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Long-Term Profitability Requires a Focus More on Habit Than Loyalty. Exactly What Does This Mean?

One school of thought about consumer behavior is a that product’s or service’s performance is less about offering the best choice, but more about offering the easy choice. In short, retaining customers is less about adapting to customers’ needs, than it is about helping them avoid making another choice. This is  something called cumulative advantage. The very premise of is that customers don’t make calculated, rational, deliberative decisions about their buying choices. Instead,the brain decides less from analysis than it does from taking various pieces of “mental noise” and filling in any gaps with past experiences.

This means that the brain prefers habit to conscious consideration and suggests that consumers merely the decision that’s easiest. For instance, it dominates the shelf in the supermarket or, a consumer has bought that product before from the same place where it sits on the shelf. The caveat is this: that product must meet the consumer’s expectations each time. Expectations met, product purchased. The added benefit  is that each time a consumer buys that product, the habit becomes deeper and deeper becoming easier and easier for your brain to choose it.

To be clear, the underlying premise here is not that people don’t, under any circumstances, think and consider products. What this proposition does say is while that company’s competitive advantage may make a consumer purchase the product, it’s the company’s ability to “habitualize” the purchase, that translates into long-term, consistent sales and brand loyalty.

The Four Cumulative Advantage Imperatives.

1. Become Popular Early - This is not a revolutionary proposition. A company should take advantage of the “experience curve” in which a company becomes increasingly better at cost management and efficiency. One commentator recommended aggressive pricing, or even offering the product for free, in the early arc of the experience curve. Winning share early on means a lot because it helps a consumer form the habit of buying the product from the beginning.Many internet businesses seem to choose the “free product” method to work on establishing habit.

One of the best examples of this Proctor & Gamble’s (P&G) laundry detergent Tide. P&G made sure that any washing machine sales included a free box of Tide. In doing so, it was focusing on winning the popularity contest.

2. Design for Habit - The best outcome is when choosing your product becomes an automatic response of the consumer. For example, Facebook’s consistent, habit-forming platform design really epitomizes this concept.. Just think of people checking their Facebook feeds and pages on a consistent, daily basis. Switching to anything else would almost seem akin to breaking an unbreakable habit.

Further, psychologically speaking, a business should keep those elements of their design and product that are easily recognizable to the eye: think the familiar “Tide” logo and bullseye, for instance.

Design changes should reinforce habits leading to repurchase.  The “Amazon Dash Button” allows a consumer to quickly reorder products that they often use developing an almost unthinking, one-click mechanism to engage in a habitual, easily duplicatable purchase.

3. Innovate Inside the Brand - Companies must naturally innovate, change, and upgrade. However, companies must make such changes within the brand. In concept, a company should implement these changes in a way that allows any upgraded edition to maintain the already-achieved habit.

As a great example, the people at P&G incorporated bleach into the detergent and called it “Tide Plus Bleach.” Note that the people at P&G made this “Tide with built-in bleach,” not a new product. This is a classic example of innovating inside the brand keeping the habit of buying the “Tide” brand but with an added bonus. It was “Tide” plus something, which could still take advantage of the old habit of buying Tide.

4. Keep Communication Simple - The best way to illustrate this point is by way of example. As a conceptual matter, it is best to focus on simple as opposed to “clever” or aesthetically-pleasing. Samsung’s Galaxy S5 advertising campaign was a case in point. One ad showed that the S5, while looking like its predecessors, was water-resistant; protected against a child sending an embarrassing message; and allowed easy change of the battery.

Consistent with what we noted above about the less than stellar ability of the mind to sort out and reason, because people did not sit by and actually ponder ad, studies showed that consumers actually associating the S5 with being a phone susceptible to being water-logged and having battery problems.

Design

for

Habit


So, what did we learn here? People make decisions that are easy and familiar. They don’t want to have to think too much about their buying decisions. It seems they want to make the decision once and never have to think about it again, and, as long as the product meets their expectations, that is exactly what they will do. The modern world of lighting-fast communications has made first impression and forming habits, all the more important. Generally speaking, this article suggests that the key is to work to have consumers form a habit of buying your product or service, whether through aggressive pricing, giving the item away, or associating it with another product (as P&G did with Tide and the sale of washing machine). The premise here is that the brain relies less on well-reasoned decisions than it does on convenience. Is this truly a theorem of consumer behavior without contradiction or rebuttal? Probably not. Yet, there is something compelling about creating a habit in people and making the choice to buy your good or service more a function of habit than a conscious, thought out decision. People seem to like what’s familiar and functional. Once they find something that satisfies those two factors, solid and expanding sales seem to be what’s in store. Truly, old habits do die hard.

Yosuf Gurung