The Choice Factory: 25 behavioural biases that influence what we buy

Author.

Contentsx

Praise for The Choice Factory

Preface

Introduction

Bias 1: The Fundamental Attribution Error

Bias 2: Social Proof

Bias 3: Negative Social Proof

Bias 4: Distinctiveness

Bias 5: Habit

Bias 6: The Pain of Payment

Bias 7: The Danger of Claimed Data

Bias 8: Mood

Bias 9: Price Relativity

Bias 10: Primacy Effect

Bias 11: Expectancy Theory

Bias 12: Confirmation Bias

Bias 13: Overconfidence

Bias 14: Wishful Seeing

Bias 15: Media Context

Bias 16: The Curse of Knowledge

Bias 17: Goodhart’s Law

Bias 18: The Pratfall Effect

Bias 19: Winner’s Curse

Bias 20: The Power of the Group

Bias 21: Veblen Goods

Bias 22: The Replicability Crisis

Bias 23: Variability

Bias 24: Cocktail Party Effect

Bias 25: Scarcity

Ethics

Conclusion

References

Further reading

Acknowledgements

Index

Praise for The Choice Factory

This book is a Haynes Manual for understanding consumer behaviour. You should buy a copy - and then buy another copy to give to one of the 97% of people in marketing who are too young to remember what a bloody Haynes Manual is.

— Rory Sutherland, columnist for The Spectator,

and Executive Creative Director, Ogilvy One

Most books in this area are academic and dry as dust. If you want to know how research and sociology can impact on real life in the real world, Richard’s book will show you - using simple words and examples that real people can understand.

— Dave Trott, columnist, Campaign, and author of

Predatory Thinking, Creative Mischief and 1+1=3

In a cacophony of overstatement, Richard Shotton possesses a melodious and balanced voice. In this short but powerful tome you can learn about how marketing actually does influence consumers. Or, for the more prosaic among us, how to get people to re-use towels, buy wine when German Oompah music is playing and select a broadband supplier by mentioning Charing Cross Station. The book also mentions me (all too briefly) which I also find enticing.

— Mark Ritson, columnist, Marketing Week, and

Professor at Melbourne business school

Actionable, memorable and powerful... Shotton has taken the jewels of behavioral economics and made them practical.

— Seth Godin, author of All Marketers are Liars

Comprehensive, compelling and immensely practical, the Choice Factory brings the building blocks of behaviour change together in one place.

— Richard Huntington, Chairman &

Chief Strategy Officer, Saatchi & Saatchi

A top class guide for those who want to put BE to work, rather than just illuminate their journey to work. Richard pushes the practical application of these central psychological concepts. An essential handbook.

— Mark Earls, author of Herd

The Choice Factory is a delightful anatomy of the biased brain that will help you understand and influence consumer decisions – including your own.

— Ian Leslie, author of Born Liars and Curious

Richard delivers a wealth of cases proving the efficacy of working with, rather than against, the grain of human nature. This is catnip for the industry.

— Phil Barden, author of

Decoded: The Science Behind Why We Buy

Richard Shotton’s application of behavioural economics is bang on the button. This book is timely, insightful, fascinating and entertaining.

— Dominic Mills, former editor, Campaign

"If you’re a marketer, understanding what really makes people tick – as opposed to what they might tell you – is vital. The Choice Factory book takes us on an elegant, witty and digestible tour of the 25 main principles of behavioural science. Richard Shotton has read widely so that you don’t have to, but he gives full credit to his many sources should you wish to pursue any of the topics further. This is a delightful and indispensable read for anyone in marketing, particularly those early in their careers."

— Tess Alps, Chair of Thinkbox

Preface

What this book covers

The Choice Factory is an overview of how findings from behavioural science can be applied to advertising. Behavioural science, the study of decision-making, is an important topic for advertisers as it provides a robust explanation about why people buy particular products.

It recognises that people are overwhelmed by the sheer volume of decisions they need to make each day. People don’t have the time or energy to laboriously and logically weigh up each decision. Instead, they rely on short-cuts to make decisions more quickly. While these short-cuts enable quicker decision-making, they are prone to biases. These biases are the subject of this book.

If advertisers are aware of these biases, and adapt their products and communications accordingly, then they can use them to their advantage. They can work with the grain of human nature rather than unproductively challenging it.

A number of successful brands – including Apple and Volkswagen – are applying behavioural science, but they’re in the minority. There’s an opportunity for you to gain an advantage by harnessing behavioural science before your competitors.

Behavioural science has identified a remarkably broad, and ever-growing, range of biases. This breadth means that whatever your communication challenge, there’s normally a relevant bias that can help solve it.

This book is not an exhaustive list of all the biases that have been discovered by behavioural science. I have been selective and focused on the 25 most relevant biases to advertising. All the biases covered can be easily applied to your campaigns to make them more powerful.

Who this book is for

The Choice Factory is primarily aimed at professionals working in advertising and marketing, whether at an agency or a brand. It’ll give you practical advice on how to apply behavioural science in your work. However, if you run your own business or you have a general interest in behavioural science, there will be plenty to interest you.

How this book is structured

The book is split into 25 chapters, with each chapter covering a specific bias. You can read the chapters in order, or if you prefer, you can dip in and out – jumping between the chapters that you think are most relevant.

Throughout the book we’ll be following a single person through their day, looking at the decisions they make. Each chapter starts with a short paragraph detailing one decision. These range from the incidental, such as what beer to order at the pub, to the substantial, such as who to hire at an interview. The person we’ll follow through the day should be of interest to you – it’s you.

I’ll explain why you made your decision by referencing one specific bias. I’ll explain the academic and real-world evidence for the bias. This evidence is more robust than many of the theories that shape advertising decisions. It’s based on the peer-reviewed experiments of some of the world’s leading scientists. Academics such as the Nobel Laureates, Daniel Kahneman and Herbert Simon, as well as respected psychologists such as Elliot Aronson and Leon Festinger.

When discussing the evidence, I’ll pull out the nuances. These are particularly interesting as they are not very well known; if you apply them it’ll give you an advantage over your competitors.

After interrogating the existing evidence I’ll cover my own experiments in the field. This is important as they bridge the gap between academia and practice. My experiments prove that behavioural science is relevant today and that it applies to commercial situations as much as non-commercial ones.

Most importantly, I’ll focus on what you should do with this knowledge. This is the bulk of each chapter. I’ll show you how you can apply behavioural science to your advertising, whether that’s the message, who you target or when you reach them. These findings are easier than ever to apply as the increase in digital advertising means that it’s cheaper and quicker than ever to test new approaches and easier to monitor their success.

Hopefully, the book will pique your interest in behavioural science. If it does you’ll find recommendations for further reading, as well as references for all the studies quoted, at the back of the book. As it’s an ever-expanding field I also tweet links to any interesting new research I discover from the twitter handle @rshotton.

Introduction

How applying the findings of social psychology improves marketing

The inside of a stuffy black cab crawling along Oxford Street isn’t a place suited to epiphanies. Nevertheless, on a swelteringly hot day in 2005, that was where I read the story that would change the way I thought about advertising.

The tale was that of Kitty Genovese. Her stabbing, and the psychology experiments it inspired, convinced me that behavioural science could shake up advertising.

Kitty’s story was a bleak one. At 3.20 am on 13 March 1964 she began walking the 100 feet from her car to the entrance of her apartment in Kew Gardens, New York. Unfortunately, as she made her way along the tree-lined street, she was spotted by the serial killer, Winston Moseley. Moseley, a 29-year-old father of two, shadowed her, until, a few yards short of her door, he plunged a knife into her back.

This single murder wasn’t enough to shock New Yorkers: after all, there were 636 murder victims in the city that year. It was the events of the next few minutes that so shook the city and led the New York Times to dedicate a front page to the incident. According to the paper:

For more than half an hour, 38 respectable, law‐abiding citizens in Queens watched a killer stalk and stab a woman in three separate attacks in Kew Gardens.

Twice the sound of their voices and the sudden glow of their bedroom Iights interrupted him and frightened him off. Each time he returned, sought her out and stabbed her again. Not one person telephoned the police during the assault; one witness called after the woman was dead.

The supposed apathy of the witnesses scandalised the city. Why did no one intervene?

While many of the details of the article were later challenged, the story sparked the interest of two psychologists, Bibb Latané and John Darley. They wondered if the commentators had interpreted the problem the wrong way around. It wasn’t that no one intervened despite the volume of witnesses; no one intervened because there were so many bystanders.

The academics spent the next few years testing their hypothesis. I’ll look at their results in more detail in Bias 24, but suffice to say they proved that the broader an appeal for help, the less likely any individual is to intervene. They termed this diffusion of responsibility the bystander effect, although it’s sometimes referred to as the Genovese syndrome.

A practical application

It struck me that these findings related to a problem I was grappling with. At the time, I was working as a media planner and one of my clients was the NHS and their Give Blood campaign. They regularly ran appeals warning of low blood stocks across the country. But these campaigns weren’t generating as many donations as hoped. If the psychologists were right, then the NHS’s broad appeals were suffering from the bystander effect.

Perhaps it would be more effective to run specific appeals?

Fortunately, the creative agency team working on the campaign were open to suggestions. The team, led by Charlie Snow, agreed to test regionally-tailored digital copy. This meant that rather than the ads saying, blood stocks are low across the UK please help, they were adapted to say, blood stocks are low in Basildon (or Brentwood or Birmingham), please help.

Two weeks later the campaign results arrived. There was a 10% improvement in the cost per donation. The simple application of a 40-year-old bias had improved a modern ad campaign.

This was a revelation for me.

I’d finished studying at Oxford University half a dozen years earlier and since then I’d ignored academia on the assumption that research was irrelevant to the hard nosed, commercial world of advertising. But I was mistaken. What could be more relevant to advertising – which aims to change the decisions of consumers – than a study of the roots of decision-making?

As Rory Sutherland, Vice Chairman, Ogilvy & Mather Group, says:

This subject provides a robust, intellectual link between understanding human nature and knowing how to make money.

In the same way that you wouldn’t trust a doctor with no knowledge of physiology or an engineer ignorant of physics, my experience over the last dozen or so years suggests that it’s foolhardy to work with an advertiser who knows nothing of behavioural science.

One of the most significant discoveries I’ve made over that time is the variety of biases that are covered in the field. There’s no single, grand theory underpinning behavioural science. Instead, there’s a broad collection of biases.

This has two benefits. First, it means that whatever brief you’re tackling there’s likely to be a relevant bias to harness. Second, it avoids the danger of making our tasks fit the solutions at hand, rather than the other way around.

Robust as well as relevant

Behavioural science provides answers to many advertising conundrums. But more important than this relevance is the robustness of the findings. The field is based on the experiments of some of the most respected scientists of the day: Nobel Laureates like Daniel Kahneman, Herbert Simon and Robert Shiller.

This evidence-based foundation contrasts with many marketing theories which are based on anecdote or tradition. Byron Sharp, Professor of Marketing Science at the University of South Australia, has been highly critical of marketers’ reliance on untested assumptions. He has compared the situation with medieval bloodletters who shunned experimentation:

The study of marketing is so young that we would be arrogant to believe that we know it all, or even that we have got the basics right yet. We can draw an analogy with medical practice. For centuries this noble profession has attracted some of the best and brightest people in society, who were typically far better educated than other professionals. Yet for 2,500 years these experts enthusiastically and universally taught and practised bloodletting (a generally useless and often fatal