Founder & CEO Beyond Philosophy
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Our competition is beating us, but we're better

25th Nov 2021
Founder & CEO Beyond Philosophy
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One of our podcast listeners, Jeanne-Claude, wrote about a problem he was having for a recent episode. I am writing about it here today because it is likely a problem some of you share. Jeanne-Claude's problem is that his company offers a complicated product, and despite their offering being better than the competition, the competition is winning.  

I can relate. When I worked in corporate life, we sold large communication systems, which were also complicated. Determining how to communicate the details of our advantages to customers was challenging. 

From a behavioral science perspective, several theories could potentially help understand this problem. For starters, we should know that it doesn't matter who is better; what matters is who is perceived to be better. 

How Are Customers Evaluating Their Options?

When evaluating options, we don't always focus on what's most important. Instead, we use what's easiest to consider. In Behavioral Science, this thinking is called the Evaluability Hypothesis. For example, Jeanne-Claude's perspective analyzes the competitor's offerings objectively regarding the essential attributes. However, his customers might choose based on something easier to compare. 

When something is difficult to evaluate, we find an easier way to decide. For example, choosing a university is a complicated decision for many students. So, they choose based on the dorm rooms instead of comparing the university's academic record, whether they will make friends or have good relationships with professors. Sometimes, universities invest in Lazy Rivers, which are slow-moving waterways that you can float down in an innertube. Believe it or not, that silly water-park feature can make or break an incoming freshman's decision to attend. 

So, it is essential to make sure that you are better than the competition on objective things and easy-to-evaluate items. Alternatively, find ways to make the important stuff more accessible for your customers to evaluate so that they will value it more.

My wife Lorraine and I were looking at travel insurance. It is a complicated purchase, so we looked at a magazine called Which?. They had compared travel insurance companies across five attributes and then gave each of them a score. So, for example, Which? gave one company a 72 and another an 85, both out of 100. So it was easy to pick which one was best using this score. 

The Evaluability Hypothesis also explains why customer reviews are critical. Many things we evaluate are complicated and vary on many dimensions, so it's challenging to figure out what to do with them. However, if we see that one-out-of-five stars score from other customers, we know what to do. So, customer reviews have outsized importance for us when we are making our evaluations. 

My Loss of Power

I live half my life in Sarasota, in Florida, where there are lots of thunderstorms, resulting in power failures. So, I decided to buy an uninterruptible power supply. However, I know nothing about uninterruptible power supplies. So, I compared them by how long they would last after the lights went out. Now, many of the "other" stats were probably pretty important, but this was one that I could understand, so it was my metric for comparison. Therefore, it would be best to remember that the specifications of products are essential, but they might not be necessary to the customer. 

Of course, what is essential to the customer changes depending on the type of customer they are. So, for me, it is how long the uninterruptable power supply lasts. However, my son-in-law, who geeks out at technical things and is in a different customer segment than me, would likely choose based on amperage or something else. Therefore, it would be best to determine the most important thing to each of your customer segments. This issue is further complicated because you often have to discover what that is rather than trust what customers tell you.   

For example, in my global Customer Experience consultancy, we did some work with a health care equipment supplier. They sold complicated systems to hospitals. They segmented their customers into three groups: Decision makers, project managers, and users. Each had a different role in the hospital, which affected what was important to them. Decision-makers cared about budget and efficiency. Project Managers cared about software compatibility and networking. The Users wanted something simple to use that made their jobs easier. 

Therefore, if you're selling a complicated product, you should define what drives value. First, however, you will probably need to look under the hood of what customers say is important and find out what is. Our Emotional Signature® research [TL1] determines the difference between what customers say and what their behavior shows is important. So guess which important thing you should promote? 

Overcoming the Curse of Knowledge

Employees have a bias that comes from the "curse of knowledge," which describes how it's challenging for you to put yourself in the position of somebody who doesn't know it once you know something. Industry experts know what should be essential and how to evaluate those attributes. Then, they assume their customers also care about and understand that stuff, but that is not always the case.

Many times, what is most important to customers is emotional. For example, I was buying a CRM (customer relationship management) system for the telecom company I worked for millions of dollars. With so much on the line, we used an extremely left-brain process:

We got people involved from across the business, from Legal to Procurement to IT. We had several vendors that responded to our request for proposal and presented.

We set up a decision matrix.

We added up the numbers to see who came out on top. 

A funny thing happened: No one liked the company that came out top. Our guts told us that the company that scored the highest on the decision matrix was not suitable. So, we chose the company that scored the second-highest on the decision matrix. Why? We chose them because we trusted them—an emotional metric we hadn't included in the matrix. 

It is essential that amongst the many things to get customers to choose them, organizations should appeal to the emotional criteria involved in the decision. People have to trust that you will do what you say you will do or that the product will do what you say if they choose you. In my case with the CRM, emotions were interwoven in that decision because it would have been my job on the line if we chose the wrong one.  

Some attributes of a product or experience are going to be very easy to define and measure. Some will be very difficult too, but that doesn't make the difficult ones necessarily unimportant. For example, the soft skills interactions with companies can be critical to a successful project, but it is hard to assess that beforehand. So, instead, you get an intuitive feel for it. Another consideration for Jeanne-Claude should be that they are winning on objective things but sending subtle negative signals in the selling process.  

How Are You Framing Your Offer?

Framing is another way that psychology could affect the outcome. There is information, and then there's the communication and reception of information. Framing describes how you can communicate the same things and get different reactions from people. For example, if your doctor recommended surgery and told you that it had a 90 percent survival rate, you would likely perceive that one way. However, if your doctors said it had a 10 percent mortality rate, you would probably have a different feeling about it. 

The way we frame information emphasizes different aspects of it, which changes people's reactions to it. So, if your product is objectively better and still failing in the marketplace, it may be a communications issue. Maybe you are framing the information improperly, communicating to your customers in a way that is not doing you any favors. But, on the other hand, perhaps your framing is not emphasizing what is best about your offering.

In my example with buying the CRM system, it was about trust. The key driver for me was, did I trust them? So, as the salesperson, if you know trust is the key driver, you should find a way to frame your offer that conveys that you are trustworthy. Again, it goes back to what I said earlier: you need to understand the key things customers will use to decide.

How Do You Present Your Choices?

Another behavioral science concept could influence Jeanne-Claude's problem: Choice Architecture. Choice Architecture describes how you present options can make it easy or difficult for customers to choose. In Choice Architecture, like framing, you emphasize different pieces of information about your offer. For example, the drink machines that let you select a soda flavor through a touch screen are a great example of Choice Architecture. 

The choice menu simplifies the choices for customers. First, you choose from one set of options, which categorizes drinks by type. Then, you get another set of options within that type of drink that narrows down more options. After two or three screens, the machine has managed customers through millions of options down to only a few.  

If you've got a complicated sales process or a problematic option for people to understand, can you impose a Choice Architecture structure on that sales process? Sometimes, people are overwhelmed by choices when they have many options and not very strong opinions going into the decision. While they're evaluating things, they're also learning a lot, which can be too much. So, would it help to educate your customers a little bit before they start making evaluations and decisions? Also, are there ways to make the decision process easier? Can you emphasize how your product is the best for something to make it easier for your customers to choose you?

So, How Do You Beat The Competition?

Behavioral Science explains why customer behavior is what it is. In Jeanne-Claude's case, it could be that they are framing the offer poorly, or they aren't making it easy for customers to choose with their Choice Architecture. It might be that they don't have a handle on emphasizing what is easier to evaluate. 

Never underestimate how easy it is to intimidate customers. It all comes back to understanding customers and what is important to them. You can have the perfect product for them, but you could miss out if you don't know what they consider perfection. Moreover, it is essential to understand that it doesn't matter who is better; it matters who your customers perceive is better. 

People have a lot going on in their lives. There may be excellent reasons why they don’t know your product is better than the competition’s. So, make it easy. Point them in the right direction. Frame your offer the right way by showing them why you are best and present those options in a way they can’t help but go with you. That’s how you beat the competition, Jeanne-Claude, and I hope anyone else who is having this problem out there. 

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