Tag Archives: behavioural economics

Waitrose, don’t make me think. The illusion of choice in the myWaitrose offers programme.

We have to begin by making the assumption that Waitrose made the decision to ‘force’ their loyal customers to choose their own offers on the basis that it would engender those customers to the brand and this would benefit the business. That is to say that someone at Waitrose ran the numbers and built a business case that said “This will be good for our business”. Now, there’s also a complication (that I freely admit I don’t fully understand) that getting more people to convert on these offers presumably means they lose margin on the specific sale but there is a general uplift on the basket of goods. One estimate put the cost of the scheme at a potential £5m to Waitrose.

From The Guardian, this is how it works:

To use the scheme shoppers must have a myWaitrose card. They can then create an online account, log in, and view the full list of almost 1,000 products from which to select the 10 items they want. They will then get 20% off the cost of these goods, however many times they buy them.

Discounts last for a fixed period, […]. After that shoppers get the chance to choose from a new list. The discount is applied automatically at the checkout, and is on top of other promotions. For example, chickens are currently £10 for three, with the 20% off on top of this.

I’m not a retail analyst. I am merely musing on a set of behavioural biases. A lot of the articles about the scheme are rich with chat about whether it’s a good deal or not for the customer. These article presuppose that the customer has done the work and selected the most pertinent 10 offers for them.

And that, dear reader, is quite the presupposition. More on that in a minute.

Talking of suppositions, Waitrose themselves make one by assuming that customer choice in this sphere is a good thing. Now, they may have done research that told them ‘customers want to choose their offers’. We know, however, that customers – human beings – are not that good at making unbiased decisions. That’s what behavioural theory tells us. Unless the research was rigorously executed with absolutely no bias then I have little faith in the leap Mark Price makes in this BBC News article from June:

The boss of Waitrose, Mark Price, says it’s a ground-breaking move giving customers the power to choose the offers they want.

“Different forms of personalised marketing have been around since the 1990s, but we’re introducing mass customisation in grocery. Customers can choose what’s valuable to them when they shop for groceries. We really are giving power to the consumer,” he said.

Ground-breaking it might be. Doesn’t make it right though.

A host of paradox of choice experiments have been run which demonstrate we are confounded by choice; too much choice, particularly where there is considerable cognitive effort involved in the eventual decision, makes that choice harder to make. We know that increasing choice (often) results in:

  • Regret that we made an incorrect choice. We have no-one but ourselves to blame.
  • Loss of presence; effectively question why we’re doing this task in the first place.
  • Elevated expectation, we’ve been given this choice, we have to make the most of it.
  • Peer pressure, other people would make better choices.

With the possible exception of the last item, the myWaitrose scheme falls, in my opinion, into this trap. The illusion of control and freedom it presents, coupled with the possible cost savings is insufficient motivation for me to get over the hump of the effort required to actually do it. As a customer and myWaitrose member, I must have received 20+ emails and direct mails encouraging me to take up my offers, I have never done this beyond a cursory look online. The reason is plain and simple: I cannot be bothered. Even before I’d seen the summaries in the aforementioned articles that showed around a 10% saving on a basket of goods (vs. Tesco) and that the hyped 20% on offer isn’t really against staples but more high-value infrequent goods.

Stopping to think about the customer touchpoints and the interface here might help illustrate. It’s right out of the mantra of Don’t Make Me Think, perhaps that’s idealistic in this day and age, some things are inherently complicated, but saving money at a supermarket shouldn’t be difficult (as pointed out in this fantastic work by Lidl).

myWaitrose try and make things easier by pulling in the favourites from your recent in-store, online and Ocado shops, using these to guide you toward things you’re likely to want offers on. Aside from a couple of high-frequency items like baby wipes, I found myself getting stuck as the task of completing the 10 slots (actually a good, persuasive interaction pattern) became tricky. The value of these slots is such that you want to make the most of them, you don’t want to waste the 10 scarce slots with bad choices. So the decision gets harder.

You, the customer has to do some tricky things. Workout how best to ‘spend’ your ten offer slots. You’re effectively making 10 assessments on whether the offers are for items you’re likely to actually buy (wants vs. needs), taking a view on when you might buy them, and, of course, establishing whether the saving is considerable (accounting for multipacks, alternative places you might get them from etc.). The ‘when’ assessment here matters quite considerably; it’s not made particularly clear when these offers expire and the customer has to predict their own behaviour: “Am I likely to buy this in my next shop?”. They are highly unlikely to be making a prediction based on the likelihood to need an item in 2 month’s time, much of this will be based on the availability heuristic, meaning that they will be thinking about their most recent purchase of that item.

Waitrose offers

In short, it ain’t easy.

Time and data will tell Waitrose whether the process works for them. Whether the small % of their customers who have a loyalty card (and note, loyalty schemes tend to reward the already loyal, not magically create new loyalists) go through the process and buy more of the stuff they were already buying (one little-promoted benefit is that the offers are repeatable within the period so you can keep saving). My hunch is that the number of engaged and active myWaitrose offers is not the point. This is a brand exercise, encouraging people to think that Waitrose are all customer-focussed and that maybe having one of their free loyalty cards is a good thing. The important thing to Waitrose is knowing which customers spend on what products. I just wonder how long it will be before customers figure out the scheme just isn’t for them and that data mine ceases to be profitable.

EDIT: Update 08.FEB.2018 …. Waitrose close their PYO Offers scheme saying: “We’re always listening to our customers’ feedback on how we can make your shopping experience with us even better. Customers have increasingly told us they have difficulty remembering what their Pick Your Own choices were and how to update them, so we will be stopping ‘Pick Your Own Offers’ after 28 February. We will now be providing tailored vouchers and personalised offers through the post or at the checkout to make it easier for you to make savings on your favourite products.” It only took 3 years to come to that conclusion….

Tagged , ,

Carrots and Sticks Wielded at the RSA

In doing a little research for some behavioural change theory as part of my day-job I came across this wonderfully brief talk that Ian Ayres did at the RSA back in April. I’ve been toying with carrots and sticks (I think both approaches can be wonderfully split-tested online) in my own work particularly around financial services. However, Ian introduces the idea of the anti-incentive and it’s a bit of a head-scratcher that I’m going to spend some time exploring for my clients. I think it’s got some potential but it’s perilous in terms of setting oneself up for quite the outlay should it be implemented incorrectly. So, without further ado, take a moment:

> More on anti-incentives found by Liz Danzico

Tagged , , , ,

A very special persuasion brief

Screengrab of the OpenIDEO brief

As an advocate of the trendy field of behavioural economics & persuasive psychology, it’s rather humbling to read a brief that plays in this space but is a little more worthy than trying to get people to spend a little more. Open IDEO have posted their latest brief:

How might we increase the number of registered bone marrow donors to help save more lives?”

For all the right reasons anyone with a creative interest in the field of persuasion should take a look and start sketching. The basics are explained eloquently in this YouTube clip. For my part, this is the reason I haven’t joined the the register is pathetically:

1. I once heard/read that the donation process is incredibly painful
2. I one heard/read that the donation process leaves you immuno-supressed for some time.
3. The small number of registered donors means it’s much more likely your marrow will be called upon

But I know, without out ever having been in the position, that if I or close family needed marrow I would be out campaigning hard to get people to sign up and I would of course submit my own marrow.  It’s a big challenge, a worthy one and one where the answers elude me right now. I shall follow this with keen interest.

Tagged , , , , ,

Brands as Placebos

 

Placebo! by Akácio S. [ /photographyk ], on Flickr

There’s something quite lazy in blogging about a blog post that someone wrote about someone else’s blog post. But I think that it’s less lazy than having a blog and not blogging. And, in my meagre defence, I do have a proper post up my draft.

Besides, the post comes from Nick, a clever chap who I work with (more accurately underneath) at Dare. And it concerns that trendy Behavioural Economics stuff. The long and short of it is that placebos are hugely powerful things and if you take the idea of a placebo and apply it to a brand you can see the power of branding and experience bias on the apparent efficacy and tolerance of products and services. Take a look-see at Nick’s post (itself a reference of the original work by the Geary Institute)

Tagged , , ,

The Obsolescence Treadmill (feat. Nike Mayfly)

Nike Mayfly

Nike Mayfly by moleitau, on Flickr

Followers of my public streams will be aware that I am engaged on a 16-week training programme* to run the Virgin London Marathon on April 17th. This does rather mean that much of my waking moments are preoccupied with all things running. Occasionally my vocational and extra curricular interests collide, as is the case here with the Nike Bowerman Mayfly running shoe.

Alerted to its existence via Matt Jones’ concise post on the Berg blog, I started to think a little more about what this does to strengthen my opinion of Nike‘s marketing function as one that just gets the psychology of the runner.

It may be stating the obvious to some, but Nike aren’t just a manufacturer of sportswear. Their heritage shows a healthy track record (ahem) of producing products based on solid insight within the running community. In the case of the Mayfly this is insight that runners are want to wear their shoes for too long. The ramifications of this are not inconsiderable: worn-down shoes lead to poor form and consequentially impact-related injuries. In addition, enthusiastic amateur runners may well own multiple pairs of shoes aligned to particular conditions: trail, track and asphalt surfaces for example. Keeping track (again…) of the kilometres out through each pair of shoes is a challenge.

In the case of the Mayfly we have a £20 shoe with a tight limit on their effective usage; you get just 100km wear out of them. A planned obsolescence. The shoes have been designed with a tight engineering tolerance such that their performance is notably degraded once the user (runner) exceeds 100km. This fact isn’t hidden, it’s considered a selling point and the shoes themselves feature a manual odometer for you to clock up the km run on the side as an aide memoir and perhaps badge of intent to fellow runners.

So, what’s happening here, isn’t this just a trick to get us to buy more shoes more often? The cynic might suggest so, but let me suggest:

Scarcity: We are a little biased toward placing greater value on items that have a obvious limitation … the scarcity of the distance you can run in these shoes ensure you use them for only the right conditions (e.g. track running) and not perhaps as your daily runner – they’re your best pair.

Anxiety: Nike have form here – Nike+ on your headphones counts you up to the mid-point and then down to the end point of your run, increasing the performance anxiety. The same ticking clock is at work in these shoes, from the moment you put them on you’re running them into the ground. Of course this is nothing new – all shoes wear out – but these shoes makes it notably more explicit.

Reactance: When faced with a limit we’re rather prone to reacting against it (see anxiety above and consider the effect this has on performance). Does this limit actually challenge the runner to exceed it faster, sooner by covering the mileage at a greater pace or running more often? Mayfly runners might find themselves running harder and faster as consequence. There is little in life that is a simple and free as going running, by placing a limit on such a libertarian behaviour the reaction – if largely subconscious – could be profound.

I’ll concede that this might all be a case of me over-thinking a rather crude marketing strategy – planned obsolescence is nothing new after all – and that instead of positive reactance, consumers might actually react by seeing the limit as a weakness in Nike‘s durability and applicability to their sport. An analogous example might be the restrictions printer manufactures placed on their low usage and non-refillable ink cartridges. Indeed, one of the most significant issues that Nike will face is possibility that consumer watchdogs may deem the practise simply unethical. Perhaps in defence of this – and the inevitable environmental criticism – the shoes have been designed to be recycled by the responsible owner.

For the moment I am happy to continue with the upgrade treadmill of my (Asics) shoes on a 500km cycle which (at a current weekly effort of 30km+) should just see me through the 16 weeks.

John

* – Training programme via the wonderful Sam Murphy from her seminal work Marathon & Half Marathon: From Start to Finish

Tagged , ,