They created a promotion intended to change behaviour, and then were surprised when behaviour changed. It reminded me of the infamous Hoover debacle of the 1990s, which nearly bankrupted them. People don’t buy vacuum cleaners often, and Hoover’s stock was piling up. So they came up with a cunning plan: you could claim two free return flights when you buy one of their products. The terms and conditions were supposed to make it hard to redeem, and to generate some income to cover the costs. Lots of consumer promotions are never redeemed.  Big brands can print 50p money-off coupons on boxes of cornflakes or laundry detergent knowing most of them will end up in the recycling. But maybe the data relating to 50p coupons can’t be extrapolated to flights worth hundreds of pounds. It generated the kind of market stimulus central banks dream of: vacuum cleaner sales went through the roof. Rapidly followed by a glut of as-new Hoovers on the 1990s equivalent of ebay.

Both these companies estimated promotional uptake based on past behaviour. Reasonable, but insufficient. This is the sort of “black swan” that Nicholas Nassim Taleb advises companies to consider when they do their risk analysis. It’s not the small effects that matter. It’s the unlikely but huge ones that do the damage.

There’s a parallel here with covid modelling, though that has more positive results (no pun intended). Every time SAGE or alt-SAGE or whoever announces the latest scary extrapolation, some people change their behaviour. For every rebel who responds by going out more, or claims they do, there’ll be more who become more cautious. The modelling is instantly rendered wrong by voluntary behaviour change. The modellers are, in due course, ridiculed for their doomsday predictions. But what a marketing success: to get significant behaviour change without spending any money or political capital. The price is of course the modellers’ reputations, and the resulting public cynicism about their pronouncements, which weakens the public response over time. Tracking attitudes and claimed behaviour, as well as actual behaviour, helps to reveal the voluntary change and offset the cynicism.

So what’s next for Pret? So far they are sticking with their subscription, though their denials that there’s a problem will not wash with their most loyal customers, whose experience tells them otherwise. It’s time they fronted up. Dealing with reality is surely the most basic of business requirements. Painting a falsely-rosy picture to the media may be tempting, but no one can expect to do it to customers and get away with it.

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Curmudgeonly iconoclast Nassim Nicholas Taleb, whose ground-breaking books include Fooled By Randomness and Anti-Fragile

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This month the review into maternity services at Shrewsbury and Telford NHS Trust concluded that many lives had been lost there needlessly, through a host of failings. It said that there had been many missed chances to learn from past errors. And yet, the same trust was previously lauded for its achievements in maternity care.

How could a drive for more patient-centred maternity care lead to more deaths of mothers and babies? It started with a desire to make the process of maternity and childbirth less medicalised. The idea of “natural childbirth” became the gold standard in the UK. Women were encouraged to attempt a natural delivery rather than elect for a caesarean section, or even an epidural.  A reduction in medical interventions followed – over time, the trust’s rates of caesarean deliveries fell to less than half the national average. But it seems that over time, these observed changes were adopted as targets. So women were denied the treatment they needed, because of a competing goal, the reduction of interventions such as caesarean deliveries.

It’s a tragic lesson in how focus can be lost. Moving away from something – excessive medicalisation in this case – towards a patient-centric approach is surely a good thing. But a patient-centric approach would surely be measured in patient satisfaction, and patient outcomes, not targets for medical procedures. Somehow the patient focus was lost along the way, perhaps in the quest for harder measures than simple satisfaction. The wrong metrics, founded on good intentions, shaped by observable data, led to disastrous results.

Some marketers can be so focused on planning activity that metrics are an afterthought. Digital marketers are highly metrics-driven, but even they tend to choose from the metrics palette on their analytics platform.

Metrics matter. We know that what gets measured gets done. But as an end in themselves they can be dangerous. As Warren Buffett, the so-called Sage of Omaha, put it, “Games are won by players who focus on the playing field – not by those whose eyes are glued to the scoreboard.”

So whatever you are planning for 2021, whether professional or personal, start with the end in mind.

More on this topic:

ROI is a false friend to marketers

Getting five star ratings in customer satisfaction? You should be worried

Trains, Enron and the real job of marketers

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Kahenman’s book “Thinking Fast and Slow” is so packed with concepts it can make behavioural economics seem complicated. This book brings it back to first principles. “Undoing” refers to the challenge of making explicit and then removing assumptions about how people think and decide, assumptions which even the academics never questioned, because they went without saying. So many of Kahneman and Tversky’s concepts – heuristics, confirmation bias, loss aversion, the peak-end effect – are now familiar in marketing circles that they start to seem obvious, but Lewis shows how hard these things were to see when started without hindsight. This is a brilliant piece of research and writing, and a bonus for anyone who wants to problem-solve for themselves. We see how new concepts couldn’t be expressed until the old assumptions were revealed and set aside. Even so, the two friends sometimes stumbled into their realisations, finding a neat hypothesis and then having to dump it when it didn’t quite work, and pushing on to find something better.

The context of their lives, early Israel and its wars, the depth and tensions in their intense working relationship, are all honestly revealed. The only gap is that although we hear directly from Danny, we cannot hear from Amos, who died of a brain tumour aged 59. His quick sharp wit is clear though. He once said to an eminent physicist, “You know, Murray, no one is as smart as you think you are. In the early days, after Amos had given a talk, an unnamed English mathematician approached him and said, “I don’t usually like Jews but I like you.” Amos replied, “I usually liked Englishmen but I don’t like you.”

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Marshall McLuhan, academic and visionary author of “Understanding Media”

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Attributed by Paul Samuelson, Nobel Laureate in Economics, to John Maynard Keynes

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There’s a host of reasons for low scores, from ad hoc operational failures through to structural factors that are slow or costly to change, or pricing models that customers dislike. These are totally different issues, and it’s madness to mix them up. Operational glitches are to be avoided, sure. Here the smiley face machine earns its keep. Moving customer feedback from an occasional survey to a continuous process gives granular data to manage and perfect routine processes. But structural causes of dissatisfaction are powerful sources of innovation, which can lead to competitive advantage if a firm is brave enough to acknowledge them. Marketers, especially, should be curious about the satisfaction gap. If it’s not there, you?re missing out.

But many firms use customer satisfaction ratings to monitor, reward and fire their sales and service people. That’s a problem. When I last bought a car, the sales person asked me to give her 5 out of 5 because, she explained, that’s what the company required of her. In some places Uber drivers have to maintain a rating of 4.6 out of 5 to stay on the roster. They’re forbidden from asking for good scores, so they wear themselves out trying to be uber-nice. Academic studies of this extra effort, this “emotional labour”, have shown that it places a significant strain on people, and can, over time, lead to burn-out. In both cases, by pushing for false positives, firms are losing one of their best sources of market information.

Most normal marketers also hope for good cust sat scores. Of course we do. So here’s a three-step programme to check your firm’s approach, in order to improve those ratings in the long term.

1. Are you getting useful, actionable feedback? Check how the system is being applied so you know whether you really have high satisfaction, or ho hum good enough performance, with pressure on customers not to ruin other people’s bonuses or risk costing them their jobs.

2. Is your best source of stimulus for maintaining competitive advantage being sanitised? It is not always culturally acceptable to focus on the negative. No one wants to be a misery-guts. OK, celebrate the satisfaction scores, then explore the gap. Paddy Barwise and Seán Meehan’s books, Simply Better and Beyond the Familiar, show that customer dissatisfaction provides more valuable and actionable feedback than customer satisfaction. They show how to use dissatisfaction across the organisation to make things better, and ultimately drive satisfaction up.

3. Are you missing opportunities for more radical innovation? Even if they are genuine ratings, getting top marks leaves you nowhere to go. Is it really perfection, or might there be ways it could be better? If your satisfaction ratings are too high, it’s time to revisit the questions you’re asking. Bookshops thought their wonderful range was close to perfect, until someone thought of saving you the bother of a trip into town. Airlines thought perfecting in-flight experience was the goal, until Virgin Atlantic realised the end to end journey mattered, and then South West Airlines in the US and Easyjet here realised people were willing to trade off a lot of comfort and privileges if it made flying cheaper.

All of this can only work if customer-facing people are not afraid of customer feedback, good or bad. Marketers can help by being curious and open to dissatisfaction, showing how the insights it yields are opportunities for change, and by appreciating those who bring them.

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The charity aims to help everyone make the most of later life. Undoubtedly some older people are confused by energy tariffs, and would welcome help to ensure they are not paying over the odds. The same applies to home and motor insurance, savings interest rates, even making sure they have smoke alarms with working batteries. Some people might even pay for help. But with the focus on raising money, Age UK came at the problem another way. Two years ago they agreed a special 2 year fixed tariff with E.ON, which was a pretty good deal at the time. Their website says that “buying this product supports Age UK’s charitable work”. Did people who signed up think they were in effect making a donation to Age UK? Or did they think Age UK was helping them by giving them a special deal? A bit more transparency rather than this woolly language might have avoided the recent media criticism and helped Age UK’s customers too. The kicker here is that people referred by Age UK to E.ON were offered a choice of all four E.ON tariffs. The charity appeared to be endorsing all E.ON’s tariffs.

Now the real deal has been revealed: The long term commercial partnership includes a typical commission to Age UK of £10 for each customer. As we know, if you’re not paying, you’re the product. This one is hard on Age UK’s customers because they are paying for their energy, while in effect they are being sold to E.ON for £10 each.

Major charities are complex organisations. Different teams have their own goals and metrics. The challenge is to keep sight of the primary job – in this case, helping older people – and to check the impact of any activity against the ultimate purpose as well as more parochial targets. As ever, a quick metaphorical walk in the customer’s shoes is rarely wasted.

Part of Age UK’s defence is that fundraising is getting harder and commercial deals are essential. The problem is the conflation of a benefit being provided by Age UK with a fundraising deal to support them. Either is fine. Even this deal is fine, as long as the customer point of view is worked through and made explicit. Plenty of happy customers will have been rattled by the negative coverage, when they may have been quite content to support the charity in this way. Soft-pedalling a message for fear some customers won’t like it is rarely good in the long run.

The wrinkle is that charities have to think about two sorts of customer – those they help, and those who support them. Other charities are under fire for targeting the same willing donors over and over, and for the trading of donor lists, which leads to the best prospects being contacted by many different charities. There’s a donor segmentation seemingly in general use among fund raisers, featuring Dorothy Donor, a typical lower value donor, and Colonel Cash, a major donor. Ignoring the perhaps inevitable gender-stereotyping, it’s a crude approach, since it’s mainly a view from the charity’s perspective, limited to the specific behaviour the charity seeks – can they give, do they give, how much do they give? The result is that poor old Dorothy Donor, the kindly female over 55 who gives regular small amounts to lots of charities, gets hit all the time for money from charities she has no interest in. This can’t be good but on a simple ROI model it generates more money than it costs, so they keep doing it. This is the danger of an overly simplistic approach to ROI, as I’ve written here.

Meanwhile an enterprising marketer at a comparison site has seen an opportunity. The top result when you search Age UK EON is Save on “Age UK energy”, with a link to energyhelpline.com, promising to compare all energy deals. That’s good business that’s good for customers.

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attributed to Wallace Earl Gray Stephens, American poet

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It seems like everyone’s doing insight too. Market research departments are now insight units. I know a market research director who insists that everything her team does is insight. And every word I write is poetry. What her team does is mission-critical. But they devalue it if they insist it is all insight. It’s mostly useful information, which is not the same thing. Not all market or consumer information, however true, makes an insight. On the contrary, it often takes a lot of wading through information of various kinds before the insight arrives.

The down-side of the market research department commandeering insight is that it suggests insight comes only from market research-led initiatives. The aha moment, the really significant, game-changing insight, will probably hit you as a realisation born of cumulative inputs from more than one source. It’s important to be open to it, wherever you are when it strikes. That can make the direct source of an insight hard to pin down, which agitates those who wish to be data-driven. But anything really worth acting on probably isn’t a simple reported number from a survey. The why behind that number, on the other hand, could unlock something with major implications.

How do you know it’s a genuine insight? First, the test of whether it can be acted upon, not just to change something but to create competitive advantage. Second, that moment when the realisation arrives is a bit like falling in love. There may be a few false starts but you know the real thing when it happens.

In business, one or two profound insights can unlock market understanding and lead to growth. Occasionally they can be transformational. The entire sharing economy is based on a simple insight: most of us own a lot of stuff we’re not using all the time. For some businesses, like Airbnb, or parkatmyhouse, that meant getting people to rent them out. For others, like Zipcar, it meant an alternative to the conventional ownership model. Hot desking is based on essentially the same insight applied in offices.

Here are a few of my favourites.

1. The famous statement attributed to Theodore Levitt, “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole.” That changes your competitive set, and recognises that some people, even drill-buyers, aren’t that interested in drills.
2. Dyson’s realisation that letting people see the dust and dirt collecting inside their vacuum cleaner makes cleaning more satisfying, and proves the machine is doing its job. It’s initially counter-intuitive because we are repulsed by the dust when emptying the cylinder.
3. From behavioural economics, the discovery that signage that reports other people’s bad behaviour has a norming effect, making us more likely to do likewise. (See the story of the Petrified Forest National Park, Arizona, as reported in Thaler & Sunstein’s book Nudge.) Hospital clinics and doctors’ surgeries should stop putting up signs telling us how many people missed their appointments last month; they’re only making it more ok for us to miss ours.

A worthwhile insight will often seem obvious once articulated, as these three do. As Levitt shows, sometimes the most significant realisation is that most people don’t think much about your brands, or your category, or even care that much about which brand they buy. Chances are, they’ll never say that directly; in market research people generally try to be helpful, and polite. A bit of common sense is needed to read the reality.

More posts on insight:

Desperately seeking dissatisfied customers

Getting customers to do it your way

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