Decoding decisions: the hidden science behind why we buy 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 
Welcome to Unicorny. This is a podcast about the business of marketing, how to create value, and how you can help your business win the future. And I'm your host, Dom Hawes. You've probably noticed it, too. There's a backlash going on, isn't there? You know, after years of over indexing on digital and data, the industry, our industry, the marketing industry, is doing what it normally does by swinging all the way over to the other pole. Marketing is not a science, they say, full of confidence and outrage. It's a humanity. Well, you know, as it happens, I agree that the whole of marketing is not a science. But even marketers can't put their finger exactly on what marketing is. And how can we define it as one thing or other until we can agree? This, I think, is a subject of its own.  

 
00:55 
Dom Hawes 
And I'm going to address that in the near future. But today I'd like to find out what role science does play in marketing. My hypothesis and what I'd like to explore is this. Much of what we do in marketing is art. When done right, marketing is creative. It's human. It makes us laugh, it makes us cry, it makes us rush out and buy things. But can we use science to explain why all that good stuff happens? And can we use science to figure out how we can get all that good stuff to happen time and time again? In other words, what is the science of the art? Now, this question puts us on a direct path to the supreme decision making unit, the human cpu, also known as the brain. We love to think we're unique, but the reality is we are just not.  

 
01:47 
Dom Hawes 
Our brains work in predictable ways if you know what to look for. And those that do know what to look for and know how to experiment have been conducting tests and proving theses for decades. And that, by the way, is science. And so in marketing, we do now have scientific fields that inform our effectiveness. Behavioral science, for example, it's much in vogue at the moment, as is data science. In a previous episode, we heard from Emmy award winner Bill Harvey, who created, tested, and now deploys driver tags, which are scientifically proven predictors of the effectiveness of advertising and marketing content. So it seems science and marketing are already very cozy bedfellows. But what is the exact nature of their relationship?  

 
02:31 
Dom Hawes 
Today, we are going to venture beyond the noise and the fury, and we are going to ask how science can help you create value by making your campaigns, your interactions, and your marketing outcomes more effective. Drum roll, please. Unicorny Productions is delighted to welcome Phil Barden. Phil is a man who has searched for the scientific answers to his creative marketing questions. And as he puts it led to his own on the road to Damascus moment. When everything became clear, it led to him writing decoded. The science behind why we buy this book is 336 pages of pure enlightenment. Because marketing is fundamentally about behavior change and Phil Barden is the expert in this area. His work basically makes you a better marketer. Phil is the expert in the field of decision science.  

 
03:26 
Dom Hawes 
And today we're going to put on our walking boots and ask Phil to take us down our own road to Damascus to throw a shaft of brilliant light on how decision science can be used by b two B marketers to improve outcomes. We're going to do this in two back to back parts. But before we begin part one, let's take our first step with Phil's definition of marketing. From the opening of his book, he.  

 
03:49 
Phil Barden 
Says marketing is essentially about behavior change. Our ultimate goal is to influence purchase decisions. And he then asks, but what drives those decisions? Decision sciences help to answer this crucial question by uncovering the underlying mechanisms, rules and principles of decision making.  

 
04:09 
Dom Hawes 
There you go. That's it. That is literally all there is to it. Simplest, or maybe not quite so simple. I think we better join Phil for part one of our journey of discovery to find out more. Hi Phil, today we're going to be talking about science, in particular the science of why we buy these days. You are the managing director UK of decode marketing and your book decoded well, it's one admiration from literally a who's who of marketing thought leaders, but you didn't start in science. So let's start today with your story. Please, why don't you take us back to the beginning, help us understand how and why you got here.  

 
04:48 
Phil Barden 
It's quite a story. I started out always wanting to get into the creative side of business, so either advertising or marketing, and I did a business studies degree course and part of that was practical experience working with a company. And I so enjoyed the marketing side when I worked there that I was convinced that's what I wanted to do and indeed that's what I started out doing. That was 25 years worth of client side marketing. So mostly with unilever in the UK and in central and eastern Europe, and then I joined Diageo and after that I joined T Mobile. And it was while I was at T Mobile that I first came across this brave new world of decision science. Because frankly, I'd hit a bit of a wall.  

 
05:36 
Phil Barden 
I had commissioned a huge piece of consumer research in twelve european countries at great expense, and also not a little personal equity invested in this particular company and their methodology. And we started to get the results back and frankly, they just didn't make sense. And I was getting really worried because I thought, how am I going to justify effectively wasting all this money? There was a risk to my own career, of course, as someone introduced me to a couple of guys from the company I now work with, and I got them in and chatted to them and they had a completely different perspective on the world, and marketing in particular.  

 
06:19 
Phil Barden 
One of them is a neuroscientist and the other is a cognitive psychologist, and they had set up a small business together, leveraging what they knew about human behaviour, and that included how the brain processes communications, how and why we choose certain brands, whether they're products, services. And they'd met with great success in the commercial world, so they'd started to leverage about 150 years worth of academic and scientific study into human behavior. And the more I talked to these guys, the more fascinated I became, because they unlocked a lot of hitherto unanswered questions. They helped explain why certain things worked and why other things didn't. As a result, I thought I might as well give them a go, because I need to salvage something out of this research.  

 
07:11 
Phil Barden 
So I actually commissioned them to work with their approach on the T mobile brand within a very competitive landscape across Europe. And the result of that, which was quantitative research, but research the likes of which I had never seen before in my entire career, a completely different methodology, different frameworks of thinking. And it really unlocked what were trying to do, which was to provide a value proposition from which we could relaunch the T mobile brand that extended into a creative platform. And the first manifestation of the relaunch was in the UK, with a flash mob dance ad at London's Liverpool street station. The results of that were, frankly astonishing. So the ad went out on a Friday night. Within 48 hours, footfall into T mobile retail stores in the UK had doubled.  

 
08:07 
Phil Barden 
And the sales teams were saying to the marketeers, why didn't you tell us you got all this local activation activity booked? The reply to which was, well, we didn't tell you because there isn't any, we didn't book any. Why are you asking? And they said, well, because the traffic monitors on the doors in the stores are reporting this incredible footfall increase that translated into sales. Sales went up by 49%, we grew share by 6%, we tripled brand consideration. That one ad has got 41 million YouTube views to date. There was something like 72 Facebook groups set up to share and talk about it. This was in the days before Instagram. It became really famous. And we then did two things. We applied the same principles to a rollout across Europe and we also applied the same principles to other brand touch points.  

 
09:03 
Phil Barden 
So we changed the look and feel of the stores, we changed customer service interactions, and we changed propositions as well. And over the next two years, we halved customer churn. And in the mobile world, that is enormous. That goes straight to the bottom line. The whole company was astonished by this. And when I talked to the guys from T code and I said, look, this is amazing. We've never seen this sort of cause and effect, they shrugged and said, well, why are you surprised? Because the whole relaunch was built on the principles of human motivation. They were successfully activated through the advertising campaign. So why are you surprised when it worked? And I couldn't believe this. And the more I talked to the guys, the more fascinated I became. And I'd ask them questions and say, how come you know all this stuff?  

 
09:51 
Dom Hawes 
And how dare they have so much confidence in the effectiveness of what they're doing. It's like, wow.  

 
09:56 
Phil Barden 
Yes. It's almost like they've studied it. So when I said, how come you know all this stuff? They'd look at me quite bemused and say, but how come you don't know this stuff? Because we're dealing with concepts and frameworks that have been around for decades in our fields, in our world, or we're using studies that have been peer reviewed and replicated in fields of neuroscience or psychology. For me, that was a real road to Damascus moment, a real light bulb, when I thought the essence of marketing is behavior change. Everything marketers do is about human behavior. Buy our brand, buy more, switch, talk about it, share stuff, whatever it is, it's about human behavior.  

 
10:36 
Phil Barden 
And here you have a whole world which marketing had generally been just ignorant of, not in a willful way, just because they were simply unaware that there was this parallel world of science and academia that have been studying human behavior and how to leverage that for commercial gain. That brought me to this realization that it was too important to leave alone and that I actually wanted to be part of it. So I quit my client side career and opened decode in the UK with no clients, on my own, running my own business for the first time ever. But I had this utter conviction that what I was doing was compelling. That then led a couple of years later to writing decoded, because I wanted to bring this brave new world to marketeers like myself.  

 
11:29 
Phil Barden 
So I'm not a neuroscientist and I'm never going to be. But if I could understand enough about the key principles of decision making and how brands work, how communication works, etcetera, and write it in terms that someone like me could understand, I felt though, it would be helpful to marketing and their agencies, whether they're b, two c, or b two b, because we're all, we're always dealing with the same brain, ultimately. And so that was the genesis of the book, decoded.  

 
12:00 
Dom Hawes 
Well, it's an amazing story. I actually remember the T mobile ad coming out and the hullabaloo that was created by it. And I was in the office I was in at the time, everyone was like, jesus, have you seen this thing?  

 
12:09 
Phil Barden 
Yeah.  

 
12:14 
Dom Hawes 
Okay, let's pause for a second there, because I think we've arrived at what we call the so what moment. Now, if you remember when that t mobile flash mob happened in Liverpool Street, I think it was in 2009, you might also remember that there was a great deal of copycat stuff that came fast on its heels. It was as if, like all the other marketers were thinking, quick, we need a flash mob too. And I think what they had totally missed was the thinking, the science behind it, the reason why that led to that particular creative activation. In my introduction today, I talked about how in marketing, we like to swing from one pillar of belief all the way over to another. We're a bipolar lot. And right now there's a ton of noise about how marketing is not a science.  

 
13:03 
Dom Hawes 
There's a fear verging on the heretical that if we do make marketing a science, we're all going to end up in the same place with the same executions. And that is where art and science need to be separated. What the science can give us is clear reasoning. If we want to achieve x, then we need to stimulate y. The art side of the business then takes over with the execution, which can be fun, emotional, surprising, in other words, something unique. But that execution will work because its built on what Phil described there as sound principles of human motivation. Like this. The science of decision making will never lead us all down the same creative path. Far from it. It can help open up endless new roads. And I think this was Phil's damascene moment.  

 
13:51 
Dom Hawes 
In his book decoded, I found this extraordinarily inspiring, and I thoroughly recommend you pick up a copy for yourself because Phil succeeds in making sciency stuff so readable. You know, I did his book in two sessions. I couldn't put it down? Well, I guess I did, but only once. And so that's kind of where I want to pick things up again with Phil. Now I want to dig into the technical stuff a bit more because he's so good at explaining it. Okay, so we've got a broad and a diverse listenership, so I don't want to assume knowledge. So I think we probably need to start by defining some of the terms that are going to come up in our conversation later today, and then maybe put some meat on the bones of the terms as I present them.  

 
14:31 
Dom Hawes 
But why don't we start with the work of Daniel Kahneman? And in case anyone hasn't heard of him, doesn't know who he is. What's the TLDR for his work?  

 
14:41 
Phil Barden 
Film professor Daniel Kahneman is a professor of psychology, and his claim to fame really is that he became a Nobel laureate for his work on decision making. His whole thesis is that the brain operates using two quite distinct sets of mental processes, and he characterizes these as system one and system two. Very easy shorthand, and they're very useful to help us understand our day to day lives and decision making, whether it's buying a brand or making any sort of decision, really. System one is all about automaticity. It's the stuff we learn. It's things that become learnt by rote or by practice. So walking is system one, reading is system one, driving a car is system one. They weren't at one point we had to learn them, and they were very difficult processes to start with.  

 
15:38 
Phil Barden 
But over time we learn the patterns and by repetition they become intuitive and they become spontaneous. And we don't have to think about them, they just happen automatically. So system one is about automaticity, spontaneity. It's geared for action. It's really evolved to keep us alive on the planet. It works incredibly quickly, largely pre consciously, and it has virtually unlimited capacity to deal with things, because when you think about the number of stimuli with which the brain is bombarded every second, we've got to make sense of that and. And predict and act if necessary, to keep us out of trouble, but also act if there's something that might be attractive, like food. So system one is incredibly powerful. It's also dominant in day to day decision making. System two, in contrast, is very slow and effortful. It's really what we think about as thinking.  

 
16:34 
Phil Barden 
It's conscious, it's reflective. And a nice metaphor is to think of them as a pilot in a plane and an autopilot system. So system two, is the pilot really happy to let system one, the autopilot, do a very good job, very competently, but the pilot can override system one if necessary. It can intervene when something unexpected happens or something new needs to be learned. But generally, it's quite, as Kahneman calls it, a lazy controller. It's very happy to let system one get on and do stuff. So that's really what characterizes Kahneman's work and why it's so important to us when we're thinking about how the brain processes information. So advertising or brands, and how over time, when we establish preferences through familiarity and brands, whether they're products or services that serve us well, we reach for those brands almost as a no brainer decision.  

 
17:32 
Dom Hawes 
Brilliant. And I liked when we had our pre meet. You know, you had a great phrase. You said, the brain is the brain. You know, when you go to work, you don't change brains. So all the prejudice and biases and thoughts and preconceptions that you have outside work, you have inside work, too?  

 
17:47 
Phil Barden 
Absolutely, because the brain is learning all the time, and we're all exposed within a culture. We're exposed broadly to similar, what the academics call statistics of the environment. And this is how we learn. So we're exposed to similar experiences, advertising, etcetera. And they create patterns that reside in associative memory, which is a sort of vast network of neural memory structures that system one accesses all the time. When we get up and go to work, we don't wash our brain and put another one in. When we're a consumer at home and go to work in a business, we don't suddenly switch brains. The brain is the brain and is susceptible to the same biases, the same influences, irrespective of what we're doing now.  

 
18:39 
Dom Hawes 
To dig deeper into decision science and specifically how a marketer might start to embrace some of its principles and use them at work. I read through your book. What I'd like to do is I'd like to go through some of the elements that caught my attention in the book and maybe just dig into them a little bit. The first one was a concept of occasion based marketing, like how situational context affects the decisions that we make. Could you talk to me a little bit about that?  

 
19:05 
Phil Barden 
Yeah. I think context is often overlooked by marketeers because we tend to focus on the individual and his or hers behavior. But what we don't realize is that the person stays constant. But if you change the context so the situation that person finds themselves in, their behavior, changes. And that explains why human behavior is so dynamic. So if you imagine yourself, if you are a drinker of alcoholic beverages, I hazard a guess then depending who you are with, the time of day, where you are, the weather, whether you're indoors or outdoors, whether you're with work colleagues, friends, a partner, on a formal occasion, whether you're on holiday or at home, all of those are contextual. And depending on the context, your choice of alcoholic beverage can change quite dramatically. So context is wholly influential in decision making and behavior.  

 
20:06 
Phil Barden 
In fact, the academics have this little expression that behavior is the product of the person and the context, not just the person on their own.  

 
20:16 
Dom Hawes 
Okay, so I understand the concept of the alcoholic beverage. I have some experience in this field, as you rightly hinted. What about a context where you're selling a service, or where you're selling at a distance, or you've got a complex sale, for example, business, big software, that kind of thing. An ERP context is still going to play a role, I suppose, but context will maybe have a different meaning in that area.  

 
20:39 
Phil Barden 
Yes, I think so, because the use case context is likely to be more specific there. But context will play a huge role in b two b, because the decision making context is vastly different to b two c. So what detergent brand I buy or chocolate bar I buy from a supermarket is an individual decision. By and large in a business. Of course, it's not only an individual decision, it's collective, and there's a hierarchy and there are many other stakeholders. So the context for decision making can be vastly different. And of course, each of those decision makers are subject to biases and influences and prejudices and different maybe learned experiences. They might have different goals as well at play. So understanding all of that makes the b two b selling process more complex than thinking from a consumer point of view.  

 
21:38 
Phil Barden 
How do I get someone to buy? Personal versus arial in a business environment.  

 
21:42 
Dom Hawes 
Where commercial survival might be one of the risks you take making a decision, do you think that means we need to make more effort on helping auto navigate through system one to get to system two? Do we need to make more of an effort in b two b to pass through the autopilot?  

 
22:02 
Phil Barden 
I think the context of b two b means that you need to spend more preparation time understanding all of the different factors at play. That's the key difference. However, the autopilots of the various stakeholders involved will still be subject to everything they've learned. So we had a great example where a finance director was saying to me that he felt that the decision making process for somebody buying a car was not autopilot, that it was a very considered, reflective decision, and therefore it was a pilot decision, a system two decision. And he used his own example to prove his point. So he said to me, I created a spreadsheet.  

 
22:47 
Phil Barden 
When I was deciding on my next company car, I had a fixed budget, and so what I put in the spreadsheet were all the different models available to me, the different trims, specification, engine size, CO2 emissions, residual value, etcetera. And that enabled me to make the decision, and that was a very reflective, considered choice. Therefore, car buying is a system two pilot decision. And I said that the process he'd been through was certainly system two. But why had he created the spreadsheet in the first place? And he answered, oh, so that I could have a BMW outside my house. So actually, his decision had already been taken by the autopilot, based on what BMW meant to him, and everything that BMW communication he'd experienced, and everything he'd experienced through seeing who drove bmws, etcetera.  

 
23:44 
Phil Barden 
So, actually what it meant was it was about status, it was about self esteem. It was helping badge him as having some sort of self worth. That was the decision. The spreadsheet enabled him to rationalize that decision.  

 
24:00 
Dom Hawes 
So I think that's a really important distinction. In b two b sales, we see that all the time, where when you're going into vendor selection, your bias and your precognition is what's going to help you develop the shortlist. Everything else is then justifying who's on there and why. Brilliant. Okay. I also love the neurologic purchase decision equation. Net value equals reward minus pain.  

 
24:20 
Phil Barden 
This was a fundamental, neuroscientific experiment, the implications of which are profound for anyone in the commercial world. So, this was a study at Stanford University in the States. And Professor Brian Knutson and his colleagues put individuals into fMRI brain scanners, and what they do is simply measure neuronal activity. They show up hotspots which indicate blood oxidation, and blood oxidation, in turn, means that neurons are firing. So basically, the scientists can see which regions of the brain are active during a particular process. And the process that they were studying was a purchase decision. So they first showed the people in the brain scanners images of products for 4 seconds, then they showed them a price for 4 seconds. And then the experiment subjects were given 4 seconds to make a purchase decision by pressing a button indicating, yes, I will buy or no, I won't.  

 
25:20 
Phil Barden 
And Knutson and his colleagues simply wanted to observe what went on in the brain at those different points in time. So each tranche of 4 seconds, what happens, which regions are active? And what they found was really interesting. When people see a brand, their so called reward centre, which is part of the orbitofrontal cortex, is activated. Now, this was significant because the scientists knew from prior studies two things. Firstly, when this part of the brain is activated, there's a high probability that action will follow. And that's plausible, because if we see something that's rewarding to us, we want to get that thing right, we will approach it, we want to get the thing that is rewarding in the brain.  

 
26:04 
Phil Barden 
The other thing that scientists knew from prior studies was that when people see other things that are very pleasurable or rewarding to them, the same part of the brain is activated. So if you show a mom a photo of her kids, her reward center is activated. If you show art lovers artworks, their reward centers are activated. So the brain is using the same mechanism, the same brain regions, to ascribe some sort of pleasurable reward value to brands. It hasn't grown a whole new region just to cope with marketing and advertising and brand. It's using what it's had through millennia. Now, when price was exposed to the study subject, something very different happened. The insula in the brain, one of the regions in the brain, was activated. Now, this part of the brain is activated when people experience physical pain or emotional social pain.  

 
27:01 
Phil Barden 
So exclusion from a group, for example, and also when they experience disgust. So it's almost like the brain is saying, wow, that's brand thing is rewarding and pleasurable, I want it, but ouch. You want me to give money away to acquire the reward. And that's painful, that hurts. And again, that's intuitive and plausible, because the flip side of pleasure is pain. You know, we want something that's rewarding, but we've got to part with something that we also value highly, which is money. And what happened as a result was, depending on the level of activation in those two brain regions, the person in the study pressed yes button, I will buy or no. And the scientists could predict, just by watching the brain activation, which button that person would press.  

 
27:47 
Phil Barden 
So knowing this gives us two very powerful levers in marketing and in the commercial world, per se. We can increase the reward expectation and or we can reduce the pain of the price. Those are the two fundaments, a purchase decision. That's why it's called the neurologic of purchase. Reward minus pain. But we can also change the manifestation of that pain using some techniques that have been tested. So, for example, the currency symbol, and in studies, and I cite this in decoded, when the currency symbol is removed, the pain is reduced. So if only the number remains, the brain experiences less pain than if the currency symbol, or even the currency word, is present. And you find that on a lot of restaurant menus now, particularly on the wine list.  

 
28:44 
Phil Barden 
So, you know, beware, because you might spend more than you perhaps had wanted to, but that's a way to reduce the implicit level of pain.  

 
28:56 
Dom Hawes 
Well, I don't know about you, but I've definitely noticed that in the moment, it's reduces that implicit level of pain. And I. And I've really started to notice it recently in the kind of haunts I hang out in Clerkenwell, near our studio. Just downstairs, there's an excellent spanish tapas place called Aberica, and I'm a bit partial to the Alberino there in the springtime. And if you look at their menu, you see lovely round numbers, like a Pazos de Lisco at four nine, whatever four nine means. It's quite a simple trade up to an Attis Lias finas, which is a 60. And although there's an eleven pounds difference without that pound sign, you don't even really notice it. So beware any menu where you don't see a threatening pound sign. In vino veritas.  

 
29:44 
Dom Hawes 
I guess, ultimately your credit card statement will tell you what you spent. But anyway, with that, we come to the end of part one. We are, however, only halfway along our road to enlightenment. Around the corner in part two is the crucial bit how you as a marketer, can use decision making science to optimize your customers path to purchase. And it's available right now. All you have to do is press play to find out more. 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 Allen is the editor. Unicorny is a Selby Anderson production.