4 Behavioral Science Reasons Why Recently Dead Artists’ Album Sales Sky-Rocket

A couple days ago, David Bowie passed and (apparently) his albums sell like warm bread during a famine. Nothing New! A few years ago, after Michael Jackson’s death the same thing happened (though, then with Michael Jackson albums; Bowie’s albums didn’t sell any better than before MJ’s death).

While from a Normative Economics point of view, this sky-rocketing sales phenomenon might seem irrational or, at least, puzzling, in fact, there are very good reasons (explanations) that come from behavioral science.

1: SALIENCE – Huge Media Exposure. While many music fans knew about David Bowie (read any recently dead musician), his name and music wasn’t in the media all that much in recent times. However, because he was (used to be) famous, the media from the USA to Romania and from the UK to Singapore mentioned his death accompanied by some kind of eulogy on his remarkable career.

When something is (very) salient, people tend to give it attention and even buy it.

2: SCARCITY. We are all suckers for things that are scarce. ONLY 1(2) ticket(s) left! When someone dies, they’re gone forever (famous quote by Captain Obvious), hence people want to not miss out on the last few albums by Bowie (or whoever).

This is particularly interesting. The fact that scarcity (not miss out on the occasion) motivates people to buy is well known for decades. The interesting twist is that music by a certain artist or any kind of information-product cannot run out. David Bowie’s music is already in digital format, which means that it can be multiplied endlessly. It goes the same with music from any other singer, with books, movies etc.

While the death of a singer means that (s)he will not produce more music, it does not mean that existing music will run in short supply. In fact, the music pieces that made someone famous (usually) are quite old by the time of the artist’s death. Thus, what is bought by many people is, in fact, old products.

Just as a note: New music by dead singers was released after their deaths… that is: previously unreleased old recordings (mixes).

3: SOCIAL CONTAGION. When the news gets out that lots of people are doing (buying) something, other people will follow (imitate) and do (buy) the same thing. This is more the case when the others have something in common with the decision maker (buyer). In this case, they are all Bowie fans.

4: STATUS ENHANCING THROUGH (COSTLY) SIGNALING. While owning a Bowie album was rather banal for most music fans, owning one of the (last) albums sold after his death is something worthy of talking about with friends, acquaintances, prospective mates (girlfriends / boyfriends) etc. In a nutshell, buying a Bowie album these days will give the buyer a reason (pretext) to brag (self-advertise) to relevant others.

RIP David Bowie and all other singers & artists who passed away! 

Why our Judgment Shortcomings about Money Aren’t Irrational

The field of Behavioral Economics / science pointed out how much of human judgment and decision making does not conform to models of economic rationality.

Oversimplifying, we could say that behavioral science gathered mountains of evidence on our own irrational thinking and behavior.

Many introductory materials such as lectures or presentations use a very popular illustration:

We like to think that we are like Mr. Spok, but in reality we are more like Homer Simpson.

This is a very catchy illustration, but it is utterly wrong because in order to understand human judgment and decision making we shouldn’t use fictional characters as references.

In order to deeply understand how Homo Sapiens thinks, we need to look back to our very distant evolutionary ancestors (early Homo Sapiens and pre-Homo Sapiens species).

Simply put, in order to understand how modern humans think, we need to look back at cave-people.

Loss aversion is probably the best known psychological effect (some would call it a judgment bias) when it comes to thinking and decision-making about money.

From a normative economics point of view, the fact that we hate losses roughly twice as much as we enjoy equivalent gains makes no sense – is irrational. We should be willing to put in the same amount of effort for both avoiding a loss of 100 dollars (euros) and gaining 100 dollars (euros). Yet, we know that things do not happen like this… people put in more effort to avoid a loss than they do to achieve an equivalent gain (i.e. 100 dollars).

However, this phenomenon – this way of thinking – made perfect sense for our evolutionary ancestors. In other words, it was (is) evolutionary rational to hate losing what you have more than you enjoy gaining some more.

By evolutionary rational I mean anything that enhances an individual’s chances of survival till reproductive maturity, achieving reproductive success (having offspring) and investing in heirs till they reach reproductive age.

To oversimplify, anything that allows an organism (person) to become a grand-parent can be seen as evolutionary rational.

Just as a note: evolution favors “metabolically cheap” solutions. Anything that brings a cost without providing an advantage in sending one’s genes into future generation(s) will be eliminated in the evolutionary process.

Let’s return to why loss aversion was, in fact, very (evolutionary) rational for our very distant ancestors.

These individuals lived in resource scarce environments. This is not to say that they were starving on a permanent basis, rather it is to say that the available (and accessible) resources were matching the minimal needs of our very distant ancestors.

In such an environment, it is more important to not lose the resources one has than to acquire additional resources. This is from an evolutionary point of view.

Putting things differently, holding on to the few resources one had offered evolutionary benefits (sending one’s genes into future generations) that were higher than the evolutionary benefits of acquiring additional (new) resources.

I am aware that I have simplified things quite a bit, but I guess you get the main idea.

What some call judgment biases such as loss aversion, mental accounting, relativity (contrast effect) etc. might very well be part of what made our generations’ existence possible.

Next week I will present (live) the three major psychological effects on thinking about money and their evolutionary explanations. Most importantly we will explore how Loss aversion, Mental accounting and Relativity influence our decision making about money in real-life situations.

Moreover, I will present some illustrations on how these so called judgment biases can be harnessed for designing better services that improve people’s lives.

The talk we be on July 15^th in Washington DC and it is part of the Action Design Meetup events. 

If you are in the area, join themeetup. 

Why Are You Asking Me Your Question?

A couple of days ago I noticed that some of my connections on Linked In were answering a question posted publicly. I do not want to name names, but since the question concerned two packages for dog food, it is inevitable to show the two packages.

The message on Linked In was:

Hi, Would love some feedback! Our current packaging is the design in the brown Kraft bag on the left and a draft of our new packaging idea is in the creme bag on the right. Which design do you prefer??

Beyond aesthetics and preferences for dog-food bags, there are some very serious issues with this kind of pseudo-research.

First, there is the obvious sampling error. The linked-in connections of the person who asked are not necessarily dog food buyers. I guess the budget for market research was very restrictive.

Second, it is utterly wrong to ask people which one of these two packages is preferred. Which one to pick, is the question that the marketer has to answer. However, the buyer (because the consumer is the dog – hopefully) will never ever have to make this choice.

Choices and preferences are to a large extent dependent on the context of the available options. We also know that choices imply (sometimes unconscious) comparisons. If package B is aimed to replace package A, then the buyers will never have to make the choice between A and B.

Third, the choices buyers make are not made in a void. In other words, the choices dog-food buyers will make are between competing products and one of the products (packages) presented above.

So, a correct way to do things would be to have a between subjects design with two conditions:

Condition A: N competing brands + package A

Condition B: N competing brands + package B

Here N is the number of main competitors on the market. The same competing brands should be used in both conditions.

What should be measured is the choice share for each package in the two conditions.

Fourth, asking people about their preferences is sub-optimal. Preferences are not as stable as we’d like to think. They depend on the other options the choice set has and on many other factors. In this case, it is obvious that asking people online about their future choices in supermarkets is a bit of a stretch.

Fifth, related to asking about preferences and purchase intentions, there is quite a difference between intentions / preferences and actual behavior. So the best way to do this is to measure behavior and not intentions. Though, my friend John Kearon, thinks there’s a better way to do this kind of research.  

The interesting thing is that someone had to make a choice / answer a question. This person then asked other people the question she had to answer. However, the respondents have to answer different questions to make their choices.

Now, the question I have to answer is:

Why I wrote this post on dog-food packaging when I am definitely a cat person.

P.S. The person who asked this question owes me a beer for (free) consulting… A Hoppy Cat beer :)

(source of picture )

Later edit (15 Jan 2016): Here's another similar example (also via Linked In), different area, but the same problem:

Good morning all! I would greatly appreciate if you could comment on which logo you prefer most. I can't say much more than it'll be for a design business.   Any comments, likes, shares and feedback will be appreciated.  Thank you!

Behavioural science is a gold mine for service design and customer experience – Interview with Nicolae Naumof on Adrian Swinscoe’s blog

Two weeks ago I gave this interview for Adrian Swinscoe’s blog. In it I explain my view on applying behavioural science in service design.

Naturally, I speak on what is behavioural science, what drives human behaviour and plead for a simple, two steps approach on applying behavioural science in service design: (1) Use the scientific literature on human behaviour to come up with behaviourally informed interventions and (2) test them, because no one knows the (absolutely) correct answer.

Interview can be listened here (30 mins or so): - open in new tab ;)

Interview and full transcript on: Adrian Swinscoe’s blog 

In a gold mine, you will not find gold bars …

More on applying behavioural science in service design www.Naumof.com

Behavioural (Service) Design Is About Technology as Much as Rembrandt’s Paintings Are About Canvases and Paints

We are going to make / made a great app that does this and that.

We are building a website that will help people with….

Our new device will enable people to….

These are phrases that are encountered at many conferences, meetings, tradeshows, get-togethers on service design.

A huge proportion of people who (claim to) do service design or customer experience focus their work and their speech on the technology they are working on and how great and mesmerizing it will be for their consumers / users.

Naturally, the ground-breaking, paradigm-shifting technology will enable organizations to be consumer / customer centric…

Although I am allergic to buzz-words, I think that the big issue is not the use of fluffy words that everyone pretends to understand.

The big issue is the over-emphasis on technology.

Good (profitable) service and great experience are as much about technology as Rembrandt’s paintings are about the canvases and paints.  

Source of picture  

It’s obvious that without paints and canvases any painter, including the great Rembrandt, would not be able to create a masterpiece. Nonetheless, good painters draw very beautiful sketches with just a piece of paper and a pencil. It's the same with technology and great service. One can have good service without too much technology being involved.

Even in the case of Service Masterpieces, technology is simply a tool.

It’s about giving a good feeling not about how you do it.

For example, a restaurant stores the phone numbers of frequent (loyal?) clients and when one of them calls to make a reservation, the receptionist answers with “Good day Mr. X, how many will you be this evening?” instead of the typical “Good day, restaurant R, how may I help you?”.

The increase in customer satisfaction with the experience of making a restaurant reservation is not due to some fancy technology (caller ID to be precise). Rather it is because someone (apparently) knows him and (apparently) cares about who he is.

Technology is, not seldom, overused while disregarding the human component.

For example, there are some elevators which have the control buttons on the outside.

Source of picture

Basically, when you call the elevator, you have to type the number of the floor you are going to. The elevator arrives and you enter into it. The doors close and it takes you to where you commanded it when you were on the outside.

I am sure that there is a good reason for this; it might be energy use optimisation.

However, the designers forgot to take into account a very basic human feeling and need.

Once you enter the elevator, you are in a closed small metal box without any control.

That’s pretty freaking, right?

Where the buttons are placed might not influence too much the technology part, but having the buttons on the inside gives you a sense of control. It’s the person who controls the machine and not the machine controlling the person.

We see the technology, but we don’t see the fundamental human truth.

More than 80% of information acquired by humans is received through the visual sense. Our vision is pretty amazing and we rely on it.

There is a draw-back of human vision:

Human vision is great at seeing what is in front of our eyes, but it is horrible at seeing what is behind the salient (shiny) object.

Several years ago, a technology company (with a fruit name) began selling mobile technology devices. There was and still is a lot of buzz around this company and its products. Recently, this company reported the highest profit for a quarter in corporate history… and that amount is in the same league with the GDP of small countries.

Hundreds of business and technology analysts commented on the success of the company and its products. The emphasis, naturally, was on technology and the products’ features: touch screens, apps, memory capacity etc.

Yet, I haven’t heard anyone speaking about the fundamental reason behind this company’s tremendous success. This reason is not technology; rather it is a fundamental human truth.

Without going too much in the depths of evolutionary psychology, the fundamental truth is that all humans have a need to communicate (advertise) themselves on the social and mating market(s).

This is true for other creatures as well, but there is an essential difference between humans and other creatures. Whereas many animals advertise their mating value through conspicuous and costly features such as the peacock’s tail, humans advertise their mating (and social) value through behaviours and ornaments.

In a nutshell, the company mentioned above managed to create and sell peacock tails… It was not the first one to do so, but it managed to become an icon of self-advertising. The most interesting thing is that this company manages to create (and sell) peacock tails that are self-degradable, thus creating the conditions for re-purchase every (other) year.

Whenever a new generation of the product is launched, both the company and its clients talk about the technology progress and the new features, but this is only the surface…

The fundamental truth is that

An “i Peacock’s Tail 5” is sexier than an “i Peacock’s Tail 4”

Happier Customers & Higher Profitability through

Behavioural Science Applied in Service Design

www.naumof.com

Can Banking Services Go from Utilitarian to (Truly) Useful?

Banking (consumer) services are, well, utilitarian.

For quite some time now, (some) banks tried to become more user-friendly, more humane and to focus a bit more on the people side of their business and less on the technicalities of numbers.

Despite, or maybe because of, these efforts, many bank customers have a difficult time understanding how (some) banking products and services actually work.

Moreover, some bank customers exhibit what seems like irrational behaviour such as having at the same time both savings and loans.

One might believe that such behaviours are caused by lack of knowledge, but, most often, this is not the case. Moreover, financial literacy has been proven to have a similar effect as holly water. It does not do any harm, but neither does it do any good.

Even financially literate people still show the same biases as naïve consumers.

The reality is that many (apparently) irrational behaviours related to money, including having simultaneously both savings and loans and paying very high interest rates for buying seemingly useless fancy products, are driven, in fact, by a form of profound rationality – evolutionary rationality.

Most learning programs, articles and books on behavioural science focus on presenting, (sometimes) explaining and giving insights on exploiting these deviations from economic rationality.    

The real challenge for banks (and other financial services) is to develop products/services that incorporate these behavioural science insights.

For example:

Up to now, some (many) banks developed payment tools that harness the cognitive shortcomings of people when considering money matters.

These payment tools make payments easy and with a low level of pain of paying.

At first glance this is great. People spend more easily, they enjoy shopping, the merchants are happy because they sell more, banks are happy because they earn money etc.

Things aren’t as straightforward as they seem at first glance. Indeed, people enjoy shopping and a lot of purchases would not have been made if the pain of paying was higher. However, many people would like to be more moderate on their shopping behaviour.

Opening the gates to easy spending brings the joy of buying, but it also brings the regret (and anger) of over-spending.

Apparently the goals of enjoying spending and avoiding over-spending are antagonistic. But there’s at least one way of conciliating the two goals and developing payment tools that fit what people want.

The main challenge banks and financial services, overall, face is to become truly useful and not just more utilitarian.

In order to avoid obsolesce,

 Truly Consumer-Centered Banking Services

Need to Incorporate these
Behavioural Science Insights.

I gathered lots of intriguing insights and potential solutions on how to make banking services more human friendly in the seminar:

Re-Design Banking & Insurance.

Oh… almost forgot: It’s 2.5 hours long and very affordable, especially for banks ;)

Nudging by Repulsion: When Evolutionary Psychology Meets Nudge

A few weeks ago, my beloved wife and I received the visit of her mother, sister, brother in law and one year old nephew. As you can imagine having a small child in the house is a radical paradigm shift for someone who doesn’t have children and some things needed to be (re)moved so that the baby will not hurt himself.

Our nephew behaved himself, well, as much as a one year old boy can. 

However, the electricity sockets (plugs) were very very attractive for him. 

Although I am all in favour of letting kids explore and nurturing their inherent curiosity, I am totally freaked out when a child approaches an electric socket. Whereas touching the cooking stove can result in a nasty burn, sticking one’s small fingers in a socket results in certain death.

A couple of weeks after our guests went (to their) home, I was reading about evolutionary psychology, particularly about beauty and sexual attraction and an idea struck. It wasn’t about sex, but about how babies and small children can be nudged to avoid electric sockets.

Here are some very rough prototypes.

The logic is that (almost) all humans are hard-wired to feel repulsion and avoid things like spiders, rats and snakes. 

We do not need to learn to fear and avoid them. On the other hand, electric sockets aren’t repulsive and we need to teach small children to avoid them.

By placing the pictures with naturally (evolutionary) repulsive things on dangerous novel things, it will / would be natural for children to avoid them.

This is an idea that needs to be tested, so this is not an advice!

I’m looking for some partners to test this idea in a scientifically proper manner. Volunteers please leave a comment.   

For more cool ideas and rules on nudging bydesign take a look at the 3 days workshop Nudge Design

Later edit:

An early adopter in France (Claudiu) sent this photo :)

Even Later edit:

Early evidence does not support the Hypothesis. Though this is a sample of one and the spider was more sketchy than vivid. Thank you  Claudiu for this photo :)

Further research is needed (at least to have a larger sample). 

Dear reader(s), DO NOT TRY THIS AT HOME!

In this post I proposed a hypothesis. Although the theory supports it, this is not an empirically proven fact. 

So, if you want to experiment with this, make sure that you are not using sockets connected to electricity.

If you are a researcher with access to a proper lab and you are willing to test this hypothesis, please get in touch with me :)