Decoding decisions: anchoring, self-herding and science in B2B with Phil Barden

PLEASE NOTE: This transcript has been created using fireflies.ai – a transcription service. It has not been edited by a human and therefore may contain mistakes  

 
00:03 
Dom Hawes 
You are listening to unicorny, and I am your host, Dom Hawes. Welcome to part two of our search for the scientific reason behind human decision making. We're on this journey today at Unicorny with Phil Barden, author of decoded the science behind why people buy. Now, in part one, we witnessed Phil's Damascene moment when the light went on, and he saw that decision making science could open up endless new creative paths with better results. We talked about how decision making in our brains is governed by two systems. System one, the autopilot of built in experience that makes instant decisions. And system two, the IRL pilot that stops to assess and calculate before deciding, we examined the power of context, how different settings can radically affect the same person's decisions, and we looked@the.net.  

 
00:57 
Dom Hawes 
Value of any decision we make as being the sum of its reward value minus the cost of its pain. Lovely stuff. Where we're going next is right to the rocky moment where we navigate from consideration to purchase. Now, I was fascinated by this in Phil's book decoded, and he calls it the decision interface. This is the hard contact we get with a product or service. Hey, Phil, talk to me about the decision interface and particularly how marketers might.  

 
01:27 
Dom Hawes 
Be able to influence it.  

 
01:28 
Phil Barden 
The decision interface really is the interface between the human and the purchase. And the first part of this, when we've got into the brain in terms of stimulus. So a piece of communication, piece of packaging, piece of messaging, whatever that is, the next process is perception. And perception beats cognition is an expression that my academic colleagues drummed into me at a very early stage. What they meant by that is perception is reality. And that, as a principle, is crucial because it affects everything that we then process in the brain, whether it's a piece of packaging or a piece of advertising. What the brain will then seek to do is to recognize whatever this thing is that's entered through our senses, because we've got to act or react in some way, because ultimately, is all about human survival.  

 
02:24 
Phil Barden 
So we have to make sense of it. So recognition and interpretation, in terms of what that thing means as well as what it is crucial. So the brain searches its associative memory banks for pattern matching. It metaphorically asks the questions, what is it? And what does it represent? Where do I know this from? And that's where we learn codes and signals within a category and across categories. So, for example, a diamond within the context of romance symbolizes an engagement ring, which is a sign of commitment, and it's a luxury item. If you put a diamond in a different context, say power tools, it becomes known for durability and hardness and precision. Or if you used a diamond in the context of detergent, its brilliance can be used for colour and colour retention or colour enhancement.  

 
03:26 
Phil Barden 
So recognizing something and understanding what it means is critical. Part of that becomes, from a brand point of view, what have become known as distinctive brand assets. So these are things that enable the brain to recognize the brand without the brand name itself actually being present. So think red and white and a curly script for Coca Cola, or a color purple for Cadbury's chocolate. Those are probably two of the best known worldwide, but brands, over time, and that's crucial because these things have to be learned through consistency and frequency of exposure. Brands can build distinctive assets that enable them to be recognized spontaneously and intuitively by system one, wherever they appear.  

 
04:15 
Dom Hawes 
There's so much in there to unpack that we're probably not going to get onto today, but we may have to do separately. But therein, the decision interface explains the importance of brand. And so often the debate in b two b at the moment is, oh, there's this whole performance marketing thing. The brand doesn't matter in b two b, which is, I mean, most people acknowledge is clearly bullshit. So consistency and frequency also is something that's really suffered, I think, during the recession because there's so many stop start budgets, which is what were talking to Steve Mordech about just the other day, like, how do you provide an environment where you can get more consistent in your budgeting so you can get more consistent in your communication?  

 
04:54 
Dom Hawes 
Other elements of the decision interface, how do things like price or attributes or other elements of a brand play a part in decision making?  

 
05:02 
Phil Barden 
Well, price is important. We've already talked about price being a trigger for pain, but it's also a trigger for reward. So if I said to you, I've got a Louis Vuitton handbag to sell you and it's ten pounds, you would immediately think, well, it's either been stolen or it's fake. Because price is an indicator of quality. And the brain understands that a certain level of price is commensurate with a certain level of reward expectation. So expect to leave we to our handbag to be several thousand pounds instead. So price is important. We talked before about how to minimize pain, because obviously when we are making a purchase decision, it's about expected pain rather than actual pain, because we haven't made the decision yet. The brain is still working out what to do.  

 
05:53 
Phil Barden 
So we can minimize that expectation by removing things like the currency symbol.  

 
05:59 
Dom Hawes 
We're going to look at how marketers can optimize path to purchase and maybe dig into some of that in a bit more detail. But it sounds to me like maybe.  

 
06:06 
Dom Hawes 
Task one for marketers is to take.  

 
06:07 
Dom Hawes 
A very conscious and deliberate attempt to explore their own decision interface and look at the levers that they can pull before then, thinking about, okay, how are we going to move on to optimize the actual purchase?  

 
06:19 
Phil Barden 
A great example we had from Deutsche Telekom was to do with a principle called anchoring. So anchoring says that we will look at the first price that we perceive, and that acts as anchor against which we judge everything else relative to that first price that we perceive. And the business question was, we have three different offers of package of products, bundles, if you like, because they're a quad play in Germany. So bundle one, two and three in a sending order of price, and each bundle has more services offered with it. And they said, we're selling a lot of bundle one and two, but hardly any of bundle three. How can we increase sales of bundle three? And we said to them, create bundle four, which is even more expensive than bundle three, and reverse the order in which people perceive them.  

 
07:13 
Phil Barden 
So whether it's on a page or online or wherever, people perceive that decision interface, bundle four becomes the first thing they see, and hence it is the anchor against that anchor. Bundle three now looks like great value. And guess what? Because you're reducing price, you're also reducing pain. So they try this out, and lo and behold, they boosted sales of bundle three.  

 
07:35 
Dom Hawes 
So once you've got your decision interface designed and you're understanding some of those concepts, and if you haven't yet read decoded, you probably need to looking at optimizing path to purchase there. You had a concept there of changing behavior without changing minds.  

 
07:49 
Phil Barden 
Yeah, this is a really interesting concept, because certainly when I grew up in marketing, I was taught that people hold a certain set of attitudes and beliefs, and in order to change their behavior, you first have to change those attitudes and beliefs. And there have been lots of studies on this that show that's not necessarily the case. There was a lovely study in the US where they communicated each or five a day, which we've had in the UK as well. So a government led public policy campaign to boost people's intake of fruit and vegetables. And over a four year period in the US, they quadrupled the percentage of the population who agreed with the statement, they should eat five a day. So a huge change in attitude, and you might naturally assume that behavior would follow. But actually there was zero change in behaviour.  

 
08:41 
Phil Barden 
Exactly the same percentage of the population, eight, five a day, four years prior as they did at the current time. So behavior doesn't necessarily follow from attitude change. And there have been other studies to look at what can change behavior without changing attitudes. And the study I cite and decoded was based on the lunch layout in a canteen in a university. So the challenge was, how do we feed students in university, but feed them healthily? We don't want them eating pizza and burgers and fries all the time. And what this scientist did was simply change the layout of the lunch line and several components within that. So, for example, the first thing that students encountered when they entered the canteen, they got their tray, the first thing they encountered was broccoli. Sales of broccoli went up 11%. Why?  

 
09:38 
Phil Barden 
Because when you enter the canteen and you're hungry, the first food you perceive has a very high reward value. So people loaded their plates with broccoli. And of course, then there's the issue that once you've got broccoli on your plate, you have physically decreased the amount of available space for other things as well. So you could switch behavior that way. But they did some other clever things. They put an opaque lid on the ice cream cabinet and sales of ice cream went down by a third. Why? Because, well, you've heard the expression out of sight is out of mind. It quite literally is, if I can't see ice cream, it's not there unless I go hunt for it. Right? So they lost that stimulus based consumption of, oh, there's ice cream, I think I want that.  

 
10:24 
Phil Barden 
They also made it more difficult for students to get the unhealthy drinks, so the sodas and the full fat drinks, which had been within arm's reach. So instead of making them within arm's reach, they put them behind the counter so that students had to ask for them. And instead they replaced the ones in arms reach with mineral water and low fat drinks. And the sales effectively reversed. It was now more of an effort to ask for the unhealthy drinks. Those are just a few of the changes. There were many others, all of which had a positive effect. So what the scientists prove by doing that is they could actually change students behavior without changing their attitudes.  

 
11:12 
Dom Hawes 
Whoa, hold your horses there, Phil.  

 
11:15 
Dom Hawes 
I just want to make sure that.  

 
11:17 
Dom Hawes 
We'Ve all heard that, right.  

 
11:18 
Dom Hawes 
Unicorny people, whatever you are doing now, as you listen to this, whether you're.  

 
11:22 
Dom Hawes 
Sitting on a train, whether you're driving the car, doing the weekly shot, walking.  

 
11:25 
Dom Hawes 
The dog, whatever it is, please take a minute just to let this.  

 
11:30 
Dom Hawes 
So what moment percolate.  

 
11:33 
Dom Hawes 
Many of us would have been taught that we need to change attitudes in.  

 
11:36 
Dom Hawes 
Our audiences before we can hope to change their behavior.  

 
11:40 
Dom Hawes 
And many of us would have spent a ton of budget in that pursuit. Hell, I even seem to remember there.  

 
11:45 
Dom Hawes 
Was a global pr firm that was.  

 
11:47 
Dom Hawes 
Like, dedicated to that practice. Their strapline even used to be like, change minds. But what Phil is saying and showing us is that ain't necessarily so. Take me for instance. I know I should go to the gym more. I desire its benefits and I see the unrequited membership fee depart my bank account monthly. Oh, and I pine for its loss. But does that change my behavior? Do I go more often? Am I sitting on an exercise bike right now or on a sofa next to a slice of cake? So what I need isn't an attitude adjustment, it's a behavioral one. So let's explore that a little bit further. I wanted to talk to Phil about the concept of self herding.  

 
12:32 
Dom Hawes 
As marketers, I wanted to know, how can we use people's past action and the consistency principle to help nudge them along the path to taking action?  

 
12:42 
Phil Barden 
This is based on the fact that the human brain has a bias to the status quo. We default to what we know, to what we like, to what's familiar. And the reason for that is simple, because change is inherently risky and ultimately the brain is here to keep us alive and pass on our DNA on the planet. That's its mission. And anything that takes us off that path of certainty and security could be risky. Ultimately risky to survival. So we love familiarity. We are comforted and comfortable with familiarity. You've heard the expression we're creatures of habits. It's absolutely true, because it doesn't involve a lot of effort to change nor perceived risk.  

 
13:28 
Dom Hawes 
If we can play on that consistency and convince people that they're being congruent in their decision making, then actually they'll be nudging themselves along the path to purchase.  

 
13:36 
Phil Barden 
Yes, exactly.  

 
13:37 
Dom Hawes 
And we haven't even yet talked about two of the most important things goals and motivations. Because they're so important in understanding why people do what they do. Yes.  

 
13:45 
Phil Barden 
This comes back to the net value equation and the study we talked about and the activation of the reward centre. There is a wide body of knowledge and studies that are consistent across different fields of academia and science that tell us that human behaviour is motivated by achieving goals, whether we're aware of it or not. So goals are. Some of them are to do with just our well being. So being thirsty or keeping warm. Quite. Functional goals, when that translates from human neuropsychology into brands. We choose and use brands that help us achieve goals, because we have learned that they are instrumental in so doing. So.  

 
14:32 
Phil Barden 
Goal achievement is absolutely fundamental, and goals exist at this functional level, but also at a more implicit level, which is about social goals, emotional and psychological goals, more about our sense of self, our sense of our own purpose and place within a community and society. And again, we learn that certain brands are more or less instrumental in helping us achieve those goals. And if that wasn't the case, we'd all be wearing the same clothing brand, and watches and cars, etcetera. But of course, we don't, because they come to mean different things to us. And that's where brand distinctiveness and differentiation comes from. Because in most categories there's a lot of competition. And at a functional level, we might find that brands are fairly interchangeable.  

 
15:25 
Phil Barden 
They all do a good job, all the detergents in the supermarket, all clean clothes, they all leave laundry smelling nice. So why don't they all have equal share? They don't, of course. And the reason is then at the implicit goal level, because we learn that they stand for different things. So Ariel, for example, is focused on efficiency and logic and effectiveness, especially at low temperatures. And that resonates now during cost of living crisis and with sustainability goals. So if you turn the temperature setting down on your washing machine, you are not compromising on the detergent's performance. So that is a very different set of goals to do with functionality and control and precision and expertise to goals such as those that persil use.  

 
16:20 
Phil Barden 
Persil is all about dirt is good, which is about relieving the mental tension that the parent or caregiver feels if they want to keep their kids clothes clean. But they also want them to go out and play. And playing, especially outdoors, means they get dirty, right? And that's good, because it means they're being fulfilled and they're learning and they're enjoying themselves. And it's all a crucial part of a child's development. The flip side is you've then got a load of dirty laundry. But that's where the Purcell brand proposition comes in. So even though at a functional level, you may say there probably isn't a lot of difference in performance, at a social, emotional, psychological level, there's a very different proposition at play.  

 
17:03 
Dom Hawes 
Of all the things you've learned since.  

 
17:05 
Dom Hawes 
The Damascene moments where you changed lanes.  

 
17:08 
Dom Hawes 
What's the one thing that you wish.  

 
17:10 
Dom Hawes 
You'D known when you were running budgets and teams?  

 
17:13 
Phil Barden 
Well, apart from going back to college and doing a degree in psychology rather than business studies, I think the one key thing which would have linked to that is the understanding that human behavior is goal directed. There's a reward centre in our brain that is purely for that purpose. And so this whole idea of propositions being based on explicit and implicit goals is absolutely fundamental to business success. One interesting thing, particularly when it comes to b, two b, because often we get asked, well, b two c is relatively easy, isn't it? You know, you've got all these different brands in different categories, and when it comes to b, two c, how do you apply goals to that? And we had a nice example talking with one of the big four accountancy firms. Their client was CFO.  

 
18:03 
Phil Barden 
And they said to us, look at a functional, explicit level. We and our competitors all do the same stuff, right? We're all competent when it comes to numbers, we all know the law, we all know compliance, we all know how to avoid tax. How can we differentiate? Is it purely based on how much money it costs to work with us versus others or not? So we explain the concept of implicit goals, and in particular, understanding their clients goals, and told them that was the starting point. So, for example, they might find that their CFO client was motivated by goals to do with discipline and security. So they wanted absolutely rock solid advice. And that may well be the case.  

 
18:52 
Phil Barden 
In which case the big four accountancy firm needed to switch their proposition and their communications to being all about security and discipline and protection and reassurance, risk avoidance, etcetera. And that would resonate and be motivating with that particular CFO. On the other hand, they may find another CFO who had ambitions to be CEO, in which case their proposition should be about, how can we help you better and stand out and be superior to your peer group in the C suite? Or they might find that a CFO is motivated more by excitement and novelty seeking goals. And there's a whole system in the brain that motivates us for this, for novelty seeking, in which case, showing that CFO new and different ways, for tax avoidance, for example, could be what motivates them.  

 
19:52 
Phil Barden 
So different CFO's different sets of goals leads to different propositions, different messaging, right through the whole marketing mix and across different touch points. So the language that they use, the sorts of events that they might sponsor, for example, even right down to corporate gifting, you know what would you send to a CFO who is into discipline and security versus a CFO that's into excitement, curiosity and novelty, versus one who's into autonomy and self esteem and superiority? That understanding of goals drives everything else you do.  

 
20:27 
Dom Hawes 
So if there's one takeaway from today.  

 
20:29 
Dom Hawes 
For me, because we're all told all.  

 
20:30 
Dom Hawes 
The time, know your customers, understand your customers. That's not enough. We need to understand their goals.  

 
20:37 
Phil Barden 
Yes, because that's what motivates them and that's what's going to get them to purchase you.  

 
20:42 
Dom Hawes 
If people want to find out more.  

 
20:43 
Dom Hawes 
About decoded, obviously they can buy the book. Where else can they find you?  

 
20:48 
Phil Barden 
I'm on LinkedIn. If people wish to connect with me there, I'd be very happy to. They could message me there as well, or on Twitter ilbarden or x. I should call it now. Sorry. Or they can email me directly philemarketing.com dcodemarketing is all one word, all lowercase.  

 
21:11 
Dom Hawes 
I wish I'd worn my sunnies for that interview because I'm now well and truly blinded by the enlightenment. I think looking back over the two parts, my favorite moment came as a bit of a surprise to me. Going into it, I was fascinated by the interplay between art and science in marketing. And that was borne out by Phil's realization that decision making science informs better and more effective creative solutions. Now, his retelling of the T mobile flash mob story was key because, well, it triggered so many memories that I have of that event. And at the same time, you know, I was skeptical of it when it happened, but now I understand why it worked. But it was what Phil said just a couple of minutes ago about the one thing he wished he'd always known.  

 
21:53 
Dom Hawes 
That really hit hard with me, and.  

 
21:55 
Dom Hawes 
I'm going to read it back to you.  

 
21:56 
Dom Hawes 
Verveitim.  

 
21:57 
Dom Hawes 
He said, apart from going back to college and doing a degree in psychology rather than business studies, I think the one key thing is the understanding that human behavior is goal directed. There's a reward center in our brain that is purely for that purpose. And so this whole idea of propositions being based on goals is absolutely fundamental to business success. Oh, wow. Let's just give that a minute to sink in. Propositions based on goals are fundamental to business success. The question that leads me to ask now is, does this inform emotion? You know, we've discussed emotion a lot, and in b two B, we know and understand the power of emotion in marketing. You know, for us, it's not new.  

 
22:43 
Dom Hawes 
Despite the endless keynote speeches that are.  

 
22:45 
Dom Hawes 
Still being given on the subject, but we do need to advance this conversation to the next level. Yes, we want to use emotion in our b two B work, but we need to ask what emotions? How do we determine them? And given that any b two B decision, well, in it there are multiple players, how do we know which emotional approach is right for which decision maker? Well, if we follow what Phil is saying here, which is basically identify the goal of the individual, to identify the proposition, does that give us the clue as to what emotion to either evoke in them or to satisfy?  

 
23:21 
Dom Hawes 
Because if we know, for instance, that a CEO is motivated less by creating shareholder value and more by creating a legacy that makes his or her reputation, then we'd know which emotional strings to pull in the work we create for that type of person. Now that is excellent food for thought to unicorn us. Which is apt, because, you know what? I'm absolutely famished. So I'm going to head back to the unicorny kitchens right now to start prepping the next feast for the marketing mind. See ya. You've been listening to Unicorny, and I am your host, Dom Hawes. Nicola Fairleigh is the series producer, Laura Taylor McAllister is the production assistant, Pete.  

 
24:02 
Dom Hawes 
Allen is the editor.  

 
24:03 
Dom Hawes 
Unicorny is a Selby Anderson production.