Ben Perreira

My head's dropbox.

Month: June, 2014

Emotion For Sale

In my quest to understand how and why people do what they do and buy what they buy, I often think about myself. There is a ton of bias in studying oneself, but there is also a lot more to work with. Once you begin to figure out how to pick that apart you can learn a lot.

I also look at what may make people consistently choose one of multiple options that would be basically indistinguishable from one another when stripped of branding.

The way we buy things can be seen as a complex system of social, price, actual/ rational need and other dynamics. That’s the context in which our purchase decisions exist. But what we can more closely study and affect is the emotions we hope to get by buying certain things.

For example, a couple feelings I get from buying an iPhone are acceptance (having something that many people consider to be the best) and status or achievement (owning something for which I paid a premium when I could get the functionality I need for much less).

The emotional utility of a given product changes over time. Some of the sentiment only available to iPhone owners when it came out in 2007 (e.g. innovativeness) is now also available to HTC One and Samsung Galaxy S5 owners.

Good brands tell stories and position themselves in ways that give their customers emotional capital. The feeling one gets from consuming a Coke is different from that one gets from Pepsi. The products are very similar; the way they are positioned is not. The emotional capital that Coke gives us is based on the brand’s imagery around happiness and smiling.

Enough consumption decisions that involve consistently choosing a product (Coke) over a similar one (Pepsi) allows one to borrow that emotion and transfer it to other parts of our lives. Put another way, you are what you consume. Your decision to become a Coke drinker (i.e. what happens when that’s your soda of choice) establishes you as the type of person who prefers happiness imagery to the more pop culture, aspirational imagery that Pepsi uses. That then becomes a part of your self-concept, encouraging you to act in a similar fashion in other settings to remain consistent with this established pattern of behavior.

This is partly how great brands affect wider culture. They find an emotion that we have been missing out on and offer it to us in exchange for our purchase of their products. Other brands, filmmakers, writers and artists identify the success of that emotional arbitrage and use it to reach larger populations that are also unfulfilled when it comes that having that particular emotion.

For most of us, though, we just think we’re picking the best product.

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When Service Becomes a System

The following is a post from my good friend and former colleague Ross Guthrie. A few times a year we get together to surf and discuss interesting business ideas, among other things. His take on ecommerce is especially important as more companies not only move much of their business online, but also have to find ways to use these ecommerce platforms as competitive advantages. 

The old business adage, “you cannot separate your service from the person providing it” implies that no matter how air-tight your employee handbook is, there is always the human factor; emotions, personalities, physical appearance, etc. But what does that mean in world where consumer touch points are increasingly digital, and business decisions rely on real data?

First, the benefits. Digital systems don’t have emotions and you can dress them exactly the way you want/need. You might be thinking, “But wait, digital systems don’t have personalities.” In this case, you would be wrong my friend.  Software is anything but perfect and I don’t think I need to tell you neither are the cables through which the data travels. Depending on your proximity to CDN, your browse behavior (machine interactions), and a myriad of other factors one can have many different experience as a user, developer, or integrator.

Now, some things to consider as you integrate new, commerce systems. Academically, information systems are judged by users on three major points; perceived usefulness, perceived ease of use, and media richness. As a business, you need a transactional engine, confidence in your data, and sound strategies for actionable tactics based on that data. Notice ‘business intuition’ is not included?  No more “I think this will work” or “I think we should” as a basis for revenue generating activity. We have machines specifically designed to observe and collect data for us and these same machines can even transform that data into information. It’s still up to you to turn that information into knowledge.

“That’s some fancy word-smithing, so what do I do?” When it comes to designing your interface, think inside the box or, more specifically, design for the smallest medium in which your customer could interact with your interface, think smartphones. This forces you to focus on essential functions and features; plus, you can always scale up. Also, follow the trends…if that little magnifying glass has proven a ubiquitous symbol for search, use it! Don’t get creative. This improves the perception of usefulness and ease of use.

Next, keep it snappy! Features are great, but if the page takes longer than 3 seconds to load you’re losing orders. Simple UI + Fast Load times = less opportunity for customers to exit the funnel.

In a brick and mortar store you can look at your customers and compare them to purchases; in the digital world this is not the case.  Configure your analytics to paint a complete picture of your customer through the purchase process. Use at least 2 but no more than three mechanisms for capturing data. That way you can extract, aggregate, and normalize data to account for any differences in methods used to collect the data.

And finally, get ahead of yourself but don’t bite off more than you can chew. Think about where you want to be 1-3 years from now.  Dream big, and then cut that dream into small bite sized pieces that a finite set of resources can realistically achieve in a given time frame.

The mechanics that come into play here are broad and complex. But if you, as a decision maker, can simplify the need into its essential components you’re left with a clean, predictable foundation on which you can build an empire. Good Luck, Godspeed, and may the coffee be plentiful.

Gassed

Have you ever gone out of your way to go to a cheaper gas station? This one is for you.

My friend and I just got back from a cross-country road trip. We filled our tank about 10 times and drove over 3400 miles. That’s a lot of fuel. It also gave us a lot of time to think about rationality and gas prices (which, by the way, are $0.75-$1.00 cheaper outside of California).

Most of us fill up on regular schedules. We work X miles away and drive round trip to work 5 times per week. Our extracurricular activities tend to fall on the same days each week and month. Aside from a few outlier weeks (like mine two weeks ago), our fuel consumption is fairly steady.

Economists call consumption (or demand) like this “inelastic” in the short term. It is unlikely to vary significantly week-to-week. Demand for fuel is more elastic in the long term because consistently higher prices may cause us to buy more fuel-efficient cars, seek alternative means of transportation, move closer to work, or change jobs altogether, all of which with the goal and presumptive effect of reducing consumption.

Now back to those of us who seek out cheaper gas. This map from GasBuddy.com shows the price of regular gas at all gas stations within about a 3-mile radius of my house over the past 48 hours. The range is $3.97 to $4.99, although most prices are in the $4.15 to $4.40 range.

Image

Imagine you live in the top left corner and you work in the bottom right corner of this map. That would take you about 25 minutes in typical LA morning traffic. You need gas tomorrow before work. Where do you stop for gas?

You live pretty close to a $4.25 station and will pass two stations that sell gas for just under $4.00. Your gas tank holds 16 gallons and you need 13 gallons to fill up. By seeking out the $3.97/ gallon station you will save $3.64 (13 x $0.28) or 6.5% off $55.25 that a fill-up would cost you at the $4.25/ gallon station. That would save you $182 per year (I multiplied by 50 to account for vacation weeks). No bad, but worth it? If it’s at all out of the way, it’s probably not worth the time.

The coffee you stopped for on the walk to your car cost you almost that much, and because you probably only fill up once per week versus daily for the coffee, the coffee is a 5x more costly expense.

So you need gas tomorrow morning before work. Where do you stop for gas?

At the station that is easiest to get in and out of. That’s more valuable than your savings of $3.64.

Rather than spending time trying to save a few bucks a week, making one’s morning coffee at home could save $500 per year (at $1 per cup vs. $3 per cup five times per week for 50 weeks).

It is important to note that people will always seek out cheaper gas even knowing that, when accounting for time and using extra fuel to drive out of one’s way, it is an irrational decision. Sure, it may save you a little money, but so would not having utilities at your house. Most Americans wouldn’t consider that a rational financial decision.

However, in the case of gas prices, in irrationality can come peace of mind: “This is just how I do it.” The satisfaction we get from being savvy shoppers is much more difficult to quantify than the simple model I used to make my gas purchase decisions. In these kinds of irrational rituals are opportunities for marketers to speak our language, because if it weren’t for a little irrationality in how we purchase, most marketers would be looking for new jobs.