About The Author
Kendra Lively

After gaining a decade of experience as a Creative Director, Kendra joined Phase 3 with the acquisition of Brand Fever in 2015. The lynchpin of the Phase 3 creative team, she guides projects from beginning to end, overseeing design innovation and execution to ensure it solves the defined business problem through creative excellence. With expertise in branding, integrated marketing campaigns, design systems and user interfaces, Kendra is a talented leader who inspires work that is individually motivating and collectively influential.

OnBranding Episode 26: Dr. Neale Martin, Part 2

In last week’s Part I episode with Neale Martin, branding and marketing consultant and CEO of Sublime Marketing, and author of “Habit: The 95% of Behavior Marketers Ignore“, we uncovered the basic foundations of HOW habits are formed and WHY they matter to marketers. Today, we’re jumping into the functions of habit – trust, lies, the business of behavioral marketing patterns – and how YOU can take action to implement proven research into your brand strategy.

If you’re listening, Tweet us with your reaction to this show at @phase3mc, using the hashtag #OnBranding.

Episode Transcript

Amanda: Hello everyone and welcome to another episode of On Branding by Phase 3. I’m your host Amanda Serfozo.

Amanda: In last week’s part one episode with Neale Martin], branding and marketing consultant and with Sublime Marketing, and author of “Habit: The 95% of Behavior Marketers Ignore", we uncovered the basic foundations of how habits are formed and why they matter to marketers. Today we’re jumping into the functions of habit – trust, lies, the business of behavioral marketing patterns – and how you can take action to implement proven research into your brand strategy.

Amanda: If you’re listening, tweet us with your reaction to this show at @BrandFever, using the hashtag #OnBranding.

Amanda: Marketers, especially those who are trying to appeal to large swaths of customers on multiple platforms, spend the greater part of their day thinking about trust. Brands are inherently built on trust – trust in the marketplace with privacy and quality and so on. The relationship consumers have with brands based on trust is the single most important deciding factor to whether or not your brand is the peanut butter, or the toothpaste, that gets bought time and time again. Whether or not you save the customer money isn’t important here. What’s important is that you save them a cognitive cost.

Neale: You can imagine that with people that have cameras on their phones and cameras on their computers that you could very quickly show an ad to a thousand people and develop a computer algorithm, and companies are doing this, that would interpret through their facial expressions what their response to the ad was. I think that the technology is going to enable us to do a lot of very customized targeted marketing.

Amanda: Yeah I was just reading about that company, and the company name escapes me, but there are people sitting on a couch and they’re reading their facial cues and whatnot. Which makes me thinl about the other side of this which is the ethics of all of this. Is it right to target people when they’re in a vulnerable state and try to establish a habit? There was a big shake up with Target not too long ago and it was revealed about how they use data to determine which customers might be pregnant or might be expecting. Is it ethical for brands to try to target people that are in a state that maybe they don’t know they’re being marketed to?

Neale: I think that ethics is absolutely the right word. This is a double edged sword. The one part of this is if you can make my life better, if you can really demonstrably improve my existence, then I’m going to be willing to share my information with you. But to do that I have to trust you. Any company that abuses my trust – there’s a great example of this: Microsoft has come out with a fantastic new gaming platform called Xbox One. Now the Xbox One has their Kinect feature which is a camera that looks at the user. In a lot of video games, whether they have a controller like on the Wii, the camera will observe your body movement and put that into the game. So if you are playing Just Dance you can be dancing and your character is going to be compared to the person on the screen and it’s going to say, “Oh yeah you’re doing great!” or “Not so good.” But they actually have six different built-in sensors in these cameras. They can recognize up to six or eight people at a time. Six people could walk into the room and the camera knows who is in the room. You walk in the room and it knows who you are. It will pull up the TV shows that you want. You talk to it and you use hand gestures to control your TV. Now the release of this was right after the NSA debacle with Snowden releasing all that information so trust was hugely on peoples’ minds. And the idea that Microsoft, a company that a lot of people, I think, don’t trust was going to be in their living room and the camera was going to always be on was a real problem for people. And so that’s what I think it comes down to. I trust Google. Now maybe I shouldn’t but I do. And I have the Chrome browser because I have an Android phone and so if I look up something on the Internet then it’s on my phone. So if it’s a restaurant or a location then it makes my life a lot easier. By enabling location, by enabling these things, it makes life easier. Now if I get hacked or if they were to misuse it then all of the sudden I can’t do that anymore. So the ethics are critical. And this is the thing about habit formation. If I trust you I don’t have to consciously think about you. If I don’t trust you then I’m always consciously thinking about you and that is a huge cognitive cost. And that cost wears me down. It’s like if you don’t trust your husband or your wife or your boyfriend or your girlfriend, or you don’t trust your kid, all the time you are thinking about that and it just drains you.

Amanda: Talking about trust, what are some instances where trust is broken? What causes people to flick that switch off and say “that brand is not for me” because they have to think about it so much.

Neale: That’s another great question and we can see a lot of examples of this. Facebook struggles with this so much. I was talking to some Facebook people a couple years ago and I said, “Look, when you guys change something on Facebook, it’s like someone comes to my house and rearranges my furniture.” Facebook is trying to make money and so much of what they do they don’t charge for but they’ve got to make money. And so they are walking the line. They really abuse that and more than once they’ve had to walk things back. And I think that may be part of the reason that younger people are not adopting Facebook as rapidly as the older generations have. You mentioned Target before and the example you gave was in Duhigg’s book. It was a best seller but the reality is that not that many people will actually read it. But that compared to the hack at Christmas – that’s a much bigger trust buster. This idea that I can’t trust you with my credit card information is disastrous and they took a massive hit for that. It’s okay that you make money. There’s a bizarre anti-business mentality in the world right now that’s just incredibly stupid because we’re not thinking about all these great things that these companies bring to us. But we as the brand need to be a good guy. We need to be a good person. Ben & Jerry’s is ridiculously expensive but they convince us that they have happy cows and they give money to charitable things and we’re okay paying $4.50 for a pint of ice cream. You go down two freezer cases and you can get two gallons for that. So there’s part of that idea about being authentic and about actually being a good company.

Amanda: When trust is broken – credit card information gets stolen, a company automatically signs us up for unwanted emails – we’re quick to walk away because it’s, again, a huge cognitive cost that wears us down having to constantly think about whether we can give this brand our time and money. But Neale says that as a culture Americans tend to forgive if the brand is upfront about its mistakes.

Amanda: Once trust is lost can it be regained? Is it gone or can it be re-established in the mind of the customer?

Neale: It can be. We are as a nation – I think this is probably culture – as a nation we will forgive if somebody is actually honest about the mistake they made and why they did it. Look at a brand that’s struggled with lots and lots of problems, Johnson & Johnson, where they’ve had so many product recalls. I was up there a couple years ago doing a talk and these guys were almost shellshocked because they wrote the book on it. After the Tylenol debacle they were the textbook – this is how you handle these kinds of problems. In almost every case it wasn’t them, it was vendors that they had contracted with. But one you can do, two maybe, but when it gets to be four, five, six, then all of the sudden what’s your brand? What does your brand represent? Why am I not buying the store brand? We can get into the whole crisis management of this and that’s the idea that I buy you unconsciously. When something happens now all of a sudden I’m back into conscious evaluation. I’m thinking about you. So during that moment when they’re thinking about you, you have an opportunity to re-establish your value. I’m actually going through this experience right now. I’m pretty much a loyal Home Depot guy – Atlanta, that’s fine – I needed a new dishwasher so I went to Home Depot. I looked at that and said, “Okay.” But I just went up to Lowe’s and I got a great price on a dishwasher. Super, great! It was such a good price, it was the same exact dishwasher that it was like I could have them install it and the price would be about the same. So I said, “Okay fine you guys install it.” And so the guy came out and installed it, and left, and then I discovered it was leaking. Right, so I called them and they’re always polite, every person I talked to was fantastically polite, “Well we’ll have the installer come back and check it out.” So the installer comes back and he’s like, “I don’t think I did anything wrong, I think it’s the machine. They should switch that out. I’ll call them.” So anyway this has been going on for now 10 days and every person is incredibly polite but what kills them is their processes. Their processes are about Lowe’s, they’re not about me. And it’s amazing to see this. I charge a lot of money to provide the consulting that I’ve been trying to provide these guys for the last two weeks about what they should be doing to make this right. Now again they’re always polite, they’re going to give me money back, they’re going to be doing X, Y, and Z. But the problem is I kept getting stuck back into the queue. Even yesterday they finally found the replacement. Well this was going on last week and I said, “You need to schedule the installer now. Don’t wait until you get there.” Well they didn’t, they did wait, and then it was Friday. And then it’s Monday and they call me and say, “Oh well the installer is sick. There was a sickness in the family and so we’re going to try and get back in touch with him tomorrow.” And I’m like, “You only have one installer?” “Oh no, we have lots of installers but we thought we would send the same person out who had been working with you already because that’s our contract.” Again this is a third-party vendor they are working with so that’s our contract with them is that they are responsible. So their processes drove their behavior. Now I don’t think that Lowe’s is bad – I think they have good products, they have good prices, they have good people – but their processes and their procedures are completely at odds with them taking care of the customer.

Amanda: Interesting. And Home Depot, I don’t know first hand what that experience is, but I know that they have a culture of customer first. They have a, I don’t know what it is, a 10 point value proposition and a “we believe” kind of mission statement – it’s all about the customer. I would be interested, if you went out and bought a dishwasher at Home Depot, what that would look like and compare the two. You might have to resort to doing that!

Amanda: Neale sets the facts straight. The word ‘marketing’ is enough to make some people hide. But not just because of the snake oil salesmen and get-rich-quick ploys customers generalize with, it’s the internal brand processes that often leave a huge disconnect between customer first strategies and the benefit of the bottom line.

Neale: I’m trying to get to this larger point. I am a marketer. I really like marketing. I’m a huge advocate, a huge believer. But the reality is that marketing is not well-respected. It’s not well-respected in the world and it’s not well-respected in corporations. A study came out a couple years ago that said, “80 percent of CEOs don’t trust their CMOs. Most executives do not trust market research that comes from their own organization.” I think that a large part of it is in these disconnects. Somebody in operations develops this process for hiring a company and installing these units in peoples’ houses. It’s a value add proposition so it seems to make a lot of sense. But when you start managing that process in a way that’s disconnected from the customer – that’s the idea of big M marketing – that’s a marketing decision that operations is making. Finance a lot of times makes decisions that have huge marketing implications but because marketing is not well-respected enough they’re not sitting at the table at those points and saying, “Hey that’s going to have a real negative effect on what we’re trying to do and what our strategies are.” So I think a large part of that failure of marketing over the years to really garner that effect comes from this misunderstanding of how the customer’s brain really works. And so that all of these ideas that we’ve had for so long are really based on assumptions that are over 100 years old that modern neuroscience, modern cognitive psychology, and behavioral psychology have shown us in the last 15 years don’t hold water. Our brains work much differently than we thought they did.

Amanda: Absolutely. And speaking of brains and how customers’ brains work, another topic I want to get to is reward. I know it’s a huge push right now for a lot of marketers and there’s something interesting that I’m not sure you know about. It’s called Kiip. We had them on the show, one of our earlier shows – it must have been in the fall sometime. They’re based out of San Francisco and they are integrated solely with mobile apps, gaming apps and productivity apps, to-do lists, things like that. When you finish a to-do item or a level in a game it gives you a reward. A pop-up banner comes up, “You just won $5 in Amazon credits!” Or, “You just won a Naked Juice!” Something like that will come up – $5 to spend at American Apparel. Little small micro-rewards like that. And what they’re doing is they’re recording all these moments, they’re keeping a bank of moments when people are on that kind of high, to then deliver the reward. So how do you think reward plays into all this? We were talking about disrupting peoples’ habits and getting them to go into that exploratory discover mode with new brands. Do you think it’s effective? Do you think it’s an of-the-moment thing that marketers are just trying to poke a stick at and see if it works? What are your thoughts on that?

Neale: Okay this is interesting. I am not familiar with them. I look forward to looking them up.

Amanda: Check them out; you would love them.

Neale: There’s two things. One is the idea that a lot of marketing over the last few years, again as we search for something, they were calling ‘gamification’. Most of gamification is stupid. It stupid because it doesn’t understand. It based on the video game industry. I’ve been working with a video game company out of Paris for the last year and these guys are the master psychologists. They will make games that kids will play and adults will play for literally 10, 12, 15 hours, which is just incredible to think that’s something so compelling. There are two components here that I really want to address. One is the idea of a reinforcement versus reward. A reinforcement is anything that makes a behavior more likely to occur in the future. But the reinforcement comes after the behavior. Too many times marketers are trying to do bribery. “Here’s a coupon, go buy my product.” And sales people do this a lot where they’ll go, “Let me take you out to a nice restaurant. Let me take you to a ballgame. Let me do all these nice things for you.” And then when you buy the product from me I go away. That’s the first part is to really understand this idea of reinforcement and punishment. Punishment makes a behavior less likely to occur. This Kiip thing sounds very interesting to me. It is geared to where a behavior occurs and then the reinforcement comes. And that’s what’s so hard for most companies to deliver. So I buy chocolate ice cream and I take a bite. I buy it. I bite it. I get the great pleasure, right, so there is a fantastic reinforcement cycle right there. I buy a can of soup and I put it in my pantry – it may be weeks before I open it. And then it may just be an ingredient in a recipe or I may just want to have soup on hand in case I get sick. I don’t get sick so I don’t need it. Again it’s really important for us to understand that our responsibility as marketers is, “How do I reinforce that behavior?” To break the purchase into multiple steps, I may need to have three or four reinforcements built-in before the person even buys the product. If I come to your website, is it easy to navigate or is that punishing? Is ordering easy? And then am I able to get the product quickly? These are all the things that we’ve got to understand from an end-to-end behavioral perspective. One of the people that I’ve interviewed for my book – I’ve become friends with her since then – is Karen Pryor. She’s a world renowned animal trainer. She invented clicker training. But she invented clicker training for no other reason than she couldn’t figure out how to get a fish to the dolphin when it was in the middle of the pond. She couldn’t throw it that far. So she had to create a secondary reinforcer so that the click would represent to the dolphin a reinforcement. And so this is what I’m saying to marketers, you’ve got to figure that out. You’ve got to figure out, “How is it that I’m going to reinforce it when my customer does the right thing?” When you look at web based things, when you look at apps, when you look at all the electronic technology – we have such an ability to do this. One of the examples that I use in my book of when I think of a company that really focused on the idea of a reinforcement versus a bribe was Kohl’s. When you move in they send you a coupon. You will get a coupon from Kohl’s. But when you go buy something with that coupon then they send you another coupon. They are reinforcing the behavior. Now how many times do we send out a coupon for a cereal, or a cookie, or whatever because our numbers are low? We’re just trying to spur some sales. But what we’re doing is we’re disrupting future behavior because now for me the cue is the coupon. If I don’t get a coupon I don’t buy the cereal. And we need to understand from the beginning to the end the behavioral implications of our decisions and to think behaviorally opposed to thinking attitudinally. Everyone wants people to love their brand. I would not care if people did not even know what my band was if they just bought it every time they went to the store. I don’t need you to love me, right, I just need to be part of your habitual behavior.

Amanda: Neale and I spoke briefly about services like Klout who plug into our already existing social worlds to reinforce our daily habits. His take? If the perk impresses you and you’re likely to hold a good impression of the brand then it’s doing its job.

Amanda: I would love to hear your thoughts on something like Klout. It’s on my mind because last week in the mail I got a Klout perk, it was my first one. I’ve been a little apprehensive of Klout, I’m not really sure what it’s about, but I’m gonna give it a try. They sent me Hill’s Cat Food. They sent me an 11 pound bag of cat food. Not only that they sent me cat toys, cat treats, and a handwritten card. That just left a major impression on my mind. I’m kind of a new cat owner. We got our cat a couple month ago. To send an 11 pound bag of food was huge. That’s a huge perk for me. What are your thoughts on Klout for rewarding people for what they’re already doing which is being a social influencer.

Neale: I haven’t paid attention to Klout since it first came out. There’s an idea I want to get across to you which is so subtle and it’s so anti common sense, it’s so weird and counterintuitive, which is that when you process something unconsciously it’s more influential than when you process something consciously. And so much of Klout at the beginning I felt like it was a narcissism thing. I was like, “For god sake you’re trying to make yourself appear to be influential?” Because we want to feel like all of the comments that we’re writing on all of these different websites really matter. And yet the idea definitely had merit. I didn’t know that they were doing the rewards system. This is the whole idea, does getting that package make you want to use Klout more? And if it does then it’s reinforcing. That’s the key. We’re all smart. I go into these boardrooms all the time and everybody wants to be smart. Everybody wants to solve the problem. Everyone wants to figure out the answer. I really am trying to get people to understand that everybody else is thinking the exact same thing they are and that what we need to do is take much more of an approach of continuous experimentation and measurement. Is an 11 pound bag the right amount of food? To me immediately I’m going, “An 11 pound bag is going to have the cat and me habituated on that food.” That’s much better than a trial sample size because once the cat eats that, if I try to switch it off to something else the cat’s not gonna want it. That’s habit-forming. That’s what I want to do. Whatever my marketing campaign is I want to create habit formation. And so you think about 3-D movies. A couple years ago I was called out to be on this group trying to fix Hollywood, it was kind of funny. But it was really interesting to hear these guys. A lot of these are directors, producers, agents for mainstream Hollywood. You sit there and listen to these guys about the 3-D movies. Avatar comes out, which is a fantastic 3-D movie. Now the next movie that comes out in 3-D is going to do great because avatar was so good. But the next movie was crap. I forget which one it was but it was really bad.

Amanda: I can’t remember it.

Neale: But the whole thing is that because it was not a good movie and the 3-D effects were done after shooting, they were just an add-on, the experience was so bad. It’s this whole idea of understanding that it’s cumulative in my brain so that now I am going to become very selective about what movies I see in 3-D. And of course most of these guys felt like 3-D was just going to be a trend. Some movies are really good for IMAX. But you need to make sure that you’re focused on what movies are really going to do well with that technology. It’s this idea that whether it’s Klout or whether it’s Kiip or any of these other kinds of things, it really is about this idea of continually saying, “This is what I’m trying to do. This is the behavior that I’m trying to get to.” And not just the sales. You got to start thinking about all the incremental steps. The behavior you may need to get to is to simply get them in the store. It may be to get them to a website. It may be to get them to trial. It may be to get them to test drive a car. But you’re thinking about what are all of the incremental behaviors that lead up to that sale? But you’re not done. It’s not about customer satisfaction. It’s about this idea of, “How do I make sure that there is a reinforcement after the purchase?” It’s going to lead to this becoming the way I get that thing done. Think about your house when you spill something. Do you grab a paper towel or do you grab the dish rag? In that fraction of a second there’s not a consideration. That fraction of a second is going to make the difference between whether or not Bounty makes money or doesn’t make money. And that fraction of a second is so often the determination between what gets purchased and so often between what gets used. And you’ve got to know how that process occurs for your core customers. It’s not just about getting new customers. It’s about how do I get customers – you think about the funnel, the funnel idea we had about getting all these people in – but its really about getting more people in to using you habitually that is going to be the critical component to not just your revenue but your profitability. Once they’re habitual they’re incredibly efficient. You don’t have to spend the same amount of marketing dollars to get them to buy again.

Amanda: And speaking of habit, Neale, I want to wrap up with you telling us about your book “Habit: The 95% of Behavior Marketers Ignore". Tell us where people can get it and why it’s absolutely essential that they need to read this and integrate it into their own marketing plan.

Neale: The inspiration for the book was really a lot of what we’ve been covering which is that through neuroscience, cognitive psychology, behavioral psychology, behavioral economics, all of these different brain studies reveals that the brain works incredibly differently than we thought it did. This is stuff over the last 15 to 20 years that has given us this incredibly rich nuanced view the brain. The big finding is that most of what we do we do unconsciously. Your unconscious brain is just a dynamo – it’s working all the time. Your conscious brain is fat and lazy and it gets overwhelmed easily. But we all think that our conscious mind is this amazing thing that does all this amazing culture, language, architecture, art, and all this other kind of stuff – which is true. But in the day-to-day stuff the unconscious brain is really about behavior and that’s been this huge disconnect for us. And that’s why the book was really important. It came out in ’08, it’s been out for a while. It’s been translated into 10 different languages. Still available on Amazon. It’s still the best book out there – it’s way better than Duhigg’s book. And again it’s not like I invented something. It’s much more about taking all of these disparate threads from all these different areas and weaving them into a tapestry that a business person – whether they’re in product, whether they’re in brand, doesn’t matter – can understand the implications of this stuff and what we should do from this point with this new understanding of how that should change how we approach the marketplace.

Amanda: Is there a new book coming out? I think that you told me that you might be working on something new. I’m not sure if that’s true or not. Is there something coming down the pipe for you soon again?

Neale: There’s one other thing that we’ve done, which I mentioned earlier, which is the new model of consumer behavior. That’s kind of a booklet which people can contact off the website at sublimebehavior.com. The academic version was published in the Journal of Brand Management. The next book is probably going to be more of translating these things for individuals. How does an individual make changes when their unconscious brain is so influential? I did a TED talk on this in November. I think that’s something that, from the other side of the coin, I feel like there’s so much frustration we have because we want to make changes and we fail because in large part we don’t understand how powerful and influential the unconscious part of the brain is. It’s very difficult to change behavior unless you really understand how your brain works and how it responds to the environment.

Amanda: Absolutely. Neale you’re just a wealth of knowledge. Thank you so much for being on the show. I think that people are really going to get a lot of value out of this. It’s something that’s so complex that people are trying to figure out. There’s a lot of black magic going on with crazy pop culture neuroscience stuff, but you really have broken it down for people specifically that work in branding. Thank you so much for being on today.

Neale: Well Amanda it was a great pleasure, thanks for having me.

Amanda: So what do you think? Does this show help you see branding and behavior in a whole new light? Tweet us with something you learned at @BrandFever using the hashtag #OnBranding.

Amanda: Thank you loyal listeners for tuning in. While you’re listening we’d love if you would give On Branding a rating or review on iTunes. And don’t forget to visit us on the Phase 3 show page at phase3mc.com/onbranding. No matter where you go you’re brand is always on, so take On Branding with you.