What You Need to Know About DMA14’s Thought Leadership Series “The Last Mile”
Thousands of data-driven marketing enthusiasts gathered at the San Diego Convention Center for DMA14, the direct marketing industry’s leading conference.
DMA14 highlights included a commanding keynote from Magic Johnson on the importance of over-delivering to your customers; a lesson on engagement with consumers across channels from Facebook’s head of Partner Development, Khurrum Malik; and a captivating dive into the Benefit Corporation movement, punctuated by Ben & Jerry’s Rob Michalak discussing trust, transparency and ice cream.
Tuesday morning’s Thought Leadership Series yielded another standout presentation in a session titled, “The Last Mile: Leveraging Decision Science to Get Your Most Important Audiences to Act.” Here, speakers from Cramer, Google, Sony and UC-San Diego explored the science behind human decision-making and showed examples of how an understanding of those behaviors are being leveraged in-market, with great success.
We summarized the key messages from The Last Mile Thought Leadership Series for both those in attendance looking for a refresher and those who may not have attended. We hope the following captures even a little of the excitement, insight and passion the presenters generated in the room.
At the core of marketing is getting our most important audiences to act.
Social science and behavioral economics have long studied why and how we do what we do…and don’t do what we decide against. The realities are fascinating and provide insight that lies at the core of what marketing is all about; getting our most important audiences to act.
As marketers, we’re challenged to influence the way the people we communicate with perceive things, interact with our companies, our products, our brands, and take action. In both B2B and B2C settings, the missing link in driving maximum results lies not only in understanding the proper marketing mix, but also in aligning communication with how human beings make decisions.
It’s Not You — It’s Them!
The aisles of the exhibit space downstairs are filled with companies that facilitate and integrate the marketing process, measure the results, provide access to our audiences and help us determine the mix of factors that will help to maximize our results. Broadly, the encoding of our communication… So, what’s missing? That’s what we’re calling “The Last Mile.” And in the last mile, it’s not about the marketer.
It’s about the audience. Understanding how they make decisions to react and interact with our brands.
We all have decision-making shortcuts that we rely on but are not aware of.
This understanding is rooted in the work of social scientists and behavioral economists who, for decades, have proven that human beings have evolved to make impulsive decisions without conscious consideration for the sake of survival. Similarly, consciously we make decisions for emotional reasons and justify them rationally afterwards.
Context in decision-making is everything.
Decision options are not weighed on their own merit alone. We frame our decisions and options against our experiences, other options, our perceptions, what we perceive as the associated benefits, etc. This can be counter-intuitive, and even small shifts in framing can have significant impact.
An example of irrational contextual perception is what behavioral economists refer to as “ mental accounting.” This principle holds that we categorize money, separating and associating different importance levels for each. For example, people often think of “savings” in different economic terms from money we owe on a credit card, and therefore, often (irrationally) choose not to pay off high interest credit card debt with funds from low(er) yield savings.
A related principle addresses “habit formation” proving that behaviors can form habits, regardless of their utility of rationality.
Both principles will be borne out in the following examples.
In one example with AdWords…
Google tested two economically identical offers (worth $75) framed in two ways. The first, a $75 coupon, the second, spend $25 and get $100 free. The result was that Option 2 yielded less conversions. However, those who did convert on Option 2 were more valuable over their customer lifetime. The second option’s framing made a significant difference immediately and changed behavior over time.
Test. Test. And test again. Our intuitions are not always right.
In another example, Google created five offers to stimulate usage of Google AdWords:
- $20 AdWords credit
- $50 AdWords credit
- $20 ‘play’ credit
- 2 movies
- No incentive (control)
Counter to Google’s internal “intuition study,” the $20 play option had the best results (redemptions) at 4x the control. One reason could relate to the nature of the options: hedonic, more pleasurable rewards such as movie tickets vs. utilitarian, more functional rewards such as AdWords credit. Smaller amounts of hedonic rewards out-performed larger amounts of utilitarian rewards.
Be in the Moment
By identifying the key moments in time of that customer’s experience, the specific “point of need,” and offering convenience with a lower barrier to entry, we can drastically increase open, click-through and conversion rates.
In the example of its “free to play” gaming portfolio, Sony converts players into payers by uniquely tailoring in-game offers in response to individual players’ behaviors. This includes offering a spell upgrade just before the hero faces the next level’s foe. It’s part of what Sony calls its “nudge program.” This system of scoring and predicting behaviors in order to intervene at appropriate touch points has significant impact on results and ROI. Results included increased conversion, longer duration of purchasing behavior and behavior change over time, exhibiting traces of what behavioral economists refer to as the “ consistency principle” and “habit formation”.
We’re Taught to Listen to Authority
In another example, Sony leverages the power of personalization and the authority principle (leveraging the fact that people are conditioned to respect authoritative figures) and sends highly personalized emails to their most loyal gaming cohort, directly from the renowned developer of individual games. The result? Drastically higher open and click-through rates (as high as 70%+).
Want to learn more about decision science in marketing?
Contact us to talk further about our experience at DMA14, Neal’s Thought Leadership Series and how decision science and behavioral economics can impact your bottom line.
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Borrowing ideas from B2C to make emotional connections.