As traditional perceptual sets are breaking down, no category is safe from disruptive influences so understanding how this influences customer behaviour and expectations is more important than ever.
Scratch the surface of any category and there is an increasingly digital story. Some categories such as music (Spotify) or taxi rides (Uber) are well known. But more and more of our lives are digitised, from snacking (Graze) and laundry services (Tide Club) to pet care (Barkbox).
So it is clear that technology is fundamentally disrupting the relationship between the consumer and brand. Technology means we are often faced with market developments that are novel and disruptive rather than familiar and incremental. Technology creates data about consumer behaviour that is used to gain an unparalleled level of insight into our inner lives that we may not even know about ourselves.
But as technology disruption leads to a more complex consumer landscape, brands need to turn to behavioural science to make sense of it. A good case in point is the design of the customer experience. Creating a distinctive and sticky experience that exceeds that of your competitors is clearly very high on the agenda for any board. But how a brand should go about designing this is increasingly challenging.
Much of this is due to new standards for customer experience being created by brands in completely different categories. My experience of the slickness of using Uber will influence my expectations of my interactions with my online bank. The ease with which I use my iPhone will bleed into my experience when trying to book an appointment to get a new washing machine delivered.
To some extent this was always the case – iPhone has not only eaten the lunch of Nokia and Blackberry but also a large number of point and click camera manufacturers. The issue now is that expectations of what our experiences should be are, to use the term coined by experience agency Fjord, increasingly ‘liquid’ across categories. So why is this?
Our expectations are influenced by the context we find ourselves in. This was first identified by psychologist Gorden Allport in 1955. ‘Perceptual set theory’ set out the way in which we are able to perceive or notice some aspects of a situation, product, etc., but ignore others. This helps us navigate the world quickly and easily, being able to ignore less relevant information.
So on this basis, if we can psychologically classify experiences together, then we are more likely to apply the same set of expectations to the experiences we are going to get. Our expectations of a cake shop will unconsciously be set by other cake shops we have visited for example.
But we can sometimes classify things together in unusual ways – psychologists Rozin and Schiller suggested that the liking of spicy food can be considered to be in the same category as roller coaster rides – they both share constrained risk and release adrenalin into the brain system. An interesting case of two apparently unrelated activities, which are in fact sharing common characteristics, meaning that perception of one is unconsciously influencing expectations of the other.
The relationship between expectations and past experiences is nicely demonstrated with the following well-known illustration from Bruner and Minturn:
Depending on the context, you will either see a B or a 13 in the middle. Past experience can be represented by A or 12, so influencing the expected number or letter in the middle.
So what is new about the consumer environment we are in now that causes our perceptions of experiences from a product or service in one category to bleed into another? Digital transformation.
As technology permeates every industry it is easy to see that the traditional ways in which categories are defined start to break down. First, the fact that they are all ‘digital’ means our expectations can more easily flow between them (we may use this as a form of classification). But in addition, it is increasingly easy for a digital brand to start offering services in adjacent categories – look at Uber moving from taxi services to food delivery for example. So it is no surprise that our traditional ‘perceptual sets’ are breaking down.
What all this means is that it is not enough for brands to only look at their immediate competitors to compare the customer experience. A high street bank, for example, may be leading the competition on all key metrics but the real threat to their customer ratings may be coming from Airbnb.
And even though other banks may not have caught up, it makes the category as a whole vulnerable to new entrants that take learnings from outside the traditional category definition. Add to this the way in which technology breaks down geographic barriers – consumers are now exposed to the very best in class in the world, not just in their home country.
The disruptive innovation we are seeing means we need to complement existing market research tools with behavioural science as an explanatory framework of the often unconscious psychological mechanisms at play in our nuanced and complex world.