← The Agile Brand with Greg Kihlström®: Expert Mode Marketing Technology, AI, & CX
The Agile Brand with Greg Kihlström®: Expert Mode Marketing Technology, AI, & CX
#798: Phill Agnew of the Nudge Podcast on the psychology of successful marketing and CX
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The agile brand.
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Welcome to Season eight of the Agile Brand Podcast. This season we're going all in on Expert Mode, MarTech, AI and Customer Experience, talking with the people and platforms behind the brands you know and love. I'm Greg Kilstrom, your host and I help Fortune 1000 companies make sense of martech, AI and marketing ops. Hit subscribe or Follow to make sure you always get the latest episodes and leave us a rating so others can find us as well. And make sure you check out our sponsor, Tech Systems, an industry leader in full stack technology services, talent services and real world application. For more information, go to teksystems.com now let's dive in. In a world obsessed with martech, optimization and AI is the most overlooked competitive advantage simply understanding how the human brain actually work. Agility requires more than just adapting to new technologies. It requires a deep, empathetic understanding of the timeless human behaviors that drive customer decisions. Today we're going to talk about the intersection of marketing and human psychology. We'll explore how understanding cognitive biases and behavioral science isn't just an academic exercise, but a critical tool for creating more effective customer experiences, more persuasive messaging, and ultimately a more resilient and agile brand. To help me discuss this topic, I'd like to welcome Phil Agnew, host of the Nudge podcast. Welcome to the show.
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Thanks Greg. Thanks for having me.
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Yeah, looking forward to talking about this with you. Definitely a topic that I find fascinating. Before we dive in though, why don't you give a little background on yourself and the podcast?
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I'm a marketer. I studied marketing at university, one of the few people in marketing to actually do that. But it didn't really help me, funnily enough. Like when I got my first job straight out of university, I struggled as a marketer and then eventually I stumbled upon behavioral science and consumer psychology and I realized that in order to change people's decisions, which is what you need to do in marketing, you have to understand why they make those decisions. And psychology and behavioral science reveals those answers. So about six years ago, I started Nudge just because I really wanted to interview people within the behavioural science space. And over the past six years, Nudge has continued to grow and grow while I was working at places like Hotjar and Buffer. And today it is the UK's number one marketing podcast. And I love it. It's the best job I've ever had.
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Yeah, love it. Love it. Yeah, that's great. Well, yeah, let's dive in then and want to start Talking about, you know, psychology and business as, as you mentioned, you know, certainly it's something that seems logical and yet I don't think enough people are thinking about it in necessarily in the, in the. In deep enough ways. You know, a lot of marketing leaders are consumed with platform selection, data analysis, all very important things. But in your view, what's the core business case for making the study of psychology and behavioral science a strategic priority, not just something that's nice to have?
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Well, there's two ways to go at this. One is high level and just saying fundamentally you are selling to humans, so you should understand how humans make decisions. I think the more persuasive way to go at it though, is just to give an example of how effective this can be at such low price points as well. So there's an example I was recently just talking about at a conference, which is KFC in Australia. KFC in Australia, owned by Yum Brands, who spend over a billion a year on marketing. So these folks know what they're doing. They had a deal, chips for a dollar, which was a very good deal. They've increased that price in recent years for chips for $2, it's still a good deal. They wanted to know how best to advertise that deal. So what they decided to do is come up with a huge Facebook experiment where they had multiple different slogans. In fact, in total, they wrote 90 different slogans to promote this deal. All sorts of creative stuff like the Colonel's never been so generous, loved from Brisbane to Perth, chips for a dollar, all these wonderful slogans. And they tested a number of these different slogans on Facebook. And the one that ultimately succeeded was one that was entirely backed by behavioural science. It used a principle which all of us know is scarcity, the idea that we are driven to want scarce resources. What did the slogan, what did the tagline in this, in this post actually say? It said chips for a dollar limited to four per customer. And that was far more effective at getting people to buy than all these wonderful creative slogans. And what this reveals, I think for me at least often is the best marketing slogan I could probably come up with is probably slightly inferior, or at least could be augmented and made better by an application of behavioral science. In this case, saying limited to four per customer makes you think, well, why are they putting a limit on that? It must be good because they're making it a scarce resource. Must be good, it makes me more likely to buy it. And they still use this slogan today. If you buy chips in Australia Today there'll probably be big signs outside the store saying $2 for large chips limited to four peeps is currently how they say it, a bit less sort of in your face. But it's a great example of how something which is totally free, it's totally free to come up with a way of defining your product like that can actually have some fairly impressive effects on your business.
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Yeah. And to your point, it's not the most creative or catchy tagline or slogan, and yet it works. And then there's the data to support that as well. Right. So it's kind of, it's reinforcing those ideas. And I know you've also analyzed a lot of key figures in business. You know, everybody from Steve Jobs and others who used psychological principles to persuade beyond a great product, which obviously is required. What's a fundamental principle that somebody like Steve Jobs mastered that enterprise brands consistently get wrong when they're trying to build their own kind of reality distortion field around their offerings?
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Yeah, Steve Jobs was fantastic at this and I think he made enterprise marketing very sexy because he did it in such a smart way. There are a number of different nudges that Steve Jobs applied. I think if you watch his keynote, you'll notice dozens of different principles he used. One that really stands out consistently throughout his tenure at Apple is his real desire to use something called concrete phrases. So this is originally studied by Ian Begg, I think, back in the 1970s. And in his study which revealed the power of concrete phrases, he gave participants lots of different phrases to remember. So sometimes the phrases were concrete. And by concrete I mean phrases that you can visualize in your head, like rusty door, fast car, happy hens, that sort of thing. And other times he gave participants abstract phrases, things that are hard to perhaps visualise. And this could, as an example, could be something like innovative quality or cutting edge tech. This is abstract. It's something you can't visualize when you think about in your mind. He found that the concrete phrases were about eight times more memorable than the abstract phrases. So being concrete in your language can be very powerful. A lot of enterprise bands forget this. And classically, the MP3 market back in the early 2000s totally forgot this, because the way that Philips would describe their MP3 player or Sony would describe their Walkman is by saying we have 253 megabytes worth of storage. And that is totally abstract. It's not concrete in any of our minds. Steve Jobs comes into the MP3 market with the iPod and he famously says 1000 songs in your pocket. Extremely concrete way of talking about something which could otherwise be quite abstract. He did this in lots of other ways. Another classic example for Apple fans out there is when he introduced the MacBook Air. And rather than just saying, this is Finn, he put it in a tiny little letter and opened the letter on stage and pulled it out and everyone was gasping, oh my God. Yeah, this really is Finn. When he brought in the ipod, he compared it to a deck of playing cards, gave it a comparison set to make you realize how thin it is. Again, something else concrete. And he consistently talks about these concrete elements like a thousand songs in your pockets. But if you're an enterprise business, I think it's important to not just talk about things in abstract ways. Don't talk about just your cutting edge tech or your incredible innovation, talk about it in real ways. Say we've written so many lines of code that if you put them all together, it would go around the circumference of the earth ten times. That's a concrete way to talk about all of the effort you put into your product.
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Yeah, yeah. So another concept that you've talked about quite a bit is often it's counterintuitive but. And probably feels unnatural to most marketers, but it's flaunting a product's flaws. Can you talk a little bit about the pratfall effect and maybe give an example of how a brand could apply this principle?
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This is a really odd one and I'll start at the end and I'll go back. But Jo Swanson, a researcher in Wales, she found this incredible thing. She got all of her research participants to apply for hundreds and hundreds of jobs. They all sent in essentially the same looking CVs to all different jobs and they would monitor how likely would it be to actually get an interview. However, in half of the CVs they would put a weakness. So they'd say, I'm really good at this, really good at this, but I know you want someone who can write code in Java. I can't do that. So they put a pretty significant weakness. Other half of the CVs, they wouldn't have any weaknesses. So it'd all be strengths saying, I can write in Java. She finds that those who declare a weakness are more likely to get an interview. It's kind of incredible. Right, so what's going on here? Why are weaknesses more likely to get interviews? Well, the original study behind the Prattful effect is Elliot Aronson's studies in the 60s and he really understood or invented the Prattful effect as a term. And what he did is he filmed a quiz participant answering quiz questions incredibly successfully in a quiz. So the participant was asked something like, what's the capital of Tuvalu? He knew exactly what it was. He films this as the quiz participant gets all these answers correctly and looks like a genius. He walks off stage, is given a cup of coffee, drinks the cup of coffee, but spills half of it down himself. So he makes a bit of a fool of himself, makes a bit of a prat of himself. He's recorded the whole thing. He then gets a group of participants and to half of them he shows the whole thing. The quiz participant successfully answering all these questions and then spilling coffee. And to the other half, he cuts that end bit off so the other half don't see him spilling coffee down himself. So one half just see the genius, 1/2 see the genius with a flaw. He asks him how likable is this person? And he finds that when they reveal a flaw, they are considered far more likable than when they just seem like a genius. There is something in human psychology that makes us attracted to people, to objects, to brands that aren't completely perfect. Joe Sylvester found this in the study in Wales. Erilee Aronson found this. And of course, this is the case for brands as well. Brands that reveal a slight flaw can actually be more attractive. A classic example in the States is Avis, who are the famous second number one car. Sorry, the famous second car rental brand. They said we're number two, so we try harder. Incredibly successful campaign for them. Another example here in Europe is Guinness. Richard Shotton talks about this a lot in his book. They have a serious flaw, which is that it takes a long time to pour a pint of Guinness. It's far quicker to go to a bar and order a lager, which takes no time at all. Now, most brands would try to hide that flaw. They wouldn't make customers aware of it. Guinness do the opposite. Their slogan is good things come to those who wait. It takes exactly 109.5 seconds to pour the perfect pint of Guinness. By embracing their floor, they benefit from that prattful effect and they actually become more likable than brands that don't have a flaw at all.
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I'll give a very, very easy to apply example, which is one that I really like. And this is an example which is built around the principle of reciprocity. I like this example because reciprocity is something everybody knows. You will know it, you're, your grandmother will know it, your granddaughter will know it, Everybody will know this type of principle. It's the idea that if somebody gives you a favour, you feel compelled to return that favour. Reagan in his studies in the 70s proved this. He ran these really interesting studies in art galleries. Two variants of the study. One where two people are just looking at all the art, another where one of the people's looking at the art, goes out, buys a can of Coke for themselves and for their partner, gives it to their partner. This person is a stooge actually paid for by Reagan. And he finds that when you give your partner a can of Coke, if you then ask, oh, I'm raising money for charity later on, they're far more likely to donate. If you do them a small favor, they like to return the favor. There's all sorts of ways businesses can apply this. Obviously, the most simple way is just giving out free samples, giving out something for free, giving a free discount code. We feel compelled to do business with a company that does that. But one amazing study from 2022 run with South Korean E commerce store, found that something as simple as a thank you note can really increase the amount of sales customers will spend in the future. So in this study, they had 1,232 customers and they split them into three groups. One group got no thank you note whatsoever. Another group got a thank you note which was printed and it just said very plain language, we really appreciate you buying from us. Our sincerest thanks from everybody at the company. They printed that, sent it to customers. They found that just sending that thank you note increased Future sales by $29 on average for that type of customer competitive control. Then there was an extra variant. So this is the third group and they got the same thank you note, so the same content, they said the same things. Except rather than having it printed, they would have one member of the staff hand write that thank you note. So they would make the effort of actually going to write it with their hands. And what they found when they sent that handwritten variant is it increased future sales for that customer on average by $52. So it goes from $29 to $52 just by taking the time to write a thank you note. And what's really interesting about this, and I don't think every business can apply this to every single customer, although I should say that they also proved that having the handwritten note printed, so you don't actually write the whole message, but you print it and it looks handwritten and you sign it yourself. That also had about a $50 increase in sales. So you can do this at scale if you want, but even if you don't do this at scale, I think it's showing that these principles really do work and that just applying a bit of reciprocity can work to your customers. And something as small as everybody's got individuals they need to influence. It might be a million customers if you're Netflix, or it could be one massive B2B buyer at a brand that you need to persuade to buy your software. And something as small as writing them a note to say thank you could be the difference between securing that multimillion dollar a year contract and not getting it.
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Yeah, yeah. And what I like about that is it kind of brings me to the next topic is it's, it's quantifiable as well. And I think that's the, I think that's the challenge is, you know, a lot of people hear, you know, for instance, like the, the thousand songs in your pocket story and things like that. Very comp. Based on strong principles. And yet some of that can feel anecdotal. Right. But when a company is actually able to measure the, you know, the difference, like the, like the handwritten letters or even the printed hand, handwritten letters, how different is measurement of this from other, let's call it more traditional marketing, email marketing opens and click throughs and advertise. You know, how, how different is this? Or is it, is it the same? It's just kind of different metrics that we're measuring?
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Well, it is different. Behavioral science is a science because it is a science. All of these studies that I'm referring to Ian Begg with the concrete phrases, Elliot Aronson with Prattful effect, the South Korean study from 2022, I can send you a link to it afterwards. We can include it in the show notes. All of these studies have been cited in peer reviewed journals, which means a number of other scientists have looked at them, confirmed the results. Many of them have been replicated. So the old ones I'm referencing from the 70s and 60s, they've been replicated hundreds of times. So they've sort of been proven to work time and time again. And more importantly, they've all been proven to have statistical significance as well. So it's one thing just you and I doing a quick test with our email audience and saying, oh, this one had a higher percentage points. It's a very another thing to get that peer reviewed, to have that replicated and to find statistical significance with that as well. And that's why I tend to lean on behavioral science quite a lot because I'd find it to be far more reliable than anecdotal evidence from Google Labs or anecdotal evidence from an autobiography by the CEO of Netflix who says, oh, we tried this and it worked. That stuff is very useful, it can be very inspiring. But it doesn't have the same validity as something that's published in a journal will have. That is not to say, of course, that everything you read in a journal will work exactly for your brand, as you might hope it will. All of these things have to be tested on and iterated. But I think it's a more reliable starting block than really anything else out there in terms of marketing inspiration.
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So then what, what does it look like to, you know, let's say somebody out there, somebody listening, finds peer reviewed research and wants to apply it. Like, what, what is the, what is the next step for that from them? You know, how different is that from, you know, other marketing experimentation that they might be doing? Again, some simpler stuff with Google Analytics or whatever the case may be?
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Well, this is, it's creating a marketing campaign. I'll give a specific example. I try to apply all of this stuff myself because I'm a marketer at heart. I want people to listen to my podcast and I think it's beneficial in trying it out. I also think it makes for a really good episode of my podcast where I talk about these principles and then apply them and then share my results. And I've done this. I mean, I've got an episode which looked at this exact study from 2022 about the handwritten notes. And I ran a test myself. I emailed, I think it was 40 people who had been listening or subscribed to my newsletter for over two years and opened a lot of the newsletters. So they were loyal fans. Half of them received an email from me saying, would you mind leaving me a review on Apple podcasts? The other half received an email with the same copy, except it had an image of a handwritten note from me asking that person to listen to leave a review on Apple podcasts. I synced it up with ratemypodcast.com which you can use to see exactly who leaves you a review. And I found that when I asked people using the handwritten note, I had significant, I think it was something like eight reviews from the handwritten note compared to just two from the, from the, from the plain email. So I applied this myself. And of course, everyone can apply this. You know, another very, very classic behavioral science principle is social proof, which is the example, the idea that we follow the actions of others. This is a sort of evolutionary trait. As cavemen and women, if we saw other cavemen and women running out of a cave screaming their heads off, we've evolved to know not to go in that cave because something in there will probably eat us. And so we've always evolved to follow the actions of others. Which is why when I'm on holiday in Greece and I'm walking down the seafront and I'm thinking about what ice cream place to go to, and one has a queue out the door and one has nobody. I'm going to go to the one with the queue out of the door because I follow the herd. And that tends to be a safer thing to do. And of course, marketers can apply this and should apply this every single day. So one of the most basic ways to apply this is to stick a most popular label on your most popular selling product. Maybe a different way to apply this is to talk about social proof in a slightly different way to saying, for example, I saw a great ad recently. It was for a skincare cream in the UK. E45, I think it's called. I don't know the brand very well, but I was walking past a bus stop and they don't just say this is extremely popular. They really quantified their popularity again using sort of concrete phrases. And they said one sold every 45 seconds or every 15 seconds, it might have even been. There's something extremely powerful about that. So they're taking that social proof principle, maybe applying a bit of concrete phrases. You can picture someone buying it every 15 seconds and then they create an ad which I think is probably more effective than if they just said buy E45 cream because it's the best cream in the UK, for example. So there's all sorts of ways to apply this. I see it behavioral science, for me, as a bit of a layer that you can apply to all of your campaigns. Some campaigns can be purely driven by behavioral science, like the handwritten campaign I talked about, but most campaigns can be improved by applying a bit of psychology, essentially. So that's how I see it.
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And so we got to talk about AI for just a minute here because I, I think we're required to as this stuff, you know, as these behavioral science principles. I mean, right now there, there's a human in the loop right now, right? And, and all, or, you know, at least most of these, most of these things that, that you're talking about and, you know, those. So there's the, the ethical component is. Okay, well, you know, someone I assume is making an ethical decision on what's the right. Right. What's the right lever to pull things like that with increased AI automation and, you know, maybe there's some human in the loop somewhere. But less and less, you know, perhaps safeguards. Where's the, where's the ethical line between, you know, manipulation and personalization? Right? Because I mean, we are talking about the potential to manipulate. I mean, people can certainly use these, humans can use these psychological principles to cause people to do things that are not in their own best Interest or things. So certainly AI could do the same. How should leaders be thinking about this and where that line gets crossed?
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Well, there's a few points to make on manipulation and ethics. I think what behavioural science is, is it's a very good marketing tool, really. It's a very good insight which you can use to improve your work. A tool doesn't necessarily mean you'll use that for bad. You know, a fantastic tool to do gardening is a gardening fork. You could use that to smack someone over the head. Most people don't. Or like a lawnmower, you could use that for some pretty awful things. Obviously, most people just use it to mow the lawn, but I think it's more the actor, which is the issue, that is the lawnmower or the marketer, rather than the tool itself. Another point to make with nudges is that everybody is always being nudged. There is no neutral element here. The best example of this is from Richard Feyler's book and he talks about the Google canteen. Lots of studies were run in Google Canteen and they wanted to reduce the amount of unhealthy eating in their canteen. So they just applied a bit of sort of behavioral science. They moved the junk food onto higher plates, which were harder to reach. They moved their fizzy drinks behind opaque glass and put the water behind clear glass. They made the plate smaller. And of course, people ate far healthier after they did this, but beforehand. And some people would say, hold on, don't nudge me to eat healthier. But what Google said was, well, beforehand we were nudging you to eat unhealthily because the junk food was right in front of you and the plates were massive and the fizzy drink was sort of right at eye level. And so there's no neutral here. You're going to be nudged one way or the other. It's like there's no easy way around it. That's the ethical dilemma here. So the real way to get around this, obviously, is to tell yourself as an actor, as somebody who is employing these insights, is this the type of message I would want to receive? Would I want my daughter or my mother or my partner seeing this type of message? If they acted upon this message, would they get something that would value them? And I think that's the type of thing marketers should be thinking about anyway, just to go on to AI, because I think there is an interesting point here. What AI is interesting from a behavioral science point of view is that what we see consistently in the literature is that AI can be Preferred by humans. So Professor Matt Johnson, he came onto the podcast recently and he told me about a study where people are shown two pieces of art. Pretty much everybody likes one of the pieces of art more than the other. It just looks slightly better. It's got a slightly better color matching. It's a bit more symmetrical. When I looked at the two pieces, I really preferred the one that everybody else sort of likes. You don't notice, you just look at it. You think, oh, it's slightly nicer. What they have done in these studies is they then reveal to people is that that piece of art that most people preferred is actually created by AI. And they reveal that the other piece of art, which we didn't really like, was human created. And they then asked the same people, do you still prefer the AI piece of art? And people look at it again and they suddenly change their minds. They suddenly say, oh, you know what? No, I think actually I'd prefer the human one. And then when they do this to a new set of people who have the labels beneath them saying, this is a. Is human generated. Almost everyone prefers the human version. Same is true for art. Same is true for songs. Same is true for content. And I think this is the catch 22 when it comes to marketing with AI is that I think we can get very effective marketing with AI. I think AI could write a really good email sequence for my listeners, but as soon as they found out, or if they were ever to sort of assume that maybe I'm using AI to create these sequences rather than writing them myself, that they'll value my work less. They won't appreciate the email as much. They'll be far less likely to read it. And this is the catch 22, and I think it's something marketers need to be really aware of. It is tempting to leave everything to AI to get AI to write your whole email page, to write all of your landing page, copy all of your blogs. And yet what literature tends to be telling us is if our customers figure out that it is written by AI, it'll become far less effective. So I think we have to be really careful with the adoption of AI in that sense.
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Do you think that's just a matter of time? I mean, I feel like back in the day when people started using Photoshop to create images and stuff, there was a lot of pushback. You could take lots of snapshots of different technologies or whatever. Now it's kind of assumed that things are digitally airbrushed or composited or whatever. Do you think? I mean, I feel like in five years we're probably not even going to call it AI anymore. It's just going to be marketing or whatever it used to be before. Is this a snapshot in time and this is something we all are going to get over, or is it more just about authenticity in general?
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I think the idea that it's a temporal thing is probably quite accurate. I spoke to Kip Bodnar, the HubSpot CMO on, on Nudge, about this and he's a big advocate of AI and he thinks it's temporal as well as in. If we give it enough time, people will loosen their aversion towards AI and they'll be more comfortable reading a menu, for example, at a restaurant which is entirely designed by AI and they won't really care as much yet. At the same time, I think we have to consider that the world is chaotic and there can't be a world in which everybody's marketing succeeds. That literally can't happen. And if everybody is using AI, how will everybody's marketing succeed? So what you will get in a world like that is a level where there's a lot of homogenation, there's a lot of people sharing the same stuff. The opportunity there would be if everybody looks the same. Distinctiveness shows us that if you stand out, if you're different from your competitors, you'll be more likely to be remembered. So I think AI will and should continue to be a really good tool for marketers to adopt. But it won't be the be all and end all. I can't really foresee a world where, I mean, just take, go back to the art example. There will never be a world where all art is created by AI. It's ridiculous because we know studies show that humans value the effort that other humans put into things. And there won't be a world where all art is AI generated. And I think for the same reason, there won't be a world where all marketing is AI generated, because humans value it when they see a marketer create a campaign which is really interesting and fascinating and they'll prefer that to a robot generated campaign, I believe. Yeah. Yeah.
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Well, Phil, thanks so much for joining today. One last question for you before we wrap up. What do you do to stay agile in your role and how do you find a way to do it consistently?
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I think to the last point, I really just rely on human psychology. Human psychology has not changed in 2000 years. We are still drawn towards scarce items. We still prefer people who showcase a small weakness. These principles are true and they will always continue to be true. We'll always read a concrete phrase and we are more likely to remember it than an abstract phrase. So to stay agile, I think I like to remind myself that humans won't change as much as we maybe sometimes assume that marketing in 10 years time will still be quite similar because it will still be marketing to humans as it is today. And to really try and remember, recall and practice all of these behavioural science principles because I think if you learn them, you future proof your career in a way that you would struggle to do if you just learn the latest version of ChatGPT, so to speak. So that's how I stay agile. Yeah.
- [31:38]
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Love it. Well again I'd like to thank Phil Agnew, host of the Nudge Podcast, for joining the show. You can learn more about Phil and the Nudge Podcast by following the links in the show notes. This episode is brought to you by Tech Systems. They're leaders in full stack, tech services, talent solutions and helping companies put it all in action. You can learn more@teksystems.com and thanks again for listening to the Agile Brand podcast. If you like the episode, hit subscribe and drop a rating so others can find the show too. And if you're interested in consulting, advisory work, or if you need a speaker for your next event, feel free to reach out. Just visit GregKilstrom.com that's G R E G K I H L S t r o m.com the Agile brand is produced by Missing Link, a Latina owned, strategy driven, creatively fueled production co op. From ideation to creation, they craft human connections through intelligent, engaging and informative content. Until next time, stay curious and stay agile.
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The Agile brand.