionable insights from employees
The financial benefits of reducing work friction in large organizations
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Customers can tell you why they do something, But they might be wrong.
It's not that customers are stupid. No, it is quite the contrary. Customers' thinking and decision-making are complicated; multiple things happen simultaneously.
Sometimes, the reason customers do things is hidden, even from the customers themselves. In our penultimate masterclass episode, we explore how you can get at these hidden motivations when designing a Customer Experience that surprises and delights customers.
In this episode, we delve into the hidden motivations of customers, particularly focusing on Confirmation Bias. This bias is a psychological tendency in which people seek information confirming their beliefs and discount contradicting them. It plays a crucial role in customer decisions, often without them even realizing it.
For example, one significant influence is the desire to be right, to see oneself as competent and knowledgeable. Confirmation Bias stems from this need, as people seek information that validates their opinions and disregards contrary evidence.
This bias manifests in various ways. One is brand loyalty.
For example, Apple enthusiasts might blame themselves for device issues rather than consider a fault with the product. This self-blame reinforces their loyalty, even if the product doesn't work perfectly. Similarly, loyal users of the social media platform X (formerly Twitter) overlook its problems to maintain their positive view of the service.
Confirmation Bias is also evident in political beliefs. Studies show that exposure to opposing viewpoints makes individuals more extreme in their views rather than moderating them. This reaction occurs because engaging with opposing views requires more cognitive effort and emotional resilience, as it threatens one's sense of being right.
In business, Confirmation Bias occurs when companies resist new findings that contradict their existing strategies. For instance, in our Emotional Signature® research, organizations often find that the real drivers of customer satisfaction differ from the assumptions. While these insights are valuable, accepting them is challenging because it feels like the organization must admit to past mistakes.
Recognizing and addressing hidden motivations is essential for businesses, so tune in to gain insights into the complex world of customer motivations and how to leverage these understandings for better business outcomes. We will explain why it is crucial to go beyond surface-level feedback and analyze customer behavior to uncover these deeper drivers.
In this episode, we also discuss:
The role of evolutionary psychology in understanding customer motivations.
Techniques for uncovering hidden customer needs.
How Confirmation Bias affects brand loyalty and customer satisfaction.
The impact of cognitive effort and emotional resilience in accepting opposing views.
Strategies for supporting customers in justifying their purchases.
The importance of being open to new information and challenging one's own biases.
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Sanjay Patel faces a challenge many of us can relate to: how to get senior executives to buy into your program.
Dealing with senior management can be nerve-wracking, as I learned twenty years ago when my heart rate spiked during a presentation to the CEO and C-suite. Today, I've mastered strategies for these situations.
In this episode, we discuss how to deal with them effectively and get what you want.
For example, it starts by being confident in your knowledge. Senior executives are usually clever and ambitious, knowing a lot about various topics but often not much about Customer Experience (CX). When discussing CX or any program you are knowledgeable about, remember they can learn from you. They wouldn’t talk to you otherwise. Respect your expertise and believe in yourself. If you don’t believe in your ideas, why should they?
So, yes, confidence is key, but avoid being overly technical or jargon-heavy. Overcomplicating your message can make you seem like you’re covering for something. Instead, align your message with what the CEO cares about most. For example, if the CEO is focused on cost-cutting, explain how your CX program can save costs. Understanding and addressing their needs will help you get through to them.
You should also keep your questions simple. Surprisingly, the higher you go in the management chain, the simpler the questions should be. Simple questions like "What experience do we want to deliver?" engage the senior team effectively. Avoid complex questions that convolute your message. Being clear and relevant is more important than appearing clever.
Additionally, using examples from within the organization or from customers helps illustrate your points effectively. Personal stories make your message digestible and relatable. For instance, Colin always asks his clients to think about a good or bad experience they had recently. By asking your audience about their own good or bad customer experiences, you can help them understand the importance of emotions in CX.
Finally, senior management values opinions. When asked, state your opinion clearly and respectfully. And be straightforward; senior management can easily detect dishonesty.
Today’s episode explores how to convince senior management to support your program. . Ultimately, persuading senior management is a sales job. So, we talk about how to sell your idea by meeting their needs.
In this episode, you will also discover:
How to frame your expertise in a way that resonates with senior executives' priorities.
Techniques for simplifying complex ideas to ensure clarity in communication.
The importance of aligning your proposals with the company's strategic goals.
Methods for using storytelling to make your case compelling and memorable.
Strategies for addressing tough questions with confidence and transparency.
Ways to gather and present evidence that supports your proposals effectively.
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This episode is the sixth in an eight-part series on Unlocking the Psychology of Customer Experience. Here, we explore the psychology we have regarding how human beings deal with predicting unpredictable outcomes. The discussion focuses on biases that influence how people perceive and assess probability and risk, impacting their judgment and decision-making processes.
We begin with a common bias in these situations, the Gambler's Fallacy. In this scenario, individuals predict future random outcomes based on past results. It feels logical but isn’t and often results in poor decision-making.
For example, casinos will often put the results of the past few Roulette rolls to give patrons a history of what has happened with the wheel. Some gamblers might use this history to predict what is likely to happen next.
However, the marble doesn’t have a memory of what just happened or any control over what happens next. The next roll will be as random as the last roll. The history of the Roulette wheel is meaningless; it only serves the casino by exploiting patrons' inability to realize the random nature of the spin and taking their money.
Another bias we discuss is the Hot Hand Fallacy, which influences people to believe that a streak of success in sports or other areas is sustainable despite statistical evidence.
The Gambler’s Fallacy and the Hot Hand Fallacy are not any more logical or rational than one another. The Hot Hand Fallacy differs because, at least, an athlete’s performance or a business outcome isn’t random. However, it isn’t any more likely to be right.
We also examine the Overconfidence Bias, which reveals how individuals tend to be overly confident in predicting outcomes, leading to misguided decisions. The Dunning-Kruger effect, a related phenomenon, highlights how individuals with limited knowledge of a topic may underestimate their competence.
Colin is guilty of this regarding his ability and drive to learn about his SLR camera’s more nuanced settings. He opts for the automatic settings instead.
Moreover, the Endowment Effect is discussed, illustrating how people overvalue items they perceive as their own, influencing their willingness to part with them. The Hindsight Bias is also explored, revealing how people tend to believe that past events were more predictable than they were.
In this episode, you will also learn the following:
The importance of ongoing learning and adaptation in navigating the complexities of human decision-making.
The implications of these biases for customer experience design and decision-making in business.
Strategies for mitigating the impact of cognitive biases on judgment and decision-making.
Real-world examples of how these biases manifest in various contexts, such as investing, sports, and customer interactions.
The role of awareness and education in addressing biases and improving decision-making processes.
Practical steps for incorporating insights from behavioral economics into experience design and business strategy.
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Regarding Customer Experiences and the behavioral sciences, there is seldom only one thing happening at a time. There are usually a lot of things happening at once. This masterclass episode, the fifth in a series of eight, explores economic biases and how they create flaws in our decision-making logic.
For example, one key bias discussed is the Sunken Cost Fallacy, where people need help to walk away from investments, leading to subsequent mistakes. Loss Aversion is another bias explored, highlighting how we feel losses more acutely than gains. This bias influences behaviors like resisting salary reductions and preferring to face a potential layoff (where one would lose all their salary) because we can’t imagine losing any part of our present income.
The Endowment Effect, stemming from Loss Aversion, emphasizes how we overvalue items we perceive as our own, leading to decisions like overpricing sentimental possessions. It’s why grad students can’t bear to part with their gift in exchange for a gift of equal value. It’s also why economist Richard Thaler, University of Chicago, can now add “Nobel-prize-winning economist” in his bio.
Ultimately, these economic biases reveal that people aren't always logical, and irrational factors often influence our decision-making processes. In this episode, we discuss why and what you can do about it in your experience design.
In this episode, you will also learn the following:
Strategies for recognizing and navigating economic biases in customer experience management.
Examples of how these biases manifest in everyday situations, such as purchasing decisions and salary negotiations.
The importance of understanding irrational decision-making in designing effective customer experiences.
Practical steps for leveraging insights from economic biases to enhance customer interactions and outcomes.
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Surge pricing, a form of dynamic pricing, involves raising prices during spikes in demand to balance supply and demand. It is a rational economic solution to manage demand effectively, but it can generate negative emotions among consumers who feel they're being unfairly charged. Surge pricing is a specific flavor of dynamic pricing or, depending on your perspective, price discrimination.
Surge Pricing is commonly seen in ride-sharing services or airlines, where prices increase during peak times to encourage more drivers to hit the road. Examples of surge pricing include Uber's increased fares during rainy weather and airlines charging higher prices for last-minute bookings or peak travel times.
In addition to ride-sharing and airline industries, surge pricing can be observed in other sectors, such as bars offering happy hour discounts to attract customers during off-peak hours. However, it doesn’t work in every situation and can damage your customer relationships.
Surge pricing has its good points. It can increase revenue and manage demand effectively. However, to do so, this dynamic pricing strategy must be balanced with customer-centric considerations and strategic communication to avoid negative perceptions.
In this episode, we explore the particulars of surge pricing and explain how effective communication is crucial when implementing dynamic pricing strategies. Customer communication can ensure customers understand the rationale behind the pricing changes and feel they're receiving fair value.
In this episode, you will also learn the following:
Examples of surge pricing in various industries, including hospitality and energy.
The role of strategic purpose in dynamic pricing implementation.
Why effective communication helps stave off disaster when implementing dynamic pricing strategies.
How framing dynamic pricing changes can influence consumer perceptions.
Balancing the benefits to the customer with revenue optimization goals.
There is a need for flexibility and supply management to support dynamic pricing strategies.
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Various motivational biases and emotions shape customer experiences, emphasizing the need for a holistic approach to designing experiences. For example, the customer’s mood significantly impacts the customer’s decision-making processes.
Today's discussion highlights why understanding the customer’s mood and managing customer emotions helps you achieve your desired experience outcomes. It also identifies twenty emotions driving or undermining value, stressing the necessity of specificity in emotional goals.
We also cover the Affect Heuristic and Mood Management Theory, two prominent theories in psychology that are particularly relevant to our discussion on the role of emotion in decision-making. Here’s why:
The Affect Heuristic suggests that our intuitive choices are often guided by emotional responses, with a preference for positive experiences. This has practical implications for businesses in terms of designing customer experiences that evoke positive emotions.
Mood Management Theory posits that our decisions are often driven by the desire to regulate our mood, seeking pleasure or alleviating discomfort. This theory helps us understand the role of mood in decision-making and its potential impact on customer experiences.
Context, culture, and age also influence mood and emotional responses. We discuss how cultural predispositions and life stages shape emotional goals and needs (which also explains why Colin’s Smiley Face Buttons on Etsy won’t sell like hotcakes in England).
In this episode, we underscore the importance of recognizing and understanding the impact of mood on decisions. We also explore the power of positive thinking in shaping perceptions and responses to reality while acknowledging its limitations in influencing external outcomes. Additionally, we advocate for a diagnostic approach to customer emotions and behavior and capitalizing on positive or managing negative moods.
Here are a few key points we make in the podcast:
Mood significantly influences decision-making processes, so understanding and managing customer emotions, which we covered in another episode recently, are crucial for designing effective experiences.
Specific emotional goals are essential for achieving desired outcomes, so if you don’t have them, you should make them now.
Context, culture, and age also influence mood and emotional responses.
Why Colin and Ryan represent both the best and the worst culture has to offer regarding positive or negative outlooks on life.
Positive thinking can shape perceptions and responses to reality but can’t change reality; so think positive but work hard—and don’t walk barefoot over a field of hot lava because you “think you can.”
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This has been created in partnership with NICE.
AI is a significant development in experience management, but many organizations need help with its implementation. While experimenting with AI, like ChatGPT, offers a glimpse of its potential, it's challenging to understand how AI fits into the broader tech stack and business systems.In today’s episode, Elizabeth Tobey, Head of Marketing for Digital and AI for NICE ) NICE, an AI platform, shares insights on effectively using AI to enhance experiences.
This video summarizes what I see happening in many organizations regarding implementing AI.
Tobey says that many organizations have told her they don’t know where to start. She emphasizes the importance of beginning with impactful AI use cases and setting clear KPIs to measure success post-deployment. NICE's suite of solutions helps identify pain points within a company, enabling targeted AI implementations, such as Enlighten XO, which stands for experience optimization.
However, implementing AI requires overcoming siloed approaches and investing in third-party solutions due to resource limitations and expertise within organizations. Customizing AI models for specific customer experiences is crucial, as different experiences require different approaches.
In other words, you don’t want the same experience buying a luxury car as returning running shoes. One must feel posh and comprehensive, while the other should be quick and easy. (We’ll let you guess which is which.)
Tobey advises that to sell AI within an organization, one should focus on solving business problems rather than promoting AI. Managing expectations about AI capabilities is essential, as AI alone cannot solve all problems. Instead, AI should complement existing technology, culture, and business objectives.
Tobey suggests clearly understanding success criteria and providing data to potential partners to demonstrate realistic outcomes. Building relationships with partners invested in success ensures alignment with business needs and fosters growth opportunities.
In this episode, we will also discuss:
The importance of understanding AI nuances and use cases across different organizational roles.
How AI solutions should align with existing technology and business objectives.
The role of partnerships in AI implementation and success.
Managing expectations and avoiding overreliance on AI.
The evolution of AI technology and its potential impact on businesses.
Customizing AI solutions to address specific business challenges.
Leveraging AI to enhance customer experiences and drive business growth.
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A Master Class Part 3: Unlocking the Psychology of Customer Experience
In the third episode of our Master Class series on the Psychology of Customer Experience, we delve into how other people influence our behavior. Understanding these theoretical dynamics is practical, empowering you to design effective Customer Experiences.
Robert Cialdini's research on influence is a cornerstone of understanding social dynamics and persuasion techniques. In this episode, we rely heavily on his groundbreaking work.
First, let’s consider Social Proof. Social Proof is a concept that describes how the actions and preferences of others influence people. Two examples that demonstrate how this works are the idea of trending, or the tendency to like something if others do, and the fear of missing out (FOMO), which drives people to join in activities or trends.
Reciprocity influences behavior, too. Reciprocity is the idea that people respond positively to kindness and favors. Many times, people who have been on the receiving end of kindness will return that behavior.. However, acts of kindness that inspire reciprocity must be genuine. If they come with the expectation of something in return, they will not produce the same results.
Scarcity is a persuasive tactic that capitalizes on the limited availability of a product or service to create a sense of urgency and desirability. It can be seen in online shopping carts indicating low stock or limited time offers presented during a cruise.
In this episode, we provide an overview of many of these social dynamics that influence customer behavior in your experience. Understanding social dynamics and influence can inform strategic decisions in customer experience design, including marketing campaigns, sales techniques, and product positioning. Best of all, Colin uses his serious “Master-Class” voice, which tells you that he really knows what he is talking about.
In this episode, you will also discover:
The concept of Social Proof and how it influences consumer behavior.
The power of Reciprocity and how acts of kindness can drive customer loyalty.
How Scarcity tactics can create a sense of urgency and increase demand for products or services.
Examples of these influence techniques in real-world scenarios, like online shopping cart messages and to-good-to-be-true cruise line offers.
The importance of considering social influences throughout the customer journey.
Strategies for leveraging social dynamics to enhance customer experiences and drive sales.
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Quality assurance is crucial in Customer Experience Management, and assessing call center operations provides valuable insights into an organization's customer-centricity. The subject of today’s episode is the result of our None of Use is Clever as All of Us feature. One of our listeners, Jamie Scott of Evaluagent shared his thoughts on Quality Assurance and the problems organizations have regarding this area.
Observations and conversations with call center agents reveal operational inefficiencies and training gaps that impact the overall customer experience. Scott highlights key issues with traditional quality assurance practices and offers insights into leveraging AI for enhanced customer service.
Scott emphasizes the importance of viewing AI as a tool rather than a replacement for human agents and advocates for analyzing all customer interactions to gain comprehensive insights. He underscores the need to focus on the emotional aspects of customer interactions and suggests using AI to predict and diagnose customer sentiments across various channels.
However, challenges such as siloed AI implementations and focusing on rational data in quality assurance metrics hinder progress in this area.
In this episode, we explore Scott's topic and how it can help you with your Quality Assurance efforts. Despite these challenges, there are actionable strategies for customer service and quality management professionals.
In this episode, you will also discover:
The significance of assessing call center operations for understanding an organization's customer-centricity.
Insights from Jamie Scott on leveraging AI and overcoming challenges in quality assurance practices.
The importance of viewing AI as a tool to enhance human decision-making rather than a replacement for human agents.
Strategies for analyzing all customer interactions to gain comprehensive insights and identify areas of improvement.
The need to focus on emotional aspects of customer interactions and incorporate emotional metrics into quality assurance practices.
Practical tips for implementing a top-down approach to delivering the desired customer experience and measuring targeted emotions across all customer touchpoints.
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A Master Class Part 2: Unlocking the Psychology of Customer Experience
In this episode, we continue exploring the psychology behind Customer Experience, focusing on the role of memory. Customer loyalty hinges on how memories are formed and retained. Therefore, understanding memory formation is crucial for designing impactful experiences.
Memory formation begins with encoding, where new information is processed and stored in the mind. Encoding involves several effects, including the Primacy Effect, which prioritizes remembering initial experiences, and the Recency Effect, which emphasizes recollecting recent events. Additionally, the Frequency Effect highlights the importance of repeated actions in memory retention.
Retrieval effects determine how stored memories are recalled. Professor Daniel Kahneman's Peak-End Rule suggests that people remember the most intense emotion experienced during an event and its conclusion. This rule applies to evaluative memory, shaping overall perceptions of past experiences.
Memory also has structure. Memory structure resembles a fishing net, with individual memories as knots connected to form a net, which represents the larger memory network. Retrieving one memory often triggers the recall of associated memories, along with the emotions and experiences linked to them. It’s helpful to picture the fishing net at the bottom of a shallow pool and imagine pulling it by one of the knots to the surface. You get the knot you grabbed, but all the connected knots come along, too.
Strategically managing memory formation involves planning for encoding, recall, and structure. Tactics such as leveraging primacy and recency, incorporating humor or emotional connections, and providing follow-up reminders can enhance memory retention. It's crucial to prioritize memorable aspects of the experience and reinforce positive memories over time.
Considering the interconnected nature of memory concepts, such as the relationship between encoding and recall, helps design experiences that leave a lasting impression. For instance, understanding how customers perceive value allows you, as a professional, to highlight key features that resonate with your target audience, instilling confidence in your ability to create memorable customer experiences.
In this episode, we discuss how memory plays a significant role in driving customer loyalty, making it essential to proactively shape how customers remember their experiences. By being deliberate about memory formation, businesses can create meaningful connections and foster enduring relationships with their customers.
In this episode, you will also learn:
The importance of encoding and retrieval in memory formation.
Strategies for enhancing memory retention, such as leveraging Primacy and Recency effects.
The role of emotional connections in shaping memorable experiences.
The significance of follow-up communication in reinforcing positive memories.
How memory structure influences the recall of associated experiences.
The interconnected nature of memory concepts and their implications for experience design.
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A Master Class: Unlocking The Psychology of Customer Experience
With this episode, we begin an eight-part series exploring customer behavior and the psychology that drives it. Each part will delve into the various psychological aspects of Customer Experiences, offering practical advice on understanding and influencing them. Our focus today is on why customers make quick decisions and how you can sway those decisions in your favor.
Understanding customer behavior is complex and influenced by multiple factors, a concept known in academic circles as high causal density. There's no one-size-fits-all solution for a perfect Customer Experience transformation; it requires a combination of approaches.
Human nature often seeks shortcuts for cognitive tasks, leading to heuristic processes. Heuristics, or mental shortcuts, simplify decision-making. We discuss four common heuristics:
Anchoring and Adjustment: People use familiar examples to estimate values quickly, which can lead to biases, especially in pricing strategies.
Focusing Effect: When faced with information overload, individuals focus on crucial details to aid decision-making. Recognizing what customers prioritize can influence their choices.
Availability Heuristic: Our brains estimate likelihood based on easily accessible examples. Understanding what information customers readily recall helps shape perceptions.
Representativeness: People often categorize based on stereotypes or representative traits. Recognizing customer expectations can guide your design approach.
Considering these heuristics, we emphasize the importance of first impressions, understanding customer values, managing expectations, and aligning your design with customer decision-making shortcuts. Recognizing the diversity in customer decision-making preferences is crucial, and segmentation plays a vital role in tailoring experiences.
This episode explores various influences and group psychological concepts tied to customer decisions. Our goal is to provide a holistic understanding of experience psychology, making you more agile in grasping customer behavior and creating plans for compelling experiences that encourage return visits.
In this episode, you will also learn:
The significance of first impressions and their impact on customer anchors.
How to identify valuable areas for customers and use them for effective comparisons.
The role of customer expectations and how to align your design with their anticipated experiences.
The importance of providing information shortcuts to simplify decision-making.
Strategies for segmentation to cater to diverse customer decision-making preferences.
The overarching theme of simplification as a design approach offers customers shortcuts to decision-making and potential sales.
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