There is a classic business school excerpt from Blink by Malcom Gladwell about Warren Harding (seen here). The concept in brief is that an unusually weak 1916 Republican candidate pool spawned a desperate search for the nation’s next Republican nominee. As the search ensued, a tall, attractive, and distinguished-looking Senator from Ohio emerged and was selected to run for President. After all, he looked the part.
The concept at play is the population’s tendency to “thin slice”. Thin slicing, or rapid cognition, is a natural tool that allows our brains to break down complex problems to arrive at a decision when we have a lack of time to properly analyze it. For example, let’s assume that you are getting your car serviced and decide to kill your time by taking a walk through the car lot at the attached dealership. A man with slicked back hair and a suit approaches notices you from across the lot and quickly heads your direction. You immediately turn around and walk in the opposite direction. Why did you do this? The context of the situation and the man’s appearance gave you the intuition that he was a car salesman and you are not interested in purchasing a car. There are applications where thin slicing can be helpful. You may dismiss a job candidate for showing up for an interview in a t-shirt. You might consider leaving a restaurant that has a failing health score posted near their door. You may choose not to swim at a beach that has visible jelly fish in the water.
Like anything, however, thin slicing should be used in moderation. In fact, our unconscious biases can be extremely destructive to society as a whole when overused. Scientists have created a computerized test known as the Implicant Association Test (IAT) which measures the length of time it takes to make associations between pairs of words or pictures and words. By measuring the amount of time it takes to connect various concepts, the test can measure how biased we are in making decisions. It may not surprise many, but the results are startling and offensive. As expected, the general populous has difficulty associating corporate-themed words with the category “Female”. Likewise, the general populous has difficulty associating family-themed words with the category “Male”.
So what’s the point? Well, the point is that societal bias exists due to deep rooted associations portrayed by the media. These biases, whether we like it or not, subconsciously influence our behaviors and decision-making ability. We often times feel confident in our gut decision based on past experience…yet we wonder when our decision doesn’t work out the way we expected.
With that statement, it should come as no surprise that Warren Harding’s short presidency is known as one of the weakest tenures ever endured at the oval office.
So how do we bring this back to marketing?
Organizations are constantly evaluating their target customer groups. They do card-sorting exercises, focus groups, and brainstorming sessions…trying to figure out personas for their target customers. They’ll even go as far as to name these customers, visualize them through cartoons or photography, and talk about their life habits as if they are a living-breathing human being.
However, many marketers fall into the same bias trap applied to President Harding. They assume that they already know the ideal customer that they want to buy their products or services. They often visualize a person’s physical traits first, and lean on demographic attributes. They begin to build segmentation around an ideal customer that they assume to exist.
This is evidenced in studies performed on negotiating car prices at an auto-dealer. Whether we want to admit it or not, biases creep into everyday customer interactions and can cost customers (in this case females purchasing a car) thousands of dollars. In a strange twist of irony, most car dealers approach men first since their biases tell them that the man is the one who will be buying the car…even though they can negotiate a higher price with the female (again all based in bias).
This is exactly the wrong way to implement a marketing strategy, though. When running a segmentation analysis, marketers must first group customers by needs and behaviors such that segment group members behave similarly when offered a certain product or service. Likewise, members of other segment groups should behave differently. These segments should be value-based and NOT demographic-based. Only once they have segmented their customers based on value, can they begin to analyze similarities and themes between these customers to build personas. Marketers simply have the order all wrong…and the readily available demographic data in Big Data technologies make this fatal error more tempting than ever.
The good news is that there are several tools and methodologies that can help us make more informed value-based segmentation decisions in the digital age. First and foremost, purchase behavior is becoming more-and-more traceable through the increased use of credit cards and digital payment. As customers use less and less cash, companies can benefit from learning their spending habits. Not only can companies increase visibility of their own product sales through E-Commerce implementations, but many credit card companies and payment processors offer analytics services (at a price, of course). If your organizations can begin to build a vast database of actual purchase behavior, you can run a proper RFM analysis to find your most valued customers.
Location-aware technologies can also help your firm better understand consumer behavior. Specifically, if your business has an App, you can begin to leverage iBeacons and other low-frequency bluetooth technology to begin to understand foot traffic at your brick and mortar stores. Some third-party deal apps also offer this service if you do not feel like making the investment in your own app. By partnering with a third party app provider, you may not only get visibility of foot traffic outside of your business, but they may also provide the in-app purchases across all of their other clients as well.
If you are a business the primarily sells products online, the internet version of location-aware technologies is click-tracking. By working with a third party online advertising provider, you can not only ensure that your ads are placed on websites across the web…but they also provide analytics on what websites your customers are visiting. This can be helpful to understand what types of websites your customers prefer, or it can help you understand what websites are ultimately leading your customers to your website.
Lastly, there are some benefits with connecting with your customers through social media. Not only can you mine a plethora of demographic data, but most social media now tracks location and travel through “check-in” features. If you can understand the top places your customers “check-in” at, you may reveal opportunities for add placement, partnerships, or even physical locations to expand your business. You will also have visibility into what your customers are talking about. By leveraging a third party social monitoring platform (such as Sprinklr or Spredfast), you can begin to understand general themes that your customers are talking about. You can then tailor your marketing messaging to play with the general themes and subjects your customers are already talking about. The easiest way to obtain this information is to give your customers an option to connect their Facebook or Google Plus profile to your app or website. This will give the customer a short disclaimer to share this information with your organization.
By building a vast database that marries behavioral data and demographic data, your organization will have a complete 360 degree view of your customers. By leveraging payment data, you could start your segmentation analysis by identifying your most valued customers based on recency, frequency, and money spend. You can then dive deeper to understand how your product mix is performing and which groups of customers prefer which products or services. By leveraging location-aware technologies and click tracking, you can begin to understand how outside-the-purchase behavior can lead (or not lead) to actual purchases. Lastly, by connecting through social, you can begin to understand what topics your customers care about and how they are behaving digitally. Once you analyze all aspects of customer behavior, you can then build your segments. After you have established your segments, you may use measurable demographic data trends through social media to begin to build your personas. By using this methodology, you will ensure an accurate depiction of your target customer, and you will avoid the bias trap that so infamously lead to Warren Harding’s short presidency.
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