- [00:40] I am very pleased to introduce you to Dr. Henry Stott, cofounder of Dectech, a behavioral science consultancy in the UK.
- [02:43] Dr. Stott started Dectech about 20 years ago with his cofounder, Dr. Nick Chater. They have spent the last 20 years refining their view on how you harness those methods to more accurately predict how consumers and other people will behave in novel situations.
- [03:54] There are two classes of problems. The first class of problems is a precedent problem when you are trying to forecast the future.
- [04:46] The second class of problems is harder (and often more valuable) where there has never been anything like it before. These are the types of problems they have set out to understand.
- [06:06] Dr. Stott shares about the Deliveroo project. The question was whether they were going to launch a subscription product or not.
- [09:04] Pricing is not about price. The way you present everything before you get to the price matters more than the number.
- [10:34] Designing the proposition so it fits snuggly into what people want is the first objective. A lot of people fail to do that. They often have to drop the price because they haven’t added value.
- [12:06] A lot of the designs of features and propositions are driven by an excessive fixation with competitors and an excessive self-confidence of the management.
- [14:36] Looking to competitors when determining your pricing is a mistake.
- [16:58] At least half of the judgment is made up of the movement of prices within a store as opposed to contrasting across stores.
- [17:40] People are much more sensitive to the order of things than the size of the differences.
- [19:54] When you are able to feel like you are part of the process waiting can feel less painful.
- [22:51] Sometimes a time delay can be a good thing.
- [23:36] Dr. Stott shares about the Lloyd’s Bank case study and the customer journey optimization process.
- [24:31] They were looking to design a home insurance renewal process that worked best for the customers and the bank.
- [25:37] They also tested a “name your price” condition, but it ended up not being very popular (which is good to know because it would have been very expensive to set up and would have been a waste of time and money).
- [28:28] In experiments, Dectech runs as many as 20 variances. Sometimes they are all run together and other times they build on each other.
- [29:33] The best approach is to immerse customers in a decision-making environment that is as close as possible to the environment they would naturally encounter.
- [32:01] You can get quite close to replicating the kind of mindset people will be in using an online decision environment. These trials have to be run entirely virtually just because of the number of participants.
- [33:20] More and more commerce is taking place online, so virtual testing and formats like this will be increasingly relevant. The pandemic has accelerated this trend.
- [35:05] Small changes can have profound effects on the economics of your business.
- [36:29] Before you start testing, think of the best ideas and try to innovate.
- [38:34] Something novel or fun is often one of the best outcomes in the experiment.
- [40:43] I love all the work Dectech is doing, it’s really fascinating stuff, and you will be hearing about them again in an upcoming episode featuring Dr. Benny Cheung.
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