From 1942 to 1960 a radio and TV game show called People Are Funny asked contestants to carry out elaborate stunts such as trying to register a trained seal as a hotel guest or carrying on a prolonged phone conversation with a stranger picked at random from a telephone book. How people reacted to the stunts was, indeed, funny.

People have odd psychological characteristics that go much deeper than that, though, and they affect how people behave as customers. Consider:

In 1999 Adrian North, David Hargreaves and Jennifer Mckendrick of the University of Leicester staged a psychology experiment in a wine shop. They found that when French music was played in the shop 77% of the wine sold that day was French. When German music was played 73% of the wine sold on that day was German. The nationality of the music was changed on alternate days over a two week period. When questioned after their purchases 86% of the customers said categorically that the music did not affect their choice.

And

Bloomingdale’s in New York had a tie rack on the main aisle near a ground-floor entrance. During busy times, shoppers would approach the rack and start browsing, until they had been bumped once or twice by other shoppers moving in and out of the store. Most of the tie browsers would abandon their search. Underhill concluded that shoppers–especially women, but also men to a lesser degree–don’t like being brushed or touched from behind, and they’ll quit their shopping behaviour to avoid it. Bloomingdale’s repositioned the tie rack and sales from the rack went up quickly without making a single change in the merchandise.

And also

A blind taste test found 75 percent of New Yorkers preferred city tap water to bottled waters. The researchers then went to a trendy California restaurant that featured a water sommelier who offered elegant water menus to the patrons. All bottles were filled with hose water in the back of the restaurant. Nevertheless, the Aguaphiles who were willing to plunk down nearly $7 a bottle for Eau Du Robinet (French for “faucet water”), Agua de Culo (Spanish for “ass water”) and Amazon (“filtered through the floor of the Brazilian rain forest”) declared them all to be far superior to tap water.

The psychological underpinnings of consumer behavior is increasingly important to success in the rapidly changing modern marketplace. However, evidence-based approaches to understanding customer experience is relatively recent. Indeed, marketers paid little attention to individual behavior until about the middle of the 20th century, using instead impersonal campaigns that aggressively pushed products and tried to convince consumers to make purchases.

Underpinnings

In the early 1950s, however, marketers began to recognize the benefits of selling to customers already inclined to buy certain products. This discovery led to a shift in focus to specific details of who customers were and what they needed and desired.

Economist Alfred Marshall believed consumers buy goods and services based on what offers the most personal satisfaction. Some criticized the theory for being uninformative—it seems self-evident that people buy what they like, if they can afford it. But Marshall gave marketers several useful hypotheses:

• A lower priced product will sell more than a higher priced equivalent product.
• A new, substitute product will cannibalize sales from older, original products if its price is lower.
• When consumer income increases, sales will be higher

Sigmund Freud revolutionized theories of human behavior, contending that unconscious psychological factors make it impossible for people to fully understand their own motivations. Consumers, in fact, respond to products as symbols (i.e success, virility)  as much as they respond to the value and function of a product.  In other words, characteristics such as age and income don’t fully account for consumer behavior, so marketing messages that contain an emotional appeal to consumers’ feelings, hopes, aspirations and fears are often more effective than rational appeals.

Even Paplov showed that conditioned responses could be used to create or change behavior. (You’re thinking of a bell, aren’t you. See what I mean?) Operant conditioning can be used to reinforce brand elements that are associated with positive customer experiences.

Another economist, Thorstein Veblen,  contended that humans are social creatures who tend to conform to the standards of the culture and subgroups in which they’re immersed—individual needs and desires are created and influenced by group membership. Critics argue that his theories may be overstated, but there’s no doubt that social influences have a fundamental impact on consumer behavior.

Biases

People are funny in many ways, thanks especially to their biases. Understanding them is key to providing an excellent customer experience.

Blind spots

All customers have biases, but they’re unaware of them.  No matter how hard you probe individuals won’t give a clear answer. Looking at aggregate behavior, however, can shed some light on what’s going on inside. For example:

Affect

Surveys show that consumers tend to be charged up, even impatient, in the morning and in the early evening, but are calmer and more patient around noon and late evening.

Cheerleader effect

Products look more attractive in groups than on their own. Products are promoted alongside known brands that, say, look sophisticated are more likely to be chosen over the same product sold alone.

Endowment effect

People value things more when they ‘own’ them, whether literally or psychologically. That is, they will ask a higher price for something they have but want to sell compared to what they’re willing to pay to buy the same object. That’s also true when someone mentally ‘owns’ a brand— they will excuse small mistakes. A small improvement in a product, on the other hand, will not please someone with low expectations.

Empathy gap

People respond differently when they’re angry, happy, hungry, a satiated. Treating all customers the same way, regardless of how they are feeling, is a great way to lose them.

One couple who paid for a flight with me in my open-cockpit biplane was clearly distraught. After takeoff, I realized they were contemplating jumping out. Managing their customer experience required an entirely different approach.

Functional fixedness

People won’t explore the full range of possibilities for interacting with a company or product that is available to them at each touch point. This isn’t a modern problem; Karl Dunker, a 1920s gestalt psychologist, defined the phenomenon as a “mental block against using an object in a new way that is required to solve a problem.”

Other biases

The list of cognitive biases is long. Thanks to Wikipedia you can ponder them all. There’s nothing funny about it!