373. The Art and Science of Influence w/ Rory Sutherland

Welcome to episode 373 of the Brainy Business Understanding the Psychology of why People Buy in today's episode, I'm excited to introduce you to Rory Sutherland, Vice Chairman of Ogilvy uk. Ready? Let's get started.

You are listening to the Brainy Business Podcast where we dig into the psychology of why people buy and help you incorporate behavioral economics into your business, making it more brain friendly. Now here's your host, Melina Palmer.

Hello hello everyone. My name is Melina Palmer and I want to welcome you to the Brainy Business Podcast. In today's conversation I am joined by Rory Sutherland. If you're interested in behavioral science or marketing, there is a good chance you have heard that name before. Rory is one of the best known people in the field and I'm so honored to have him joining me on the show today. Rory Rory is the Vice Chairman of Ogilvy, something he explains as an attractively vague job title which has allowed him to co found a behavioral science practice within the agency. He works with, a consulting practice of psychology graduates who look for unseen opportunities in consumer behavior. These are the very small contextual changes which can have enormous effects on the decisions people make. For instance, tripling the sales rate of a call center by adding just a few sentences to the script. We do talk about call centers in today's episode, so keep an ear out for that. Lots of agencies will talk about bought, owned and earned media on Rory's team. He says they also look for invented media and discovered media, seeking out those unexpected and inexpensive contextual tweaks that transform the way that people think and act. In our conversation, Rory talks a lot about met unneeds instead of the more commonly discussed unmet needs that we hear about often in life and business and the problems that those things can create. We also talk about Rory's early days, including some of his favorite childhood books and how they led him to this place, and helping companies to work on solving problems they haven't yet noticed. Before founding Ogilvy Change, Rory was a copywriter and Creative director at ogilvy for over 20 years, having joined as a graduate trainee in 1988. He has variously been President of the IPA, Chair of the Judges for the Direct Jury Jury at Cannes, and has spoken at TED Global. He writes regular columns for the Spectator, Market Leader and Impact, and also occasional pieces for Wired. He's the author of multiple books, including the well known Alchemy, the Surprising Power of Ideas which Don't Make Sense and Transport for Humans, which he co authored with Pete DYSON. And spoiler alert, sneak peek alert. He talks a little bit about his next book, which is in the mix when we have our conversation today. So stay tuned for that. Rory is so fun to talk to and such a wealth of information. I can't wait to jump right in really quickly. Before we get into the conversation, I want to be sure you know that there are links in the show, notes for everything, including related past episodes, links to articles and books, including Rory's and more. It's all within the app you're listening to and at the brainy business.com373 now. Let's jump right in. Rory Sutherland, welcome to the Brainy Business podcast.

I was going to say it's an honor. I mean, for those of you watching in full Technicolor, there are two copies of your book behind you, which are what your employees need and can't tell you, what your customer wants and can't tell you. And I have to say, in each case, those eight words are a perfect encapsulation of really what behavioral science is about, which is that the tools we have for uncovering what people truly care about, as distinct from what sort of economic logic suggests they care about on the one hand, or what market research can tell you. Okay. The tools for what I call the third eye of behavioral science, which is understanding the things that logic doesn't necessarily tell you and nor do consumers know how to vocalize those things. That strikes me as effectively the holy grail of behavioral science. So I have slight book title envy. I think those are magnificent titles.

Well, thank you so much and it is a great honor to hear that you feel that way about them.

I will definitely let my publisher know.

It's one of those. I know. I heard in one of your different interview that your original for I think it was for alchemy that you were going to call the book of the that which We Know and Can't say or the Words We Can't Articulate. Sort of the vibe on that.

I think it was something like the thing for which we have no name. And it was very similar. It was very similar in that I was conscious of the fact that there are feelings and this. If you wanted to get really sort of philosophical about this, you could go to the work of Ian McGilchrist, who writes about the divided brain. And language is very much left brain activity. So the capacity to what you might call necessarily accurately vocalize or explain the origins of emotions is actually very poor because you have something experienced, in a sense, in one part of the Brain and the other part of the brain, this is also the work of Gazzaniga as well, is effectively kind of confabulating a plausible sounding story to explain the emotional state, which may have very little to do with the real emotional origins of a particular feeling or indeed a particular behavior. And so I find that it opens up enormous creative possibilities and enormous possibilities for actually two things which I call unmet needs, which is the things that consumers deeply want, but which nobody's giving them, and the other thing which is the counterpoint, which is what I call Met unneeds, which are things that businesses think are really important and spend a lot of money on, but which consumers actually don't care about very much. The example I always give of a Met unneed is when you arrive at a five star home hotel and they insist on trying to take your luggage up to your room even before you know which room you're staying in. Okay?

Right.

And I know that, I know it's well intentioned and it's kind of a hallmark of a high, high status hotel. I've just spent the last nine hours going, don't forget your bag, hold on to your laptop, don't let your bag get out of your sight. Whatever you do, don't let anybody steal your bag. And then this complete stranger tries to take my bag. Okay? I know they probably work for the hotel, but I can do without that anxiety. Certainly. I'm, you know, I'm perfectly capable physically of maneuvering a wheeled suitcase into a lift. I don't travel. I'm not Elton John. I don't travel with Louis Vuitton steamer trunks. Okay? I'm perfectly capable of manhandling my own luggage. So that's one of those things I describe as a met unneed. And by the way, I think that's important because met unneeds are a massively wasteful misdirection of effort which can be better deployed somewhere else. Another example would be, in a sense, with FedEx. Did people really want the parcel to get there overnight or did they just want to know where it was? Okay. In other words, did they want it there because it needed to meet a deadline, or did they want it to go very fast to minimize the period in which they were experiencing anxiety and uncertainty? Which is where I always talk about the Uber map. Do people actually want their car to turn up sooner because they're in a massive hurry, or is it just that they hate the uncertainty of waiting for a car whose location and indeed very existence is uncertain to them? Answering those psychological questions. I often argue that Uber, there are whole billion dollar businesses which really rest on the accidental or intuitive discovery of an unspoken psychological disposition. I mean, okay, if you want my Extreme case readers, I mean, American Express effectively, okay, built a billion. Well, they actually derived several billion dollars of revenue from a single direct mail letter written by Ogilvy, which started, quite frankly, the American Express card is not for everyone. And not everyone who applies for it is approved. Okay? Which was, you know, basically pure Cialdini. You know, okay, this isn't for everyone. Okay. I mean, the bizarre thing about Cialdini's rules is that they are in many cases sort of self contradictory. You know, they're social proof, which is everybody does this. So it's a great idea. And not many people have one of these. That must be great, you know, and of course, in different contexts you can deploy one or the other. It'd be very silly to try and make Coke exclusive. Okay, Right. But I mean, it is fascinating because I often joke that the most extreme case is Reader's Digest, where you're too young to remember this, but you used to get a Reader's Digest prize draw entry and you'd enter the prize draw that was free because legally you couldn't make purchase a requirement of prize draw entry. But you stuck on the envelope a massive sticker that said yes, if you're subscribing to Rena's Digest, which was highly colorful. And if you didn't want to subscribe to Rena's Digest, you could enter the prize drawer, but you stuck a massive sticker on the envelope which was like black and white and looked a bit dismal and said no. And it went on. I think it was either on the outside of the envelope. Now, obviously a large part of that was that people thought that the winner would be drawn more likely from the people who'd said yes, even though I think they were entirely legitimate. But a large part of that, that was a billion dollar business, partly based on the fact that people really like sticking stickers on things. Now, obviously it's discomforting for economists and people who want to derive a science out of human behavior to acknowledge the fact that apparently trivial things can have billion dollar effects. But markets are like, you know, weather systems, they're complex systems and there are butterfly effects. And I find that really, really interesting. Still envying your book titles, by the way.

Well, thank you.

Well, that I have so many things.

We could talk about. I've been such a big fan of yours for so long and I was thinking about. So I know you started with direct mail, right? Was a lot of what you did early on with your time at Ogilvy, and in that, learning a lot about writing copy and whatnot. So how do you think, what do you think made you successful in that? And that has helped you through your career to grow into what you do now?

I mean, where, where does my interest in behavioral science come from? And why was it that I felt so grateful when it was given a name and it was formalized? Okay, wrongly, it was formalized as behavioral economics or behavioral science. And really it is just a branch of psychology and we ought to admit that. But nonetheless, behavioral economics was a great marketing ploy to get left brain people to take psychology seriously. Okay. It overcame what you might call fluffiness aversion that you tend to find in people of a particular disposition. And one of the. So the earliest ones, the things that I regard as formative is when I was a very young kid, I had a children's book which was full of Aesop's fables. Now, Aesop lived in the 6th century BC and I may be wrong. I'm just trying to think probably, and I'm probably doing an injustice to some Eastern philosopher or other, but probably Aesop was the first, in a sense, behavioral scientist in that quite a lot of those fables. Sweet, sour, what is it? Bitter sour grapes. Okay. Dog in the manger. Okay. A lot of those sort of psychological quirks would detail. I mean, the guy's, you know, genius. I think he was probably a slave. They're not entirely sure who he was, but I mean, he was before Plato. Jesus was also a behavioral scientist. I mean, if you look at the lost sheep, okay, the parable of the Vineyard, many, many of Jesus's parables are actually either complex systems or behavioral science. What you might call, I guess, analogies. Lost sheep is obviously loss aversion and so on. You could argue the parable of the Vineyard is proportionality bias and so on and so forth. The parable of the Sower is kind of systems thinking. Okay, right. And so, and then we move through and it's fair to say that Adam Smith was basically a philosopher, he wasn't economist. And the other people that always interest me, by the way, the other influence, before I even started work was just reading things like Sherlock Holmes short stories, which are the business of problem solving backwards. In other words, it's not thinking forwards, which is this has happened, therefore this will happen next. It's the much more speculative and creative business of Going, this has happened. What can the conditions have been beforehand that led to this outcome? So it's reasoning backwards, or technically I think, called abductive inference. In other words, it involves some degree of imagination, speculation or hypothesis. It isn't just a linear and sequential process of logic. And that's in a sense, actually, although it's always depicted as scientific, it's actually highly creative. I know Holmes is, and I think this is one of those kind of myths, which is Holmes is presented as this supremely rational person. But if you're really to actually describe Sherlock Holmes as a fictional character, he's a spectacularly creative person. The dog that didn't bark in the nighttime, noticing something that didn't happen, that's a leap of the imagination. It's not a leap of deductive logic of any kind. Okay. And then of course, then of course I start working in direction marketing. And the whole law of direct marketing was full of these things through testing. And bear in mind the tests generally replicated because we continue to do them. They involved large budgets and very, very large control groups and large test cells because you're dealing with 50,000 people, not 27 graduate students in a pub. Okay. And time after time, it revealed findings that were completely, completely at odds with what you would logically assume. Okay. And the early epiphany. I'm sorry to be people who've heard this story before, but I don't always tell it. Okay, we did this experiment, okay? Now the experiment was we used to write to people who were customers, subscribers, as they were once called to the telephone company. And we just introduced digital exchanges in the UK which made it possible for you to use the star and pound or hash buttons on your phone to do a few whizzy things like divert your calls, turn on call waiting, a few other things. I can't remember, wake up calls, that kind of stuff. Okay? And for whatever reason, they decided not to charge for these one at a time, but to charge people an extra three pounds a month if they wanted to add this functionality, their phone. And we used to write to people because that's all you could do then because there wasn't an Internet. And they could reply by phone or by post if they wanted this, they just ticked a box, they sent the free post envelope back, or they could phone a free telephone number and they could then effectively order the product. Simple as that. Either a tick or a single free phone call. And we had a mad client and it was slightly bonkers, but he resented giving all this money to the postal Service because they were the phone company. And it's possible that he wanted to maintain numbers at the call center for some reason by increasing the volume of calls. I have no idea what his ulterior motive was, but he said, we just want to do. I just want to get this postal option, take it away, and just give people a phone number to call. We said, well, we will do that, but we do know enough about direct marketing that we think you need to test that before you do it. So three randomly selected cells, 50,000 people each. 50,000 people got phone only as a response rate, 50,000 people got post only as a response rate, and 50,000 people got as before, the choice of both, okay, we obviously didn't do 50,000 tests where you couldn't vote, you couldn't back, because that would have been dumb. Okay, so we did those three tests and the response rates. I wish I had the full data, but I can remember it within kind of a decimal point or so. And it was like, phone only got a 2.1% response rate, post only got a 5% response rate. Okay. And a choice of both got a 7% response rate. Now, okay, I accept the fact that people like Richard Thale have written about things like called what you might call transaction utility, and economists understand transaction costs. But broadly speaking, the way an economist would assume this would work is that. Basically, you want the product or you don't want the product at the price stated. And the means of ordering the product, which is, let's face it, only 2 minutes work either way, shouldn't have a material effect on how many people want that product. But it turns out that it did to an astounding extent. Now, it may be that the addition of choice stops people thinking of do I want this product? And moves them on to thinking, which way shall I order it? Which may explain the uplift. But even so, the fact that there's a sort of practically a kind of two and a half to one ratio between postal orders and phone orders is pretty weird. Okay, that's pretty weird. Okay, so enough to say that with a high degree of confidence, there's something else going on. Now, what I think arose from that is, by the way, if I'm basically slightly reverse engineering my own life here, because it didn't really happen like this at the time when the Internet came along. Having known about this finding, what I immediately realized was that the interface fundamentally determines the behavior and that giving people a new way of buying things or a new way of interacting with companies would significantly increase levels of interaction and there would be things you could sell on the Internet which you couldn't sell over the phone or by post, hence Amazon. Okay, basically. Okay. And it also explains actually multi channel. But it's also, by the way, that same finding is also a word of caution to people who go, the future is going to be all online. No. Because depending on context, mood, circumstances, temperament, a whole load of contextual factors, people will at any given moment have a strong preference towards one or other mode of interaction. And therefore, if you are trying to drive people to interact with you exclusively through one medium, you're missing out on a very large part of the market at any given moment. So those kind of findings strike me as really, really important because they. And this is what I like to do. The other big influence on my life is effectively Darwinian, both evolutionary psychology and evolutionary thinking, because it's a science of how things change rather than the science of how things are. Darwin's theory is fundamentally different than Newton's stuff because it's a theory of how things get from one place to another place, not a theory of how things are eternally. You know, it's not a theory with eternal laws, it's effectively laws of change. And the Darwin thing is also, I think, relevant because it helps you think in complex system terms. I often find that colleagues who've studied biology or genetics or one of the biological sciences make very good advertising people because they tend to think in a systems thinking way, not a kind of Newtonian linear way. So that, you know, that also encouraged me to think that actually it effectively taught me that a large part of progress is variation and selection, not intent. Okay. And so that's also, along with my direct marketing background, made me a huge devotee of effectively experimentation that actually, yeah, what behavioral science often does is it tells you what's worth testing. And some of those things are things which seem silly to logical people because they don't seem worth testing because you think the answer's obvious, but actually it isn't. You know, the best answer. I know you're writing a book on the psychology of price and a very, very necessary book. And one of, you know, one of the most important things is I spoke to real price experts and I said, okay, when do you do round pound pricing, as we call it? You know, you drop £1, £2, £5 for something, when do you do 299, 395? In other words, when do you do 90x pricing and when do you do completely fluid pricing, which is £3.17? £2.42. Okay. That tends to be the hallmark of sort of lower price down market retailers tends to be okay. But it does two things. It does reduce the price the people who are really price dependent. But it also actually signals that we're really, we're not rounding up here. We're really, really tight. And the only answer they could come up with, they could say is it's always worth testing because it makes a huge difference. But we can't actually generalize. We have never found a generalizable law as to which you should deploy in certain circumstances. The only generalizable law we can actually derive at is you need to test this.

Yeah. Yep. I'm a huge advocate of testing as well. I'm sure that's, you know, shocking, of.

Course, but I mean, you know, because the replication crisis. First point I'll make is that none of the Cialdini things. And I think we need to give Robert Cialdini a big shout out here. I do this occasionally because before there was thinking fast and slow, before there was Richard Thaler, there was Bob Cialdini for sure. Yes.

Friend of the show. We'll link to his episode in the show Notes.

Love him.

Big, big shout out to Bob. And all his stuff is basically fundamentally replicable and true. And by the way, I mean, where the evolutionary psychology comes in, generally speaking, I've been suspicious. First of all, in business, you don't care if things don't replicate. They simply have to be true for your specific situation. And by the way, I was on a call defending the experiment in terms of sign at the top versus sign at the bottom. And I said, I don't know about the data, but I always thought that would work on a paper form. They've attempted to replicate it on the Internet. That's different. Because when you change your mind on a paper form, you have to go back and cross out your original answers, whereas on the Internet you can actually tweak them on the assumption that no one knows. Although they probably do know. I think insurance companies do look at people who continually go and tweak the variables to try and get the price down on the assumption that they're lying. But the assumption of the person filling in that web page is, ooh, ooh, oh, I've got to sign it now. I better go and be a bit more truthful. Okay. And they can actually work backwards, which people on a paper form can only do when it's visible. And sure enough, someone who is on my call said, we did exactly the same experiment with Paper. And it did replicate for us. It made a big difference. So I'm going to defend that as a replicable and plausible finding. After all, in the legal system in the U.S. you swear an oath to tell the truth in court before you give evidence, not at the end. Okay. It's not a stupid idea. Right? Okay. Right. Okay. You know, you don't want people telling, I'll let it lies again. Now you have to swear on the Bible. Hold on, I take it all back. Right. I mean, that theory strikes me entirely plausible. Just because some people have failed to replicate it doesn't mean it's not a useful thing. Worth testing. Emphatically worth testing. Okay. The second thing is that I generally find that things that make either logical sense, when you look at second order human consideration, all the things that make sense in evolutionary terms, you can understand. Okay? If you look at all Bob's findings, the 6, now 7, now 8 rules, they make complete sense in an evolutionary setting. Reciprocation, okay, you can completely understand that in any social species, a propensity to reciprocate, or even a propensity to actually be generous by default is hugely important to your survival and reproductive prospects within a social setting. It makes complete sense that nature selected for reciprocation, that it's selected for scarcity, okay. That it's selected for social proof, that it's selected for habit. Okay? All of those things make absolute sense because we have to survive in a world of imperfect information and those kind of heuristics, which is if everybody else is eating the purple berries, they're probably okay. Or if this is a rare occurrence, I need to pay more attention to it, those kind of things. And also there's, you know, there's, after all, there's the reproductive urge where you want to stand out and there's the survival urge where you want to fit in. Okay. You know, generally, you know, in dating you probably want to emphasize your unusual qualities, whereas in other settings you want to actually meld in with a group. And so all of Cialdini's things to me make complete sense in an evolutionary. Once you understand that the brain is the product of evolution and that evolution doesn't stop above the neck, they make sense. And sure enough, I think they pretty much reliably replicate a lot. They'll always be freak circumstances. And so I'm going to do a big shout out to Cialdinius for being really, in a sense, the 20th century. I mean, okay, we can go back to people like Alais and the paradox and we can go back to some of the French people who don't get enough credit, actually, and a couple of Brits like Sugden and whatever his name is, they're both at the University of Essex who've done some fantastic work, who probably don't get the kind of shout outs they deserve. What was his name? Grim. Oh, dear. I'll remember their names. They have a great thing, sort of regret theory, that what we're trying to do is to minimize the risk of. Of regret, that we use that as a kind of, you know, heuristic in decision making. Well, it seems elegantly simple to me, certainly, and seems to explain quite a lot.

Yeah, definitely. And yeah, love, love shout outs, Rob.

And one of the things that I really. Oh, evolutionary piece.

I have of course, linked to Sam Tatum's episode about evolutionary ideas and his book in the show notes as well.

Gotta do shout outs for Sam.

Hi, Sam.

So I end every episode of the brainy business with be thoughtful.

You know, remember to be thoughtful.

And I'm a big advocate of asking good questions and not being afraid to ask the questions that no one else is asking.

Absolutely right. Dare to be trivial. You'll only come to an interesting answer if you start with an interesting question. And the modern business world makes it too easy to be boringly, shallowly logical, or what Nassim Taleb would call naive rationality. This seems to make sense. I won't get fired for doing this, therefore that's what I'm going to do. And one of the things I think we've got to restore is to build in a period of time before we embark on any project where we are allowed to be Pythonesque. And that's, by the way, another huge influence. I think we. One of the influences in both evolutionary psychology and in behavioral science, I think, is comedy. I think it's one of the. Because one way of being creative is to actually have a comedic take. You know, comedy notices things. Comedy notices things that, as you said, that everybody wants but nobody talks about. Okay.

Yeah.

So, you know, I think that the contribution the Pythons made to creativity in Britain and the subsequent 30 years was, you know, is actually highly appreciable. And to America, of course, that. That was the strangest thing of all, that they were popular in the United States. They never dreamt for a millisecond that they'd be popular. They thought. They experimented with places like Denmark and they thought, well, our pop art comedy is so zany and kind of peculiarly British as they thought they. And it was one PBS station in Dallas that gave them their break. And this PBS guy in Dallas just started broadcasting Python stuff. You would have thought if you were stereotyping people. Now, just to be clear, I think Texans are great. I love the place. Okay, but if you're stereotyping Texans, you say that's the last state in which you try and launch Monty Python. Okay, Dallas, probably, you know, you know, Dallas would be, you know, well down the list after, you know, weird places in Connecticut or the west coast of California or whatever. But no, no, it was Dallas and it just went huge. And then of course, all the other PBS stations being desperate for content, followed suit. But, but, but I mean, the, the, the value of that kind of what you might call absurdist humor. I don't, I think, you know, I don't think you should be a behavioral scientist if you don't have a sense of humor. Because, I mean, and part of it is that it's what people. It's not just the Ed McGilchrist thing of how the brain sees the world. A further part of that's how the brain wants the world to be. And to do this job, you've just got to accept that it's messy, it's funny, it's ridiculous, but it's interesting. And you're up against the forces of people who are desperate for the world to make sense. You know, they're desperate to come up with what you might call the shallow, rational explanation for. Dysons are very popular vacuum cleaners because they don't lose suction when a very large part of the appeal is they look great and we perfectly enjoy seeing the dust accumulate inside. If you'd made dystons opaque rather than transparent, I don't think they would have sold. Certainly not at those prices. Okay? People are desperate for the world to make sense, particularly if you're in a sense making job where logic is your stock and trade. And look, it really does. As I said, there are billion dollar businesses that are worth billions of dollars. Netflix, I'll tell you a lovely story about that, which is a great behavioral science example. Poor old Blockbuster are ridiculed for refusing to buy Netflix for $50 million. But at the time they turned down the opportunity to buy Netflix, Netflix didn't have a good idea. It was DVD rentals through the post. Okay, well, there were lots of people doing that. There were several other Love Film and several other competitors. Okay? And let's face it, Blockbuster could have replicated that model very easily. What Netflix did was a piece of what P and G called commercial innovation. In a moment of desperation, because they weren't cutting through, they hit this offer, which was, if I've got it right, it's 3D. No, sorry, three DVDs at any time. Replace them as often as you like. No late fees ever. 1995amonth. And 1995 at the time was about the price of buying a dvd. And it was also the price of renting a DVD if you didn't get around to returning it very quickly, which MEANT you spent 1995 and you didn't even get to keep it. And for whatever reason, quite a high risk pricing offer, because when you think about it, if people had continued to recycle their DVDs every single night, you would have lost a fortune just on the postage costs, okay? And it was effectively banking on human inertia that people would start in month one, they'd probably watch six or eight films, but actually in month two, they'd fall back to two or three, which is what happened, which is why Netflix still exists. But that was the magic formula. It wasn't DVDs through the post. The magic formula was getting the pricing exactly right. And as you said, I think the psychology of price is one of the most interesting things, because it is a total blind spot in economic terms, genuinely in that they think you should. They have this daft kind of supply demand curve, which is probably just about reasonable if you're trading some commodity, but is a total nonsense in consumer markets, okay? I mean, you know, guys have rescued whole vineyards here by tripling the price of the product, you know, because no one wants to buy champagne or sparkling wine if the recipient thinks you got it for 8.95, right? Okay? It doesn't do its purpose of signaling generosity. It's a Veblen good, okay? And there are lots of Veblen goods. There are Veblen goods all over the bloody place, to be absolutely honest. And so price is a really interesting one because you can't research it, because people talk bollocks, okay? They just give an answer that seems to make sense. No one will ever say to you, I wouldn't buy this at £5.50, but I would at 9.95. But experimentation shows that is exactly what happens. And the example I always give, again, apologies, people who heard this before is, let's take an economic assumption, okay? You have two products. One of them has more features, more functionality than the other. And the one that has more features and more functionality also cost less than the other. Now, economic logic would go, well that's a no brainer. That's a complete slam dunk. Higher utility, lower price, new buy product B no, because consumers then get confused. They go, well if that product really was better, I'd expect the guy to charge more for it. So the fact that it's cheaper probably means there's something that I don't know about. Now the net result of that is they don't buy either of them them. And that actually happened when Nest launched the Virtuo coffee machine and I rang them up in a panic and said, you've got the Virtuo and the Virtuo plus which opens automatically rather than manually and you're pricing them at the same price. That is going to totally screw with consumers brains. You can't have a better product at the same price as a basic product because at this point now they can no longer make sense of their decision in retrospect and so they won't buy either of them. I said just add a fiver to the Vertuo plus or subtract a fiver from the other one, then you're back in the game. But I said you can't do that because it creates just too much dissonance. People can't effectively understand what the seller is trying to do, which means they're not really prepared to buy.

Yep. So the book, the Truth About Pricing, my book will be out by the time this episode comes out, which is very exciting. And as the audience here potentially knows, one of the things that the truth is that pricing isn't about the price. The psychology matters and everything that happens before the price matters more than the price itself.

Well, the phrase I use is to economists, price is a number. To consumers, prices of feeling love that. And it's also a contextually mediated feeling which is what seems expensive in one context or one frame can seem really cheap in another.

Oh yeah, for sure. I'm all about always talking about context.

I confess only today I've got to install an electric car charger and originally an electrician came around who said you'll need to tap into the three phase supply. We'll need to talk to the actual national power networks and run a line from your local, whatever it's called, substation and it was going to cost 7,000 quid and this other electrician came along and said no, no, the cable you've got to the garage is fine. This guy was telling you rubbish. Okay, you don't need to spend 7,000 quid. I think I can do it for one or two. I basically. I almost said to him, we'll just charge two, okay? Because I'm so pathetically grateful that it's so much insanely cheaper than I thought it was going to be that I'm really not that bothered whether you charge me one or two. Because by comparison to what I was assuming I had to pay, you'd be a bargain if you charged me three. Okay? So, you know, that was literally the case where I did. I actually made the awful. From a negotiating point of view, I made the awful thing of saying to him, look, mate, partly to get him to do it sooner, but I said, look, mate, I'm not being. I'm not being super price sensitive here, you know, you've saved me a fortune. And in fairness, I think that's reciprocation, because he'd saved me a fortune through his expertise and honest advice. By consequence, I want to reward the guy, but I think there's an element of reciprocation there. One of the saddest things in the world if. And you're Americans, you tip people for doing the most banal things, okay? The one thing I'd like to, you know, you're not as bad as the French, where you have to tip someone for using a public lavatory who sits there in a chair for no reason. Never understood that one. Okay? But the one thing I love is I love someone to invent a mechanism where you could tip customer service call center agents. So if you look at the Cialdini principle of reciprocation, I think that in a just world, a really good call center operative should be able to earn 120, 150,000 a year, easy, you know? Okay, now, okay, how many calls are they taking a year? Let's say they take 20 calls a day, 30 calls a day, 200 days a year. That's a lot of customer interactions, and it's a lot of really decisive. Now, okay, shout out here to the Ford Motor Company. Shout out to Zoom. And finally, a shout out to Amazon, who solved a weird problem I had with a new product I had. In all three cases, they were highly complex technical products. The person instantly knew what I was talking about and told me what to do. And if I had the opportunity then to say, give that person a fiver, which is £5, $7. Okay for your. Okay. I would have done it like, you know, if I could press one to give the person a fiver, I would have done it like a shot, okay? Because the value of those people is greater than rubies. And yet they're probably being like paid by the hour. They're not really, you know, I mean, some of them are possibly on minimum wage. No, no, no. Really good customer service people should be rich. Because what we've got to fight against is this ghastly narrative of the accentures and the tech companies and the world that you make everything better by automating it. You don't. You make everything better by giving people a choice of automation and human interaction. And indeed, customer service over zoom, I think is potentially a very powerful thing which we need to explore. And this whole thing that I mentioned earlier, which is it has to be an omnichannel world because people don't like being trammeled into one particular. The most annoying thing of all is you spend 20 minutes trying to solve a problem on the web. You give up. You then spend 10 minutes finding the phone number on the web because they've buried it in something like, you know, at the very bottom of the kind of decision tree. And then you ring them up and you get a two minute message saying, why don't you go on the web, okay? Now it's not difficult to solve that problem. You have a different phone number on the web which accepts the fact that, that the caller has tried to solve the problem online and failed. And customer service also the other thing is there are too many rules given to customer service operatives because great customer service depends on the capacity for the person providing the service to improvise and extemporize to some degree. I see that you have a special circumstance, okay? And therefore I'm going to do what I normally wouldn't do. That is actually one of the sort of core moments of a decisive customer service moment when someone says, I'm going to breach the usual rules here because I accept the fact that your circumstances are different or your circumstances are exceptional. And so this whole business of trying to algorithmize and codify everything so that you reduce people into fungible agents who can't accumulate experience or tacit knowledge or anything else because, oh dear, it might make them indispensable and expensive, is a huge scam perpetrated on a whole service class across the world. It's a massive, outrageous scam perpetrated by consultants and general tech people who sell sort of the false God of total automation. The point about automated solutions is they're really, really great. When everything goes to plan, the second you go off piste, it's a f. Flaming, flaming catastrophe. Right? You know, literally a catastrophe. I'll tell you a story about that. I had to claim on a detached retina, which happened in Switzerland. So I had to claim off my credit card company's insurance partner to claim for the medical bills, for the operation to reattach the retina. And it took probably 30 hours of my wife's life sorting out the problem. The problem, it turned out, at the end of 30 hours was that the hospital had invoiced us and the insurance company couldn't pay an invoice which wasn't addressed to them. Right. But there was no one because this process had slightly deviated from the norm effectively. And what happens is people design these systems for optimal efficiency for the perfect outcome. They don't design them for resilience and they don't design them for adaptivity. And I think what the lesson of evolution here, the lesson of evolutionary science is that we're optimized for multiple conflicting things. There's a trade off between, I guess, how attractive you are and how fit you are. Babies want to be big, which isn't great for the mother when they're born. Okay, right. Babies want to be born late, which is rather unfortunate for the mother who has to give birth. There are conflicting forces and the idea of a single thing you optimize for without trade offs elsewhere is mistaken. And if you optimize for one thing, if you optimize for efficiency, you're probably putting yourself at risk of under optimizing for resilience. And there are also things, which is a very useful phrase, which bizarrely comes from the economist Paul Samuelson, which is there are many things which are micro efficient, efficient, but macro inefficient. In other words, by optimizing the part, you are not optimizing the whole. There's a wonderful essay you can look at which is called When Slower is Faster. So there are certain processes where slowing the process down at one part of the process makes the end to end process, of which it is a part actually quicker to be completed. It's really, really interesting.

Awesome. We'll definitely link to that one in the show notes for everyone so they can can check that out.

And just as we close out here, for people who are looking to be more thoughtful and see what isn't there.

Some of what you've been talking about. Do you have recommendations for questions to.

Ask and or I'm fascinated, I have to ask. Do you spend a lot of your days just thinking and reading?

I have this vision of you sitting and reading and being thoughtful.

My reading's taking a bit of a hit, unfortunately. I'm now, just had a cataract operation, but my reading took a bit of a hit for the year after this bloody eye operation because I just. Oh, yeah, no point in getting spectacle reading glasses because you don't have to throw them out again. You'd have to, they'd have to be prescription. And I don't read nearly as much. I'm getting into audio books more and more in the car particularly I've got noise canceling headphones, so I use audio books more. I don't read as much as I like. What I do do is I browse extensively online, very extensively. One tip I recommend is just get good at using Google, which sounds like the most bizarre banal advice. Okay? But actually there are a whole load of techniques you can use in Google, like bracketing things, putting plus or minus in front of things, putting inverted commas around things which significantly improve the value you can derive from a search. And yet, weirdly, nobody's really taught them. Yeah, I know it sounds really strange, but there's a whole goo we're talking now about it with AI, which is you have this so far, largely imaginary class of people called prompt engineers, whose skill is prompting AI with exactly the right definition of a problem. But actually, before that, we need actually people just to be taught how to use Google really, really well, because that makes a big difference, your ability to find things that are relevant and also surprising. Actually, the other thing I do which is useful is I write quite a lot, so I write for the Spectator once every two weeks in the uk. And that's also useful because this is actually one of the problems with AI, which is that quite often, if you think about your student essays when you were an undergraduate, okay, you haven't kept any of them, you've never reread any of them as pieces of writing, they're worthless. What's the value is the process you went through in order to write them. Getting your thoughts in a row, constructing a thesis, ordering your thoughts, structuring the whole piece. What does worry me about AI is the value of writing is very, in many cases is not actually the product, it's the process. I think that's also true of advertising, by the way. I think the value of doing an advertising campaign is as much in the byproduct of the process you have to go through, which is spending three or four weeks thinking, who are we talking to? Why should they care? What makes us distinctive? Why should they choose us? What are the circumstances in which the choice is presented to them? Is there, you know, asking all those questions, which is the Customer Copernicus? As there's a wonderful book called the Customer Copernicus which I British colleague of mine has just brought out. That's that actually the insights that derive from having to go through the process of producing an advertisement as a human being made me more valuable than the resulting advertisement, even if, you know, even when it runs. And so I think there's something there which we're in danger of taking what you might call false shortcuts, where actually it's the journey that's the value as much as the destination is.

Yeah, for sure. I worked at an advertising agency just out of college and I remember one of my mentors there, one of the owners of the agency, he had said to me, I was given a tagline, you know, I could write a tagline for this client. And he said to take an hour and write everything you can think of on the notebook and then put it away. And then the next day you spend another hour writing everything you can think of, put it away. And then on day three, and then day four, he said, and by the end of day four, you might have something worth using.

Brilliant. Brilliant. And actually as both. I mean, several people. John Cleese has said this in terms of. In his book on creativity, Creativity a Shortened and Cheerful Guide, which is wonderful. And Rick Rubin says the same thing. It's kind of ready when it's ready. It's not a process you can rush. And actually attempts by automation to short circuit this process may actually destroy more value than they create. And we have to be very. It's a bit like the thing which is that where they are conscious of this is in the airline industry, which is the extent to which, okay, the autopilot deprives pilots of their instinctive flying skills, which they may need in a hurry if the autopilot suddenly malfunctions. And so the airline industry is astute enough to know that you have to put people through a lot of training in both simulations and they have to make a certain number of landings manually so they don't actually become de skilled by the technology. And that strikes me as do we actually become deskilled in the quality of our thinking by technology that affects to do it for us.

Yeah, wonderful question.

I think that's a really. I. I'm sure you can appreciate that everybody probably says they could talk to you all day and forever and ever, but I want to be respectful of your time and we'll go ahead and close out here.

I think that's such an Interesting point.

It would be lovely if you could come to Nudge Stock and Speak and pop me an email to that effect, because you've got three books which are tremendous. I'll obviously try and catch up with you if ever I come out to Seattle. I do actually have relatives in Washington state, but it's unlikely I'll be visiting them because he's in prison for kidnapping and attempted murder. So he is quite a distant relative. I hasten to add it. Not my brother, but I have a friend who did the family tree. It's very interesting, actually, that, you know, half my family tree is actually pretty respectable. And they're kind of academics or, you know, doctors or whatever. And there's also the wild half of the family who are kind of bikers and slight rogues. Okay. Now, the only point I'll make in defense of the rogue side of the family is they also produce the war heroes. You know, the guy who got a DFC and bar for three missions as the rear gunner in the Lancaster Bomber, he was from the slightly roguish side of the family. So, again, you know, maybe in evolutionary terms, we actually need these people, even though they're obtained most of the time.

Well, there's a balance to all of it, for sure.

There is.

Emphatically awesome. Well, thank you again so much for joining me. And we'll put links for nudge stock. I was going to do that anyway. I talk about it in my books. I love what you've done with Nudge stock and anything else for people that are wanting to follow you, to learn.

More, to connect, things like that.

Twitter. I'm more active on LinkedIn than I was. I've got people to nudge me into using LinkedIn more and subscribe to the Spectator. And of course, you can buy the book Alchemy. And I do have a new book coming out sometimes. I think the submission dates, like December 24th or January 25th, it's probably shifted a bit, but that will be partly looking at the leitmotif for it. They're not. The entire content is looking at great advertising, great advertising campaigns and showing what they can teach us about effective persuasion and effective behavioral change.

Ooh, I love that. I actually had an article saved from that you did with 42 courses. Like I mentioned, Chris Rollinson's a friend about your top 10 favorite ads that I didn't have time to ask you about. You mentioned a couple of them while we were in the show today.

That's on there. Yeah, yeah. Avis now, Cialdini one of Cialdini's principles is the admission of a weakness somehow confers persuasive strength. Avis, we're number two, so we try harder is perhaps the masterly exposition of that insight. So AD people kind of knew this stuff, okay, before there was behavioral science. What they failed to do was to codify it. They failed to do a kind of class, kind of Linnaean classification of different, you know, of different ways in which persuasion worked.

Yeah, yeah, definitely. Well, I can't wait to read that one. And definitely Open invite. Would love to have you back to talk about the new book when it's in its rounds.

Absolutely, I'd be delighted. I'd love to. I'd love to go to Seattle one day. I've never been. I've been to Vancouver, which I absolutely love.

Canada or Washington? Vancouver.

Sorry? Vancouver, Canada. Yeah, yeah. Which is quite close. Okay. Different country. But the Northwest looks fantastic. It looks absolutely brilliant.

Yes, it's beautiful. Well, when you come here, let me know and definitely we'll follow up on nudge stock and everything.

You can also kind of do British gardening there, can't you? Because of the climate?

For sure.

Because I always remember boarding a flight, British Airways flight, I think I was going to Chicago, but the check in desk next to me was full of a bunch of people aged mostly female, aged about 60, who were all flying back to Seattle, who'd been on a gardening tour of England and of course.

And probably got a bunch of roses.

If you live in Arizona, there's limits to what you can actually learn and apply. But apparently what they were explaining to me is if you live in Washington state, actually this stuff is pretty applicable.

Very much so.

It rains a lot is basically what they're saying.

Yeah, definitely. Definitely. Awesome. Well, thank you again, Rory. It's been a delight to chat with you and I look forward to the next one.

Likewise. Absolute pleasure. Thank you very much indeed. Have a great weekend too.

You too. Thank you again to Rory Sutherland for joining me on the show today. What got your brain buzzing in today's conversation? For me, it was such a joy and honor to finally meet and chat with Rory. I've of course known of him and been fascinated by his work and ideas for years. So it was really cool to finally have this conversation. And speaking of honors, how cool for someone like Rory to say he has title envy for my books. Thanks, Mango, for your support with that. Amazing. Because I have my roots in advertising, I have a real affinity for people like Rory. I know I mentioned one of my early mentors and that first tagline project. I got to take the lead on this ability to see what isn't seen, to ask the questions others are afraid to ask, to wonder and take time to read and research stuff that that doesn't make sense on the surface, to find brilliant insight. I love and admire those qualities and that approach to the world, which is one of the many reasons I've always loved Rory's work and hearing his thoughts. Even something as seemingly simple as humor and how it ties in with behavioral science is so smart it seems obvious.

When you hear it, but that doesn't.

Mean anyone else was really talking about it yet. It takes a lot of work work to get to the clear, simple and seemingly obvious stuff, and Rory truly is a master of that. What inspired you most from this conversation? We'd love to hear about it. Come find us on Twitter or X or whatever you call it these days where he is at Rory Sutherland and I'm the Brainy Biz. Or of course on LinkedIn where he's still Rory Sutherland and I'm Melina Palmer. There are links in the show notes to make it easy for you, along with links to related books, including Rory's and his colleague Sam Tatum's, which we talked about in the episode. Sam's episode is actually my top recommended next episode for you, if you haven't heard it yet, talking about evolutionary ideas so great in it. We also talk more about Nudge Stock, which Rory briefly mentioned at the end there, but we didn't have time to get too much today. So hopefully we can talk about this year's Nudge stock when Rory comes back to to discuss that next book. If you have questions or thoughts or things you want me to ask Rory the next time I talk to him, please do let me know. Again, reach out to us on social media in case you're looking for those show notes. They are waiting for you in the app you're listening to and at the brainy business.com373 and thank you again to Rory Sutherland for joining me on the show today. It was a delight to chat with, with and learn from you. Join me Tuesday for another Brainy episode of the Brainy Business Podcast. It's going to be a lot of fun. You won't want to miss it. Until then. Thanks again for listening and learning with me and remember to be thoughtful.

Thank you for listening to the Brainy Business Podcast. Melina offers virtual strategy sessions, workshops and other services to help businesses be more brain friendly. For more free resources, visit thebrainybusiness.com.