Thoughts

There is a popular saying which says that money can’t buy you friends. But nothing can be further from the truth. Indeed, in the online world it’s easy to buy a bunch of Facebook fans or Twitter followers. The going rate is about £15 per thousand on average! Yet these friends won’t meet you for dinner or buy you a drink. In fact, they don’t even exist. They are bytes a server somewhere in cyberspace. Other times they are real people, but rewarded for liking your Facebook page with points to play online games or given free downloads.

A recent study by Marco Calzolari, a professor at Milan University, shows that a massive proportion of followers of some of the world’s biggest brands are not real at all. Based on criteria such as the number of posts from a fan’s Twitter account and the use of specific writing styles in Facebook posts, he concluded that nearly half of any brand’s social equity is probably false. Taking the computer maker Dell as an example, he estimates that about 700,000 of their Twitter followers simply don’t exist. 

There is no evidence to say that any of these brands have actively bought followers – automated bots often attach themselves annoyingly to people and brands without payment. But some businesses do buy a social media following. Faked personas are at the centre of a very vibrant and growing hidden economy. Your brand may be approached directly via your Facebook or Twitter account. Or if you so wish, there are plenty of offers on eBay to set up fictitious profiles.

For many businesses this is very tempting. A strong following can boost credibility and business, especially for start-ups which can look like a booming company thanks to a buzzing Twitter account. But large firms are not averse to such trickery. A small number of followers in the early stages of a Facebook campaign can be galling at best and damaging to a brand at worst. Buying crowds of fans can give an artificial boost. But such boosts are rarely effective in the long term.  Remember, these fans are bytes on a server. They are not real customers engaged with your brand and ready to spend money on your products.

For now, this skulduggery works. Most ordinary people do not yet know that this activity exists. They have a real trust that a brand’s social equity is real. But many brands are finding diminishing returns of large followings, whether naturally grown or artificially bought. When everybody has a huge following, any impact is much reduced. And consumers are starting to wise up to sharp practices. 

Another impact of this activity is to put into question the whole area of social media measurement and analytics. Artificial fans and friends severely distort measures such as reach, share and influence, to mention a few. How can you trust these numbers when they are corrupted by some brands trying to make themselves more popular than they really are? Here is a very strong argument for treating social media listening with a big dose of scepticism. Instead, we strongly recommend putting your trust for insight into online communities. They are made up of real people with real views, real feedback and real opinions.

So where does all this leave us? Just remember, money can buy you friends—just not very good ones.  

Before a forthcoming pitch, a prospective client for The Opinion Company quipped ….

 “You might want to avoid telling us how many CATI stations and clipboards you’ve got!!”

Well, the particular client knows we’ve never had CATI stations and rarely go down the clipboard route but he wanted to make the point about the approach to gathering customer / market information and how agencies often focus on their in-house resources rather than their ability to derive helpful and actionable insights. (Read ‘death by stale PowerPoint’). 

Is this now a widely shared view of how the research industry (from a client perspective at least) is feeling? 

A quote from a recent read entitled ‘Consumerology - The market research myth, the Truth about Consumers and the Psychology of shopping’ by Philip Graves, perhaps echoes the sentiment….

“I would argue, the convenience of a technique that can be very good at providing research data – very good in the sense of the volume produced and how interesting it seems – has little to offer by way of dependable accuracy”

 Philip goes on to say …..

"Creative questioning styles can provide more interesting responses, but they are not necessarily more reliable. If any of the research techniques used has induced a frame of mind that is not present during the actual consumer experience, it is unlikely to have obtained an accurate picture of what people think."

This perhaps suggests that we need to get closer to the transaction and/or the real time brand experience to really gather meaningful insights – but then what of the post purchase / service feelings? Do store exit interviews not come under criticism for being a little short and rushed due to time pressures and a less than ideal environment generally? Traditional personal data collection modes can be said to give the answer the interviewer wants to hear, introducing additional unwanted bias. Established qualitative groups are at the mercy of (un)scrupulous recruitment to ensure the right individuals are in the room in the first instance and again, we must be ever conscious of direct moderator influence. Certainly for speed and access, online panels can be very effective but can also come under fire for sampling problems, representation and not getting to the why and how questions.   

So where do online communities fit in?  Do they resolve some of the more pertinent concerns of traditional market research?  For example, interviewer influence, environmental issues, timeliness, respondent selection etc. Can they really be used in a more flexible way, over longer periods of brand exposure time and capture valuable insights from naturally occurring conversations versus the interrogatory style of some traditional market research practices? Do quick start up, albeit technically competent, social media consultants offer an easy route into an arguably tired market research industry with their counts of brand mentions and sentiment analytics or are they too missing a trick by precluding and not integrating some of the more established data capture methodologies? 

I’m not sure we are all ready for a broad brush out with the old and in with the new but surely there is room for the twain to meet? Is it time for the industry to embrace and bring together the best of the past in a more holistic fashion and take advantage of the benefits of the new choices open to insight professionals today? 

We see them at the back of factories, burn them at bonfires and pick giant tins of cooking oil from discount supermarkets. What are they? Humble collections of wooden slats nailed together, otherwise known as Pallets.

There are billions of them. An estimated 80% of the world’s trade are carried on them. And about 50% of the planet’s hardwood production goes on making them. 

But they are not just boring piece of wood made to carry things around, either. They have had a profound influence on the way we design and manufacture products.

For example, companies like IKEA, have literally designed thousands of products around pallets. The oddly named Bang mug has had three redesigns, each one not for aesthetic reasons, but to make sure that more mugs would fit on one pallet. After making changes it became possible to stack over 2,200 mugs on a pallet instead of the original 864, thus reducing shipping costs by 60%.

Indeed a new science has emerged, known as pallet optimisation; a kind of tetris-like game for packaging. Some really cheeky manufacturers design cartons that actually overhang by a couple of inches. This is frowned upon by shipping companies because it produces pallet gaps and ruins their packing efficiency ratios.

The reason why pallets have become ubiquitous is because they have changed the speed at which our shipping economy moves. In the 1940’s it took three days to unload a ship carrying 15,000 cases of goods. With pallets the same load now takes 4 hours. 

So who invented the pallet? No one knows for sure. Wooden skids were used by the paper and automotive industries before the 1920s to move heavy items around factory floors. However without efficient means to lift them they were cumbersome and difficult to push around. 

The invention of the forklift truck in the 1930s doesn’t seem to have made much difference. During the Great Depression, with ample labour and little cash, there was little urgency to invest in new material handling methods.

However the Second World War changed everything. Having to move vast amounts of goods and equipment the US army was quick to see the benefits of combing pallets with the use of forklift trucks. The war in the Pacific saw a desperate need for volume movements and where the use of pallets would have the greatest impact. The humble pallet was born.

After the war, the United States military left about 60,000 of them in Australia, starting an industry in which Australia now leads the world. It specialises in ‘pooled’ pallets. Pooled pallets are simply rented pallets – they go out, deliver things, and then return to the company. Anywhere in the world you see a blue pallet its one of about 280 million that belongs to the Australian company CHET. A red pallet belongs to its main competitor PECO. The alternate, one-way pallets are the ones you often see scrapped. They, like their name implies, only go one way.

The pallet is one of those things that, once you start to look for it, you see everywhere; stacked outside supermarkets, supporting pyramids of Coke in store, being broken up for a beach bonfire or even recycled into innovative modern furniture. For the most part, though, they are totally ignored. Yet without pallets, most of what we eat, wear or use would not have got to us as easily or cheaply as it does. A wonder of the modern global economy; hugely understated, yet without which we could not live our everyday lives.

The human brain is arguably the most complex object in the known universe. We have evolved brains that are superbly adapted to deal with complex environmental situations. But that doesn't mean that our brains don’t have limitations. For a start we are not particularly quick; try doing complex sums faster than a calculator; and our ability to remember large amounts of factual information is often hopeless; do you remember the last number you dialled?

Moreover, we are subject to certain cognitive biases; those really peculiar inconsistencies in thinking that cause us to make irrational decisions and take questionable actions. Here are several of the most common cognitive biases that anyone who measures customer feedback should know and consider when evaluating what customers have said or done.

Before doing this let’s first distinguish between cognitive biases and logic errors. A logic error is a fault in logical reasoning, for example, by basing an argument on factors that are not really related as one assumes. A cognitive bias on the other hand, is a genuine deficiency or limitation in thinking, for example, a flaw in judgment based on mistaken personal frames of reference.

Psychologists have long wondered why cognitive biases exist. Some believe these help us process information more efficiently, especially in dangerous situations. The argument is that you don’t need to consider all factors when escaping from danger; only the most familiar ones or those which the brain decides will lead to the quickest escape.

Still, cognitive biases in other situations lead us to make big mistakes in non life-threatening situations. We may all be prone to such errors in judgment, but at least if we are aware of them we can take them into account when understanding others. Here are some important ones to keep in mind.

Confirmation Bias

People love to agree with people who agree with them. It’s why they tend to associate with others who hold similar views and tastes. We tend to dislike individuals, groups, and situations that make us feel uncomfortable or insecure about our views – a feature labelled as cognitive dissonance. This mode of behaviour results in confirmation bias – the often unconscious act of referring only to those perspectives that fuel our pre-existing views, while at the same time ignoring or dismissing opinions — no matter how valid — that threaten our own view.

In-group Bias

Somewhat similar to the confirmation bias is the In-group bias – an expression of our inborn tribalistic tendencies. It means that we prefer to form tighter bonds with people in our own group and makes us suspicious, fearful and even hostile to others. Ultimately, the In-group bias causes us to overestimate the abilities and value of our immediate circle at the expense of people we don’t really know, who may actually be better able to help.

Gambler’s Fallacy

It’s called a fallacy, but it’s really an error in our thinking. People tend to put a lot of weight on past events, believing that they will somehow influence future outcomes. The classic example is coin-tossing. After flipping five heads in a row, our tendency is to predict an increase in the odds that the next toss will be tails. But in reality, the odds are still 50/50. As statisticians know, the outcomes in different tosses are statistically independent and the probability of any outcome is still 50%.

Positive Expectation Bias

This is closely related to Gambler’s fallacy and seems to fuel many gambling addictions. It’s the sense that our luck has to eventually change and that good fortune is on the way. It also contributes to the “hot hand” misconception, namely, that the next hand of dealt cards will be the winning one. Similarly, it’s the same feeling we get when we start a new relationship that leads us to believe it will be better than the last one.

Post-Purchase Rationalization

Do you remember the time you bought something totally unnecessary or expensive and then you rationalised the purchase so much that you convinced yourself it was a great buy all along. That’s post-purchase rationalization in action — a mechanism that makes people feel better after they make poor decisions; especially at the checkout. It is also known as Buyer’s Stockholm Syndrome.

Probability Neglect

Very few people worry about getting into a car but many of us experience great fear about boarding an airplane. Flying, quite obviously, is an unnatural and seemingly dangerous activity. Yet virtually all of us know that the probability of dying in a car accident is much higher than getting killed in a plane crash — but our brains won’t release us from this unnatural logic. Probability neglect leads us to overstate the risks of relatively harmless activities, while forcing us to overrate more dangerous ones.

Observational Selection Bias

This is the common event of suddenly noticing things we didn’t notice before — making us wrongly believe that the frequency has increased. The classic example of this is after we buy a new car. Suddenly we start to see the same car virtually everywhere. A similar effect happens to women who suddenly notice a lot of other women wearing the same dress as them.  It’s not that these things are happening more frequently, it’s that we have registered the item in our mind, and in turn, are noticing it more often. The problem is that people don’t recognize this as a bias and actually believe these items or events are happening with greater frequency. It also leads to the feeling that the appearance of certain things or events couldn’t possibly be a coincidence, even though it is.

Status-Quo Bias

Most people tend to be wary of change, which often leads us to make choices that guarantee that things remain the same, or change as little as possible. This has important consequences in everything from politics to shopping. We like to stick to our routines, political parties, things we buy and our favourite meals at restaurants. Part of the negative impact of this bias is the false assumption that another choice will be inferior or make things worse. This is one of the main reasons why change in society is so slow to happen.

Negativity Bias

People pay more attention to bad news or events — and it’s not just because we are naturally pessimistic. Sociologists speculate that it’s because we have selective attention and that, given the choice, we perceive negative news as being more important, interesting or newsworthy. We also tend to give more credibility to bad news, perhaps because we’re suspicious of claims to the contrary. Unfortunately we run the risk of dwelling on negativity at the expense of genuinely good news. Consequently even though crime, violence, disease, war and other injustices are generally declining in the world today; most people still argue that things are getting worse.

Bandwagon Effect

People love to go with the crowd. When the masses start to pick up on something our individual minds seem to shut down and enter into a kind of “groupthink” mentality. But it doesn’t have to be a large crowd or a whole nation; it can be very small groups, like a family or even a small group of office workers. The bandwagon effect is what causes certain (sometimes strangely odd) behaviours or norms to propagate among groups of individuals — regardless of their sense or implication. Much of this bias stems from our integral desire to fit in, conform and obtain the approval of others.

Projection Bias

As individuals it is very difficult for us to look outside of our own consciousness, preferences and experience. We tend to assume that most people think just like us — though there may be no reason for it. This bias often leads to a related effect known as the false consensus bias where we tend to believe that people not only think like us, but that they also agree with us. It’s a bias where we overestimate how typical and normal we are, and assume that a consensus exists when there may be none. Moreover, it can also create the effect where the members of a radical or fringe group assume that more people on the outside agree with them than is the case.

The Current Moment Bias

People have a really hard time imagining themselves in the future and altering their behaviours and expectations accordingly. Most of us would rather experience pleasure now, whilst deferring the unpleasant for later. This bias is of particular concern to economists in the current financial climate, typified by our unwillingness to spend money now and saving for later. But if e don’t spend how can we stimulate the economy? Another example is food. In a study looking at food choices for the coming week, 74% of participants chose fruit. But when the food choice was for the current day, 70% chose chocolate.

Anchoring Effect

This is a tendency to compare and contrast only a limited set of items. It’s called the anchoring effect because we tend to fixate on a value or number that in turn gets compared to everything else. The classic example is a sale item in store; we tend to see (and value) the difference in price, but not the overall price itself. This is why some restaurant menus feature very expensive entrees, while also including more (apparently) reasonably priced ones. It’s also why, when given a choice, we tend to pick the middle option — not too expensive, and not too cheap.

Decision Event Bias

People find it really difficult to imagine when they may do something that is not routine or urgent or when they haven’t already committed to doing it. Thus asking them what they might do and when they might do it, nearly always lead to the wrong answer. An example is asking someone if they are likely to buy a new car and how likely they are to buy it in the next three, six or twelve months. Unless the person is already considering this action and is actively engaged in the decision-making process they will usually underestimate the length of time, pointing to an earlier demand where there is none.

Social Desirability Bias

This is the tendency of people to respond to questions in manner they think will make them more acceptable or pleasing to others. It can take the form of over-reporting "good behaviours" or under-reporting "bad" or undesirable behaviours; especially in the context of what they believe are socially acceptable norms. An example of this is sexual or stimulant-taking activity. Whereas men tend to inflate the numbers, women tend to underestimate theirs. In either case, the results from both groups are likely to be highly distorted by this bias.

Whether you are a small business or a global brand, giving away free stuff can make you loads of money. So don’t be miserly or mean spirited when dealing with your customers. Here’s why.

1. Free stuff creates a buzz

In today’s day and age, thanks to social media, news travels fast. If you give away something free people will tell their friends who will tell their friends, and so on. You can create a lot of excitement and noise in this way. People will want to check out what’s going on.

2. Free stuff encourages people to try your products or service risk free

This is important if you want to prove that you have something different or better to offer. People are more likely to try something they normally wouldn’t if it is free and without commitment. 

3. Free stuff is the hook that gets customers in 

Sure, there are always a few customers that will order the bare minimum but the majority will buy what they would normally would and return to buy more. Why do so many restaurants offer “Kids Eat Free” days? Because kids don’t eat alone. 

4. Free stuff means that customers are more forgiving 

People are more forgiving if they feel like they’re getting a bargain. That’s not to say you should use it as an excuse to give poor service or sell substandard products, but it can be an advantage for testing out something new or relatively untried. 

5. Free stuff creates positive brand association 

People love to get something for free, no strings attached. It makes them happy and brightens their day. By doing this, you can create a hugely positive association with your brand. Often the cost of offering a freebie is not all that different from deep discounting. Yet the former has much stronger customer value because they perceive your business as being generous and not penny pinching.

6. Free stuff creates a usage habit 

By offering something free, people are more likely to give your product or service a try. And once they’ve been hooked (assuming their experience is positive) they’re more likely to come back. So you become part of their consideration set and are much more likely to gain their repeat business in the future.

7.Free stuff can connect you with your customers

People often place value on intangible elements that your business can provide. For example free training videos, usage hints, alternate product uses, podcasts and other digital content. Because it's digital, it costs you nearly next-to-nothing to distribute. Yet it has the great benefit of getting customers to register their name and email address, giving you with a means to contact them in the future. 

8. Free stuff persuades customers to upgrade to a premium

Providing a free or basic service allows you to gain a large user base quickly. Then, those who want more features can pay for a premium or advanced version. People that upgrade tend to be the minority, sometimes only 5% or less. Yet, if the incremental production costs of your product or service are low, this can often be more than enough to keep the business highly profitable. 

Can you think of any other ways that giving away free stuff could benefit your business?