Over the past few years marketers — financial services marketers, in particular — have increasingly recognized the importance of emotional factors in how consumers make decisions. Especially when it comes to products that they believe should be evaluated on rational factors, like the interest rate on a checking or savings account, or on a loan.
The light shone brightly on this topic this week as Roger Dooley, Tony Mannor, Jeffry Pilcher, and I all blogged about a marketing test conducted by a South African bank which found that replacing the photo of a male with a photo of a female in an offer letter significantly increased take-up; equal to dropping the interest rate about 4.5 points.
This recognition has impacted Web site design approaches, as illustrated by the four-quadrant system for categorizing a person’s purchasing style developed by Roy Williams and the Eisenburg brothers (and cited by Jeff Larche in his blog, which is where I read about it). The quadrants are formed by two dimensions — the speed with which a decision is made (fast versus slow), and the style with which a decision is made (logical versus emotional).
My take: Studies like the one from the bank, and the decision quadrants from the Eisenburgs, can lead marketers to think that emotional decisions are not necessarily rational decisions. This is not niecessarily true. Emotional is not the opposite of rational.
Example: You’re watching Bambi, and Bambi’s mother is kiiled. You begin to cry. That’s an emotional response. But it’s a rationally emotional repsonse. After all, crying in response to something that’s sad is not an inappropriate response. If you were to laugh at that, that would be an irrationally emotional response.
Marketers don’t sufficiently understand the degree to which consumers’ decisions are emotional or rational. But one thing is for certain: It’s not an either/or situation. The challenge marketers face is determining (preferably through testing) what combination of rational and emotional factors should be included in their marketing efforts. And for site designers, categorizing someone as making either an emotional or logical decision is probably wrong, and could lead to poor site design decisions.
What’s disturbing, though, are studies like the one from the South African bank. The decision that many of the bank’s customers made were neither rational or emotional — they were irrational (at least as far as I can tell, or will allow myself to believe).
What could have been going through the minds of these guys (and as the study found, it was mostly guys who were influenced by the pictures) to let a picture of a pretty woman influence their decision to accept a loan offer? I could guess — but not publicly.
As marketers, we can better understand emotions, the role emotions play in consumer decisions, and the interaction of emotional and rational factors in decision making. But if consumer decisions are irrational, then we’re all in trouble.
Technorati Tags: Marketing, Roger Dooley, Tony Mannor, Jeffry Pilcher
Ron, you’ve cracked the door on the whole subject of branding here. Why does anyone pay $400 for a pair of tennis shoes, when mine cost $40 and last longer? Why would a woman pay $2,000 for a handbag or pumps? Why would anyone pay $100,000 for a car? Luxury items exaggerate a point that applies to any purchase: The best quality item at the lower price *should* be the one people buy, but they don’t. Why?
It all has to do with perceptions. Some people think things are higher quality simply because they are expensive. Other people want to feel special buying something that others can’t afford. Some people think its critical to have brands that align with- and reflect their self-image. And others still hope that certain brands will *transform* their self-image – from ugly, unsexy, dumb, fat, slow, frizzy, lumpy, frumpy or uncool into something unattainably perfect.
The crux of your argument hinges on what you deem is a rational or irrational perception (i.e., “feeling”) with which one should make buying decisions. I may think it’s silly for someone to dream of getting laid over a loan, but who the hell am I to cast a judgment? Heck, if it makes them happy – or more specifically, if it makes them think they’ll be happier – does it really matter?
Some people are willing to pay a lot for just a little hope.
What is that saying “a fool and his money are easily separated”? Jeffry points that it has all to do with perceptions. I wish I could fully understand the word perception because that seems to be vital in understanding why people decide to buy what they do. How does anyone try to examine and understand what someone else perceives in today’s world.? My perception can change in the blink of an eye given to certain events (driver’s that cut in from the left on freeways). So is it the current mood of someone, or how they are feeling, or what sense or senses are being used in analyzing or perceiving a small piece of reality. The closer one thinks one is to the answer the quicker it seems to slip away.
I wouldn’t want to say to someone that their decision for a purchase is irrational. I would like to ask them ‘Why’ and proceed to listen to all of their ‘becauses”. But my insight after listening may only be a unique understanding of that individuals decision and unlike that of the next person I ask and listen too.
Ron: I don’t agree that we as marketers are in trouble if consumer decisions are irrational. Whether the choices that our customers make are rational or emotional is ultimately unimportant – what is important is that we understand what they are likely to do and adjust our marketing efforts to take advantage of their decision making process (whatever it may be). If I know that male customers are more likely to respond to a picture of an attractive woman than a lower rate, all the better for me. That way I can keep the higher rate and still get better response.
@Andy: The point I was trying to make is that an emotional decision can be a rational decision. But if a consumer’s decision process and criteria are irrational, that implies to me that the process CAN’T be analyzed and understood in advance — or perhaps after the fact, for that matter.
You’re right, though — if you know that males are more likely to respond to a picture of an attractive woman than a lower rate, then you can market to that. The question is: Does this hold for all products in all situations? If yes, great.
And maybe men responding to pictures of attractive women isn’t as irrational as I’m making it out to be.
@Ron: I agree that an emotional decision can be a rational decision. However, I don’t equate irrational with random — to the extent that irrational choices are exhibited in patterns, with reoccuring frequency, and by segments of consumers, they can be predicted.
For an interesting read, try “Predictably Irrational” by Dan Ariely (2008).