S.02: The Connected Consumer: E.04

Customer-Centric Arms Race

with Jason Hreha

March 28, 2018 • 12:38 min


  | Customer-Centric Arms Race (w. Jason Hreha )


A conversation with Jason Hreha, Head of Product, Behavioral Sciences at Walmart and author (find his work here: The Behavioral Scientist), discussing the business application of human behavior principles. New digital channels or spaces where channels begin to overlap one another, like digital and in-store, impact human interaction and behavior in ways we've not considered before. Can what seems like strictly an academic study help to guide us in creating meaning and value in the products and experiences we design? 


Welcome to Season 2 of It's Worth Doing Right. I'm your host, Olivia Hayes: passionate pragmatist, and the head of product strategy at Accomplice. Sometimes it's nice to know that in spite of all of our differences as human beings, there are aspects of our behavior that we all share in common. Behavioral psychology is a fascinating study of just that: how we humans behave, which is a delightful mix of irrationality, conditioned responses, and cultural expectations. What seems at first just like an academic study actually is a business application in consumer experiences. For those of us that design products and experiences for humans, this course of study can be invaluable in helping us better understand what drives our consumers, how to reach them, and how to keep them coming back. To talk about how to apply behavioral psychology to the design of consumer experiences, we talked to someone who spends his entire day doing just that.



My name is Jason Hreha, and I'm the Head of Product for Behavioral Sciences at Walmart.



To start, we wanted to talk about leveraging behavioral science in business. In general, should the goal be to incite a desired response, or are we trying to avoid an undesired response?



The quick answer is both. The end goal in every behavior design project is always to get somebody, or a group of people, to do a specific behavior, right? So you're always trying to get people to do a desired response. But to get to that point, you often need to spend a lot of time figuring out how to prevent people from doing the wrong thing in your product, your store, whatever you're designing for. Right? So there is a lot of behavior design through elimination.



The beauty of human behavior is in its complexity and seeming unpredictability. In business, building experiences for an unpredictable and complex audience can be a challenge that feels close to sorcery. As business practitioners and non-academics, what subjects of behavioral psychology should we be paying attention to, and why?



Those are behavioral economics, evolutionary psychology and personality psychology. And I think that findings or theories from each of those different fields are absolutely critical if you want to operate in business or in product design at a high level. Behavioral economics is really the study of how people actually make decisions, right? So it's the study of how we assign value to things. What are the biases that impact our decision making, and our perceptions, and our actions? How can we, if we understand these things, get around them or take advantage of them to achieve our goals?



A great example of interesting research, or an interesting finding, from behavioral economics is something called the default effect. Most of us are lazy creatures. We don't really like to make decisions. Most of the time, we just go with the default, or we let the default decisions that are made for us become the norm. And unless our motivation is really high, or we have a really strong opinion about something, we usually go with the flow. That gives you a different lens for seeing the world. And that's a tool, actually - the defaulting is a tool that you can then use for designing a product ,or designing a marketing program, or whatever.



From evolutionary psychology, we can learn a lot about the real reasons why we experience different emotions, the real reasons why we do different behaviors, because evolutionary psychology goes really deep. And if you understand that, it gives you a better understanding of how to market your stuff, or how to frame your products, or which products or services you should even offer in the first place. If you better understand the fundamental motivators or reasons why we do what we do, it'll help you do that.



And then finally, there's personality psychology. So personality psychology really is the study of what are all the different kind of like fundamental character or personality traits that people possess, and how you measure these things. And then what are these different traits predictive of? Understanding different personality traits and how those things are connected to behavior is incredibly important in general for companies to understand. Google and Facebook use machine learning models to come up with predictive models for which content to recommend to which users. And they're pretty much doing this same personality-matching, or predisposition-matching, without a personality model in the middle mediating those predictions.



But I think that if business people and product designers understand a bit about personality, and how we differ, and depending on what the average person in your audience is going to look like personality-wise, it just will dramatically help marketers, product designers, and business people think in a more sophisticated psychological manner. "How should we frame this, how should we word this? Of these four features that we want to add to the product right now, which one would actually be most useful to our target audience?"



Understanding human behavior principles can help to guide us in creating meaning and value when entering into uncharted territory. New digital channels are an example, or channels that begin to overlap one another, like digital and in-store. As today's consumer becomes more connected with spaces to lean into digital opportunities, what does this mean for behavior?



There has been a lot of conversation in the retail world about omnichannel, and if digital is just going to eat kind of physical retail? People frame it as if there are two experiences: the in-store experience, and the digital experience, and they are at odds with one another. But I really fundamentally believe that they're quite synergistic. The online experience is an incredible boon for the in-store shopper and vice versa. People, while they're in a physical environment, can use their phones, they can look at reviews online, they can price compare. They can do all this wonderful research and use their phone as an assistant for them when they're in a physical environment. For Walmart (walmart.com), our inventory on there is gigantic. If people don't see something that they want in the store, they can order it online. When they're online, they can order things to pick them up in the store. I see the two experiences as completely supportive of one another.



A connected consumer can be in your physical retail space while simultaneously, they could be online interacting with your competitor. How can companies strategically leverage that consumer attention while the consumer is in their store?



The fact of the matter is people love their phones. People love going on the Internet. People love answering texts. They love going on social media. They're going to do these things when they're in your environment. I think that all you can really do as retailers is just build the best in-store experience possible. You can create the cleanest, most well-organized, well-stocked stores possible, and after that, just let people kind of do what they're going to do. Of course you can have signage, or you can have little messages around the store like, "Hey, have more questions about this? Scan this QR code!", or "go to our website!", or "check out this article on this product!".



We as retailers can do a better job of explicitly calling out the online link when people are in the store to direct them to the places we want them to go. But at the end of the day, I'm a big believer in creating the best experience possible, and then just let people do what they're gonna do. I don't think it's necessarily advantageous or even possible to get people to use their phones less. It's just kind of a societal trend that will just keep continuing.


Yeah. And to your point earlier, it's probably better to focus on how to make those two experiences compliment one another, rather than focusing on trying to get people to experience one or the other individually.



The two are completely complimentary. Building the best digital experience, building the best store experience, and then pointing people to the other experience when it seems elegant or necessary? I think that's the way to go.



So companies talk a lot about engagement and attention, and especially consumer loyalty. Is the fact that consumers are more technologically connected now changing their loyalty behaviors around brands?



Definitely. With technology and digital experiences, the switching cost is lower, right? So it's just a lot easier to try out new things. If you open up Uber and the ride quote you get is $10, how hard is it to go over to Lyft and check it out as well? It's incredibly simple. Because the switching cost is so low, it's I think building loyalty can be really hard, and you have to. It's great for consumers, because it means that to win the loyalty of the user, companies have to really go all-out. They have to invest in user experience resources. and they have to create the best user experience possible. And they have to do as much research as possible to understand the mental model of the people that they're building for. They have to understand the needs and the concerns of the people that they're building for. And the better they can understand that, the better the new features they will release are. There's this customer-centric arms race happening. And overall, it's really good. You can never stop running in this game, because if you stop improving your product, if you stop improving your recommendation systems, if you stop adapting your inventory or adapting the customer experience? Somebody else's gonna run right by you. I think it's never been a better time to be a customer.



Is there something that you're working on personally or professionally right now that you're excited about?



I have a newsletter that you can sign up for. I write little articles, or insight, or reflections on behavioral science. I send them out to my list a few days a week. You can sign up for that at my website, which is thebehavioralscientist.com. I made a course for my method, the spark method, which is a personality-based, behavior change approach. It's all focused around figuring out what the best and behavior would be for the group or the person that you're trying to change, for the goal that they have. And then, based also upon the specific characteristics of the person or the group that you're designing for, how you can make that behavior as simple as possible. I have like a cool method for that. So if you want to learn about any of those things, you should definitely go to my website and sign up for the newsletter.



As our experience design becomes more complex, it's imperative that as business leaders, we develop a more nuanced and sophisticated understanding of human behavior. Moving beyond traditional user personas and assigned superficial likes and dislikes, you can begin to map personality traits to behaviors such as openness, agreeableness, and extroversion. We can begin to answer the question, "what characteristics are these traits predictive of?", and have a deeper understanding of what creates value for these people. Applying fundamental behavior psychology principles to solutions consumers, as Jason suggests, can help us design meaningful experiences across every touchpoint.



Thanks for joining us for today's conversation. To see more content from the Accomplice team or leave us feedback, visit us at iwdr.wpengine.com, or drop us an email at podcast@itsworthdoingright.com. And remember: if it's worth doing, it's worth doing right.