Jun 27, 2019
Your Innovation Podcast. This is the third episode of the Driving Eureka! Podcast. The science of innovation success - part 3: Why the customer is often wrong; pictures vs words; and how to grow loyalty. Subscribe to learn how to Find Filter and Fast Track Big Ideas.
The Driving Eureka! Podcast - Episode 36
The Science of Innovation - Part 3
The Customer is Often Wrong
Pictures vs Words
Tripp: [00:00:00] This is episode 36 of the Driving Eureka! podcast. In this episode, we'll discuss why the customer is often wrong pictures versus words and how to grow the loyalty.
Tripp: [00:00:14] The Driving Eureka! podcast with Doug Hall and Tripp Babbitt is sponsored by the Eureka! Ranch, the Ranch specializes in helping companies find filter and fast track big ideas.
Tripp: [00:00:29] OKay.
Tripp: [00:00:31] We're in to a third part of our series on the science of innovation, success and the three topics we're to talk about this summer.
Tripp: [00:00:40] Why the customer is often wrong. That's interesting. Pictures versus words and how to grow loyalty. So why the customer is often right. I thought the customer was always right. Doug.
Doug: [00:00:55] Well, as it turns out, and this is this is really interesting.
Doug: [00:01:00] And this is original research that the Eureka! Ranch team did and in is specifically associated with innovations. Okay.
Doug: [00:01:09] So it's taking something that's new to the world. I got this meeting cleaning thing that people don't have. And what we don't spend a lot of time thinking about is, is we have a sales force is used to selling the same old stuff. Then we bring them something new and they sell it like they're selling the same old stuff, which is they cut deals, which is like they're not helping the process here. And so they're going to take a different approach. But what was interesting is, is that we took a huge database. We had eight or eight times.
Doug: [00:01:37] We had customers that were shown innovations, things that were different. And we asked them if they were like how likely they would be to buy them. And then what I did is I called them back. And ask them, did they buy it or not? OK, so I mean, this is like a tracking site, so you got 800 people.
Doug: [00:01:57] Times people are looking at something and making a decision and then you call them back and see what happened. So what was interesting about it was we asked him how he likely would do in the six months and we followed up at six months. So real clean. And of the 250 or so who said they absolutely, positively, definitely, I'm gonna buy this thing.
Doug: [00:02:18] You are great. I love you. I love you. I love you. Only less than half the time. Forty five percent of the time do they actually do it. I mean, come on, baby. You told me you loved me and you didn't even bother us by it.
Doug: [00:02:36] No. I mean, how discouraging is that? So.
Tripp: [00:02:40] So what happened? D.D. did were able to dig in a little bit deeper as far as each of those.
Doug: [00:02:44] Oh, I've got a second thought. Are they they they find something pretty or something. Got distracted, you know, they got distracted on it. They thought it sounded like a good idea.
Doug: [00:02:55] But either they learn more or whatever happened, maybe they asked their friends and that was that. Mm hmm. So here's the good news. We asked we'd looked at the people who said they definitely weren't gonna do it. There was no chance. No chance they're going to do it. One in five, 20 percent actually did make a purchase. OK,.
Tripp: [00:03:17] OK.
Doug: [00:03:18] So just because somebody says no. And just because somebody says yes doesn't mean they're gonna do it. So we're gonna come back to this again in another episode. But when they say no.
Doug: [00:03:33] Maybe no. Don't give up, don't give up.
Doug: [00:03:39] And when they say, yes, close the sale as fast as possible, they can be ready to take the sale because it's gonna change.
Doug: [00:03:47] You gonna to lose less than half of them. So it's interesting and I think a lot of it has to do with the fact that these are new things that they've never seen before. And so they've got to do some processing of them.
Tripp: [00:03:59] I and that I may be the differentiator as far as that it is a meaningfully unique product that you ultimately made. Interesting. I I I wouldn't have expected that I would I would have thought that 20 percent at that. That seems awfully high. So. Okay.
Doug: [00:04:17] I hate you. Oh, not really. Yeah, 80 percent. That 20 percent might be OK. All right. All right.
Doug: [00:04:27] Those are the extremes, by the way, Tripp. Those are the extremes that also help people in the middle where you see the same distribution. And so the people say, I probably don't want a whole lot more of those go up, but I'm just talking the extremes here in this segment.
Tripp: [00:04:38] Ok. All right. Pictures versus words.
Doug: [00:04:42] Ok, so this is kind of controversial with people. You know, we've got a billboard world. People who like to show me the pictures.
Doug: [00:04:49] I like the pictures. I just like pictures. I don't like to read because it takes cognitive energy to read. But some studies were done with eye tracking research where an infrared signal tracks where the eye is looking as participants paged through a magazine. And it's over. Thirteen hundred ads, over 3000 consumers. And IT research found that when it came to getting customers to stop and take notice of an advertisement text, the words were twice as effective as pictures. And when it came to holding customer attention, texts was an incredible 15 times more effective. And so while, yes, you can have a pretty picture. The fact of the matter is news matters, ideas matter. And a picture may be worth a thousand words.
Doug: [00:05:41] The problem is, it's a whole thought, a thousand words, and it's a whole thousand different words where words tell a very specific message. So take fire up that word processor, get your pen and pencil and say specifically what is your meaning for uniqueness? What is the benefit promise you're making and why should I believe you? Tell me the story of why you're great.
Doug: [00:06:02] Because if you don't, you leave it up to the customer to try to figure it out.
Tripp: [00:06:09] Yeah, I would have I would have thought that the pictures would be maybe. Does that do the pictures provide an initial draw? And then that's the words that kind of know a little.
Doug: [00:06:18] I think, no, that's not what the research really the research said to get them to get their attention. You know, to get them to take notice. The text was twice effective. They've numbed out the images.
Doug: [00:06:33] I mean, for Christ sakes, 80 percent of them are stock images anyways.
Doug: [00:06:38] Give me a break.. There's nothing there.
Doug: [00:06:43] And they just don't do it. But that's it. See, this is the difference. When we measured teams, we measured thousands of teams at the ranch in the act of creating and we asked likability, how much did you like what you're doing? How much fun was it? And we caught looked at that against the number of ideas created, we found no relationship between liking and fun with effectiveness. But we said, how effective was this team coming up with ideas against the objective? We've got a very strong relationship. So there's a difference between play and work. There's a difference between entertainment and selling. That's, you know. And I think we've got a lot of art directors who think they're Cecil B de Mille or something, you know, entertain people as opposed to telling me.
Doug: [00:07:29] I mean, how many commercials do you see there? I have no idea what the heck that was about. Oh, yeah. Especially to doubt it. Not that is not a good idea. Let me let me tell you what. Listen to this. Ready? OK. That's the sound of wasted money. What it does. One more time. See here again.
Doug: [00:07:48] Nothing. Okay.
Tripp: [00:07:54] All right. Well, that's something new, I had not run into that.
Tripp: [00:07:59] Okay. Next one is how to grow loyalty.
Doug: [00:08:02] So a couple of weeks back, I asked you the question, is it better to get new customers or to sell more to existing customers? And the answer, there was new customers.
Doug: [00:08:15] Now, that said, we have to walk and chew gum at the same time because a leaky bucket is, Dr. Franklin says. Never gets filled so he can't be losing existing customers.
Doug: [00:08:26] So what I did is I took the data nine thousand eight hundred four businesses and I looked at of existing customers.
Doug: [00:08:36] What happened when we increased the number of times they bought. Versus the amount they bought when they purchased. OK. OK.
Doug: [00:08:49] So the question is, is it better to get them to buy more frequently or to buy more when they're buying? And what the research found was the increasing dollars per purchase was three point eight times more important than the number of times customers purchased.
Tripp: [00:09:08] Ok, OK.
Doug: [00:09:09] So we think we'll just get them to buy on a frequent basis. But the reality is each time they come up to the aisle or go on to the Internet or go into the Amazon jungle, you know, and they type in that search thing, they keep giving other suggestions. And you own a certain part of the roulette wheel, if you would.
Doug: [00:09:30] And the people are just as likely to say, oh, yes, I always buy Zico. But now there's bingo. I think I'll try bingo this time.
Doug: [00:09:41] And so if you want to get your business to grow that supersize thing they do with the fast food places. It really works. It really works. Get them to buy more when they're buying. Package up your stuff so that they can buy. How can you get more of their share requirements? How can you get more them to do it? That's what it does.
Tripp: [00:10:01] Okay, so. So a related question to this I've always wondered about is when you're because you're inventing new products all the time or, you know, from new ideas and doing as I say things, do you. Is it easier to sell to your existing customer, to new customers? How would you answer that? Usually it's not as simple of a question.
Doug: [00:10:29] Ok. Because if the question is, is to get a dollar from them, you can get a dollar from the existing customers. The problem is, is instead of buying the thing that they did before, they now buy your new one. Right. So it's all cannibalization. And so the net growth of what you've got is can be sometimes pretty tiny when it comes to getting additional sales. It is far easier to get additional sales by getting new customers to buy than it is to get existing customers with an innovation. Now, that said. You've got to have a loyalty program. And the biggest on the loyalty program is the more you can get them into where you get a higher share of what they buy by getting them to stock up to get him to do it. And there's some variation bike industry, obviously, but as a general rule, you are retrying every time they buy because it's not a static world. We have this mindset in our head that once a customer spot us, they can't see anything else in the world except us. Well, that's just not the way the world works. There's other cheese balls sitting in a room creating ideas to try to take you out, you know, and I've had the opportunity having done this for 40 years. There's some industries where I've worked with four of the five biggest players. And it's hilarious. You know, we have to keep quiet from a security standpoint, but it's hilarious to hear them talking about these other companies.
Doug: [00:11:57] Like they have no clue what's going on, other companies or how they're thinking about what's just stupid.
Doug: [00:12:04] They can't make that work and they don't understand. They've got a different business model across. I have to say, I shut up. I don't say anything because that's just in our industry. You don't stay in the innovation business a long time if you have loose lips, as they say.
Tripp: [00:12:19] And that's what the things I find interesting, guys. Very rare. You talk about existing clients. It's hard to get information for you on that.
Doug: [00:12:29] Interestingly, I was up I was up at a I was talking to a vendor because we're doing a big project for a client and we have these sort of black ops projects will do.
Tripp: [00:12:40] Oh, yeah.
Doug: [00:12:41] Corporations. We've done a bunch of them over the years and four major, major companies where they'll hire us to go do something to explore something that maybe then they don't want their competitor to know that they're looking at it. And so they don't want to be associated with it. So they use us to do it and we'll file trademarks and patents and different things and then assign them to them and do them with them. And and so in this case here, there's a vendor that's going to be very important for us. They're going to run clinical studies. It's a medical thing. And I purposely went and I had dinner with them. And then I spent the day with them and drank wine in Whisk(e)y. And I asked questions and I asked questions about different things from 17 different directions. And they didn't tell me anything about who they were working with or what they were doing.
Doug: [00:13:32] And I went back to the client and said, their good, you know, because the minute anybody talks, you know, if you ask that, well, tell us what you did for them. And they talk about it, then just remember, they're going to do the same about your stuff, you know, and people get mad at us about it.
Doug: [00:13:53] It's a thing it's a founding principle of what we do now. We do talk about some things because a lot of clients have talked about it. We do talk about things when our names are on patterns because it's public record. Right. And clients have been very kind and given us permission to do it. But unless we have they've made a disclosure. We really, really don't don't talk much at all at all. I mean, it's it's incredibly I mean, I think in 40 years, there was one case where something was talked about. And interestingly, it was bizarre. It was one division in another division found out about what another division was doing.
Doug: [00:14:33] And it was the same company. And they were upset about it. And it was an inadvertent slip.
Doug: [00:14:38] And, you know, we thought same company. No, no, we're competitors.
Tripp: [00:14:46] Isn't that awful corporate guides,.
Doug: [00:14:48] But we compete. So this to be no disclosure across silos. And it was early on in the history of the Ranch. And oh, man, I was I learned a lesson on that one.
Tripp: [00:15:00] Wow. Now that's. So so Doug, when they when people hire the Ranch, are they usually looking for new products then for for new customers? Is that kind of the mindset? Do they not even go into it with that type of mindset? It's come out later.
Doug: [00:15:16] It's less specific than that generally. I mean, because we everything we do is code development with them. OK. And, you know, we work with them. And generally it's if I was to break it down, come up with a way for us to make more money, OK? And they're agnostic. I mean, they'll say a bunch of stuff that put a bunch of stuff, but they're looking for a way to generate growth. OK.
Doug: [00:15:41] You know, they're going down the lifecycle curve. They need growth. And so they're generally I we need some fresh ideas and we need to spark some of the growth, sometimes very specific. There's a growing market.
Doug: [00:15:54] There's a competitor. And they want to leapfrog a competitor in those things. But at the end of the day, it's how can we grow more and profitably grow? And the other. They can be profitable growth, you have to innovate, obviously. Otherwise, it's just a commodity game and you can't make any money.
Tripp: [00:16:06] So. All right. Well, that's a good way, I think, to in the science of innovation success. Part 3.
Doug: [00:16:15] Yeah. It's about giving up. The power of words and supersize.
Doug: [00:16:23] If you want to learn more. The book on innovation engineering called Driving Eureka! has got more of these fun facts.
Tripp: [00:16:31] Thank you for listening to the Driving Eureka! podcast. This podcast is part of the Innovation Engineering Institute. Innovation Engineering is a new field of academic study and leadership science. Its mission is to change the world by enabling innovation by everyone everywhere, every day, resulting in increased speed and decreased risk. To learn more about on campus, off campus, live and online courses, visit innovation engineering dot org.