Published on: October 17, 2017by Michael Sansolo
A few years back, the CEO of a good-sized chain told me an ironic story about his shoppers. It seems that once a week, the chain would have a special discount on gasoline purchases and shoppers would line up to fill up.
The irony was this: many of those same shoppers were drinking cups of Starbuck’s coffee. As the CEO observed, the same people who waited to save a few cents on a gallon of gas were perfectly willing to spend far more than those savings on their morning coffee. Apparently, some liquids are valued a lot differently than others.
That’s hardly the only contradictory behavior you will find from shoppers or any of us. There are some products or experiences for which pay will gladly pay higher prices without a moment’s hesitation. For other items the same shopper - at times on the very same shopping trip - will value price above all else.
That inconsistency and illogic of behavior is what makes customer satisfaction such a tough nut to crack. And, in essence, that’s the reason Richard Thaler (as Kevin reported Monday here) was awarded the Nobel Prize in economics.
Let’s be serious: there’s little likelihood that most of you read up on Thaler and his prize winning theories in behavioral economics even though MNB offered a link to a terrific article yesterday. Here’s another one.
These articles and Thaler’s theories are something you must think about because new insights into consumer behavior are essential for future success.
But let’s face facts: reading an article about new economic theory is possibly the least attractive offer I’ve ever made in one of these columns. Hell, both my wife and I studied economics in college and we know the two essential truths of that work:
• Economists are usually students without the personality to become accountants.
• If you laid every economist end-to-end they still wouldn’t reach a conclusion. (Sure the courses are dry, but we are at least self-deprecating. Answer that, sociology majors!)
Behavioral economists like Thaler are changing all of that by marrying the economics and psychology to understand the illogic that drives so much of decision-making. There’s no simple formula for deciphering any of this and certainly very few of us could possibly understand the insights people like Thaler have.
Yet we still need consider this emerging area of thought to better unravel the forces that motivate behavior. There’s no surefire way (and likely never will be) to read a customer mind, but more than ever we need to try so that just maybe we can get a better sense of what they really think and what they truly value.
We know we are in times of change thanks to demographics, technology, competition and more. It seems almost logical to conclude that new thinking is necessary to understand the shopper.
That is, if anything is logical these days.
Besides, as a wise Vulcan once said, “Logic is the beginning of wisdom, not the end.”
Michael Sansolo can be reached via email at email@example.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available on Amazon by clicking here. And, his book "Business Rules!" is available from Amazon by clicking here.
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