444. Bridging the Intention-Action Gap: Behavioral Insights with Dr. Sudy Majd

Welcome to episode 444 of the Brainy Business Understanding the Psychology of why People Buy in today's episode, I'm excited to introduce you to Dr. Sudhi Majd. 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. Today's episode is all about applying behavioral science at Candid, a company that helps people straighten their teeth with clear aligners without ever having to go into an office. There is definitely some intention action gap at play here as people don't always do what they say they're going to do or even what they want to do. So how might you nudge them to return those kits and get started with the program? Dr. Sudhi Majd shares all about that in today's conversation, which originally aired back in early April 2020. Sudhi is a leader and behavioral scientist with expertise in E commerce purchasing behaviors. She largely focuses on end to end experiences of users, from crafting email campaigns to checkout flows with a goal of reducing costs, increasing revenue and improving the overall customer's experience. Since the initial recording of this conversation, she has started working at Squarespace Super Cool. Don't forget that there are links to my top related past episodes and books waiting for you in the show notes for this episode which are found within the app you're listening to and at the brainy business.com 444 all right, let's jump right in. Dr. Sudi Majd, welcome to the Brainy Business Podcast.

Thank you. It's great to be here.

Yeah, I'm so excited to have you here. As with quite a few of the people I've been interviewing recently, we got connected through LinkedIn, possibly because we're both in the behavioral economics group or something along those lines. But I would love if you can just tell the audience a little bit about your background and tiny bit on the work you do. We'll get into that for sure.

Sure. I've been interested in how people behave for most of my career. I've had the opportunity to focus on that in a number of ways. My first career job out of college was working for a consulting firm where we were hired to travel all over the world and observe how people behaved and then make recommendations to the retailers about how to increase sales based on how people were behaving. And that was kind of my first introduction into the fact that people and their behavior can be quite malleable. And that led me to pursue a PhD in psychology at Columbia where I focused on consumer decision making. And that really gave me exposure into not only what kind of decisions people are making, but why they're making those decisions and how to influence those decisions. As I was wrapping up my PhD, I began working at a healthcare tech startup called Candidate, leading all of the research. On that front, anything from marketing, operations, sales, retail research touched it. Most recently, I transitioned to an advisor period to help continue to grow their business as well as work with many other different clients incorporating behavioral science into their businesses.

Awesome.

And so let's go ahead and jump right in and talk a little bit about the stuff you've been doing or have done while you've been either an advisor or working with Candid, because I love some of the studies that you were sharing with me. One, I know that you said the behavioral science, everything that should have worked didn't work. So what can you tell us about that?

Yeah. So one of my earliest research projects at Candid focused on getting customers to return a kit back to Candid. So Candid is a direct to consumer clear aligner company. And in order to get started, customers buy a kit and they have to take diagnostic photos and impressions of their teeth, which you can imagine not very easy to do if this is the first time you're doing something like this. And then they have to return it. And then with that information, Candid can print aligners for customers. And that's really where we would make a sale. That's where we could get customers to purchase the aligners for $1900. Lo and behold, we found that the majority of customers who were buying these kits were actually not returning them. Like psychologists in me kind of imagine like we're not was not surprised by that because people think about changing their teeth for a really long time. And so there's a lot of stuff status biases there. So the young psychologist I was, I thought this is a great opportunity to test some of the stuff coming out of the nudge unit out of the UK using descriptive and social norms. And I created these beautiful cards that really did a lovely job of incorporating these behavioral science heuristic tactics into the copy. And we sent them out, we put them in the kits, we sent them out and I said, oh, these are going to work great. When people open up these kits, they're going to really read this card and they're going to be so motivated to take these impressions and photos. And after a while, we ran the numbers, and we found that those kits actually did marginally worse than our baseline. And so that was a real shock to the system of the real application of behavioral science in business.

Yeah. I talk all the time about needing to test, you know, and it's important where if you. And if you just try once, it doesn't mean that that concept isn't valid. It's just something else was going on. Right. That impacted. So do you remember some of the concepts that you were testing on that initial mailer that you sent out?

Yeah, we were saying for, like, the descriptive norms one, you were saying that, you know, 90% of people return this kit within a week. Be one of those people. The descriptive norm one was all about recognizing that goals are hard. And this was actually right around tax time. So this is right around March, April, and saying that, you know, getting your taxes in on time, losing weight, exercising consistently, like, these are all potentially very difficult goals to reach. But don't let this goal that you have be one that falls through. Do your kit today.

So I'm not surprised that that didn't work. When you look back on it, it's that I've talked about in episodes on herding and whatnot. There's the. I call this, like, unintentional. Normal is just the term I've come up with that which is like, you know, the first day of college, if Your professor says 80% of kids cheat and we're watching you, and then you kind of go, like, maybe, like, if everyone's cheating, I. You know, there's still plenty of students here. It's not like they're kicking out 80% and it makes it to where.

Yeah.

So making it so you're potentially sort of priming that it's hard and difficult and you don't want to do that. And you know, that hurting mentality. The first one, though, of like 90% return within a week. That hurting piece seems like that should have worked.

Yeah. I think looking back on it, and this is definitely something that I've. I've made a conscious effort to do moving forward. As not only candid grew and the testing ramped up, but also with my personal clients is really understanding that humans have, like, a lot of conflicting things going on in their life, and this one card was just not enough to push them over the edge. What a better test would have looked like, although a messier test would have been this concept really presented throughout their journey, you know, whether or not they first sign up for emails with Candid, they first get their kit. Maybe that's kind of when we start hitting them home with this idea that, like, this is something you should do, everyone else is doing it, although they definitely weren't. And then even someplace like on the website and stuff like that, like, incorporated these concepts to almost like, sledgehammer at home into their psyche. So that when they got the kit, they were already primed and ready to go. Yeah, yeah.

And so you did, though, see some impact. So the next phase, I guess, was then you said, so this isn't enough. Where else do we look and start digging? You got into some consumer feedback, which helped you redo the website, and that saw a boost, right?

Yeah. For this issue in particular. It continued to persist for a while at Candid. And, you know, we tried discounting heavily also didn't work. That had some, like, down funnel effects on some of the quality of customers that we were getting through our funnel. One thing that we did test that worked really well was kind of going back and looking to see whether or not we could begin to identify, like, certain psychological traits of customers who were and weren't returning their kits. I had done a lot of interviews with customers in the past trying to understand, why aren't you doing this? And every single time we talked to customers who did or didn't return it, we'd kind of get the same answers. It's like, I'm still very interested in doing it. I have all of the tools I need to succeed. I believe Candid can do a great job at fixing my teeth, but obviously their behavior was in direct contrast with what they were telling us. And so I thought we got to find out kind of like who these people really are. And so we did a big survey of our customers and found that customers who didn't return their kits were more likely to be procrastinators than customers who were returning their kits. And going back to the literature, the model suggests that one way to get people to become less procrastinator, like, is to create a, like, a feedback loop that is either, like, incentivized with a reward or a penalty. So it's like a customer does something, candid does something, or a customer doesn't do something, candid doesn't do something. And so what we implemented was a variety of different tests that got customers to act within a short period of time. So we would say, you know what, this kit is free if you return it within seven days, and if you don't return it within seven days, we're going to charge you the full amount or the other way around. You can buy this kit at full price. And then if you return it within seven days, we'll give it to you for free. Right. So we kind of created this feedback loop of behavior and reward and punishments throughout Candid's cycle. And it really worked well to get customers to return their kits.

And so some of the concepts for listeners that we'll be tagging, I'll link for in the show notes. So that's showing the different ways you can frame the same message. So there's the do this, then this, or if you don't, then that. You know, it's the same numbers at play of the $49 and getting it for free. You also have loss aversion factored in there where you don't want to lose this $49 that you don't have to. You also talked about incentives and some of that nudging. So we'll link to that episode. And also those procrastinators are obviously victim to time discounting, which we talked about. And so I'll link to that episode as well as priming and herding, which we've talked about already, and setting up your own experiments. All sorts of great episodes to link back to, for sure. So did one of those work better than the other in the. Or did they both have a positive impact or how did that look?

Yeah, they both had a positive impact on the return rates. The one that worked better was one that we kind of framed to be your penalty, where if customers didn't return their kits, we would. We would charge them.

Right. Because then I guess you kind of have the sunk cost in the first one. Right? You've already spent the $49 and you're no worse off if you don't send it back, then.

Yeah, yeah, yeah. Well, it's interesting also, you know, when you get into this kind of testing, you have to take other things into consideration, like parts of the business, such as customer acquisition costs. Even though the customers that we got from the penalty incentive that we gave customers returned it at a greater rate. They actually converted worse down funnel for us, but they were much cheaper to acquire. And that in the end is the reason why you go. Why Candid went with the test that they did.

So I want to touch on that a little bit in that. So I was talking with a client recently and saying when they have people come on site to do a tour in their type of business, they have an 80% conversion rate. But we were saying they don't have very many people that actually book a tour. And so we're looking to up the number of people that do a tour knowing that if you go from 10 people doing a tour and 80% converting to 100 people doing a tour and 30% converting, as long as your, you know, your conversion rate goes way down because you're bringing in more, but as long as it's not too much of a burden to do that many tours, you're actually improving. Is that sort of what you were seeing on that as well?

Yeah, exactly like that. Yeah. And we. That was always kind of in consideration throughout the business when we were trying to weigh the pros and cons of different things that we were testing is that, you know, sometimes it's not really about what incentive worked best. It's about what incentive worked best at getting people interested.

Right. And I have said for my entire career, so my background being in marketing and branding and then getting my master's in behavioral economics in that, like, marketing's job is to get people interested enough to take the next step. And like, each piece is the one thing, whether it's call, come into a branch or whatever, go to the website, click a button, like that's all we can do as the marketing piece. And then the converting is, you know, next step down the line. And so having more people interested and kind of knowing even who you are and thinking about you, where they might buy down the line is really a big deal. I know you did some interesting work with overcoming concerns that your consumers had. And so if you think about, there was that list of points from your focus groups that people came up with as far like why they were procrastinating. So they're likely to procrastinate. But one thing being those are individuals who have lived with their teeth in a way that they don't feel good about for their entire life and always wished they could have different ones, but never actually pulling the trigger because it's incredibly expensive. And then you feel like, yes, this is less expensive, but maybe it's a scam. It doesn't. If I don't have to go to an orthodontist, it feels like it's not real. What if I do the scans incorrectly? What if it doesn't work and I'm out this $1900 and who are these people? And so you did some work after finding that out to help kind of pre answer those questions for people so that they felt comfortable moving forward and that Helped with conversions early on as well. Right.

Yeah. You know, you touched on something like status quo bias, which is a huge thing that not only a company like candid deals with, but it's really what I found to be true in most direct to consumer clients that I've been working with is that it's just really hard to get people to kind of shift off of something that they're so used to doing. And in the case of teeth, you know, you do it, you have, you know, you're unhappy with your teeth for years and years and years.

Right. You've gotten accustomed to smiling with your lips closed.

Yeah. And so what's another three months, six months of dealing with this? But going back to your original point, we always incorporated customer feedback whenever we were trying to figure out why something was happening or what a solution would look like. I think one of the ways that I go about setting up, answering kind of an ambiguous question is always to first go and see what people are saying and then come up with hypotheses based on that and then go about figuring out and then really, you know, testing those hypotheses to see whether or not we're right, whether or not we're wrong.

That's. Yeah, I love that. I think I have a very similar approach in that balance of qualitative and quantitative research in saying that, that I'm a big fan of. Whether it's observational research or just all the open ended questions you could possibly ask people and to hear in their own words or watch them have conversations with other people about what's going on. Where when you can get someone to actually say what they're experiencing, then it's much easier to find what you're trying to test. I talk a lot about, you know, it's so easy to find the right answer to the wrong question or you can go all day solving the wrong problem and it doesn't make any difference because it wasn't the right thing. And so where it seemed like that, you know, the card with the kit was, you know, that was the easy solution. Oh, perfect. We'll put in the behavioral, buy it like we're good to go, like easy peasy. And that's, you know, you can test, start there and if it worked, awesome. But it's not always quite as easy as we would like it to be.

Yeah, that was a good early lesson. I would also say using, going back to some of, I think kind of like social proof type of stuff. I think one of the social proofs or one of the Principles of persuasion is to have the user see themselves in your brand or your website or whatever it is. One thing we did, one thing I encourage my clients to do, is take the language that the consumers are using to describe the product or the experience and incorporate that. And incorporate that into, like how you talk about it on your website. Because. Because that's actually how they're thinking about matters a lot less about how a company is thinking about it.

Right. And even if it's not super grammatically correct or it's a little bit. But if that's the way everybody is saying something, that it's also the perception is reality. And if everybody calls your company something that is not what you feel is your brand. So at some point you are what everyone calls you, whether that's what you want your brand to be or not. And so if everyone was calling candid something else, I don't know, then you have to be aware of that. But yeah, that social proof is so important in websites. And just the way that the message. And I really liked in some of the slides you sent where it's the kind of. I just did an episode on social proof and there's that piece about. You don't have to use the entire testimonial. You don't have to use everything that someone said, but pulling out just that really important tidbit that encompasses the point that you're trying to help someone to understand, you know, so using the feedback about orthodontists to show that you're the only ones that were using all orthodontists for the work and explaining the process better. So people have that familiarity with it that there are all these different tactics that you work in to uplevel and those tiny decision points all the way along the way.

A lot of questions that clients have for me is when should they start showing social proof on their website? Like, what's the number of reviews that they need to get before they start showing them? And my take on it is it always depends. It depends on what your product is. And if it's a product that you find people view as potentially low risk, then there's no, not. Like, start whenever you can. Right. But then the higher the risk is, I feel like the more you need to kind of supplement that with numbers.

Right?

Higher numbers.

Yeah. I would say, though, in addition, it's always. But one is better than zero and two is better than one. Right. So, I mean, you got to start somewhere. But if you can shoot for the know that you need, you want 10 but yeah, if you show that someone's reviewing, then it makes it easier to ask for your next testimonial. Maybe where you don't have to wait until you have all 50 before you start posting them.

Yeah, absolutely. Yeah.

So let's talk a little bit about as you're looking at your career moving forward. I know that you're an advisor and so there are other projects you're working on. What sort of concepts and things are you really interested in testing? And if you're looking at the future of behavioral science, what gets you passionate?

That's a good question. I think overall the big picture on the future of behavioral science is really testing it in actual business as opposed to just the lab. That's kind of why I went and I got my PhD because I wanted to get like these tools and bring them to the private sector and see like what can we actually do with this stuff. Very quickly learned that, you know, what's coming out of academia isn't always applicable to what's happening in the real world. Which I think is an important lesson to have my interests, I really love understanding how retail spaces and like the physical design of things influence how people behave. I mean, going back to, you know, one of my first jobs out of career, out of college and so I was, you know, traveling all over the world and seeing just how much people behave the same regardless of where you were and how easily they were convinced to do something just based on how things were designed or whatever scents were in the air, you know, was the furniture movable, was it comfortable? All of these things like really play into impacting people's behavior on a subconscious level. And I think on the other side, you know, shifting towards like a more digital world, I would love to start incorporating behavioral science theories into big data applications. So if we are talking about understanding how we should segment certain groups of people and we have their Google search data, there are theories that we can take and see what are the words that they've used to describe whatever it is that they're looking for. And that tells us a lot about a consumer, a lot about who that person is and what kind of decisions can we anticipate them making. And so I really think that is really big picture and I think that's actually a very powerful application of behavioral science that I don't think anyone is really doing yet.

Yeah, I know there well had been scheduled some conferences and things really looking at this big data, AI, behavioral science, how they go together. I was on a panel last fall and I know that was a question. And, you know, people saying that, yep, we've got. We're starting to have that conversation as well. I think that is very much just a really interesting next phase where when you can. Things like behavior, like you've been saying, it's so complex, there are so many pieces going on at any given time that you really. To understand it properly and to be able to predict even better, having as many data points as you can and something that can actually efficiently scan the information is necessary to be able to be more accurate in that. Because there's this one little thing over here that you didn't think about that could be a really big trigger. And just because you didn't ask the question or think about it doesn't mean that that's not what's causing the issue. So, yeah, having really smart computers that can run those analyses and figure it out is a very interesting space, to be sure.

Yeah. Yeah. I mean, decisions don't exist in a vacuum. And I think, you know, coming out of academia, a lot of the work has. It has to start there. Right. It has to start in the lab. But, you know, moving it out into the real world, it's just not that simple.

Right. And then even if you're trying to recreate a test, simulate a real experience, like somebody going into the grocery store to buy something. But if you. I talked about this on a previous episode, I think, when I was interviewing Will Leach and the stuff he does with marketing to Mind States, which is very fascinating and aligned with what you're talking about. But if you send people into the grocery store to see how they're going to be acting, and you give them a list of, you're buying these four things, and here's the list and it's in front of you, and follow it and don't get, you know, that's what you need to go find. That is not life. Even if you put them in a real grocery store. And so if you're not having them actually be overwhelmed or having kids tugging at their pants while they're trying to walk through the store and begging for things and getting stressed out, it won't reflect reality, no matter how much you want it to.

Yeah, right. Right.

Awesome. Well, I love all of what you've got going on and really cool ways that you're applying. And I just love that, like you said, anyone else who's trying to bring this into business out, I say all the time, I want to bring behavioral economics out of academia and into application. And I love that that's what you're doing as well. It's so important. And having people that understand that testing process and that knowing that a non result, to have something that doesn't work teaches you just as much as having something that does work and that you don't get discouraged and say, well, it's all wrong, it doesn't, none of this will ever work.

Yeah, yeah, absolutely. It's definitely a humbling moment when you start testing in the real world and all of these other, you know, variables of the business start to come into play. Was it like, did we increase spending through certain channels? You know, for some, you know, a particular company like Canada that has one product that is like a funnel that's like everyone starts off at the same place and then it gets narrower and narrow and narrow as it goes down. It's just, things get much more complicated. But it makes the behavioral science even more applicable in some ways when you understand all of the aspects that kind of factor into the decisions of the customers and the decisions of the business.

Right. And yeah, just knowing it's a phased approach where it would be great if everything was the sort of one hit wonder and you know, all the time it's not like you can just say it's the loss aversion and we, we incorporated loss aversion and we fixed everything. That's not the way it works.

That would be great.

That would be amazing. We could just boop. I did a quick flip of the frame and we're set to go.

We're set for life now.

Awesome. So for anyone who wants to connect with you, what's the best way to get in touch or follow you or anything?

Yeah, LinkedIn is a great way to connect with me and stay in touch.

Awesome. Well, we will make sure to link to your LinkedIn in the show notes and just want to thank you so much again, Dr. Sudhi Majd for joining me on the show today. And you know, stay brainy.

Yeah, thank you.

So what got your brain buzzing as you learned from Sudhi today? For me, this is one of the first episodes I did which profiled and applied example within a company. So it holds a very special place in my heart. We have done so many more since then, including conversations with people at weight watchers, shape, McDonald's, impulse makers, mark Mars, Walmart and more. I'm very appreciative for Sudi for reaching out to me way back in early 2020 just to connect and share about how she enjoyed the podcast which turned into a conversation about her work, which turned into this episode. I always say business is a long game, so you never know how those conversations and check ins will work out. I love connecting with people and know it always comes back around in a great way. So if you've been on the fence about connecting with me on social media, do it now. LinkedIn is the best. You'll find me as Melina Palmer there. So in case you're wondering what why I decided to refresh this one today, other than it just being a great conversation and episode, it is because of the new episode this week, a conversation with Evelyn Gosnell and Isabel McDonald of Irrational Labs discussing a project they did recently with Lyft incorporating nudges into the app to increase opt ins for drivers in their Women Connect feature. While it's a totally different application, the behavioral elements made me think about this conversation with Sudie about encouraging people to take action on something they're already interested in but might have missed out on or forgotten about. And so it felt like the perfect primer for that conversation, which will air in a few days. You don't want to miss that one. So if you aren't already subscribed to the Brady Business podcast, now is a great time to do so. As we close out the show, don't forget about those show notes with links to my top related past episodes, books and more. It's all waiting for you in the app you're listening to and@the brainybusiness.com 444 and just like that, episode 444 with Dr. Sudhi Majd is done. Join me Friday for a brand new episode with Evelyn Gosnell and Isabel McDonald of Irrational Labs discussing a behavioral project they did with Lyft. It's going to be a lot of fun. You don'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.