00:00 I've spoken to a lot of people of otherwise unimpeachable moral character who admit that if they try to scan something three or four times and it just won't scan, they nick it. Okay? I have done that myself once. What makes people buy? I always say if you look at the things you own, ask yourself a question. If it broke, would I buy another?

00:26 And you know, generally speaking, it's, you know, air fryer, yes, you know, yogurt maker, no. Apparently one great thing is whenever you go there, even if you don't want them, ask for a knife and fork instead of chopsticks, it really sets them off. Okay. That just drives them practically insane. I always invert the question. To be honest, about a third of the time, this is my secret trick, which is just take the question.

00:52 and ask it the opposite way around. I realised after I'd done this a couple of times that it was probably insensitive. I used to sit on the plane, sitting with this bloody great screen, I used to watch Air Crash Investigation! And they asked him what his secret it was.

01:06 I said it's very simple. I do something that no other car salesman does. As soon as someone comes in who is vaguely interested in some sort of car, I ask a completely different question. Everybody else asks effectively, how do I sell this person a car? How do I make sure they don't walk out without buying a car? I optimize for something completely different. The question I ask myself is...

01:37 Today we're joined by not only one of the greatest minds in marketing, not only one of the greatest minds in business, but also one of the greatest minds in human psychology. So if you're looking to really get under the hood of what makes us tick, this is the episode for you. Jack, what did you learn?

01:54 To be joined by the one and only Rory Sutherland was an absolute hit today. He is brilliant with anything he touches. We learnt so much about psychology, human biases and the way that people buy. If you are a budding marketeer or you're just looking for the edge when it comes to being better, you're gonna love this one.

02:17 Rory Sutherland, thank you so much for joining us today. We've been so excited for this for so, so long. We've sat down with many people on this podcast and we've mentioned your name and

02:28 We've seen their faces light up. I think they're slightly overexcited, be honest. But there we go. I'm very happy for the acclaim and I hope I can deliver. I'm sure you will. sure you will. I've listened to you on many podcasts and I've taken you've been a secret mentor in terms of your marketing, your strategy, and I've taken that and I've solved problems in the business world. I want to hit you with a big open question and see

02:56 where you take it and where we end up. What makes people buy? Very, very interesting question. don't know. But what I do know is it's worth testing lots of different ways in which people might buy because economics is fundamentally... I don't know what the right answer is.

03:22 But I know that the standard assumption which pervades most business thinking is fundamentally wrong. In that it assumes that people conceive the need for something and then set out to satisfy that need at the lowest possible price that will match their utility function or whatever economists would call it. And sometimes that happens, by the way, but most of the time I don't think it works like that at all.

03:49 And we had a very interesting discussion, funnily enough, last two days. You've to be quite old to remember this, but if you went to London in 1980s, the 1990s actually, early 90s, before there was Right Move.

04:03 The city was a forest of for sale signs because every single property that was for sale, the estate agent, typically or real estate agent or realtor for the American listeners, used to put a bloody great stake in the garden with a huge sign with the name of the real estate agent and the words for sale or sometimes for rent. Never happens anymore. And the reason is that people assume it's unnecessary because they assume that anybody who's in the market for a house

04:32 is already on right move or possibly prime location. They're already searching for a property. And the only question I asked is, particularly, there's a massive fashion towards dematerialization. If you can avoid a physical thing in your business, like sending human beings around to stick stakes in the ground, that's the first thing that gets cut. And my question is,

04:56 If we're right in our assumption, and some of the time we are, that people go, it's time for us to move house. We've had the children. This place is too small for us. We need to upsize or we need to downsize. So let us go to Rightmove and we'll buy a house. Then getting rid of those for-sale signs, which were bloody ugly, by the way. But nonetheless, it makes business sense. No need for those anymore because everybody in the market for a property is basically already looking in the area they want on Rightmove.

05:25 Now here's my problem. I think it often doesn't work like that at all. I think genuinely there were loads and loads of, the majority of people who buy a house, particularly in London, only move a few miles, if that. I think there are a huge number of people who are wandering around. They see a house they've always liked and they see a for sale sign and they go, well wasn't thinking of moving house, but now I know that place is for sale, I might have a look. And so we're assuming this absolutely kind of

05:54 homogeneous journey where everybody travels from conceiving the need to purchase in this kind of military formation in a completely consistent way. And I genuinely don't think people buy that. Some people do. Okay. There are people still who do what was the standard shopping practice when I was a small child, which is you write a shopping list and you go to the supermarket. You effectively check everything off your list.

06:24 And the reason the shopping list started was partly because when I was a very, very small child, our local shop was still not a supermarket. went to, this is hard to believe, you went to a counter. It was a bit like Argos, basically. Okay. You went to a counter and you said, packet of cornflakes, please. And the man went round the back and fetched you a packet of cornflakes. And then you probably know the two Ronnies fork handles. Shop still in the late sixties.

06:53 were quite often like that. So you wrote a shopping list, you relayed the shopping list. There was no opportunity for an impulse buy really. You simply had to stipulate to your chap what it was you wanted. Now, there are people who still shop like that, absolutely. But there are also people, I'm you're sure, who wander around the shop. Basically, they walk into Marks and Spence's Simply Food or whatever. They have absolutely no clue.

07:17 what they want other than the fact that the fridge is empty, okay? And they basically go in and they use what's on the shelf to determine what they buy. And in fact, the extraordinary amount of, obviously people who've done research into this, extraordinary amount of decision-making takes place at the shelf in the store. Now my point is that actually, of course, it's both.

07:41 There are people who plan, there are people who have specific needs, there are also additional opportunities where putting a for sale sign on your house, I am sure increases the odds of selling that house by a not insignificant factor, okay? I don't know whether it's 100 % or 50%, but I would argue that it's not a waste of time to put a for sale sign outside a house because it gives people another opportunity, it creates a market rather than serves a market.

08:12 And this is what worries me about the whole business of marketing and online and digital and sales and optimization and performance marketing is it seems to me fundamentally focused around the idea that demand is finite and pre-existing, the market is already defined, it is our job to serve that existing market as efficiently as possible.

08:33 And at its worst, I think it turns to a kind of absurdity in digital marketing, which is we're not going to define our customer base as those people with whom we can have a profitable interaction and a lifetime relationship over time. We're going to define our target audience merely as those people who are prepared to interact with us in low-cost channels. And that seems to me, it is no surprise that brands that adopt that approach don't grow.

09:02 This is just a point about the obsession with reducing transaction costs in business strikes me as fundamentally misdirected in that most big brands grow because they sell to a lot of people and those people buy them quite frequently. So it's a mixture of repeat purchase and size of overall market.

09:26 And what we're doing is we're basically saying, let's try and force everybody to transact with us in the lowest cost channel.

09:39 And that strikes me as fundamentally wrong. You should actually say we will use whatever media are necessary to acquire and keep a customer. And some of them will be more expensive than others. But that's a product of reality. That's just how the real world works. There are people who will respond to direct mail and there are people who will respond to email. And yes, okay, the people who respond to email may be slightly cheaper to reach.

10:08 that it is not fair to conflate customer value with cheapness of acquisition. And I'll tell you a wonderful story which illustrates this. A very, very wise person who runs a very successful online travel business. We were sitting in a meeting and the chief executive and founder was just sitting at the end and somebody said, use the phrase, the need to maximize online conversion from the website. And the guy just said very shrewdly, he said,

10:36 Hold on on this basis," he said. said, the typical visitor to our website converts at about 0.8%.

10:49 The typical person, now he acknowledged the fact we're not comparing like with like here, okay. The typical person who phones us up converts at 35%. Now he said, I appreciate the fact that people who phone us up are warmer prospects than people who visit the site. Nevertheless, he said, do you really want to hide the phone number?

11:10 on the site to minimize the cost of the call center because as you could roughly put it, you know, I'd rather have 90 % of a lot than 100 % of not very much. What you're doing is you're effectively privileging low cost to serve over ultimate value. Now, when would you do something so silly? Well, the answer is you do it if you had very short time horizons.

11:40 If you're obsessed about the next quarter, okay, and if you basically were trying to impress the shareholders largely through cost cutting, that's exactly the mistake you'd make. I'm not generally very vociferous, but I did write quite extensively against the business of closing railway ticket offices.

12:03 And I also have written fairly extensively against this practice of supermarkets of more or less trying to force their customers to self-checkout. Self-checkout, by the way, really important point about technology here. Generally, technology arrives as an option.

12:20 think of parking apps. When they first arrived, you're like, thanks. I don't have to find seven pound coins to park at Oaks station. And I don't have to walk 300 yards to that stupid ticket machine and then walk all the way back to my car. And he's like, oh, that's brilliant. If I get drunk and take a taxi home, I can actually buy Saturday morning parking from my bed rather than having to get my wife drive me into Seven Oaks before I get a parking ticket in the car park. All of those aspects of parking apps were totally well-

12:50 Welcome.

12:51 The only problem that then happens is what starts as an option ends up as an obligation because someone spots the fact that it's cheaper to make people pay on the app than it is to maintain pay and display machines or to have a human selling you a ticket. And the next thing you know is they've kind of imposed parking apps in basement car parks where you can't get a mobile signal to save your life. And the whole thing then becomes absolutely an absurd imposition.

13:21 where it started off as a really welcome alternative and it ends up as basically a trap. It's a cage.

13:31 And I think that's happened with things like self-checkouts at supermarkets. I know I'm talking slightly nerdishly about this, but no, no, it's great idea, right? I'm in a hurry, there's a bit of a queue, I know exactly what I want, I know how the self-checkout works, or I know which railway ticket I want, I go straight to the machine, don't have to join the queue. I can pretty much buy a return from Seven Oaks, a day return from Seven Oaks to London, blindfold, using one of those machines, okay? Not a problem.

13:58 But then there are all the occasions where you don't know what you want. And my argument is, okay, let's look at those sort of self-checkout tills. One, what happens with technology is that consultants come in with technology companies and they basically talk a very, very good game because it's a very plausible narrative about cost saving. Look at all the resources you will save if you get people to do this this way rather than the other way.

14:27 Now.

14:28 Technology is such a kind of beguiling, tempting thing that whereas people normally do a cost benefit analysis, when you've got a technological solution, somehow people are tricked into just doing a benefit analysis. Look at all the money we'll save because it's automation and we all know that automation is good and nothing ever bad happened because of technology, so we'll implement this technological solution. And then you notice that what's happened, okay, in supermarkets is one, you can't really do a family weekly shop if you're self-checked.

14:58 checking out, can you? Because A, you've got to have a kind of weighing scales that's like eight feet by three, okay? B, it takes an unbelievably long time, right? you got, hold on, I came here to shop, I didn't come here for a job. You've outsourced your cashier's job to me. I don't mind scanning 15 items, Scanning 47.

15:21 No, I do it with my phone. I'm quite geeky that way. That's not so much of a problem. But scanning 47 items at one of those, you know, self-checkout till it's impossible. Third problem, it's led to a massive kind of epidemic of shoplifting where apparently some grocery retailers are selling more carrots than they're buying. And the reason for this miracle isn't Jesus, okay? It's actually that people are checking out, say, kiwi fruit or plums and pretending they're carrots.

15:51 for the purpose of the weighing machine. And people will cheat from a machine much more readily than they will from a human, much easier to do. And let's be honest, there's, if we're being frank about it, there's plausible deniability. Yeah. Okay? If you're caught not scanning something, you go, oh, I'm sure I scanned that, okay?

16:10 There's completely plausible. Now, you wouldn't want to get caught six times in a row because at that point people would go, look mate, I think you're off the self-scanning machines now. But there's quite a lot of plausible deniability. OK, I'll confess this. I've spoken to a lot of people of otherwise unimpeachable moral character who admit that if they try to scan something three or four times and it just won't scan,

16:38 they nick it. Okay? I have done that myself once.

16:44 Now bear in mind this was after I wiped down the glass screen. I tried every possible thing I could to scan this thing. There was no one available to help. There was no other means of actually keying it in. I go, look, OK, I've done a lot of work for you. And just to be clear, it wasn't caviar. It was something unbelievably tedious, like carrots or something like that. And it was sort of 75p. And I kind of went, I've done enough work here to earn my 75p.

17:14 I've done it myself once okay now you know I wouldn't know other circumstances would I think of heisting stuff from the shops okay but on that one occasion I kind of lost my rag and went okay you know if you're not going to meet me halfway and make it easy for me to pay I'm not going to pay at all mm-hmm so so what I'm saying is that there's this weird cult of short-term efficiency gains which I think in lots of areas of business

17:41 are deeply deleterious to what a real brand relationship and what the customer value exchange over time should really be. And there's a story I really love about this which comes from Drayton Byrd who's the great guru of direct marketing. His book Common Sense Direct Marketing.

17:59 For American listeners, he's kind of the British Lester Wonderman. He's still alive, he's in his 80s. He actually gave his last talk about direct marketing probably about a year and a half ago. Brilliant, brilliant man. He was my first boss and a huge influence on everything I believe and think and how I think and so on. And Drayton told the story, I think it's in his book, of America's most successful car salesman.

18:26 Presumably sometime in the 60s or 70s this particular title existed and it was just this guy who had an extraordinary record of car sales. And they asked him what his secret it was. I said it's very simple. I I do something that no other car salesman does. As soon as someone comes in who is vaguely interested in some sort of car, I ask a completely different question to everybody else.

18:53 Everybody else asks effectively, how do I sell this person a car? How do I make sure they don't walk out without buying a car? I optimize for something completely different. The question I ask myself is, what can I do now that makes it absolutely certain that they'll come to me when they need to buy their next car? Wow. Now, it occurred to me,

19:17 And this interests me a bit. It is, when you think about it, absolutely brilliant. Because I would argue that if there's one single metric that's a pretty good guide to a product, it's repeat purchase. I always say, if you look at the things you own, ask yourself a question. If it broke, would I buy another one?

19:35 Generally speaking, it's air fryer, yes, yogurt maker, no. You what mean? You go through your stuff and you ask that question, if this thing broke, would I just go straight out and go, I need to buy another one? And repeat purchase is kind of, think, the best indicator for an enduring business.

19:55 And this guy basically understood this completely and he said, okay, my success is not selling them a car immediately. It's that when they think of buying a car the next time, they don't think of coming to anybody else. They basically, the first port of call is, I want to buy a car from Bob. Now I wonder what car I should buy. Now it occurred to me that when that person adopted that policy, for the next three years,

20:22 they were probably a slightly unsuccessful car salesman because they were actually willing to sacrifice short-term transactional gains for long-term loyalty.

20:35 And there's something there which is really, really interesting, which is if you go on YouTube, I'm a big fan of Jay Leno's Garage, because obviously he's a brilliant presenter, he's Jay Leno, I'm a big fan, but it's an act of extraordinary philanthropy in a way that you develop a hundred million dollar car collection, but then you spend your time sharing it with the wider populace, you know, it's great. You know, what a great thing to do, seriously. You know, I mean, if you think of the net happiness created by that, it's really fabulous.

21:04 And he tells, there's a wonderful episode which is called Why I Don't Own a Ferrari by Jay Leno. So his whole collection contains no Ferraris, I think. And he won't buy them because he says, I won't put up with all the bullshit you have to go through to buy one, which is kind of, they'll only sell you one of the rarer ones if you've already bought sort of six run of the mill Ferraris. There is a run of the mill Ferrari, but you get what I mean. In other words, it's a bit like those very high end French handbags where you have to go in and splurge a load of money on

21:34 random, non-resellable stuff before they're prepared to actually let you into the inner sanctum where you can buy the crocodile Kelly bag which theoretically you could resell on eBay for whatever it is. And he said, I don't want to play those games. I just don't like it. I don't want to play those games. And he contrasts this with his experience of buying, I think it was the McLaren F1, but I might have got this wrong. It might have been another McLaren. And his experience was that he contacts McLaren.

22:04 And he says, I'm thinking of buying this thing. That's fine. They're obviously very helpful. And you would kind of expect that. Yeah, we're all right. And he says, I was thinking, by the way, of getting the ceramic disc brakes. I think I've got this right. Brake discs, sorry. I was thinking of getting the ceramic brake discs.

22:25 And said, the guy said to him, I this is Mr. are you planning to track race this car, to track this car, or are you mostly going to be driving it on the road? And he said, look, to be honest, I'd probably take it out of the track once, but most of the time I'll be driving around Los Angeles stuck in traffic. And the guy just said, well, Mr. Leno, let me save you $25,000 straight off, straight off the bat.

22:48 don't get the ceramic things because actually they take ages to warm up. They're actually a bit of a nightmare in everyday traffic. You you'll end up bumping into the car in front because they haven't warmed up adequately. Just go with the standard brakes. And what's interesting is from that moment on, basically the relationship was different because this person is not trying to maximize their commission in the short term. They're trying to maximize the value of the relationship over time by establishing trust.

23:17 Talking to Dan Ariely, you probably know of him, the author of Predictably Irrational, very good book, behavioral economist at Duke. And he came in and as an extraordinary thing, a couple of weeks ago, he offered effectively to work as an intern in our behavioral science department for a week. Genuinely, probably the world's most overqualified intern, okay. There's a house near me in Seven Oaks where...

23:44 The owner, a man called Spotty's Wood, it was something like the third house in Britain to be wired for electricity. And he got Michael Faraday to supervise the wiring. So this was equivalent to that. You get the person who's practically invented everything to do with electricity, and he's actually supervising the wiring of the house. I always thought that was a fantastically overqualified case.

24:13 But anyway, he comes and works for me. And one of the most interesting things he says and reminds us of repeatedly is, what the consumer often needs is a reliable sign that you're on their side. Because the relationship between buyer and seller can be a negative sum or zero sum relationship, right?

24:33 What makes it honest and rewarding is actually signs that you are investing in the relationship, not in the immediate value of the immediate transaction. So everything that suggests that a business is in it for the long term, upfront investment in things, all kinds of things like that, tends to create an atmosphere of trust. In the same way that if you like, we probably trust a kebab shop more than we trust a kebab van.

25:02 Because the kebab shop has had to open a shop, install the thing that goes round and round, okay? They've got to put the signage up, they've got to print the leaflets. And if their kebabs turn out to be crap, they're dependent on repeat customs from the local market to actually survive. So it's in their interests to serve every customer as though they have the potential to be a repeat customer. Whereas if you're a kebab van at a festival,

25:25 Okay, you have no prospect of repeat business unless you wait for two years and rely on people to be spectacularly loyal for some reason. Okay. So we can't trust the kebab van to the extent we trust the kebab shop because the kebab shop is invested in its markets and the kebab van isn't. And so similarly, what Dan Ariely was saying is that

25:51 activities from salesmen which seem short-term self-defeating.

25:58 doing more than you have to do, recommending you don't get the ceramic break disks, that kind of thing. Actually, in the long term, make a huge amount of sense, because it changes the nature of the exchange between the salesperson and the consumer into one of what you might call mutual value creation over time, rather than a combative one-off battle of winner takes most.

26:26 I think that's just really interesting because I think humans instinctively understand this. Weirdly, economists don't seem to understand it at all because economists assume complete trust for all their models.

26:38 And that strikes me as about the most stupid and unhelpful thing you can do because the whole point about human evolution, really, of the brain, probably a huge chunk of our revolved experience is when to trust, when not to trust. So the idea that you can create an economic model where you basically set distrust to zero.

26:58 and assume it away is a pretty good starting point for completely misunderstanding most of human action and exchange. So if there is that relationship with reluctance to change, human beings are maybe wired to think the worst of salespeople, marketers perhaps.

27:17 How do disruptor brands and disruptor services and products work? If we're already wired, I don't want to change. one weird thing about how we're wired, and this actually was a conversation between David Ogilvie, who obviously was the sort of founder of Ogilvie and Maither and then what's now called Ogilvie. He had a conversation with a guy, I met David Ogilvie once and I met this other guy, a guy called Joel Raffelson.

27:41 several times. He was the kind of creative director of Ogilvy in Chicago and was in my opinion an extraordinary, just one of those, he was from the bad men era and he was just an extraordinary guy in every respect. mean you know, and he had a conversation with David Ogilvy sometime I think in the 1960s which I think is one of those interesting conversations.

28:02 He said, you know David, said, think consumers buy brands not because they think they're better, but because they're more certain that they're good. And I think one of the things that's misunderstood in advertising is that,

28:22 An awful lot of instinctive consumer behavior is what's sometimes called minimax. You could call it variance reduction. You could call it loss aversion. It's irrational to call it loss aversion, by the way, because it's not a bias. OK. It's basically asking the question, what's the worst that can happen? And I will choose the route, not the route that's on average best, but the route that has the least worst case scenario coming out of it.

28:48 and particularly the least chance of extinction or disaster. And I would argue that completely rationally and sensibly, people pay a premium for let's say a Samsung TV or a McDonald's meal, not because they think it's better in the conventional sense of value per pound, but in the completely I think correct prediction or reliable prediction that a Samsung TV is much less likely to be terrible.

29:16 than one of those weird TVs on Amazon that looks like a row of scrap, the brand name looks like Scrabble Ties, right? Okay, now those may be great value for money. You might buy one and find it's a fantastic TV and you saved $150, but we will pay a premium.

29:32 for what you might call the avoidance of catastrophe because in evolutionary terms avoiding catastrophe is more important than seeking perfection. Probably true in marriage as well but we never say that. We never say I chose my wife particularly because I love the fact that she's not totally bonkers. You have to pretend that your decisions are optimizing decisions.

29:59 But by the way, I'm not making this an unromantic point, I've been married for 36 years, but there is a perfectly sensible point to marriage, which is that one important characteristic of a life partner should be they're unlikely to set fire to your clothes. Right? Okay. And we obviously never mention that because we've always got to accentuate the positive and pretend the absence of negatives is not really a factor. And so I think a lot of the time people talk nonsense about why they do the things they do.

30:28 And I think, you know, as I said, McDonald's is, I've often said McDonald's is the most successful restaurant in the world, not because it's really, really good, but because it's incredibly good at not being bad. And we had this discussion just at lunch just now, which is, and I love what I call kind of anthropological detective work, which is what explains the popularity of Nando's, you the extraordinary success of Nando's. And one part of it probably is,

30:57 If you think about it, there's very little there to dislike. And if you're a party of six, basically everybody's happy, aren't they? So the spicy people can have something spicy, the bland people can have something bland. There's a fabulous practice, if you've heard this practice at Nando's, where people who take girls out for a date ask the person to make them a mild chicken, but to put the flag in for the super spicy chicken. It's really funny because

31:26 Now, I may be getting this wrong. I'm the last person to put myself forward as an expert in dating psychology. But there is that very peculiar male belief that women will be really attracted to men by their ability. So that is undoubtedly men admire other men for their ability to eat spicy food, don't they? But the assumption of this translates to the opposite sex, which is, I didn't really like you much, but when you order them to eat you far, oh, that was it. You've pulled.

31:56 Maybe that happens. don't know. It seems particularly implausible. I don't know. It was his ability to handle a chicken vindaloo. That's what I knew he was the one. Oh, he's a keeper. But I found this sort of psychology of let's... Because there's always a rational explanation, which is kind of half true. it's good value for money. You know, people like chicken, all of which is kind of true. Right.

32:24 But I always think getting to the bottom of it, what's the real, you know, if we could find out what that real magic formula is. And maybe part of it is that no group of people has a Nando's hater in it. So the absence, one of the most important things I think in dealing with anything, when you look at any sales problem is we tend to go, how can we ladle on some positives? I'm a big believer in the Warren Buffett thing of always invert. You if you ask the same question backwards,

32:53 or the opposite question. Generally, actually, it's illuminating. And I always ask the question, I always invert the question. To be honest, about a third of the time, this is my secret trick, which is just take the question and ask it the opposite way around. So we're doing a brief about train travel and how we encourage people to use the train more.

33:16 And my approach is the natural sort of approach of marketers, salespeople is to list a lot of benefits for people using the train. And my approach is there's an opposite approach which we also need to follow, which is let's ask lots of questions about why people don't go by train. And generally, if you make a list of them, some of them will be completely sensible objections. I need a car at the other end. I've got a ton of luggage. There loads of good reasons not to take the train.

33:43 But some of the reasons will be stupid. One of the most common ones, it never occurred to me. There's literally a huge swathe of people. No, no, no. Because if you think about people who always go by car, they bought their car, cars are big sunk cost. They go by car everywhere. Genuinely, the rail would not even feature on their repertoire. And another really dumb reason why people don't go by train is nearly all train information and advertising.

34:12 I mean this, is on trains and in stations. So if you don't use the train, you never see any rail-based communications at all. You go to the station, there loads of ads going, hey, go buy a train. I'm already on a fucking train. You've got me. Go and do some door drops to people who never take the train. Because my father made this point. He said, you know, the people who work on the railways know everything about the railways.

34:40 That's one of the things you've got to do is as the salesman for anything, you've got to put yourself in the mindset. You've got to know everything about your product. But the second thing you've to do is put yourself in the mindset of someone who knows nothing about your product. And the thing that always happens with the travel is that the people who work for the railways love railways and they're slightly nerdy. With the best will in the world, I am.

35:01 I'll freely admit to this. And so they know a hell of lot about trains. And then they start to assume that everybody else knows it as well. Now, my father always made the point, said, he was in South Wales, he was not that far from Newport, which is his major mainline station, or he'd use Abergavenny. But he said, if you asked a random person on the street, where can you go to from Newport station? Most people would go London, okay? A few people would obviously say, well, I suppose in the opposite direction, it goes to Cardiff and Swansea. And then you go, where else?

35:31 and they'd probably just freeze. Now actually, if you actually do the research, I think you can get a Newcastle, can certainly get a Portsmouth, you can obviously get a Bristol, you can get a Cheltenham on the fascinating My Steg to Cheltenham line, world's most demographically varied railway. And you can get a tons of places, nobody knows. They genuinely haven't got a clue. And so quite often, when you invert and say, why aren't people doing this?

36:01 A very simple answer is it's never occurred to them and they don't know. And one of the things I think we've made a mistake about is we get very, very complicated about advertising. We use the brand positioning and it's about differentiation, it's about this. Hell of a lot of advertising just works because you're telling people shit they didn't know. I mean, one of the weirdest things that drives me nuts is the number of businesses now that develop something really useful.

36:31 OK? They've obviously spent quite a lot of money developing something, and they don't tell anybody about it. So how would both of you presumably use Wi-Fi calling, right? But you had to turn that on on your phone, right? Because you had to go, let's face it, most people don't get phone settings on their mobile. I who the hell goes to settings on their mobile phone, right? Nobody does. Now, how did you learn about Wi-Fi calling, just for interest? Did someone tell you about it?

36:58 I think, someone wanted to call me like that. This is a really interesting thing, because what happened is all the mobile networks basically introduced it. Nearly all handsets under what, six years old now, will offer it. But weirdly, by default, it's turned off, probably for legal reasons. I must say to one of our clients who's a mobile phone network, this

37:20 totally transformed my satisfaction with my service because ninety percent of the times I couldn't get signal were when I was indoors.

37:29 Okay? In a basement, whatever, in a metal frame building, okay? There was Wi-Fi, there just wasn't a mobile signal. So, okay, if I'm in the middle of a goddamn field, you know, in the north of Scotland, and I haven't got a signal, one, I don't get that angry, and two, I can go and walk 100 yards until I pick up a signal. That's a solvable problem. But being in a place where there's Wi-Fi and no signal indoors when it's raining is a total pain in the arse.

37:56 No, but they didn't tell anybody. If you've got the Marks and Spencers app, there's a whole self-scanning thing. Did you know this? On the M &S app, you can actually go around M &S, pick up one of those nice bags with the sort of Union Jack fruit on it, basically scan everything into your bag, hit the pay button, pay with Google Pay, walk out like a shoplifter. Bingo. Now, why develop that and not anybody?

38:20 And literally, I think there's this weird engineering mentality or this financial mentality that sees money spent on communication as a cost to be minimized, not as an opportunity to be maximized. And repeatedly, so I make this point because sometimes we always get, in advertising there's this slight problem because in order to justify existence, we've got to try and look quite clever. And sometimes you need to be really clever.

38:45 But sometimes it's really effing simple. It's just people don't know about this, tell them. And I'll give you a perfect example of this, which is if someone asked me my greatest life disappointments, this is ridiculous thing. But both my boss and I...

39:03 went when we had Phillips as a client. Phillips is an extraordinary organization because it's an absolutely brilliant company with a spectacular talent for shooting itself in the foot. In other words, it will invent something amazing and then totally fail to capitalize on it. It's like Death Wish coming here. But it is a very brilliant company. And years ago, I went out and I just said to them, look, very simple tip.

39:31 You've basically the only company that makes an air fryer. You're sitting on a gold mine here, right? Because the reason I know this is very simple. It's totally anecdotal, but then all data emerges, all new data emerges first in anecdotal form. Never listen to anybody who disses anecdotes, right? Serial killers get caught because of an anecdote. Brilliant scientific discoveries get made because of an anecdote. An anecdote is what happens when someone notices something. And nearly all progress happens because someone notices something.

40:01 It's true in detective work, it's true in scientific discoveries, it's true in marketing. The anecdote, Jeff Bezos famously says, when the anecdote disagrees with the data, I usually find it's the anecdote that's true. Okay? And actually, so we just said, look, I said, I appreciate this is anecdotal, but I bought an air fryer, I became a total evangelist, I thought it was a, have you got one? Yeah. Yeah, okay.

40:27 I bought one for my dad for his birthday. He was 83 at the time. He was massively cynical. And basically he turned into like the Y Valley's leading air fryer evangelist going around all his octogenarian friends going, you really need to buy an air fryer. And actually not long before he died, I was in the pub with my dad and we were just sitting there having a drink and an old gent came towards us, tapped my father on the shoulder and just said,

40:53 air fryer and gave a big thumbs up. Anyway, I just said to Philip, look, trust me, most products don't have this effect, right? First of all, most products people are on balance. I'm glad I bought this. This is a case where people that like go slightly weird about them. I mean, you know, not altogether healthy way, you know? Yeah. Okay. And we just said, you're sitting on a gold mine here. Just do some ants.

41:14 Just tell people what they are and people will buy them and what they'll do, maybe they won't buy one, they'll just ask, has anybody got an air fryer? At which point everybody with an air fryer on social media will go, oh, it changed my life. It was the second coming. It's fantastic, right? And there's just a load of things out there.

41:33 And maybe we make advertising so difficult because we've got to jump through all these hoops and do your competitor analysis. Actually, 50 % of advertising is just be famous. Okay? Make sure people have heard of you. It really is that simple. Because when you're famous, your customers find you. If you're not famous, you've got to find all your customers. Trust me, the first is a hell of a lot easier than the second.

42:01 And so I think it's really, really interesting, which is that there should be a kind of, in a sense, someone should start an ad agency called Diabolically Fucking Obvious, or DFO, right? And it should basically just go, this product is very good, nobody knows about it, we're gonna tell people about it in a nice way, end of. And I do, you know, because.

42:26 This is the way, it's a very strange business because you can be very, very clever, you can be very imaginative and every agency needs to be able to do that because some problems are really, really difficult and require extraordinary creativity. But I do wonder that what happens at the times when it's just easy? Are we actually, do we have a fear of the obvious?

42:48 that's too extreme. when you reverse, I always say that, reverse the question. Don't say why should people buy this. Say why aren't they buying it? And you'll come up with a list of reasons, some of which are very good reasons, so leave those people alone, they know what they're doing. And then some of the reasons are just dumb, like never heard of it, never occurred to me. I don't think the trains, what did someone say?

43:12 They had some deluded belief that like trains didn't stop in Bristol. I mean, you just total, you know, just total nonsense. Okay. And you realize, okay, well, what we'll do is we'll tackle the reason that the reasons against that are stupid and we'll leave the other ones alone. Yeah. We, um, we have a page on our website that says why you shouldn't work with us. And it's just getting there first. And we just kind of want to stand out. you spoke to me, it says, uh, really just couple of examples. Yeah.

43:42 expensive, we don't guarantee anything, what else is on there? You can probably do it yourself. Yeah, that's the main one. We tell people how you could just do it all yourself. So Robert Cialdini, funnily enough, added to his principle of persuasion the principle that an honest admission of a weakness is actually

44:06 in itself highly persuasive. Because the pretense of perfection, the human brain looks for trade-offs. The best thing you can do as a salesman is provide them with a trade-off which is manageable because it's better than focusing on the one trade-off you've provided. Stellar Artois are reassuringly expensive. We're number two so we try harder for Avis. It's better for them to actually focus on the trade-off you've provided, which is a single trade-off, than go around imagining trade-offs of their own.

44:36 Now, that's going to bring me to a really interesting topic, which is never covered in marketing textbooks, because logically, it's not a problem that should arise, but actually happens all the time. And a very rapid example of this happened when some guys in Berkeley who are American, sorry, Indian Americans,

45:03 used NASA based food preservation technology to make Michelin quality Indian food that you can seal in a sachet that has a shelf life of months. Okay. And you take it out, you heat it in a pot, you microwave it. And it's like something you get in a Michelin starred Indian restaurant. And I didn't believe them. And then they sent me some stuff through the post. And just arrives in the ordinary USPS airmail thing. And I

45:30 didn't just, because obviously I knew, so I tried it myself, I tested it on my wife as kind of blind tasting and she was equally astounded by the quality of this biryani. There was a khilim, a fantastic khilim akbari or something similar. was just astonishing, right? And I said weirdly, and I wouldn't have said this four years ago, or five years ago, but I increasingly realized because of this human mental trade-off assumption, I said,

46:00 Your actual marketing problem is really weird, I said, but it's not that uncommon. It's that it's too good to be true. And people genuinely are always assuming. I said, one solution is you just make it insanely expensive.

46:14 Yeah. Okay. Because then there's a mental, there's a trade off reassuringly expensive. Okay. And one of the Chaldini's kind of principles of salesmanship would be you're selling someone a photo. God, I'm showing my age of photocopy. Jesus. You're selling someone a horse and buggy. Yeah. Can I say photocopy? That was of course the great, you know, salesmanship thing. Then it moved into car phones. You know, there are always these really, really hot areas for salesmanship. I understand fantastically that hello,

46:44 fresh are actually selling door-to-door did you hear this no I see them a lot of like exhibitions and stuff like that but I didn't know they were doing you see that's really interesting there

46:54 Don't try and sell everything online by the cheapest means possible. Some people will only buy in slightly more expensive channels. That's just the price of acquiring a customer. You want to grow your business, just suck it up, mate. Stop trying to over-optimize things. should, at the cost of making, of forging new relationships, okay? That's a bit like someone going online to try and find a girlfriend when there's a supermodel who really fancies them living next door. You know what mean? This obsession with digital channels is completely

47:24 And anyway, sorry, but with Cialdini, one of the things you say if you're selling a photocopier is you basically say shortly before the point of sale, you go, look, it is expensive, but trust me, it's worth it. That the admission that, okay, it's not all roses is just fundamentally plausible. Follow, I think, Dan Ariely's point, which is give a sign that you're on their side, which might be an act of generosity that isn't expected.

47:53 You know, that might be the double-tree cookie when you check into a double-tree hotel. Hotels aren't obliged to give you a cookie. The very fact that the double-tree does this spontaneously, fundamentally primes you for reciprocation. Okay. But also establishes trust, which is this is obviously long-term relation. Basically, there's relational capitalism and there's transactional capitalism. Transactional capitalism seeks to maximize the short-term value of any transaction, regardless of the value of the relationship.

48:23 down the line, relational capitalism seeks to maximize the value of the relationship with the customer over time.

48:31 Economics doesn't understand the distinction between the two humans I think always asking the question is this transactional or is this relational and if you violate the norms Okay one of the most fascinating findings from customer satisfaction was that people who've had a problem with a product and yet the problem was very well resolved End up being more loyal to that brand than if the problem didn't occur the first place and economists get really angry about that

48:58 because they go, well, surely it's better to have a product without a problem than it is to have a product that had a problem, even if the problem was solved. And my argument is no, no, no, no, no, because when they called you with a problem, assuming you didn't charge them for solving the problem, your reserves of reciprocation, goodwill, and long-term investment in the relationship are being tested. And if you solve the problem, okay, then you have proved that

49:27 you are someone to be relied on because you're actually interested in keeping them as a customer. Rather than someone who, sorry your transactional value was six months ago, why don't you just piss off? Is this why people prefer a 4.7 review than a five star review on Amazon? There's some very interesting stuff about that, isn't there? Which is, mean, five star reviews may just mean they're very few reviews, of course, so you've got to be a wary. Uber drivers basically prefer a 4.9 or 4.8 to a five, partly because the person with a five might

49:57 be a brand new customer who doesn't know what they're doing who's given a five by default or it may be someone who has basically kicked off the platform who's signed up under a false you know under a fake name but what Uber would say is if you're a 4.9 okay you've taken 150 uber trips and you've been a little bit of an asshole once okay you know like you've been a bit late to show up or you know presume it you know doesn't mean you've vomited all over the car that would probably get you but

50:27 But actually, that's almost more reliable in a sense than someone who's taken five journeys and they've all been perfect. You're right. people are, think, astoundingly astute at a lot of this decision making. They spot things instinctively very, very cleverly. So on that too good to be true problem, that's a marketing problem. How on earth do we make this product great as it already is believable?

50:56 And Dan Ariely said various things. You can have a guy who's like a wizard, like Steve Jobs, who basically makes everybody believe that, normally magic isn't possible, but here am I, Steve, a wizard, and look what I've done. That's one way in which you can kind of just get people to believe the impossible. Then there are other interesting ways which might be you build in a downside, like you actually make the product more difficult to prepare.

51:23 Okay, you say you what you've got to do is actually you know Leave it on a south-facing wall for three days and then cook it. Okay, but there are various things I mean there are lot of things you could do but if you just go this is how great it is people will go well, where's the catch? Yeah, and men were always asking where's the catch and I mean actually Favours the of course if girls chat up guys

51:52 Right? Which isn't supposed to happen. It's too good to be true. Actually, you'd think blokes would go, oh, this is fantastic. And actually, they're going, this is weird, right? Basically, is someone trying to honey trap me? Is this like a blackmail attempt? What the hell's going on here? Too good to be true actually makes people actually a bit nervous. And you're probably right about all sorts of things, And actually, of course, with a rating of five on Amazon, well, those ratings can be massively gamed.

52:18 So having a few negatives. I have always wanted to have an Amazon selection of the world's most polarizing products. You know what mean? The thing is that basically it's either a five or a one. So things which you either, because I've always thought in TripAdvisor, that'd be great, like hotels which are just massively polarizing. And there's a really funny one which is hugely polarizing. It's a hotel in East Berlin.

52:44 And it used to be, I think, something like a police station or the headquarters of the Starz or something like that. And the rooms are basically what were former cells. the...

52:56 There's a platform in each room. So you sleep above the shower and above the wash basin because the rooms are so small. You actually sleep about three feet from the ceiling on this weird platform. Every room has a television in it. It's a black and white television. It only has one channel. I'm not making this up, okay? And it shows the big Lebowski on continuous loop. That's the problem. The problem I had is I went to sleep with the big Lebowski on. So my whole brain and my dreams were full of some really weird.

53:26 This is nob, this is bowling. There are rules, right? And, god love that film, it's fantastic. But in fairness, it has, this is very clever, it's a very clever thing, it has an absolutely brilliant coffee shop. In other words, the place in the middle serves one of the best flat whites I've ever had in my life. So it's one of those clever brands which goes, if you do one thing brilliantly, actually people are prepared to satisfy us with everything else.

53:52 And what's very funny about the reviews to that is obviously in and amongst the reviews, a lot of people have chosen it because they've heard about this unbelievably cool hotel in East Berlin, And there's a chunk of people who obviously turned up expecting the marathons, right? And those people are kind of apoplectic. We had a great experience. I was in Italy. We stayed in this really, really good value hotel. And there was a guy who was the guy who ran the bar.

54:18 that will make toasted sandwiches and bring you a beer and drinks and an ice cream next to the swimming pool in this very reasonably priced fantastic hotel in Rada in Chianti. Or was it Roda in Chianti? One of the two. And my wife and I looked at the reviews and they were again massively polarized. And what it was, this guy who we thought, because we're Brits, was absolutely hysterically funny and really charming, okay?

54:45 And because he had a very, very dry kind of sarky sense of humor. And what was hysterical about this is that half the reviews said, what a great guy, typically Brits, OK.

54:58 A lot of the Americans, not all of them, because don't ever say that Americans don't do irony or anything like that. Of course they can. Some Americans don't do irony. Among some of the American guests, this guy drove them practically insane. It's so incongruous to American service culture to be served with sarcasm. It's just, hey, this is going to be great. I love this thing, that kind of mock negativity.

55:28 was just completely baffling to them and therefore they interpreted it as rudeness. We're a family of Brits and we basically, you know, this guy was an honorary Brit with his sarky kind of back chat, right? But I'm always fascinated by things that really polarize people because really polarizing restaurants would be really interesting, wouldn't they? It's Marmite, you either love it or you hate it. That's another perfect example, by the way, acknowledging your weakness in an ad. Of course.

55:55 Do know Wonky's in Chinatown? There's a great article about that that's just come out, by the way, which tells the whole history of the thing. Oh, really? And that's my perfect example of the opposite of a good idea can be another good idea. Yeah. That usually the opposite of where the mainstream market is actually provides you with with an opportunity. Yeah. And that was brilliant. You're so rude that actually it becomes your distinguishing feature. I took that Wonky's is a restaurant in Chinatown and they throw you in the restaurant. make you just sit down.

56:25 and then when you order it they're so rude to you when you get in there and then they're like throwing the plates at you. I took some work friends once and I was like and everybody was going this is awful and I'm smiling like how amazing is this? It's like theatre. It's brilliant absolutely brilliant. Now obviously if you turned up expecting a standard restaurant okay you've got to know you this is where framing is so important. If you're just told in advance what to expect

56:49 It's one of the funniest experiences of your life, okay? If you generally turned up, as I said, expecting the Marriott, as it were. There's some brilliant stuff, by the way. Apparently one great thing is whenever you go there, even if you don't want them, ask for a knife and fork instead of chopsticks. It really sets them off, okay? That just drives them practically insane, and you'll be just completely insulted, you know? But I think there's a fantastic thing which is

57:17 Benchmarking, there's a brilliant writer, read this guy, whatever you do. As I said, there's Alex Hormozzi I really recommend for understanding, I think, the idea of the offer and offer framing better than anybody has done before.

57:32 You know, I think he's a really, really interesting writer. I think there's a great book on customer service, which is called Unreasonable Hospitality by guy called Will Gadara. And that's a great deal about this is give people what they weren't expecting. Doesn't have to be expensive, okay? But just what you might call discretionary effort or discretionary expense carries, it's the things you don't have to do.

58:00 that carry the bulk of the meaning about what you're really saying. So a lovely example of this is I was talking to the guy who founded AO Appliances Online. they deliver their own stuff, you know, because they've got their own delivery fleet. And they've got a box of little AO branded teddy bears in the back of each van. And if they're kids in the family, then they give the kids an AO branded teddy bear. And as he said, one, you know,

58:30 Don't ask me to do the ROI on that, for God's sake. Secondly, it's a good thing to do because nobody else can do it in a way because they don't deliver their own stuff, right? The fact that we deliver our own stuff allows us to do this. Here's something our competitors can't copy. Thirdly, you've got a free ad for your product in your house for the next eight years if the kid likes the bear. Nobody throws a bear away when they've got a young child. But also, because you don't have to do it,

59:00 Okay. It has this extraordinary meaning. It's the thing. I always joked about this. Okay. You don't want to be totally customer led because if you're customer led you kind of.

59:10 you lose the capacity to surprise if you're completely customer driven. And I always make this joke, OK, that 10 years ago, if you did research into British people and their attitude to their own barber, OK, not a single person would go, yeah, I really like my barber. I just wish they'd flick burning methylated spirits in my ears. I've always felt right. There was something missing when I got my hair cut. And why can't they just get a flammable substance and flick it into my ears? And it's that kind of thing with

59:40 with a Turkish barber the thing that you weren't expecting that's completely that's the thing you notice that's the thing you remember that's the thing which is kind of like wow this is special you know and I just find it really interesting because if you're optimizing for a narrow idea of value you'll just give people what they expect if you're optimizing for meaning memorability significance trust actually

01:00:04 Give people a few things they weren't expecting. And they can be a bit gratuitous, to be honest. They can be a bit childish and silly. And I think, you know, I mentioned the DoubleTree Cookie, which I think is a brilliant idea. There's a hotel in Los Angeles called the Magic Castle Hotel. And what's bizarre about it, it's nothing special about it or fancy, but it's always like number eight of the hotels in LA on TripAdvisor.

01:00:32 Now, just to be clear, apparently the staff are brilliant. So I'm not just suggesting they get away with it just on the basis of a gimmick. But...

01:00:41 What they undoubtedly do is they have this thing called the Popsicle Hotline. So when your kids are in the pool, they can pick up a red telephone. And if they pick up the red telephone and say, I want Popsicles, someone comes out and brings them a tray of ice lollies, and they can choose a free ice lolly. OK? Now, it's kind of gratuitous, but if you've got young kids. They love it.

01:01:03 For some utterly bizarre reason, I had this problem with my own kids, which is that there was something they really liked about Ryanair. And for about 10 years, until they fortunately grow out of it, they go, no, I don't want to go on British Airways business class. I want to go on Ryanair. But there was something that I can't remember what it was. was some gesture or maybe they'd given a coloring kit or something. I have no idea what it was.

01:01:28 But there's that really interesting stuff which is the thing that you weren't expecting. Actually a large amount of how we judge things is not what is the thing, but how did it compare to what I was expecting. I was recommended by the way, get on holiday to Wales. Because the one great thing about Wales is that

01:01:49 It is actually full of pleasant surprises. Have you been? I did Snowdon. Okay, there's North Wales. I just said the Wye Valley for own That's why I grew up, you see. Beautiful. Like you say, there was no expectation around it and it was actually like... And actually, you go into a restaurant, Wales, I went into the cafe in Cwmbran Station, which doesn't look anything special, and the guy there who's Turkish-Welsh...

01:02:13 is basically like the god of panini making. It was just an extraordinarily good panini coming from this tiny little station in Qumran. And it's those little pleasant surprises which I think are what make us really happy. I'm always interested in brands and service businesses which benchmark or even under benchmark on 10 conventional dimensions and then massively over index on one.

01:02:42 Have you ever stayed in a Moxie hotel? No. It's category of hotel which is called something like boutique. don't know what it Is premium? It's like premium economy. what the Moxie hotel chain is, they're generally in very good locations. So they're not in an industrial estate outskirts or whatever. So the one in Manchester is in really good location in Manchester. the one I've stayed in about three.

01:03:11 They're well located, that's the first thing. The rooms are really small. There's no room service. There's no laundry service. I think you can borrow an iron or there might be a laundry room. The rooms are pretty small. There's very good flat screen TV. There's good Wi-Fi. There's no cupboard. You just hang your clothes on the wall. Very, very basic room. And what totally sets it apart is the ground floor is basically coffee shop, restaurant, bar.

01:03:40 which runs 24 hours a day, you can come down at three o'clock in the morning and say I want a flat white. I just had an operation. I was in Lausanne and I had to have an eye operation. So I was heavily sedated and I actually wandered downstairs in my underpants at three in the morning under the influence of fentanyl or something and asked for a coffee, which my wife was absolutely mortified about. And also you check in.

01:04:04 Okay, and you turn up, you check in at the bar. There's not one of those weird check-in deaths. There's no weird concierge person, the function of which I've never fully understood, okay? Check in just at the bar, and they go, would you like our signature cocktail? And they give you a cocktail, which is usually fantastic. And...

01:04:21 The other, the great thing about that whole ground floor is imagine it, it's a bit weird. It's got like eight foot teddy bears and weird things dotted around the place. But the great thing is you can basically just hang out there all day. They'll bring you food, they'll bring you drinks, they'll bring you very, very good coffee. And actually, to be honest,

01:04:38 Yeah, after you've checked out, okay, normally after you've checked out of a hotel, you feel kind of homeless. After you've checked out of that place, they'd be totally chill for you to stay there for another five hours, using the loos. And if you imagine something like a cool, a weird version of a WeWork, the whole ground falls like that. And it's a brilliant thing because what you do, it's a great marketing trick, is you focus people on the one thing where you're amazing.

01:05:04 and then downplay everything else and what they remember is the amazing thing.

01:05:09 I talked to someone who ran a hotel in London which they said we haven't got room for a really good kitchen. And so our foods, it's okay, I'm wrong with our food, but we can't produce really exciting food. So here's what we do. We don't talk about the food. We don't raise any expectation about the food. Instead what we do is we have like London's best mixologist and we talk about the drink and we make amazing cocktails and they're incredible. And while people are focused on the cocktails, they order some chicken wings and the chicken wings are perfectly good. Nobody complains about them. I'm not saying you can get away with being crap.

01:05:39 You've got to hit the basic threshold across things. But you can play these really interesting games where you just do one thing amazingly and everything else is pretty basic. And actually, what's interesting about that, judging by the expansion, it's privately owned, Marriott. In fact, I think the president of Marriott is still Bill Marriott, actually, would you believe it? So Moxie's one of the many brands under that kind of Marriott aegis.

01:06:08 What's interesting is it seems to be really, really popular. It's expanding really fast. I wouldn't stay there for a week, right? Okay? know, the room's a bit small, et cetera. But if you want to stay in a hotel, in a good place, in a city, for one night, two nights, maybe three nights, okay, it absolutely hits the spot. Because it's really good at the one thing you care about and everything else is basic, but even at the same time, you get a reasonable price. I think the psychology of what you might call where you focus

01:06:38 as a business is really, really interesting. Is there a way a business can create some peculiar distinguishing feature like the Popsicle helpline?

01:06:52 In order to do so, think you've just got to be prepared to be bit silly. And you've also got to be prepared to ignore your finance director who will say, you know, it is not in our service level agreements to provide free ice cream or some bollocks like that. think it's very, I think there's something very interesting about basically building in salience to what you offer, focusing the attention in the right place, surprising them in the area where they're looking and then just satisfying everywhere else. You spoke about loss aversion and it felt like you were talking a little bit about like a

01:07:21 So what other biases when it comes to selling and marketing do we have to be aware of that we can lean into to help us sell more or we can try to combat when it comes to selling? Weirdly, what's so fascinating about this is that psychology clearly sometimes is a contradictory science. So if you look at Cialdini's principles of influence and persuasion, there's like social proof. Everybody's got one of these.

01:07:49 you know or everybody and then the scarcity which is not very many people have one of these. If you think about it two ways you can sell things. This is so good that very few people can have it and this is so good that everybody has it. I think if you look at brands by the way the French have been masters of the scarcity thing and the Americans have historically having a much bigger market. Coca-Cola is the absolute

01:08:18 masterpiece of the every it's great and everybody should be able to have it. you know. And historically the Americans were never very good at luxury brands because there's something fundamentally un-American. This is going back quite a long time. They've learned since obviously. But Americans, I suppose the opportunity to actually sell to another hundred million people.

01:08:39 It's worth noting that Cadillac in the 1930s was a brand on a par with Rolls Royce. It was a super, super premium brand. And what often happens, I think it happened with Cadillac, is they get tempted to offer a slightly cheaper Cadillac in order to achieve volume sales. And the French have always resisted that, where unsold handbags actually end up in landfill, you know, but to maintain the scarcity of the thing.

01:09:04 I mean, that's generalization, but there's a kind of French approach to branding, a little American approach, you know what mean? And that's in keeping with Shaldini's principles. so quite often, are, undoubtedly, only three left at this price works. I bought something this morning because it said only one left, okay? You know, I might have bought it anyway, but when I saw only one left, I had to buy it. That undoubtedly works, to extraordinary degree. Sometimes,

01:09:34 There's sunk cost bias, obviously. mean, there are an awful lot of... One of the reasons why it's going to be really difficult to unseat Apple, okay, is that people are so invested in the ecosystem. Okay, well, you could produce an Android phone which is better. Some people would even argue that the best Android phones are better.

01:09:55 But you've got your whole ecosystem of the earbuds, you've got the charging cables and everything else. That's a case of undoubtedly of some cost bias, which is, I mean, now in for a penny. A great one, which is sometimes called foot in the door syndrome, which is if you sell people a small thing, it's then easier to sell them a big thing. Actually, learned a brand that more or less understood all of these principles.

01:10:20 whether accidentally on purpose, well I like to say it was on purpose because Ogilvy was quite heavily involved in the creation of it. American Express is a fantastic brand. Everything from the member since date on the card. Why does nobody copy that?

01:10:36 Okay, because if you think about it, no one wants to cancel their American Express card because then if they get another American Express card, won't say, what does mine say, members since 95, I think it is. Mine will then say members since 2024. I don't want that, right? It looks like some Johnny come late. Okay, and you know, it understood the whole scarcity principle, the most famous successful sales letter for American Express.

01:11:05 I can't remember who wrote it. was written by someone in Ogilvy and it just outperformed everything for years. Started with the letter opened, Dear Mr. Sutherland, quite frankly the American Express card is not for everyone. Which is exactly the same as your website, which is why you shouldn't work with us.

01:11:22 And it basically said, not everybody wants to pay for a card, da-di-da-di-da. Every single in that letter, it's an extra... What's interesting is that letter was written long before there was a kind of discipline of behavioral science. It was an instinctively brilliant copywriter who understood every trick in the book. know, people want to identify as the kind of person who pays for quality, not the kind of person who buys on price, da-da-da-da-da. They want the fact that the card is exclusive. I think it was Ogilvie who had the idea of putting the member since date on.

01:11:52 I think that was Ogilvy. What's strange sometimes is quite often you have a brilliant idea like that member-since date because that's a really – that's a kind of sunk cost bias. I've established this relationship with them.

01:12:09 There is a small practical use of the member since date on the card, which is sometimes it can be used to detect fraud. Because if you get some 19-year-old comes in and it says member since 92, you can reasonably suspect they've nicked the card, OK, because they weren't born then, right? But basically, it's an acknowledgment of the relationship. We did something with British Airways where

01:12:35 One thing that provides reassurance to a customer is that I, the customer, know that you know that I am a reasonably valuable customer. So quite a lot of loyalty programs partly work not with the rewards mechanism. It's the second order kind of knowledge that the consumer knows.

01:13:02 that the company knows that they're quite a reliable long-term customer with some therefore likely future lifetime value whom you wouldn't want to piss off. So one of the things we did with British Airways is we – it very simple change. It cost nothing. But if you get your AVIOS statement on BA, it gives you your lifetime tier points. Now if you remember, you can redeem your AVIOS points, right, because you might want to go and

01:13:28 flight did you buy for four days or whatever, okay, and that sets your avios points back to zero. Your tier points, which determine your status within the program, they reset to zero every year. So when you start a year after you've redeemed your avios and you've got 20 tier points and you've got 5,000 avios left,

01:13:51 You're going to have that anxiety that goes well as far as BA are concerned looking at me I'm just some random tourist. You know I'm not a serious business traveler, right? I'm just some random backpacker who's been on BA once, right, with his parents or something, right? Now when it says lifetime tier points 15,000 or whatever it is and that's there it basically says we know, okay, you're a serious traveler and you've brought us a lot of business in the past therefore we're disproportionately disinclined to want to piss you off.

01:14:20 In other words, you have the feeling, which may be erroneous or accurate, but nonetheless it is a feeling that if there's some massive thunderstorm or whatever and there's only one flight, one seat left on the last flight back from Boise, Idaho or whatever, they're gonna try and get you on the plane, not the random backpacker guy. And so quite a lot of loyalty programs are actually the consumer signaling their loyalty to the organization.

01:14:49 in the presumption of slightly more favorable treatment or at least the benefit of the doubt. an example would be if you I bought

01:14:57 Let me get this right. I actually was a customer of Amazon before it was called Amazon. was called bookpages.co.uk. Back in the 90s, sometime in the mid 90s, there was a company called bookpages.co.uk, which is an online bookstore in the UK, which got bought by Amazon. So I'm actually an Amazon UK customer, like before there was amazon.co.uk. So as a consequence, I bought literally thousands of things from them. It is literally thousands of things. Bear in mind, that's, what, 28 years, right?

01:15:30 And maybe a little less, certainly 25 years. And occasionally, very occasionally, something from Amazon doesn't turn up. And I ring them up or contact them. And they say, don't worry, we'll you another one. Now, part of the reason they do that is because they can see, I've bought a few thousand things and I've only returned 0.3 or claimed that 0.3 % of them have not arrived. So they can basically afford to give me the benefit of the doubt.

01:15:57 If I'd never bought anything from Amazon before and I ordered a massive flat screen 85 inch TV with 8K and I said no, never arrived, okay, they would not, they would be to a great degree more suspicious. And not unreasonably so, okay, right.

01:16:15 And so part of way in which loyalty programs work, I genuinely think, is that consumers like businesses to know. It's like a pub, okay? If you're a regular in the pub, you want to be recognized as a regular. Very weird one, actually. When we were students, this was me being an asshole, actually. When we were students, the college kitchens were closed every Sunday lunchtime. They didn't open.

01:16:41 And so a load of us just got into the ritual of every Sunday we went to Pizza Express, which is practically every Sunday in term time. And after we'd been doing this for literally two and a half years, every Sunday in term time, I kind of went to our friends. One thing that slightly pisses me off, OK, is we come here every Sunday. They've never even given us a free garlic bread. They've never acknowledged the fact that we're regulars.

01:17:06 Now the reason I say this was me being an asshole is because what I didn't realize is they knew perfectly well we're students, right? We're there for three years, then we fuck off, they never see us again, okay? Actually, I was there thinking, you I'm a stalwart of the local pizza express. To be honest, they were right because why make a fuss of these people? They're only here for a few years, okay? I'm sure if, know, I've been like a local family, it might've been completely different. But fundamentally, people like their loyalty not only to

01:17:36 be rewarded which is nice and but that all makes sense economically they like their loyalty or their frequency of custom to be recognized you know that all all transactions to some extent not quite all but there's a degree of social exchange alongside the economic exchange I think

01:18:02 Economics, lot of finance people try and pretend everything is just about the money. It's never just about the money. There are all these other variables, I said like trust for example. Fundamentally, is the person trying to sell you this car and they don't care about the next car. I think that's probably the most wonderful heuristic for a salesman I've ever come across. What can I do now?

01:18:30 that makes it absolutely certain that even if they don't come and buy a car from me right now or even if I don't sell them the most expensive car they're capable of buying.

01:18:39 They're bound to come back to me in three years time when it's time to replace their car. Brilliant, brilliant thing to think, you know, fantastic. Where does status fit into things? And I mean, from a standpoint of I want to be seen with the designer brand. Well, how does that work? OK, very useful. It's not it's not exhaustive as a list. It's a very useful piece of sort of light neuroscience done. But I think it was first developed by a guy called David Rock, who's a Kiwi neurosurgeon.

01:19:09 scientist who's based in New York and it's called the scarf model of things other than financial incentives okay it's things people care deeply about

01:19:22 that don't factor in economic models very well. And SCARF is an acronym and it stands for Status, Certainty, Autonomy, Relatedness, although I'd say something like reciprocation or something relatedness, this is R, and F is fairness. So fundamentally, one thing every business has to be alert to.

01:19:45 is okay, you might be optimizing for economic, short-term economic value, but if you're doing that at the expense of status, certainty, autonomy, relatedness and fairness.

01:20:00 be really, I mean the Oasis tickets thing is really interesting. The one thing I don't get, okay, the one thing I think was wrong there that really violated fairness was the jump from, was it 135 to 315? Now, to me, it's a bit weird they didn't have an intermediate jump around about the 200 and something pound mark.

01:20:29 That's the difference between an oh shit and what the fuck. Okay, you know, 100 and whatever it is, 135 to 240 is oh shit, right? 315 is well, here was I planning to go and now I can't. Yeah, exactly. You know, it's and you know.

01:20:49 There was a bit of that. mean, it's really, okay, the arguments about price discrimination, the arguments about differential pricing, yield management pricing, easy jet pricing, whatever you call it. Oh, God. It's a kind of really interesting discussion area. Broadly speaking, I'm in favor of price discrimination because generally it's...

01:21:14 Overall value maximizing so if you take an example of really clever price discrimination, it's the McDonald's wrap of the day Okay, so you go into mucky D's I actually know someone who is in the room or when they came up with that idea And it is apparently very very successful. The basic deal is three times What do they have their five wraps of the day was it for they recycle don't they according to the day of the week? And basically the deal is that if you want the wrap that is in your

01:21:43 preferred flavor, well, four times out of five, you pay a pound extra for it. Or if you want to save a pound, you sacrifice specificity of flavor and you save a pound and you get the wrap that they've probably pre-made in advance because they make more of them.

01:21:57 It's kind of like a win-win, okay? In other words, the people who are more concerned about flavor than price pay for the flavor. The people who are more concerned about price than flavor, it's the other way around. If you look at that, the guy who's an expert on this, who by the way is quite a left-wing economist in some respects called Robert H. Frank, is a very, very big fan of price discrimination because he thinks it actually delivers the most value for most people. If you think about cars, when...

01:22:25 more cash constrained people buy a car, they're paying for transportation. When richer people are paying for a car, they're paying for status to a degree or...

01:22:36 or what I call L'Orealism, which is because I'm worth it. I'm not all status about showing off to other people. A lot of status about showing off to yourself. You know, there's a certain thing we do, which is not really because we're showing off to other people. It's kind of reinforcement of our own identity and self-worth by spending a bit more on things, even if nobody else notices, you know, that's the sort of Versace underpants school of, oh, by the way, do want the funniest story? I absolutely love this talk about underpants. It kills me.

01:23:06 Okay. Which is one of the strangest problems of the rich, okay? It's just Calvin Klein's daughter.

01:23:17 complained at one point about the disadvantages of being Calvin Klein's daughter with a complaint that I have to admit would never have occurred to me, which is that when you're Calvin Klein's daughter, just at a high point in sexual excitement when you're getting romantic with a man, you're confronted with your dad's own name in the child letters. The rest of us have never had to put up with that. I always thought that was a brilliant observation.

01:23:47 But it's interesting that, what a weird experience that must be. bizarre. But no, mean the whole thing is, I mean the whole thing about why we buy what we buy and also what prompts us to buy it. To be honest, I think it's always a bit messy and there are always.

01:24:13 multiple reasons going on, know, from one consumer to another, because people are fundamentally different. But the violation of fairness is an interesting one. One thing that really annoys me personally, and I will say this to the rail industry repeatedly, okay, if you buy an advance ticket and you miss your train, okay, they make you buy a full fare ticket. I think they should allow you to put something from the advance ticket towards the full fare ticket. I think what you're doing there is

01:24:44 Generally, it is if you if you want a bit of moral advice for how not to scandalize customers, anything which profits from another person's predicament is a really bad idea in terms of people morally hating it. There's a wonderful actually 1690 pamphlet called Vendittio by John Locke, the same the philosopher John Locke, where he it's all about the idea of the just price. And he makes the point that we have we seem to have

01:25:13 particular moral aversion to profiting from another person's misfortune and I would argue that if you know if you miss by 10 minutes your designated so actually Nikola Raihani who's a very brilliant evolutionary biologist and evolutionary psychologist wrote to me about this because coming back from her honeymoon the train was late getting into Lille I guess okay where she had to change for the euro star and

01:25:40 because she'd missed her Eurostar, their tickets that they'd pre-booked months in advance to come back from their honeymoon were voided and you had to go and pay 300 and something quid on top.

01:25:53 I think that's a shitty thing to do. I get it legally, you're totally within your entitlement to do that kind of thing. I think that's an asshole thing to do. The other reason is I don't even think it's good business because it will put people off traveling by train again. And people who are cash constrained, you're significantly taking advantage of them.

01:26:17 OK, to a point where that could ruin the next six months of their life, suddenly having to shell out 400 quid when they weren't expecting it. Someone who's cash flow constrained, that's an absolute bummer, right? And I think there are certain things where what we ought to do is just, OK, one thing I think is totally shit. So when I retire from advertising, I'd like to be kind of poacher turned gamekeeper. I've always jokingly said I quite like to work in consumer protection.

01:26:45 Because my experience of working in advertising and marketing for 35 years is actually it's not very evil. Okay. That doesn't sound like a big thing. No. Actually the instances of people I've seen in marketing and advertising conceiving something that I would regard to be deceptive, morally dubious, unfairly sludgy or manipulative.

01:27:15 are very, pretty rare. Most people in marketing are trying to do the right thing by the consumer, for the most part, okay? But there are a few things which I regard as absolutely intolerable. For example, the fact that if you have a recurring subscription payment on a credit card, you can't cancel it through the credit card. That strikes me as just fundamentally wrong, right? If you subscribe to something online with a credit card,

01:27:40 And now with a if you subscribe by direct debit online, you can just go to your online bank and go don't want to pay that direct debit anymore. That's their problem. They don't get the money anymore. The fact that with a credit card, you have to go to the original person with whom you subscribed and they make it really difficult for you to cancel. I think that's shit. Now, I think there is legislation coming out in Germany, isn't there? Which is called something like the two click law that you must be able to cancel any online subscription almost as easily as you signed up in the first place.

01:28:10 I there should be legislation where recurring payments appear at the top of your online credit card statement. And if you wish to query one or cancel one, you should be able to cancel it through the... Now, technically, you have to tweak something like the Consumer Credit Act to make that happen. I think that business of basically selling sludgy subscriptions to people, which is you get people in on a free trial, then you start charging them pounds a month, then it's like six months before they bloody notice, and then when they try and cancel it,

01:28:40 it's almost impossible. The reason I really support legislation there, by the way, is that the bad actors in that field are ruining it for everybody else. So you'll have a point soon where nobody, so good actors would probably include, I think Netflix and Amazon, who make it tolerable. From what I remember, canceling your Amazon Prime membership or canceling your Netflix membership is kind of like, it's not.

01:29:07 absurdly complicated. I think so. I've got a vague memory. think I've got that right. But the good actors are being unfairly basically they're having their business unfairly destroyed by the bad actors on the simple grounds that you'll end up with millions of consumers going I don't care who you are. There's no way I'm subscribing to anything. Once bitten twice shy. I'm done with this whole subscription model. And that's problematic for the people who are actually playing fair. Rory.

01:29:36 I feel like we could talk to you all day about sales psychology marketing. It's been a brilliant conversation. Typically we ask where people can find you. I feel like if anybody wants to Twitter, I'm at Rory Sutherland all one word. like Twitter. I know it's unfashionable to say so and you know, Elon is should we say, you know, divisive, not always helpful.

01:30:05 I kind of indulge the bastard on the grounds that practically everybody really remarkable in human history is bloody weird, difficult, pain in the ass, annoying, okay? And that applies to the good people as well as the bad, to be absolutely honest.

01:30:21 So that's my take on that. Twitter's a pretty good place to find me. I'm on LinkedIn, where you can follow me, thankfully, because I ran out of connections or something. I'm at Ogilvy, where we have a behavioral science practice. But finally, I also run a course. Who doesn't? But it's an online course called Madmasters. And if you look for madmasters.co.uk, there's a whole sort of series of 10 one-hour long courses combined with

01:30:51 I do live surgeries every two weeks. So if you're on the course, you also get live access to ask your own questions. And that's madmasters.co.uk. all I can say is the people who've done it seem to love it.

01:31:05 I get weird kind of fanboys going, thanks to something you said, I managed to solve a weird problem that I didn't realize I could solve, or I managed to solve a weird problem in a way that was much, much easier than we assumed because we realized it was a psychological problem, not a technological one. Nice. We'll include all the links. And then what do the next, I guess, 10 years look like for you? Oh, bloody hell. I don't know.

01:31:35 I'm very committed to Ogilvy because I think the behavioral science practice is really important as a next stage in the development of advertising. So I want to continue that connection also because I think you can only really teach if you also practice. That's not quite true. I think after you've stopped or after you've retired, you can teach for two or three years.

01:31:56 But actually, the two are intimately connected. I think you kind of run out of material if you stop actually doing it and exclusively talk about it. There is a sort of weird documentary film being made about me for one of the streaming services. What I would like to do is if I can just continue beating the drum to the extent that

01:32:25 Every time you have a problem that involves some form of human perception or behavior, look to tweak the variable that's easiest to tweak, that has the biggest effect. Very often, the variable you need to tweak is the perceptual one or the psychological one, not the technological one. As I said, don't make trains faster, make train journeys more productive, more enjoyable, more valuable. That's where

01:32:52 What you might call metrics benchmarking and fixating on standard metrics of comparison actually kind of makes us all dumb because we end up over optimizing for things that consumers have stopped caring. I don't genuinely give a shit whether it takes me two hours to get to Manchester or one. Right. OK.

01:33:11 would give a shit if it took four hours, right? Okay, you can't get a Manchester for the day. After four hours on a train, you can start to get a bit bored, know, da-da-da-da-da. There are lots of reasons why you don't want to take four hours. Yeah, okay, get it down to an hour and a half. That'd be kind of cute. Beyond that point, to be honest, once I've gone to the hassle of catching a train, I kind of want my rewarding hour and a half of sitting on my ass, okay? I think you could make that journey too fast, to be absolutely honest.

01:33:39 So my point is that actually most problems now are multivariate. There lots of variables you could tweak. Generally, for reasons I don't understand, both organizations, institutions, and governments, and particularly economists are guilty of this, tend to focus on those variables which are most expensive to change. the vital thing, I think, and the great thing about psychology is there are butterfly effects. You can literally add three words to a sentence.

01:34:09 Okay? And you can change everything. There's a story told about Charles Sartchi and I don't think it's true. I think it's completely apocryphal, it might be true, that there was some beggar sitting outside Sartchi and Sartchi and it just said, I'm hungry. And that Charles Sartchi wrote underneath, I'm hungry on his board, I'm hungry and it's spring.

01:34:32 Okay, and the donations to the beggar went up by a factor of two or whatever it was. Okay, to be honest, I'm always certain that's entirely apocryphal, but it nonetheless makes my point. You know, there are literally occasions where you can tweak something to a tiny degree and just have a transformative effect in how people react to it emotionally. There's a nice example which I can end on actually, which is someone

01:34:59 I'm not sure whether they thought it was a good idea or whether they thought it was just marketing bullshit, but they were at Changi Airport in Singapore and their flight was listed. It was leaving 30 minutes after the schedule time. The flight was listed not as delayed but as retimed.

01:35:18 There are two ways of looking at this, which is what a load of marketing bullshit. You're trying to escape the blame for a delay by referring to it as retimed. OK? What a load of crap. And that's one interpretation. But I responded with a more benign interpretation, which is hold on a second. You could look at that and say it's a very generous thing to do. Let me explain. Because 20 % of the people waiting for that flight, on average,

01:35:48 a shit scared of flying. A lot of people are. Any of you? No. There's a percentage of the population who genuinely are shit scared of flying, okay? If you put delayed, retimed looks like it's a logistical thing. It's due with schedules, pushback dates, runway slots, whatever. We've made a conscious decision to actually reschedule this flight.

01:36:10 Delayed is going to make that 20 % of scared people think, oh, they probably noticed one of the ailerons is missing or that the engine's going to catch fire. And then they'll go into a fear spiral of what else does this mean? Because I imagine, I'm not a nervous flyer. Terrible admission. I've confessed this once before. In the early days when you could actually download Sky programs from Sky Go to your laptop.

01:36:37 When I used to fly, I to just take all the things I'd recorded on the sky and watch them in the air. What was something like a 15, 17 inch Apple MacBook at the time?

01:36:48 I used to sit on the plane, sitting with this bloody great screen, I used to watch Air Crash Investigation. when I told my... I realized after I'd done this a couple of times that it was probably insensitive, when I told my wife and children, they said, Dad, I cannot fucking believe it. So there are a of people behind you who are shit scared of flying, and they're looking over my shoulder and seeing like footage of the wreckage strewn across a Japanese mountainside or, you know.

01:37:13 burning debris or whatever or the know all the basically the recreation of a plane flying upside down because Anyway, that was my terrible confession of total crass insensitivity for which if anybody was on one of those flights I really apologize and it was astoundingly insensitive of me, but if you're frightened of light I imagine that every time it's delayed

01:37:35 you go into that mindset of imagine the worst, what's the worst that can happen? And you don't go, oh, they've probably rescheduled this because of change in departure slots or whatever, okay, or the crew, the crew are late. They're only going, oh my God, oh my God, it's just the beginning of, they've discovered this problem and then they're not gonna fix the problem. And so actually retimed might be a really nice thing to say. I think that might be a really, really good idea. I love it.

01:37:59 Rory, thank you so much for joining us. You've been absolutely incredible today. What a joy. It's absolutely delightful. Really, really super. Beautiful. What a lovely place. This has been an absolute joy. Thank you so much.