Business Book Club: The Choice Factory

I've set myself a goal to blog the books I read. I will extract wisdom from the best business and personal development books I've read and share it with you.

This time, I've been reading The Choice Factory by Richard Shotton.

This book was recommended to me by a coaching client who knows the author. He suggested I took a look at it and I was really pleased that I did.

In this book, Richard Shotton covers some theories and lots of research about behavioural science, which informs the way that we make choices when we make purchases. Shotton separates his work into 25 separate chapters. Each one looks at different behavioural biases, which illustrate the way in which decisions are made when we buy things. Every chapter starts with an example of a behaviour that will be familiar to you. Then it talks about the theory and the research behind the behaviour. Each chapter shows how you might apply some of this learning.
The book focuses on 25 biases, some of which will be familiar to you. Such as price anchoring, social proof, the primacy effect and confirmation bias. The author explains why they work and how you might use them. Here are a few things I learned.

Pain of Payment.

If you want customers to buy from you, make paying as effortless and as quick as humanly possible. Some suggestions here for how you might do this are:

Card payment

Some students were asked to bid on basketball tickets. They were given the option to bid by cash or by card payment. The people who bid with cards bid $69 on average, whereas the ones bidding with cash were only willing to bid around $29 on average. Card payment is quick, effortless and it encourages us to spend more.

Charm pricing

Most people know about this. It’s where you charge £3.99 instead of £4. We are aware of this tactic. You know what the seller is doing. They're trying to make the price sound less. When people shop, we are usually in a bit of a hurry. So when we’re doing the mental calculation, we tend to think of the price as being lower than it is.
Remove the £ symbol

Restaurants like Byron Burger or Café Rouge for example, give the price on the menu without including the £ symbol. It's a tiny thing but research shows that people were willing to spend more where the pound sign or a dollar sign wasn't there. Shotton remarks that few organisations actually do this despite the fact it’s known to work.

Shift time frames

Whether you give a price as £3 a day or £21 per week makes a difference. The smaller number is more attractive. It is as if 7x3 is smaller than 3x7. Logically we know it isn’t but when making a purchase, it feels that way.

The Curse of Knowledge

Sometimes marketers assume the customer knows everything that they do or that the customer wants to know everything they do. Often, descriptions of products or services are far too detailed.
Customers are satisfiers, not maximisers. Marketers tend to be maximisers. They want to present the very best value or the very best products. A customer on the other hand, doens’t regret not getting the best product, they just want it to satisfy their needs. They want to avoid straying from the crowd.
Think like the customer
Richard Shotton's own team did not have the time or budget to put together a research group to test out what customers thought about products for male incontinence. So instead, they tried to think like a customer. They set up an experiment. Every so often they would send a text to tell their team that they had to find a toilet as quickly as possible. This gave their team insight as to what it was like to be the target customer. Of course, they found that when they were at home near a toilet this was fine, but when they were out of the home, it caused a lot of frustration for them and their families and potential embarrassment too. This highlighted a number of problems that the team could then address in the way that they marketed the product to customers. So a good reminder for us all, to know what your customer needs are.

Pratfall Effect

The idea that being flawed or making mistakes can actually make you more appealing to customers.

Some companies use this really well. Guinness for example, takes forever to pour but they use the tagline “The best things come to those who wait”. Think about Stella Artois: reassuringly expensive. They've made the weakness in their brand part of the appeal. When people only hear good things about your brand, they tend to assume you're only showing the good bits and you're hiding the flaws. Flaws can make a brand seem more authentic.

This can work to your advantage however, it must fit your brand and you've got to be consistent. So if customers don't think you offer a good quality product or service, the pratfall effect could make you seem worse, not better.

Bad reviews
Bad reviews can work to your advantage, don’t hide them. We see this more and more these days. Sites like booking.com show all reviews and rather than shy away from the bad ones, companies now respond to them professionally. This balanced view increases authenticity and customers still buy from sellers who respond professionally.

What do I think of the book?

Overall, I think it's really interesting. It highlights the key differences between what customers say and do.
The research shows that sometimes asking your customer isn't always the best way to find out what they want or need. It also shows that even if you know about biased, it doesn't make you immune to them. I've come across many of them before and I'm even aware of them as I'm buying a product, yet they do still sway me.
I like the way that the book gives us an example for each bias, shares the research and then shows you how to apply it. I was particularly pleased to see a chapter at the end on ethics. Some of these methods might sound a bit manipulative. I don't think they have to be if they are used well, but they have the potential to be used in a self-serving way. Richard Shotton doesn't swerve that question.
The book is very much aimed at marketers. It gives some interesting insights into psychology and the way that people behave, but if you're not looking to sell products you might find there’s not a huge amount you can apply. Nonetheless, if you're interested in why people buy and the difference between what they say they want and what they actually do, then you will find plenty of interesting ideas.