Multichannel Customer Strategy

AFFECT HEURISTIC

The second bias is affect heuristic: the human tendency to base our decision on our emotions.

E.g. A study conducted at Shukutoku University, Japan. Participants judged a disease that killed

1,286 people out of every 10,000 as being more dangerous than one that was 24.14% fatal.

People reacted emotionally to the image of 1,286 people dying, whereas the percentage didn’t

arouse the same mental imagery and emotions. People are impressed the most by the things

they can visualize, not by numbers.

CONFIRMATION BIAS

A third bias is the confirmation bias: we love to agree with people that agrees with us (e.g. it is

what social networks do). We tend to avoid people and news sources that make us feel

uncomfortable or insecure about our views, what is called cognitive dissonance. Confirmation

bias is the tendency to seek out information that supports our pre-existing beliefs. while at the

same time ignoring or dismissing opinions that threaten our world view. It makes true that

‘lying a million times, makes it true’.

GAMBLER’S FALLACY

E.g. coin-tossing: after flipping heads 5 consecutive times, our inclination is to predict an

increase in likelihood that the next coin toss will be tails. But in reality, the odds are still 50/50.

We tend to put a tremendous amount of weight on previous events, believing that they'll

somehow influence future outcomes. It contrasts with some kind of communication: if we

properly emphasize something that happened in the past, we can win customer’s trust even if

we do not deserve.

Plus, positive expectation bias: it's the sense that our luck has to eventually change and that

good fortune is on the way.

POST-PURCHASE RATIONALIZATION

If, after shopping, you do not understand why you bought something. If the evaluation is not

from you (exogenous), you always tend to justify it.

When you buy something totally unnecessary or overly expensive and then you convinced

yourself it was a great idea all along.

This is post-purchase rationalization, a built-in mechanism that makes us feel better after we

make crappy decisions. It is a way of subconsciously justifying our purchases, especially

expensive ones. neglecting probability:

A consequence of post-purchase rationalization is e.g. if a guy smokes,

he wants to justify it in some way. In general, when we run surveys, we ask people why they

behave in a certain way in the past but we should be aware of the fact that neglecting probability

happens.

E.g. The probability of dying in an auto accident is significantly greater than getting killed in a

plane crash (statistically, we have a 1 in 84 chance of dying in a vehicular accident, as compared

to a 1 in 5,000 chance of dying in a plane crash). Anyway most people are scared about flying

but not about driving a car (because of confirmation bias and because flying is perceived as

something unnatural and you cannot drive the plane but you can drive the car). 38

Probability neglect is our inability to properly grasp a proper sense of risk, which often leads

us to overstate the risks of relatively harmless activities (e.g. flying rather than having a car),

while forcing us to overrate more dangerous ones.

OBSERVATIONAL SELECTION BIAS

We buy a new car and we inexplicably start to see the same car everywhere. This is that effect

of suddenly noticing things we didn't notice that much before, but we wrongly assume that the

frequency has increased (we just notice more that model). According to the level of

engagement, the evaluation of the surrounding environment will be totally different: it can

affect surveys since they do not consider the context. It's also a cognitive bias that contributes

to the feeling that the appearance of certain things or events is not due to a coincidence (even

though it is).

ANCHORING EFFECT

Expressing the discount in absolute term and not with percentage, the idea of saving money is

stronger (e.g. Amazon tells you how much money you save).

An item at the store that's on sale. We tend to see (and value) the difference in price, but not

the overall price itself. This is why some restaurant menus feature very expensive entrees,

while also including more (apparently) reasonably priced ones.

Is the tendency we have to fixate on a value or number that in turn gets compared to everything

else.

STATUS QUO BIAS "everything that can be

Charles H. Duell, Commissioner of US patent office said in 1899:

invented has been invented".

We like to stick to our routines, political parties, and our favorite meals at restaurants. The bias

is generated by the unwarranted assumption that another choice will be inferior or make things

worse, which often leads us to make choices that guarantee that things remain the same, or

change as little as possible.

It creates a bias between what we say and what we make: saying that you will change a habit in

a survey most of the time does not mean you actually change it, because it costs a lot to you.

ENDOWMENT EFFECT

The tendency for people to demand much more to give up an object than they would be willing

to pay to acquire it. Basically, the sales price is higher than the willingness to pay so I would sell

an item for a higher price than my willingness to pay. The endowment effect has to be taken

into account in the willingness to pay experiments (make to find a reasonable price).

AVAILABILITY BIAS

One of the biggest marketing levers is the availability bias. It is the tendency to overestimate

the likelihood of events with greater "availability" in memory, which can be influenced by how

recent the memories are. Even if in absolute term the likelihood of an event, when it happens

we always hear about it and we think it is more likely to occur: overexposing of unlikely events

lead to over-estimation of them. Insurances work on it: they stress on unlikely events.

THE CURRENT MOMENT BIAS

Most people prefer to experience pleasure in the current moment, while leaving the pain for

later. In a study, when making food choices for the coming week, 74% of participants chose

fruit. But when the food choice was for the current day, 70% chose chocolate (same for movies).

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Generally, the two main tendency for human being: escape from pain and struggle for pleasure.

Between an immediate pain for a future gain and no pain no gain, people prefer to not suffer

today. If you are looking forward too much in the survey, it will be affected by the current

moment bias. The best would be to run the service for the moment in which is performed.

PROJECTION BIAS

We tend to assume that most people think just like us and that they also agree with us. It's a

bias where we overestimate how typical and normal we are, and assume that people agree with

us. Or confidence we have in make predictions. We think we are more normal than we actually

are: we give for granted many of the things we have in mind so we do not explain everything.

In surveys we miss explaining things because we give them for granted.

HALO EFFECT

If you have a positive impression, the same kind of behaviour in the future the same behaviour

will have a positive effect on you; same for negative. If the first impression was good, all the

following will be positive too.

You never get a second chance to make a good first impression. The halo effect occurs when

someone crates a strong positive first impression and that impression sticks.

It can strongly affect the customer: if we are able to have a good first impression we will be

perceived as good even if we do not perform so good.

THE HORN EFFECT

It is the opposite of the halo effect. When someone perform poorly at first, the negative

impression may stick even if he works enough to disprove that notion.

THE BANDWAGON EFFECT

Is the unconscious tendency to do what everyone else is doing. The bandwagon effect is what

often causes behaviors and social norms to propagate among groups of individuals, regardless

of the evidence or motives in support. Much of this bias has to do with our built-in desire to fit

in and conform. (e.g. yawning)

NEGATIVITY BIAS

Crime, violence, war and other injustices are steadily declining, yet most people would argue

that things are getting worse. People tend to pay more attention to bad news. We perceive

negative news as being more important. We also tend to give more credibility to bad news,

perhaps because we're suspicious of proclamations to the contrary.

PLANNING FALLANCY

When we tell we will be ready in 10 minutes... and we go out after 30. Planning fallacy is the

tendency to think that we can do things more quickly than we actually can. For procrastinators,

this leads to incomplete work, to overpromise and undelivered outputs. We tend to

overestimate our capacity.

BIAS BLIND SPOT

If you begin to feel that you’ve mastered your biases, keep in mind that you’re most likely

experiencing the bias blind spot. This is the tendency to see biases in other people but not in

yourself. It is a problem especially for the researchers.

Uses of biases: when people yawn or when people applause. 40

How unconscious processes drive consumption? E.g. if your friend takes the small size of ice

cream, you will take too; fish-shaped cookies are considered healthier than cow-shaped.

The priming concept: pre-concept leads you to a certain kind of conclusion.

Priming is the unconscious activation of higher-level beliefs can lead to

subsequent behaviours. If I contextualize a message, I have different

responses. Contextualization is very important in marketing.

Advertising and other marketing methods can have powerful priming effects, neuro-marketing

can understand how subliminal stimuli can influence consumer behaviour.

Left hemisphere of our brain is related to more rational, while the

right side is more emotional; the hands are the opposite: for right-

handed people, the left side is more developed.

Observational Analytics

Observing behaviours may be more effective than asking:

ethnography is an approach based on the fact that to understand

something, you have to go there and see how people behave (they

act in they natural context, like you are not there).

Observe the behaviour in natural context and try to understand

how people react to stimuli. It is a powerful method because it has not biases. It is the best

method if the customer does not know what he wants. The main disadvantage of this approach

may be than through researches we make questions to go deeper while with observation we

make a picture but sometimes we do not know why people acted in that way: if we do not

interact and ask them we understand how they behave but not why. With ECG (Heart Rate

Monitoring) it is sometimes possible to understand their feelings and emotions but still it is

complicated: we just make inferences on their emotions.

Beside feelings, about someone entering in a retailer, we want to know why do they feel it: eye-

tracking makes it possible; it makes a representation of the investigation strategy of the user,

which are t