I've spoken to a lot of people of otherwise unimpeachable moral character who admit that if they try to scan something three or four times and it just won't scan, they nick it. Okay? I have done that myself once. What makes people buy? I always say if you look at the things you own, ask yourself a question.
If it broke, would I buy another one? Generally speaking, it's air fryer, yes. Yogurt maker, no. Whenever you go there, even if you don't want them, ask for a knife and fork instead of chopsticks. It really sets them off, okay?
That just drives them practically insane. I always invert the question. To be honest, about a third of the time, this is my secret trick, which is just take the question and ask it the opposite way around.
I realized after I'd done this a couple of times that it was probably insensitive. I used to sit on the plane with this bloody great screen. I used to watch Air Crash Investigation. I don't know. they asked him what his secret it was.
He said, it's very simple. He said, I do something that no other car salesman does. As soon as someone comes in who is vaguely interested in some sort of car, I ask a completely different question. Everybody else asks effectively, how do I sell this person a car?
How do I make sure they don't walk out without buying a car? I optimize for something completely different. The question I ask myself is. Today we're joined by not only one of the greatest minds in marketing, not only one of the greatest minds in business, but also one of the greatest minds in human psychology. So if you're looking to really get under the hood of what makes us tick, this is the episode.
for you. Jack, what did you learn? To be joined by the one and only Rory Sutherland was an absolute hit today. He is brilliant with anything he touches.
We learned so much about psychology, human biases, and the way that people buy. If you are a budding marketeer or you're just looking for the edge when it comes to being better, you're going to love this one. Rory Sutherland, thank you so much for joining us today.
We've been so excited for this for so, so long. We've sat down with many people on this podcast and we've mentioned your name and we've seen their faces light up. I think they're slightly...
very exciting to be honest but there we go i'm very happy for the uh the acclaim and um i hope i can deliver i'm sure you will i'm sure you will um i've listened to you on many podcasts and i've taken you've been a secret mentor in terms of your marketing, your strategy, and I've taken that and I've solved problems in the business world. I want to hit you with a big open question and see where you take it and where we end up. What, how do I phrase this in the best way? What makes people buy? Very, very interesting question.
I don't know. But what I do know is it's worth testing lots of different ways in which people might buy. because economics is fundamentally, I don't know what the right answer is, but I know that the standard assumption which pervades most business thinking is fundamentally wrong, in that it assumes that people conceive the need for something, and then set out to satisfy that need at the lowest possible price that will match their utility function, or whatever economists would call it. And sometimes that happens, by the way, but most of the time I don't think it will. works like that at all.
And we had a very interesting discussion, funnily enough, over the last two days. You've got to be quite old to remember this, but if you went to London in the 1980s, the 1990s, actually, early 90s, before there was Rightmove, the city was a forest of for-sale signs because every single property that was for sale, the estate agent, typically, or real estate agent, or realtor, for the American listeners, used to put a bloody great stake in the garden the huge sign with the name of the real estate agent and the words for sale or sometimes for rent. Never happens anymore.
And the reason is that people assume it's unnecessary because they assume that anybody who's in the market for a house is already on right move or possibly prime location. They're already searching for a property. And the only question I asked is, particularly, there's a massive fashion towards dematerialization. If you can avoid a physical thing in your business, like sending human beings round to stick stakes in the ground.
That's the first thing that gets cut. And my question is... If we're right in our assumption, and some of the time we are, that people go, it's time for us to move house, we've had the children, this place is too small for us, we need to upsize or we need to downsize, so let us go to right move and we'll buy a house. Then getting rid of those for sale signs.
which were bloody ugly, by the way. But nonetheless, it makes business sense. No need for those anymore, because everybody in the market for a property is basically already looking in the area they want on right move.
Now, here's my problem. I think it often doesn't work like that at all. I think genuinely there were loads and loads of...
The majority of people who buy a house, particularly in London, only move a few miles, if that. I think there are a huge number of people who are wandering around, they see a house they've always liked and they see a for sale sign and they go, well I wasn't thinking of moving house, but now I know that place is for sale, I might have a look. And so we're assuming this absolute...
kind of homogeneous journey where everybody travels from conceiving the need to purchase in this kind of military formation in a completely consistent way and i'd genuinely don't think people buy that some people do okay there are people still who do what was the standard shopping practice when i was a small child which is you write a shopping list and you go to the supermarket you you effectively check everything off your list and the reason the shopping list started was partly because when i was a very very small child our local shop was still not a supermarket you went to this is hard to believe you went to a counter it was a bit like argos basically okay You went to a counter and you said, packet of cornflakes, please. And the man went round the back and fetched you a packet of cornflakes. And then you probably know the two Ronnies, four candles.
Yeah. Shop still in the late 60s were quite often like that. So you wrote a shopping list.
You relayed the shopping list. There was no opportunity for an impulse buy. You simply had to stipulate to your chap what it was you wanted. Now, there are people who say, who still shop like that. Absolutely.
But there are also people, I'm sure, who wander around the shop. Basically, they walk into Marks & Spencers, Simply Food or whatever. They have absolutely no clue what they want other than the fact that the fridge is empty.
Okay? And they basically go in and they use what's on the shelf to determine what they buy and in fact an extraordinary amount of if you obviously people who've done research into this extraordinary amount of decision making takes place at the shelf in the store Now, my point is that actually, of course, it's both. There are people who plan. There are people who have specific needs. There are also additional opportunities where putting a for sale sign on your house, I am sure, increases the odds of selling that house by a not insignificant factor.
I don't know whether it's 100% or 50%, but I would argue that it's not a waste of time to put a for sale sign outside a house because it gives... people another opportunity. It creates a market rather than serves a market.
And this is what worries me about the whole business of marketing and online and digital and sales and optimization and performance marketing is it seems to me fundamentally focused around the idea that demand is finite and pre-existing. The market is already defined. It is our job to serve that existing market as efficiently as possible. And at its worst, I think it turns to a kind of absurdity in digital marketing, which is we're not going to define our customer base as those people with whom we can have a profitable interaction and a lifetime relationship over time.
We're going to define our target audience merely as those people who are prepared to interact with us in low cost channels. You know, and that seems to me it is no surprise that brands that adopt that approach don't grow. Now, this is just a point about the. the obsession with reducing transaction costs in business strikes me as fundamentally misdirected in that most big brands grow because they sell to a lot of people and those people buy them quite frequently. So it's a mixture of repeat purchase and size of overall market.
And what we're doing is we're basically saying... Let's try and force everybody to transact with us in the lowest cost channel. And that strikes me as fundamentally wrong. You should actually say we will use whatever media are necessary to acquire and keep a customer.
And some of them will be more expensive than others. But that's simply. a product of reality.
That's just how the real world works. There are people who will respond to direct mail, and there are people who will respond to email. And yes, OK, the people who respond to email may be slightly cheaper to reach.
That it is not fair to conflate customer value with cheapness of acquisition. And I'll tell you a wonderful story which illustrates this. A very, very wise person who runs a very successful online travel business.
We were sitting in a meeting and the chief executive and founder was just sitting at the end. And somebody said, used the phrase, the need to maximize online conversion from the website. And the guy just said, very shrewdly, he said, hold on on this basis, he said, the typical visitor to our website converts at about 0.8%. The typical person, now he acknowledged the fact, we're not comparing like with like here, okay? The typical person who phones us up converts at 35%.
Now he said, I appreciate the fact that people who phone us up are warmer prospects than people who visit the site. Nevertheless, he said, do you really want to hide the phone number on the site to minimize the cost of the call center? Because as you could roughly put it, you know, I'd rather have 90 percent of a lot than 100 percent of not very much. What you're doing is you're actually. Effectively privileging low cost to serve over ultimate value.
Now, when would you do something so silly? Well, the answer is you'd do it if you had very short time horizons. If you're obsessed about... the next quarter okay and if you basically were trying to impress the shareholders largely through cost cutting that's exactly the mistake you'd make i mean i i i'm not generally very vociferous but i did write quite extensively against the business of closing railway ticket offices. And I also have written fairly extensively against this practice of supermarkets of more or less trying to force their customers to self-checkout.
Self-checkout, by the way, really important point about technology here. Generally, technology arrives as an option. Think of parking apps. When they first arrived, you're like, oh, I don't have to find £7.
coins to park at Sevenoaks station and I don't have to walk 300 yards to that stupid ticket machine and then walk all the way back to my car and he's oh that's brilliant if I get drunk and take a taxi home I can actually buy Saturday morning parking from my bed rather than having to get my wife drive me into Sevenoaks before I get a parking ticket in the car park all of those aspects of parking apps were totally welcome the only problem that then happens is what starts as an option ends up as an obligation Because someone spots the fact that it's cheaper to make people pay on the app than it is to maintain pay and display machines or, you know, or to have a human, you know, selling you a ticket. And the next thing you know is they've kind of imposed parking apps in basement car parks where you can't get a mobile signal to save your life, you know. And the whole thing then becomes absolutely an absurd imposition where it started off as a really welcome alternative. And it ends up as basic. completely a trap.
It's a cage. And I think that's happened with things like self-checkouts at supermarkets. I know I'm talking slightly nerdishly about this, but no, no, it's a great idea, right?
I'm in a hurry. There's a bit of a queue. I know exactly what I want. I know how the self-checkout works, or I know which railway ticket I want.
I go straight to the machine, don't have to join the queue. I can pretty much buy a return from Sevenoaks, a day return from Sevenoaks to London blindfold using one of those machines, okay? not a problem but then there are all the occasions where you don't know what you want and my argument is okay let's look at those sort of self-checkout tales one what happens with technology is that consultants come in with technology companies and they basically talk a very very good game because it's a very plausible narrative about cost saving.
Look at all the resources you will save if you get people to do this this way rather than the other way. Now, technology is such a kind of beguiling, tempting thing. thing that whereas people normally do a cost benefit analysis when you've got a technological solution somehow people are tricked into just doing a benefit analysis look at all the money we'll save because it's automation and we all know that automation is good and nothing ever bad happened because of technology so we'll implement this technological solution and then you notice that what's happened okay in supermarkets is one You can't really do a family weekly shop if you're self-checking out, can you? Okay, because A, you've got to have a kind of weighing scales that's like eight feet by three, okay?
B, it takes an... unbelievably long time, right? So you go, hold on, I came here to shop.
I didn't come here for a job. You know, you've outsourced your cashier's job to me. I don't mind scanning 15 items, okay? Scanning 47. Now, I do it with my phone. I'm quite geeky that way.
That's not so much of a problem. But scanning 47 items at one of those, you know, self-checkout tills is impossible. Third problem, it's led to a massive kind of epidemic of shoplifting where apparently some grocery retailers are selling their groceries. selling more carrots than they're buying and the reason for this miracle isn't jesus okay it's actually that people are checking out say kiwi fruit or plums and pretending they're carrots for the purpose of the weighing machine and people will cheat from a machine much more readily than they will from a human much easier to do and let's be honest there's we're being frank about it there's plausible deniability yeah okay if you know if you're caught not scanning something thing you go i'm sure i scanned that okay there's completely plausible now you wouldn't want to get caught six times in a row because at that point people will go look mate i think you're off the self-scanning machines now but there's quite a lot of plausible deniability okay i'll confess this um i've spoken to a lot of people uh of otherwise you know unimpeachable moral character who admit that if they try to scan something three or four times and it just won't scan they nick it okay i have done that myself once now bear in mind this was after i wiped down the glass screen i you know i tried every possible thing i could to scan this thing there was no one available to help okay there was no other means of actually keying it in and i go look okay i've done a load of work for you you can just be clear it wasn't caviar okay it was it was something unbelievably tedious like carrots or or something like that, and it was sort of 75p, and I kind of went, I've done enough work here to earn my 75p, so I've done it myself once, okay? Now, you know, no other circumstances would I think of heisting stuff from the shops, but on that one occasion I kind of lost my rag and went, okay, you know, if you're not going to meet me halfway and make it easy for me to pay, I'm not going to pay at all.
So what I'm saying is that there's this weird cult of short-term efficiency. gains, which I think in lots of areas of business are deeply deleterious to what a real brand relationship and what the customer value exchange over time should really be. And there's a story I really love about this, which comes from Drayton Bird, who's the great guru of direct marketing, his book Common Sense Direct Marketing.
For American listeners, he's kind of the British Lester Wonderman. He's still alive. He's in his 80s. He actually gave his last talk about direct marketing. direct marketing probably about a year and a half ago.
Brilliant, brilliant man. He was my first boss and, you know, a huge influence on everything I believe and think and how I think and so on. And Drayton told the story, I think it's in his book, of America's most successful car salesman.
And presumably sometime in the 60s or 70s this particular title existed and it was just this guy who had an extraordinary record of car sales. And they asked him what his secret it was. He said, it's very simple.
He said, I do something that no other car salesman does. He said, as soon as someone comes in who is vaguely interested in some sort of car, I ask a completely different question to everybody else. Everybody else asks effectively, how do I sell this person a car?
How do I make sure they don't walk out without buying a car? I optimize for something completely different. He said, the question I ask myself.
is what can I do now that makes it absolutely certain that they'll come to me when they need to buy their next car? Wow. Now, it occurred to me, and this interests me a bit, it is when you think of it, and absolutely brilliant. Because I would argue that if there's one single metric that's a pretty good guide to a product, it's repeat purchase. I always say, if you look at the things you own, ask yourself a question, if it broke, would I buy another one?
Generally speaking, it's air fryer, yes. Yogurt maker, no. You know what I mean? There's a kind of thing, you go through your stuff and you ask that question, if this thing broke, would I just go straight out and go, I need to buy another one? And repeat purchase is kind of, I think, the best indicator for an enduring business.
And this guy basically understood this completely. And he said, OK, my success is not selling them a car immediately. It's that when they think of buying a car the next time, you know, they don't think of coming to anybody else.
They basically the first port of call is I want to buy a car from Bob. Now I wonder what car I should buy. Now, it occurred to me that when that person adopted that policy, for the next three years, they were probably a slightly unsuccessful car salesman because they were actually willing to sacrifice short-term transactional gains for long-term loyalty. And there's something there which is really, really interesting, which is If you go on YouTube, I'm a big fan of Jay Leno's Garage, because obviously he's a brilliant presenter, he's Jay Leno, I'm a big fan, but it's an act of extraordinary philanthropy in a way, that you develop a $100 million car collection, but then you spend your time sharing it with the wider...
populace, you know, it's great. You know, what a great thing to do, seriously. You know, I mean, if you think of the net happiness created by that, it's really fabulous.
And he tells, there's a wonderful episode, which is called Why I Don't Own a Ferrari, by Jay Lenino. So his whole collection... collection, contains no Ferraris, I think.
And he won't buy them because he says, I won't put up with all the bullshit you have to go through to buy one, which is kind of, they'll only send, sell you one of the rarer ones if you've already bought sort of six run-of-the-mill, there is a run-of-the-mill Ferrari, but you get what I mean. You know, in other words, it's a bit like those very high-end French handbags, where you have to go in and splurge a load of money on random non-resellable stuff before they're prepared to actually let you into the inner sanctum. where you can buy the Crocodile Kelly bag, which theoretically you could resell on eBay for whatever it is.
And he said, I don't want to play those games. I just don't like it. I don't want to play those games.
And he contrasts this with his experience of buying, I think it was the McLaren F1, but I might have got this wrong. It might have been another McLaren. And his experience was that he contacts McLaren, and he says, I'm thinking of buying this thing. That's fine.
They're obviously very helpful. And he would kind of explain. expect that okay yeah yeah um and uh he says i was thinking by the way of getting the uh ceramic disc brakes i think i've got this right brake discs sorry uh i was thinking of getting the the ceramic um uh brake discs and they said the guy said to him um the thing is mr leon are you planning to track race this car to track this car or are you mostly going to be driving it on the road and he said look to be honest i'd probably take it out of the track once but most of the time i'll be driving around Los Angeles stuck in traffic. And the guy just said, well, Mr. Leno, let me save you $25,000 straight off the bat. Don't get the ceramic things because actually they take ages to warm up.
They're actually a bit of a nightmare in everyday traffic. You know, you'll end up bumping into the car in front because they haven't warmed up adequately. Just go with the standard brakes.
And what's interesting is from that moment on, basically the relationship was different because this person is not trying to maximize their commission in the short term. they're trying to maximize the value of the relationship over time by establishing trust and Talking to Dan Ariely, you probably know of him, the author of Predictably Irrational, very good book, behavioral economist at Duke. And he came in and as an extraordinary thing, a couple of weeks ago, he offered effectively to work as an intern in our behavioral science department for a week.
Genuinely, probably the world's most overqualified intern. There's a house near me in Sevenoaks where the owner, a man called Spotterswood. It was.
something like the third house in britain to be wired for electricity and he got michael faraday to supervise the wiring okay so this was equivalent to that you get the person who's practically invented everything to do with electricity and he's actually supervising the wiring of the house i always thought that was a fantastically overqualified case you know um but um uh but anyway um he he comes and works for me and one of the most interesting interesting things she says and reminds us of repeatedly is what the consumer often needs is a reliable sign that you're on their side. Because the relationship between buyer and seller can be a negative sum or zero sum relationship. Right.
What makes it honest and rewarding is actually signs that you are investing in the relationship, not in the immediate value of the immediate transaction. So everything that suggests that a business is in it for the long term, upfront investment in things, all kinds of things like that, tends to create an atmosphere of trust. In the same way that if you like, we probably trust a kebab shop more than we trust a kebab van.
Because the kebab shop has had to open a shop, install the thing that goes round and round, okay, they've got to put the signage up, they've got to print the leaflets, and if their kebabs turn out to be crap, they're dependent on repeat custom from the local market to actually survive, so it's in their interests to serve every customer as though they have the potential to be a repeat customer. Whereas if you're a kebab van at a festival... OK, you have no prospect of repeat business unless you wait for two years and rely on people to be spectacularly loyal for some reason. OK, so we can't trust the kebab van to the extent we trust the kebab shop because the kebab shop is invested in its market and the kebab van isn't. And so similarly, what Dan Ariely was saying is that.
Activities from salesmen which seem short-term self-defeating. You know, doing more than you have to do, recommending you don't get the ceramic brake discs, that kind of thing. Actually, in the long term, make a huge amount of sense, because it changes the nature of the exchange between the salesperson and the consumer into one of what you might call mutual value creation over time, you know, rather than a combative one-off battle of, you know, kind of winner takes most.
I think that's just really interesting because I think humans instinctively understand this. Weirdly, economists don't seem to understand it at all because economists assume complete trust for all their models. And that strikes me as about the most stupid and unhelpful thing you can do because the whole point about human evolution, really, of the brain, probably a huge chunk of our revolved experience is when to trust, when not to trust. So the idea that you can create an economic model where you basically set... distrust to zero and assume it away is a pretty good starting point for completely misunderstanding most of human action and exchange so if there is that relationship with reluctance to change human beings are maybe wired to think the worst of salespeople marketers perhaps how do disruptor brands and disruptor services and products works if we're already wired i don't want to change well one weird thing about how we're wired and this This actually was a conversation between David Ogilvie, who obviously was the sort of founder of Ogilvie and Mather and then what's now called Ogilvie.
He had a conversation with a guy. I met David Ogilvie once, and I met this other guy, a guy called Joel Raffleson, several times. He was the kind of creative director of Ogilvie in Chicago and was, in my opinion, an extraordinary...
He was from the Mad Men era, and he was just an extraordinary guy in every respect. I mean, you know... And he had a conversation with David Ogilvie sometime, I think, in the 1960s, which I think is one of the most interesting conversations that, you know, took place in the last. That is probably overstating it a bit.
He said, you know, David, he said, I think consumers buy brands not because they think they're better, but because they're more certain that they're good. And I think one of the things that's misunderstood in advertising is that an awful lot of instinctive consumer behavior is what sometimes. called minimax you could call it variance reduction you could call it loss aversion it's irrational to call it loss aversion by the way because it's it's not a bias okay it's basically asking the question what's the worst that can happen and i will choose the route not the route that's on average best but the route that has the least worst case scenario coming out of it that and particularly the least chance of extinction or disaster and i would argue that completely rationally and sensibly people pay premium for, let's say, a Samsung TV or a McDonald's meal, not because they think it's better in the conventional sense of value per pound, but in the completely, I think, correct prediction or reliable prediction that a Samsung TV is much less likely to be terrible than one of those weird TVs on Amazon that looks like a row of Scrabble. The brand name looks like Scrabble time. Okay.
Now, those may be great value for money. You might buy one. one and find it's a fantastic tv and you saved 150 but we will pay a premium for what you might call the avoidance of catastrophe because in evolutionary terms avoiding catastrophe is more important than seeking perfection yeah probably true in marriage as well but we never we never say that we never say i chose my wife particularly because i love the fact that she's not totally bonkers right you can't you have to pretend that your decisions are optimising decisions, right?
But by the way, I'm not making this an unromantic point. I've been married for 36 years. But there is a perfectly sensible point to marriage, which is that one important... characteristic of a life partner should be they're unlikely to set fire to your clothes right okay um and we obviously never mention that because we've always got to accentuate the positive and pretend the absence of negatives is not really a factor and so i think a lot of the time people talk nonsense about why they do the things they do And I think, you know, as I said, McDonald's is, I've often said, McDonald's is the most successful restaurant in the world, not because it's really, really good, but because it's incredibly good at not being bad.
And we had this discussion just at lunch just now, which is... I love what I call kind of anthropological detective work, which is what explains the popularity of Nando's, you know, the extraordinary success of Nando's. And one part of it probably is, if you think about it, there's no...
There's very little there to dislike. And if you're a party of six, basically everybody's happy, aren't they? Right? So the spicy people can have something spicy.
The bland people can have something bland. There's a fabulous practice. If you've heard this practice at Nando's where people who take girls out for a date ask the person to make them a mild chicken but to put the flag in for the super spicy chicken. I didn't know. To show they're a real man.
It's really funny because now I may be getting this wrong. I don't know. I'm the last person to put myself forward as an expert in dating psychology.
But there is that very peculiar male belief that women will be really attracted to men by their ability. So that is undoubtedly men admire other men for their ability to eat spicy food, don't they? But the assumption this translates to the opposite sex, which is, I didn't really like you much, but when he ordered the chicken, oh, that was it. You've pulled.
I mean, that's. Maybe that happens. I don't know. It seems particularly implausible.
I don't know. It was his ability to handle a chicken vindaloo. That's what I knew he was the one. Oh, he's a keeper.
But I found this sort of psychology of let's, because there's always a rational explanation, which is kind of half true, but it's good value for money. People like chicken, all of which is kind of true. But I always think getting to the bottom of it, what's the real, you know, if we could find out. what that real magic formula is.
And maybe part of it is that no group of people has a Nando's hater in it. So the absence, one of the most important things, I think, in dealing with anything, when you look at any sales problem, is we tend to go, how can we ladle on some positives? And I'm a big believer in the Warren Buffett thing of always invert. If you ask the same question backwards or the opposite question, generally, actually, it's illuminating. And I always ask the question, I always invert the question.
To be honest, about a third of the time, this is my secret trick, which is just take the question and ask it the opposite way around. So, you know, we're doing a brief about train travel and how we encourage people to use the train more. And my approach is the natural sort of approach of marketers, salespeople is to list a lot of benefits for people using the train. And my approach is there's an opposite approach, which we also need to follow, which is, Let's ask lots of questions about why people don't go by train.
Okay. And generally, if you make a list of them, some of them will be completely sensible objections. Right.
Okay. I need a car at the other end. I've got a ton of luggage. Right. There are loads of good reasons not to take the train.
But some of the reasons will be stupid. Right. Okay.
One of the most common ones, by the way, it never occurred to me. There's literally a huge swathe of people. No, no, no. Because if you think about it, people who always go by car, they bought their car.
Car's a big sunk cost. They go by car everywhere. Genuinely, the rail would not even feature on their repertoire. And another really dumb reason why people don't go by train is nearly all train information and advertising, and I mean this, is on trains and in stations. So if you don't use the train, you never see any rail-based communications at all.
You go to the station, there are loads of ads going, Hey, go by train. I'm already on a fucking train. You run the gate. you've got me go and do some door drops to people who never take the train because my father made this point he said you know the people who work on the railways know everything about the railways that's one of the things you've got to do is as the salesman for anything you've got to put yourself in the mindset you've got to know everything about your product but the second thing you've got to do is put yourself in the mindset of someone who knows nothing about your product and the thing that always happens with rail travel is that the people who work for the railways love you of railways and they're slightly nerdy that's with the best will in the world i am i mean you know i'll freely admit to this and so they know a hell of a lot about trains and then they start to assume that everybody else knows it as well now my father always made the point he said he was he was in south wales he was not that far from newport which is his major mainline station or he could use abigavenny um but he said if you asked a random person on the street where can you go to from newport station most people would go london okay a few people would obviously say well i suppose the opposite direction it goes to Cardiff and Swansea and then you go where else And they'd probably just freeze. Now, actually, if you actually do the research, I think you can get a Newcastle, you can certainly get a Portsmouth, you can obviously get a Bristol, you can get a Cheltenham on the fascinating Maisteg to Cheltenham line, the world's most demographically varied railway.
And you can go to tons of places. Nobody knows. They genuinely haven't got a clue.
And so quite often when you invert and say, why aren't people doing this? A very simple answer is it's never occurred to them and they don't. don't know and one of the things i think we've made a mistake about is we get very very complicated about advertising going we about the brand positioning and it's about differentiation it's about this hell of a lot of advertising just works because you're telling people shit they didn't know i mean one of the weirdest things drives me nuts okay is the number of the number of businesses now that develop something really useful okay you know they've obviously spent quite of money developing something and they don't tell anybody about it so how both of you presumably use wi-fi calling right but you had to turn that on on your phone right because you had to go let's face it most people don't go to phone settings do they on their mobile i mean who the hell goes to settings on their mobile phone right nobody does now how did you learn about wi-fi calling just just for interest did someone tell you about it i think yes someone someone wanted to call me like that this is a really interesting thing because what happens happened is all the mobile networks basically introduced it uh nearly all handsets under what six years old now will offer it but weirdly by default it's turned off probably for legal reasons yeah i'm gonna say to one of our clients who's a mobile phone network this totally transformed my satisfaction with my service because 90 of the times i couldn't get signal were when i was indoors okay in a basement whatever in a metal frame building okay there was was Wi-Fi, there just wasn't a mobile signal.
So, okay, if I'm in the middle of a goddamn field, you know, in the north of Scotland, and I haven't got a signal, one, I don't get that angry, and two, I can go and walk a hundred yards until I pick up a signal. That's a solvable problem. But being in a place where there's Wi-Fi and no signal indoors when it's raining is a total pain in the arse. And they didn't tell anybody. If you've got the Marks & Spencers app, there's a whole self-scanning thing.
Did you know this? On the M&S app, You can actually go around M&S, pick up one of those nice bags with a sort of Union Jack fruit on it, basically scan everything into your bag, hit the pay button, pay with Google Pay, walk out like a shoplifter. Wow.
Now, why develop that and not tell anybody? And literally, I think there's this weird engineering mentality or this financial mentality that sees money spent on communication as a cost to be minimized, not as an opportunity to be maximized. Right. Repeatedly.
So I make this point because sometimes we always get in advertising. There's a slight problem because in order to justify existence, we've got to try and look quite clever. And sometimes you need to be really clever.
But sometimes it's really effing simple. It's just people don't know about this. Tell them. And where I'll give you a perfect example of this, which is if someone asked me my greatest life disappointment. This is a ridiculous thing.
But both my boss and I. went when we had phillips as a client phillips is an extraordinary organization because it's an absolutely brilliant company with a spectacular talent for shooting itself in the foot in other words it will invent something amazing and then totally fail it's like death wish um but it is a very brilliant company and years ago i went out and i just said to them look very simple tip you've basically the only company that makes an air fryer, you're sitting on a goldmine here, right? Because the reason I know this is very simple. It's totally anecdotal, but then all data emerges, all new data emerges first in anecdotal form.
Never listen to anybody who disses anecdotes, right? Serial killers get caught because of an anecdote. Brilliant scientific discoveries get made because of an anecdote.
An anecdote is what happens when someone notices something. And nearly all progress happens because someone notices something. Yeah, it's true. It's true in detective work.
It's true in scientific discoveries. It's true in marketing. The anecdote, Jeff Bezos famously says, when the anecdote disagrees with the data, I usually find it's the anecdote that's true. Okay?
And actually, so... We just said, look, I said, I appreciate this anecdotal, but I bought an air fryer. I became a total evangelist.
I thought it was amazing. Have you got one? Yeah. Yeah, okay.
I said, I bought one for my dad for his birthday. He was 83 at the time. He was massively cynical.
And basically he turned into like the Y Valley's leading air fryer evangelist, going around all his octogenarian friends going, you really need to buy an air fryer. And actually, not long before he died, I was in the pub with my dad. And we were just sitting there having a drink.
And an old gent came towards us, tapped my father on the shoulder, and just said, said air fryer and gave a big thumbs up anyway i just said to philip look trust me most products don't have this effect right first of all most products people are on balance i'm glad i bought this this is a case where people that like go slightly weird about them i mean you know not altogether healthy way you know yeah okay and we just said you're sitting on a goldmine here just do some ads just tell people what they are and people will buy them and what they'll do maybe they won't buy one they'll just ask has anybody got an air fryer at which point everybody with an air fryer and social media will go, oh, it changed my life. You know, it's the second coming. It's fantastic, right? And there's just a load of things out there. And maybe we make advertising so difficult because we've got to jump.
through all these hoops and do your competitor analysis. Actually, 50% of advertising is just be famous. Okay? Make sure people have heard of you. It really is that simple.
Because when you're famous... your customers find you if you're not famous you've got to find all your customers trust me the first is a hell of a lot easier than the second and so you know i think i think it's really really interesting which is that there should be a kind of in a sense someone should start an ad agency called diabolically fucking obvious or dfo right and it should basically just go this product is very good nobody knows about it we're going to tell people about it in a nice way end of And I do, you know, because this is the way it's a very strange business because you can be very, very clever. You can be very imaginative. And every agency needs to be able to do that because some problems are really, really difficult and require extraordinary creativity. But I do wonder that what happens when the time is when it's just easy.
Are we actually do we have a fear of the obvious, you know, that that's too extreme? But, you know, but when you reverse, I was. say that reverse the question don't say why should people buy this say why aren't they buying it yeah and you'll come up with a list of reasons some of which are very good reasons so leave those people alone they know what they're doing and then some of the reasons are just dumb like never heard of it never occurred to me um i don't think the trains was it someone said they've had some i mean some deluded belief that like trains didn't stop in brist i mean you know just total you know just total nonsense okay and you realize okay well what we'll do is we'll tackle the reason that the reasons against that are stupid and we'll leave the other ones alone yeah we um we have a a page on our website that says why you shouldn't work with us brilliant and it's just getting there first and we just kind of want to stand out so you tell me what it says uh we're really just a couple of examples yeah we're really expensive uh we don't guarantee anything what else is on there um you can probably do it yourself yeah that's the main one so we tell people how you could just do it all yourself yeah So Robert Cialdini, funnily enough, actually added to his principle of persuasion the principle that an honest admission of a weakness is actually in itself highly persuasive.
Yes. Because the pretense of perfection, the human brain looks for trade-offs. The best thing you can do as a salesman is provide them with a trade-off which is manageable because it's better than focusing on the one.
trade-off you've provided stellar artois reassuringly expensive okay we're number two so we try harder for avis it's better for them to actually focus on the trade-off you've provided which is a single trade-off than go around imagining trade-offs of their own now i'm going to that's going to bring me to a really interesting topic which is never covered in marketing textbooks because logically it's not a problem that should arise but actually happens all the time and a very Rapid example of this happened when some guys in Berkeley who are American, sorry, Indian Americans used NASA based food preservation technology to make Michelin quality Indian food that you can seal in a sachet that has a shelf life of months. OK, and you take it out, you heat it in a pot, you microwave it, and it's like something you get in a Michelin starred Indian restaurant. And I didn't believe them. And then they sent me some stuff through the post.
And this just arrives in the ordinary USPS airmail thing. And I didn't just, because obviously I knew, so I tried it myself. I tested it on my wife as kind of blind tasting. And she was equally astounded by the quality of this biryani.
There was a fantastic Haleem Akbari or something. something similar. It was just astonishing. And I said, weirdly, and I wouldn't have said this four years ago or five years ago, but I increasingly realized because of this human mental trade-off assumption. I said, your actual marketing problem is really weird.
I said, but it's not that uncommon. It's that it's too good to be true. And people genuinely are always assuming.
I said, one solution is you just make it insanely expensive. Yeah. Okay? Because then there's a mental, there's a trade-off.
Reassuringly expensive. Okay. And one of Cialdini's kind of principles of salesmanship would be, You're selling someone a photocopy.
God, I'm showing my age of photocopy. Jesus. You're selling someone a horse and buggy. Yeah, did I say photocopy?
That was, of course, the great salesmanship thing. Then it moved into car phones. There are always these really, really hot areas for salesmanship.
I understand fantastically that HelloFresh are actually selling door-to-door. Did you hear this? no I see them at a lot of like exhibitions and stuff like that but I didn't know they were doing daughter's you see that's really interesting don't try and sell everything online by the cheapest means possible some people will only buy in slightly more expensive channels that's just the price of acquiring a customer you want to grow your business just suck it up mate stop trying to over optimise things you should at the cost of making of forging new relationships okay that's a bit like someone going online to try and find a girlfriend when there's you know you know, a supermodel who really fancies them living next door. You know what I mean? This obsession with digital channels is completely absurd.
Anyway, sorry, but with Cialdini, one of the things you say if you're selling a photocopier is you basically say shortly before the point of sale, you go, look, it is expensive, but trust me, it's worth it. The admission that, okay, it's not all roses is just fundamentally plausible. Follow, I think, Dan Ariely's point, which is give a sign. that you're on their side, which might be an act of generosity that isn't expected. You know, that might be the Doubletree cookie when you check into a Doubletree hotel.
Hotels aren't obliged to give you a cookie. The very fact that the Doubletree does this spontaneously, fundamentally primes you for reciprocation, okay, but also establishes trust, which is, this is obviously long-term relation. Basically, there's relational capitalism and there's transactional capitalism. Transactional capitalism seeks...
to maximize the short-term value of any transaction regardless of the value of the relationship down the line. Relational capitalism seeks to maximize the value of the relationship with the customer over time. Economics doesn't understand the distinction between the two.
Humans are, I think, always asking the question, is this transactional or is this relational? And if you violate the norms, okay, one of the most fascinating findings from customer satisfaction was that people who've had a problem with a product and yet the problem was very well resolved end up being more loyal to that brand than if the problem didn't occur in the first place and economists get really angry about that because they go well surely it's better to have a product without a problem than it is to have a product that had a problem even if the problem was solved and the argument is no no no because when they called you with a problem assuming you didn't charge them for solving the problem your reserves of reciprocation goodwill and long term investment in the relationship are being tested and if you solve the problem okay then you have proved that you are someone to be relied on because you're actually interested in keeping them as a customer rather than someone who sorry your transactional value was six months ago why don't you just piss off is this why people prefer a 4.7 review than a five-star review on amazon there's some very interesting stuff about that isn't there which is i mean five-star reviews It may just mean there are very few reviews, of course, so you've got to be a bit wary. Uber drivers basically prefer a 4.9 or 4.8 to a 5, partly because the person with a 5 might be a brand new customer who doesn't know what they're doing, who's given a 5 by default.
Or it may be someone who's basically kicked off the platform, who's signed up under a false, you know, under a fake name. But what Uber would say is, if you're a 4.9, OK, you've taken 150 Uber trips and you've been a little bit of an arsehole once. OK, you know, like you've been a bit late to show up or, you know, presume it doesn't mean you vomited all over the car.
That would probably get you. But but but actually, that's almost more reliable in a sense than someone who's taken five journeys. They've all been perfect. It's actually, you're right, and people actually, people are I think astoundingly astute at a lot of this decision making. They spot things instinctively very, very cleverly.
So on that too good to be true problem, okay, that's a market. problem. How on earth do we make this product great as it already is, believable?
And Dan Ariely said various interesting things. You can have a guy who's like a wizard, like Steve Jobs, who basically makes everybody believe that no... normally magic is isn't possible but here am i steve a wizard and look what i've done that's one way in which you can kind of just get people to believe the impossible then there are other interesting ways which might be you you build in a downside like you actually make the product more difficult to prepare okay you say you know what you've got to do is actually you know uh leave it on a south-facing wall for three days and then cook it okay but there are various things i mean there are a lot of things you could do But if you just go, this is how great it is, people will go, well, where's the catch?
Fundamental. We're always asking, where's the catch? And, I mean, actually, famously, of course, if girls chat up guys, right, which isn't supposed to happen, it's too good to be true. Actually, you'd think blokes would go, oh, this is fantastic.
And actually they're going, this is weird, right? Basically, is someone trying to honey trap me? Is this like a blackmail attempt?
What the hell's going on here? Too good to be true actually makes people actually a bit nervous. And you're probably right about all sorts of things, yeah.
And actually, of course. course with a rating of five on amazon well those ratings can be massively gamed so having a few you know having a few negatives i have always wanted to have an amazon selection of the world's most polarizing products you know what i mean the thing is that basically it's either a five or a one so things which you i because i've always thought i always thought in trip advisor that'd be great like hotels which are just massively polarizing yeah and there's a really funny one which is hugely polarizing it's a hotel in the east Berlin and it used to be I think something like a police station or the headquarters of the Stasi or something like that. And the rooms are basically what were former cells and the there's a platform in each room so you sleep above the shower and above the wash basin because the rooms are so small.
You actually sleep about three feet from the ceiling on this weird platform. Every room has a television in it. It's a black and white television.
It only has one channel. I don't not making this up okay and it shows the big lebowski on continuous loop that's it and the problem i had is i went to sleep with the big lebowski on so my whole brain and my dreams were full of some really weird this is the hub this is bowling there are rules right okay and god i love that film it's fantastic but in fairness it has this is very clever it's very clever it has an absolutely brilliant coffee shop in other words the place in the middle serves one of the best flat whites I've ever had in my life. So it's one of those clever brands which goes, if you do one thing brilliantly, actually people are prepared to satisfy us with everything else.
And what's very funny about the reviews to that is obviously in and amongst the reviews, a lot of people have chosen it because they've heard about this unbelievably cool hotel in East Berlin, and there's a chunk of people who obviously turned up expecting the marriage, right? And those people are kind of apoplectic. We had a great experience. I was in Italy, and we stayed in this really, really good value hotel.
Thank you. And there was a guy who was the guy who ran the bar that would make toasted sandwiches and bring you a beer and drinks and ice cream next to the swimming pool. And this very reasonably priced, fantastic hotel in Rada in Chianti, Rada in Chianti, one of the two.
And we looked, my wife and I looked at the reviews and they were, again, massively polarised. And what it was, this guy who we thought, because we're Brits, was absolutely hysterically funny and really charming. okay And because he had a very, very dry kind of sarky sense of humor. And what was hysterical about this is that half the reviews said, what a great guy.
Typically Brits. OK. A lot of the Americans, not all of them, because don't ever say that Americans don't do irony or anything like that. Of course they can. You know, some Americans.
Americans don't do our... Among some of the American guests, this guy drove them practically insane. It's so incongruous to American service culture to be served with sarcasm, right? It's just, you know, hey!
This is going to be great. I love this thing. That kind of mock negativity was just completely baffling to them, and therefore they interpreted it as rudeness.
We're a family of Brits, and we basically, this guy was an honorary Brit with his sarky kind of back chat. But I'm always fascinated by things that really polarise people, because really polarising restaurants would be really interesting, wouldn't they? In Marmite, you either love it or you hate it.
Do you know... That's another... Another perfect example, by the way, of acknowledging your weakness in an ad.
Of course. Do you know Wonky's in Chinatown? There's a great article about that that's just come out, by the way, which tells the whole history of the thing.
Oh, really? And that's my perfect example of the opposite of a good idea can be another good idea. Yeah.
That usually the opposite of where the mainstream market is actually provides you with an opportunity. Yeah. And that was brilliant.
You're so rude that actually it becomes your distinguishing feature. I took... that Wonky's is a restaurant in Chinatown and they throw you in the restaurant.
They make you just sit down and then when you order, they're so rude to you when you get in there and they're like throwing the plates at you. I took some work friends once and I was like, and everybody was going, this is awful. I'm smiling like, how amazing is this? It's like theatre. It's brilliant.
Absolutely brilliant. Now, obviously, if you turned up expecting a standard restaurant, you've got to know, this is where framing is so important. If you're just told in advance what to expect, it's one of the funniest things.
experience of your life okay if you generally turned up as i said expecting the marriott there's some brilliant stuff by the way apparently one great thing is whenever you go there even if you don't want them ask for a knife and fork instead of chopsticks it really sets them off okay that just drives them practically insane and you'll be just completely insulted you know um but uh it's i i think i think there's a fantastic thing which is benchmarking there's a brilliant writer read this this guy, whatever you do. As I said, there's Alex Hormozy I really recommend for understanding, I think, the idea of the offer and offer framing better than anybody has done before. You know, I think he's a really, really interesting writer.
I think there's a great book on customer service which is called Unreasonable Hospitality by a guy called Will Godara. And that's a great deal about this is give people what they weren't expecting. It doesn't have to be expensive.
OK, but just what you might call discretionary effort or discretionary expense carries. It's the things you don't have to do that carry the bulk of the meaning about how you what you're really saying. So a lovely example of this is I was talking to the guy who founded AO Appliances Online and they have they deliver their own stuff.
You know, they've got their own delivery fleet and they've got a box of little AO branded. teddy bears on the back of each van and if there's if they're kids in the family um then they give the kids nao branded teddy bear and as he said one you know don't ask me to do the roi on that for god's sake secondly it's a good thing to do because nobody else can do it in a way because they don't deliver their own stuff right the fact that we deliver our own stuff allows us to do this here's something our competitors can't copy thirdly you've got a free ad for your product in your house for the next eight years if the kid likes the bed And nobody throws a bear away when they've got a young child. But also, because you don't have to do it, it has this extraordinary meaning. I always joked about this.
You don't want to be totally customer-led because if you're customer-led, you lose the capacity to surprise if you're completely customer-driven. And I always make this joke, okay, that 10 years ago, if you did research into British people. and their attitude to their own barber, okay?
Not a single person would go, yeah, I really like my barber. I just wish they'd flick burning methylated spirits in my ears. I've always felt right.
There was something missing when I got my haircut. And why can't they just get a flammable substance and flick it into my ears? And it's that kind of thing with the Turkish barber.
The thing that you weren't expecting that's completely, that's the thing you notice, that's the thing you remember, that's the thing which is kind of like, wow, this is... special, you know. And I just find it really interesting because If you're optimizing for a narrow idea of value, you'll just give people what they expect.
If you're optimizing for meaning, memorability, significance, trust, actually, give people a few things they weren't expecting. And they can be a bit gratuitous, to be honest. They can be a bit childish and silly.
And I think, you know, I mentioned the double tree cookie. which I think is a brilliant idea. There's a hotel in Los Angeles called the Magic Castle Hotel and what's bizarre about it, there's nothing special about it or fancy, but it's always like number 8 of the hotels in LA on TripAdvisor.
Now, just to be clear apparently the staff are brilliant so i'm not i'm not just suggesting they get away with it just on the basis of a gimmick but um what they what they undoubtedly do is they have this thing called the popsicle hotline so when your kids are in the pool they can pick up a red telephone and if they pick up the red telephone and say i want popsicles someone someone comes out and brings them a tray of ice lollies and they can choose a free ice lolly okay now it's kind of gratuitous but if you've got young kids they love it they For some utterly bizarre reason, I had this problem with my own kids, which is that there was something they really liked about Ryanair. And for about 10 years, until they fortunately grow out of it, they go, no, I don't want to go on British Airways business class. I want to go on Ryanair.
But there was something that I can't remember what it was. It was some gesture or maybe they'd given a colouring kit or something. I have no idea what it was.
But there's that really interesting stuff, which is the thing that you were... weren't expecting actually a large amount of how we judge things is not what is the thing but how did it compare to what i was expecting yeah i always recommend by the way get on holiday to wales because the one great thing about wales is that it is actually full of pleasant surprises have you been uh snowden okay there's north wales i just said the y valley for my yeah no that's why i grew up you see beautiful but yeah like you say there was no expectation around it and it was actually like, where's this come from? And actually, you'll go into a restaurant in Wales.
I went into the cafe in Cwmbran Station, which doesn't look anything special. And the guy there who's Turkish-Welsh is basically like the god of panini making. It was just an extraordinarily good panini coming from this tiny little station in Cwmbran.
And it's those little pleasant surprises which I think are what make us really happy. I'm always interested in brands and service businesses because... which like benchmark or even under benchmark on 10 conventional dimensions and then massively over index on one. Have you ever stayed in a Moxie hotel?
No. Citizen M? It's a category of hotel which is called something like boutique. I can't remember, what is it? Is it premium?
It's like premium economy. But what the Moxie hotel chain is, they're generally in very good locations. So they're not in an industrial estate, outskirts or whatever. so the one in Manchester is in a really good location in Manchester and you know the one I've stayed in about three they're well located so that's the first thing the rooms are really small there's no room service there's no laundry service I think you can borrow an iron or there might be a laundry room. The rooms are pretty small.
There's very good flat screen TV. There's good Wi-Fi. There's no cupboard.
You just hang your clothes on the wall. You know, very, very basic room. And.
What totally sets it apart is the ground floor is basically coffee shop, restaurant, bar, which runs 24 hours a day. You can come down at 3 o'clock in the morning and say, I want a flat white. I just had an operation. It was in Lausanne.
I had to have an eye operation. So I was heavily sedated and I actually wandered downstairs in my underpants at three in the morning under the influence of fentanyl or something and asked for a coffee, which my wife was absolutely mortified about. But... And also you check in, OK, and you turn up, you check in at the bar. There's not one of those weird check-in desks.
There's no weird concierge person, the function of which I've never fully understood, OK? Check in just at the bar and they go, would you like our signature cocktail? And they give you a cocktail, which is usually fantastic.
And the great thing about that whole ground floor is, imagine it, it's a bit weird. It's got like eight-foot teddy bears and weird things dotted around the place. But the great thing is, you can basically just hang out there all day.
day. They'll bring you food. They'll bring you drinks.
They'll bring you very, very good coffee. And actually, to be honest, yeah, after you've checked out, OK, normally after you've checked out of a hotel, you feel kind of homeless. After you checked out of that place, they'd be totally chill for you to stay there for another five hours using the loos.
And if you imagine something like a cool of a weird aversion of a WeWork, the whole ground floor is like that. And it's a brilliant thing because what you do, it's a great marketing trick, is you focus people on the one thing. thing where you're amazing and then downplay everything else and what they remember is the amazing thing I talked to someone who ran a hotel in London, which they said we haven't got room for a really good kitchen.
And so our food's OK. I'm wrong with our food. But we can't produce really exciting food.
So here's what we do. We don't talk about the food. We don't raise any expectation about the food.
Instead, what we do is we have like London's best mixologist. And we talk about the drink and we make amazing cocktails. And they're incredible.
And while people are focused on the cocktails, they order some chicken wings. The chicken wings are perfectly good. Nobody complains about them. I'm not saying you can get away with being crap.
You've got to hit the basic threshold, okay, across things. But you can play these really interesting games where you just do one thing amazingly and everything else is pretty basic. And actually, what's interesting about that, judging by the expansion, it's privately owned, Marriott.
In fact, I think the president of Marriott is still Bill Marriott, actually. Would you believe it? So Moxie is one of the many brands under the... that kind of Marriott aegis. And what's interesting is it seems to be really, really popular.
It's expanding really fast. And I wouldn't stay there for a week, right? Okay? You know, the room's a bit small, et cetera. But if you want to stay...
stay in a hotel in a good place in a city for one night two nights maybe three nights okay it absolutely hits the spot because it's really good at the one thing you care about and everything else is basic but even at the same time you get a reasonable price so i think the psychology of what you might call where you focus as a business is really really interesting you know is there a way a business can create some peculiar distinguishing feature like the popsicle helpline you and in order to do so I think you've just got to be prepared to be a bit silly and you've also got to be prepared to ignore your finance director who will say you know it is not in our service level agreement to provide free ice cream or some bollocks like that I think it's very I think there's something very interesting about basically building in salience to what you offer focusing the attention in the right place surprising them in the area where they're looking and then just satisfying it everywhere else you spoke about loss of it and it felt like you were talking a little bit about like a recency bias towards the end. So what other biases when it comes to selling and marketing do we have to be aware of that we can lean into to help us sell more or we can try to combat when it comes to selling? Weirdly, what's so fascinating about this is that psychology clearly sometimes is a contradictory science.
So if you look at Cialdini's principles of influence and persuasion, there's like social proof. Everybody's got one of these. You know.
And then there's scarcity, which is not very many people have one of these. If you think about it, there are two ways you can sell things. This is so good that very few people can have it. And this is so good that everybody has it. And I think if you look at brands, by the way, the French have been masters of the scarcity thing.
And the Americans have historically having a much bigger market. And Coca-Cola is the absolute masterpiece. of the it's great and everybody should be able to have it in school. And historically, the Americans were never very good at luxury brands because there's something fundamentally un-American. This is going back quite a long time.
They've learned since, obviously. But Americans, I suppose the opportunity to actually sell to another 100 million people. It's worth noting that Cadillac in the 1930s was a brand on a par with Rolls-Royce.
It was a super, super premium brand. And what often happened, I think it happened with Cadillac, is they get tempted to offer a slightly cheaper Cadillac in order to achieve volume sales. And the French have always resisted that, where unsold handbags actually end up in landfill, you know, but to maintain the scarcity of the thing. I mean, that's a generalization, but there's a kind of French approach to branding, an American approach, you know what I mean?
And that's in keeping with Cialdini's principles. And so quite often things are undoubtedly only three left at this price. works.
I bought something this morning because it said only one left. OK, you know, I might have bought it anyway. But when I saw only one left, I had to buy it.
That undoubtedly works to an extraordinary degree. Sometimes, you know, there's sunk cost bias, obviously. I mean, there are an awful lot of one of the reasons why it's going to be really difficult to unseat Apple, OK, is that people are so invested in the ecosystem.
You know, OK, well, you know, you. You could produce an Android phone, which is better. Some people would even argue that the best Android phones are better now.
But you've got your whole ecosystem of the earbuds. You've got the charging cables and everything else. That's a case of undoubted sunk cost bias, which is, I'm in now, in for a penny. A great one, which is sometimes called foot-in-the-door syndrome, which is if you sell people a small thing, it's then easier to sell them a big thing.
Actually, you learned a brand that more or less understood all of these principles, whether accidentally on purpose. Well, I'd say it was on purpose because Ogilvy was quite heavily involved in the creation of it. American Express is a fantastic brand.
Everything from the member since date on the card. Why does nobody copy that? OK, because if you think about it, no one wants to cancel. their American Express card, because then if they get another American Express card, it won't say, what does mine say? Member since 95, I think it is.
Mine will then say member since 2024. I don't want that, right? Looks like it's some Johnny-come-late thing, right? Okay? and you know um so you know and it understood the whole scarcity principle the the most famous successful sales letter for american express uh i can't remember who wrote it it was written by someone in ogilvy and it just outperformed everything for years started with the letter opened dear mr sutherland quite frankly the american express card is not for everyone which is exactly the same as your website which is why you shouldn't work with us and it basically said not everybody wants to pay for a card, da-di-da-di-da.
Every single, in that letter, it's an extraordinary, what's interesting is that letter was written long before there was a kind of discipline of behavioural science. It was an instinctively brilliant copywriter who understood every trick in the book. You know, people want to identify as the kind of person who pays for quality, not the kind of person who buys on price, da-da-da-da-da.
They want the fact that the card is exclusive. I think it was Ogilvy who had the idea of putting the member since date on. I think that was Ogilvy.
What's strange sometimes is... Quite often you have a brilliant idea like that member since date because that's a kind of sunk cost bias. I've established this relationship with them. There is a small practical use of the member since date on the card, which is sometimes it can be used to detect fraud.
Because if you get some 19-year-old comes in and it says member since 92, you can reasonably suspect they've nicked the card because they weren't born then, right? Yeah, but basically it's an acknowledgement. Acknowledgement of the relationship.
We did something with British Airways where one thing that provides reassurance to a customer is that I, the customer, know that you know. that I am a reasonably valuable customer. So quite a lot of loyalty programs partly work not with the rewards mechanism. It's the second order kind of knowledge that the consumer knows, that the company knows, that they're quite a reliable long-term customer with some therefore likely future lifetime value whom you wouldn't want to piss off. So one of the things we did with British Airways is we...
It's a very simple change. It costs nothing. But if you get your Avios statement on BA, it gives you your lifetime tier points. Now, if you remember, you can redeem your Avios points, right? Because you might want to go and fly to Dubai for four days.
days or whatever okay and that sets your avios points back to zero your tier points which you determine your status within the program they reset to zero every year so when you start a year after you've redeemed your avios and you've got you know 20 tier points and you've got you know 5 000 avios left you're going to have that anxiety that goes well as far as ba are concerned looking at me i'm just some random tourist you know i'm not a serious business traveler right I'm just some random backpacker who's been on BA once, right, with his parents or something, right? Now, when it says lifetime tier points 15,000 or whatever it is, and that's there, it basically says, we know, okay, you're a serious traveler and you've brought us a lot of business in the past. Therefore, we're disproportionately disinclined to want to piss you off.
In other words, you have the feeling, which may be erroneous or accurate, but nonetheless, it is a feeling that if there's. there's some massive like thunderstorm or whatever and there's only one flight one seat left on the last flight back from boise idaho or whatever they're going to try and get you on the plane not the random backpacker guy yeah and so quite a lot of loyalty programs are actually the consumer signaling their loyalty to the organization in the presumption of slightly more favorable treatment or at least the benefit of the doubt so an example would be if you i bought um let me get this right i I actually was a customer of Amazon before it was called Amazon. It was called bookpages.co.uk.
Back in the 90s, sometime in the mid-90s, there was a company called bookpages.co.uk, which is an online bookstore in the UK, which got bought by Amazon. So I'm actually an Amazon UK customer, like before there was Amazon.co.uk. So as a consequence, I bought literally thousands of things from them.
It is literally thousands of things. Bear in mind that's, what, 28 years, right? And maybe a little less, certainly 25 years. And occasionally, very occasionally, something from Amazon doesn't turn up, and I ring them up or contact them, and they say, don't worry, I'll send you another one.
Now, part of the reason they do that is because they can see I've bought a few thousand things, have only returned 0.3% or claimed that 0.3% of them have not arrived. So they can basically afford to give me the benefit of the doubt. If I'd never bought anything from Amazon before and I ordered a massive flat screen 85-inch TV... with 8K, and I said, no, it never arrived, okay? They would be, to a great degree, more suspicious, okay?
And not unreasonably so, okay? Right? And so part of the way in which loyalty programs work, I genuinely think, is that consumers like businesses to know. It's like a pub, okay?
If you're a regular in the pub, you want to be recognized as a regular. Very weird one, actually. When we were students, this was me. being an arsehole, actually.
When we were students, the college kitchens were closed every Sunday lunchtime. They didn't open. And so a load of us just got into the ritual of every Sunday we went to Pizza Express. Okay, which is practically every Sunday in term time. And after we'd been doing this for literally two and a half years, okay, every Sunday in term time, I kind of went to one of my friends and said, one thing that slightly pisses me off, okay, is we come here every Sunday.
They've never even given us a free garlic bread. They've never even... acknowledge the fact that we're regulars.
Now, the reason I say this was me being an arsehole, of course, what I didn't realise is they knew perfectly well we're students, right? We're there for three years, then we fuck off, they never see us again. Actually, I was there thinking, you know, I'm a stalwart of the local Pizza Express. To be honest, they were right, because why make a fuss of these people?
They're only here for a few years, okay? I'm sure if, you know, I'd been like a local family, it might have been completely different. But fundamentally, people People like their loyalty not only to be rewarded, which is nice, and that all makes sense economically.
They like their loyalty or their frequency of custom to be recognised. You know, all transactions to some extent, not quite all, but there's a degree of social exchange alongside the economic exchange. I think economics, you know, a lot of finance people try and pretend everything is just about the money. It's never just about the money.
There are all these other variables I said, like trust, for example. Fundamentally, is the person trying to sell you this car and they don't care about the next car? I think that's probably the most wonderful heuristic for a salesman I've ever come across. What can I do now that makes it absolutely certain that even if they don't buy a car from me right now, or even if I don't sell them the most expensive car they're capable of buying, bound to come back to me in three years time when it's time to replace their car brilliant brilliant thing to think you know fantastic where does uh status fit into things and i mean from a standpoint of i want to be seen with the designer brand well how does that work okay very useful um it's not it's not exhaustive as a list it's a very useful piece of sort of light neuroscience done but i think it was first developed by a guy called david rock who's a kiwi neuroscience scientist who's based in New York.
And it's called the SCARF model of things other than financial incentives. Okay. It's things people care deeply about that don't factor in economic models very well.
And SCARF is an acronym and it stands for status, certainty, autonomy, relatedness. Although I'd say something like reciprocation or something related. This is our F is fairness. so fundamentally one thing every business has to be alert to is okay you might be optimizing for for economic short-term economic value but if you're doing that at the expense of status certainty autonomy relate relatedness and fairness be really i mean the oasis tickets yeah is really interesting the one thing i don't get okay the one thing i think was wrong there that really violated fairness was the jump from was it 135 to 315 now to me It's a bit weird they didn't have an intermediate jump around about the 200 and something pound mark. Because that's the difference between an oh shit and what the fuck.
Okay, whatever it is, 135 to 240 is oh shit, right? 315 is, well, here was I planning. to go and now I can't.
Yeah, exactly. And, you know, there was a bit of that. I mean, it's really OK. The arguments about price discrimination, the arguments about differential pricing, yield management pricing, easy jet.
pricing, whatever you call it. Oh, God, it's a kind of really interesting discussion area. Broadly speaking, I'm in favor of price discrimination because generally it's overall value maximizing.
So if you take an example of really clever price discrimination, it's the McDonald's wrap of the day. OK, so you go into Mucky D's. I actually know someone who is in the room or when they came up with that idea. And it is apparently. very, very successful.
The basic deal is three times, what do they have? They have five wraps of the day, or is it four? They cycle, don't they, according to the day of the week.
And basically, the deal is that if you want the wrap that is in your preferred flavour, well, four times out of five, you pay a pound extra for it. Or if you want to save a pound, you sacrifice specificity of flavour, and you save a pound and you get the wrap that they've probably pre-made in advance because they make more of them. It's kind of like a win-win, OK? You know, you know...
You know, in other words, the people who are more concerned about flavour than price pay for the flavour. The people who are more concerned about price than flavour, it's the other way around. If you look at that, the guy who's an expert on this, who by the way is quite a left-wing economist in some respects, called Robert H. Frank, is a very, very big fan of price discrimination because he thinks it actually delivers, you know, the most value for most people.
If you think about cars, when more cash-constrained people buy a car, they're paying for transport. transportation. When richer people are paying for a car, they're paying for status to a degree or what I call l'orealism, which is because I'm worth it. Not all status is about showing off to other people. A lot of status is about showing off to yourself.
There's a certain thing we do, which is not really because we're showing off to other people. It's kind of reinforcement of our own identity and self-worth by spending a bit more on things, even if nobody else notices. You know, that's the sort of versatilization. underpants school.
Oh, by the way, do you want the funniest story? I absolutely love this. Talk about underpants.
It just kills me. Which is one of the strangest problems of the rich. Okay.
It's just... Calvin Klein's daughter. I complained at one point about the disadvantages of being Calvin Klein's daughter with a complaint that I have to admit would never have occurred to me, which is that when you're Calvin Klein's daughter, just at a high point in sexual excitement when you're getting romantic with a man, you're confronted with your dad's own name in each high letters.
Now, the rest of us have never had to put up with that, have we? I always thought that was a brilliant observation. Mark Frimston.
Exactly. Whoa, I don't want that. but um but it it's interesting that that that um what a weird experience that must be completely bizarre but no i mean the whole thing is you know i mean the whole thing about why we buy what we buy and also what prompts us to buy it um to be honest i think it's always a bit messy and there are always multiple reasons going on you know from one consumer to another or another because people are fundamentally different.
But the violation of fairness is an interesting one. One thing that really annoys me personally, and I will say this to the rail industry repeatedly, if you buy an advance ticket and you miss your train, they make you buy a full fare ticket. I think they should allow you to put something from the advance ticket towards the full fare ticket.
I think what you're doing there is generally, it is, if you want... I want a bit of moral advice for how not to scandalize customers. Anything which profits from another person's predicament is a really bad idea in terms of people morally hating it. There's a wonderful, actually, 1690 pamphlet called Venditio by John Locke, the philosopher John Locke, where it's all about the idea of the just price. And he makes the point that we seem to have a particular moral aversion to profiting from another person's misfortune.
And I would argue that if you miss by 10 minutes, you're designated. So actually, Nicola Raihani, who's a very brilliant evolutionary... Biologist, an evolutionary psychologist wrote to me about this because coming back from her honeymoon, the train was late getting into Lille, I guess, where she had to change for the Eurostar.
And because she'd missed her Eurostar, their tickets that they'd pre-booked months in advance to come back from their honeymoon were voided and you had to go and pay 300 and something quid on top. I think that's a shitty thing to do. You know, okay, yeah, yeah, yeah, okay, I get it.
Legally, you're totally within your entitlement to do that kind of thing. I think that's an arsehole thing to do. The other reason is I don't even think it's good business because it will put people off. traveling by train again and people who are cash constrained you're significantly taking advantage of them okay to a point where you know that could ruin the next six months of their life suddenly having to shell out for 400 quid when they weren't expecting it.
Someone who's cash flow constrained, that's an absolute bummer, right? And I think there are certain things where what we ought to do is just, okay, one thing I think is totally shit. So when I retire from advertising, I'd like to be kind of poacher turned gamekeeper. I've always jokingly said, I quite like to work in like consumer protection because my experience of working in advertising and marketing for 35 years is actually, it's not very easy.
Evil. OK, that doesn't sound like a big thing. No, actually, the instances of people I've seen in marketing and advertising conceiving something that I would regard to be deceptive, morally dubious, unfairly sludgy or manipulative. Very pretty rare most people in marketing are trying to do the right thing by the consumer for the most part Okay, but there are a few things which I regard as absolutely intolerable For example the fact that if you have a recurring subscription payment on a credit card you can't cancel it through the credit card. That strikes me as just fundamentally wrong, right?
If you subscribe to something online with a credit card, and now if you subscribe by direct debit online, you can just go to your online bank and go, I don't want to pay. pay that direct debit anymore. That's their problem.
They don't get the money anymore. The fact that with a credit card you have to go to the original person with whom you subscribed and they make it really difficult for you to cancel. I think that's shit. Now I think there is legislation coming out in Germany, isn't there, which is called something like the two-click law, that you must be able to cancel any online subscription almost as easily as you signed up in the first place.
I think there should be legislation where recurring payments appear at the top of your online account. credit card statement and if you wish to query one or cancel one you should be able to cancel it through the now technically you have to tweak something like the consumer credit act to make that happen i i think that business of basically selling sludgy subscriptions to people which is you get people in on a free trial then you start charging seven pounds a month then it's like six months before they bloody notice uh and then when they try and cancel it's almost impossible the reason i'm really i really support legislation there by the way is that the bad actors in that field are ruining it for everybody else. So you'll have a point soon where nobody... So good actors would probably include, I think, Netflix and Amazon, who make it tolerable. From what I remember, cancelling your Amazon Prime membership or cancelling your Netflix membership is kind of like...
It's not absurdly complicated. I think so. Yeah, I'd say that's fair. I've got a vague memory. I think I've got that right, OK?
But the good actors... are being unfairly basically they're having their business unfairly destroyed by the bad actors on the simple rounds that you'll end up with millions of consumers going I don't care who you are there's no way I'm subscribing to anything once bitten twice shy I'm done with this whole subscription model and that's problematic for the people who are actually playing fair mmm Rory I feel like we could talk to you all day about sales psychology marketing it's been a brilliant conversation and typically we ask where people can find you um i feel like if anybody wants to twitter i'm at rory sutherland all one word i like twitter um i know it's unfashionable to say so and you know elon is should we say you know divisive you know not always helpful um i i kind of indulge the bastard on the grounds that practically everybody really remarkable in human history is bloody weird difficult pain in the ass annoying okay and that applies to the good people as well as the bad to be absolutely honest um So that's my take on that. Twitter's a pretty good place to find me.
I'm on LinkedIn. where you can follow me thankfully because I ran out of connections or something and I'm at Ogilvy where we have a behavioral science practice but finally I also run a course who doesn't but it's an online course called Mad Masters and if you look for madmasters.co.uk there's a whole sort of series of 10 one hour long courses combined with I do live surgeries every two weeks so if you're on the course you will also get live access to ask your own questions. And that's madmasters.co.uk. Nice. And all I can say is the people who've done it seem to love it.
Good. And I get weird kind of fanboys going, thanks to something you said, I managed to solve a weird problem that I didn't realise I could solve, or I managed to solve a weird problem in a way that was much, much easier than we assumed because we realised it was a psychological problem, not a technological one. Yeah.
Nice. We'll include all the links. And then what do the next, I guess, 10 years look like for you?
Oh, bloody hell. I don't know. I'm very committed to Ogilvy because I think the behavioural science practice is really important as a next stage in the development of advertising. So I want to continue that connection. Also because I think you can only really teach if you also practice.
That's not quite true. I think after you've stopped, after you've... retired you can teach for two or three years but actually the two are intimately connected you know i think you kind of run out of material if you stop actually doing it and exclusively talk about it um i there is a sort of weird documentary film being made about me for one of the streaming services um what i would like to do is you If I can just continue beating the drum to the extent that every time you have a problem that involves some form of human perception or behavior, look to tweak the variable that's easiest to tweak, that has the biggest effect.
Very often, the variable you need to tweak is the perceptual one or the psychological one, not the technological one. As I said, don't make trains faster, make train journeys more productive, more enjoyable, more valuable. That's where what you might call metrics...
benchmarking and fixating on standard metrics of comparison actually kind of makes us all dumb because we end up over-optimizing for things that consumers have stopped caring. I don't genuinely give a shit whether it takes me two hours to get to Manchester or one, right? Okay, I would give a shit if it took four hours, right? Okay, you can't go to Manchester for the day. After four hours on a train, you can start to get a bit bored, you know, da-da-da-da-da.
There are lots of reasons why you don't want to take four hours. Yeah, okay. OK, get it down to an hour and a half.
That'll be kind of cute. Beyond that point, to be honest, once I've gone to the hassle of catching a train, I kind of want my rewarding hour and a half of sitting on my ass. OK, I think you could make that journey too fast, to be absolutely honest. So my point is that actually most problems now are multivariate.
There are lots of variables you could tweak. Generally, for reasons I don't understand, both organizations, institutions and governments, and particularly economists. are guilty of this, tend to focus on those variables which are most expensive to change. And the vital thing, I think, and the great thing about psychology is there are butterfly effects.
You can literally add three words to a sentence, okay, and you can change everything. There's a story told about Charles Saatchi, and I don't think it's true. I think it's completely apocryphal. It might be true that there was some beggar sitting outside Saatchi and Saatchi, and it just said, said, I'm hungry.
And that Charles Saatchi wrote underneath, I'm hungry, on his board, I'm hungry, and it's spring. OK? And that the donations to The Beggar went up by a factor of two, or whatever it was. OK?
To be honest, I'm almost certain that's entirely apocryphal. But it nonetheless makes my point. There are literally occasions where you can tweak something to a tiny degree and just have a transformative effect in how people react to it emotionally.
there's a nice example which I can end on, actually, which is someone, I'm not sure whether they thought it was a good idea or whether they thought it was just marketing bullshit, but they were at Changi Airport in Singapore, and their flight was listed. It was leaving 30 minutes after the scheduled time. The flight was listed not as delayed but as retimed.
And... There are two ways of looking at this, which is what a load of marketing bullshit. You're trying to escape the blame for a delay by referring to it as re-timed.
OK, what a load of crap. And that's one interpretation. But I responded with a more benign interpretation, which is hold on a second. You could look at that and say it's a very generous thing to do. Let me explain.
Because 20% of the people waiting for that flight, on average, are shit scared of flying. A lot of people are. Either of you?
No. There's a percentage of the population who genuinely are shit scared of flying. If you put delayed, retimed looks like it's a logistical thing. It's to do with schedules, pushback dates, runway slots, whatever.
We've made a conscious decision to actually reschedule this. this flight delayed is going to make that 20 of scared people think oh they probably notice one of the ailerons is missing or that the engine's going to catch fire and then they'll go into a fear spiral of what else does this mean because i imagine i'm i'm not a nervous flyer um terrible admission i've confessed this once before in the early days when you could actually download sky programs from sky go to your laptop when i used to fly i used to just take all all the things I'd recorded on Sky and watched them in the air on what was something like a 15, 17 inch Apple MacBook at the time. And I used to sit on the plane with this bloody great screen.
I used to watch Air Crash Investigation. I realised after I'd done this a couple of times that it was probably insensitive. When I told my wife and children, Dad, I cannot fucking believe that. There are a load of people behind you who are shit scared of flying and they're looking over my shoulder and saying like footy of the wreckage strewn across a Japanese mountainside or burning debris or whatever or basically the recreation of a plane flying upside down because anyway that was my terrible confession of total crass insensitivity for which if anybody was on one of those flights I really apologise and it was astoundingly insensitive of me but if you're frightened to fly I imagine that every time it's delayed you go into that mindset of imagine the worst what's the worst that can happen and you don't go oh I think they've probably rescheduled this because of a, you know, change in departure slots or whatever, okay, or the crew, you know, the crew are late.
They're only going, oh, my God, oh, my God, it's just the beginning of, you know, they've discovered this problem and then they're not going to fix the problem. And so actually retimed might be a really nice thing to say. I think that might be a really, really good idea. I love it.
Rory, thank you so much for joining us. You've been absolutely incredible today. Thank you. What a joy.
No, it's absolutely delightful. Really, really super. Thank you. Beautiful.
What a lovely place. This is amazing. It's been an absolute joy. Thank you very much.