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Steve:
"Would you like to supersize your order?" You might not realize it, but I just used some pretty heavy science to influence your purchase decision.

Richard:
An enormously important part of behavioral economics: how do we as CX professionals identify whether a customer is going to make a rational or irrational decision, but also how we might nudge that behavior so that there is an economic balance as well, so that you have a sustainable fiscal impact for ourselves, as well as making sure that the customer feels that they won.

Steve:
A look into behavioral economics and why it's important to customer experience pros on this episode of The CX Leader Podcast.

Announcer:
The CX Leader Podcast with Steve Walker is produced by Walker, an experience management firm that helps our clients accelerate their XM success. You can find out more at Walkerinfo.com.

Steve:
Hello, everyone. I'm Steve Walker, host of The CX Leader Podcast, and thank you for listening. On The CX Leader Podcast we explore the topics and themes to help leaders like you leverage all the benefits of your customer experience and help your customers and prospects want to do more business with you. There's a ton of science behind something as simple as a customer making a decision to purchase a product or service. Behavioral economics is a field that seeks to help us understand the biases and errors in a person's decision making process. Sometimes this field can be used to influence customer choices, like asking if they want to supersize their meal or offering extended warranties on a purchase. But understanding this field can also provide CX pros with better insight into customer behavior, thereby finding ways to improve the customer experience. Well, I'm really excited to have our guest on this week to talk about this topic, and my guest is Richard Jordan, the CEO of Raggit, a customer service review app, and one of the contributing authors of a new book, "Customer Experience 3", which features 28 international customer experience professionals sharing their current best-thinking strategies and insights for achieving impact and visibility, using world-class, best practice CX principles and techniques. Richard, thanks for joining us and being a guest on the podcast.

Richard:
Steve, thank you so much for having me. It really is my pleasure. It's been a long time goal of mine coming on The CX Leader Podcast. So thank you very much for the opportunity and I'm very much looking forward to having a chat with you.

Steve:
Well, I'm delighted this is I've just met you here just as we've gotten ready to record the podcast today. But just for perspective and for context, why don't you give us just a little background on you and your company just so our listeners will know what your journey's been in the customer experience world?

Richard:
Yeah, certainly. Thank you so much. So I'm going to take you on a journey, if I can. I'm going to take you back to 1997. That was really when my career into CX began. And I say that almost humorously because it was then when I joined the British Royal Marine Commandos. Now you might not necessarily identify the military perhaps as an immediate advocate of customer experience, but in actual fact, perhaps the best analogy I can give for somebody in the military who looks to to demonstrate their CX skills is that in the military, you're asked very often to sell some of the more difficult messages in life. Steve, I would like you to run headfirst towards a very difficult situation and do it enthusiastically and positively. Well, when you learn that skill, when you learn the behaviors and the psychology that goes into studying, it becomes an inherent skill. And in the military, you do pretty well if you can develop them. And that translates actually quite naturally into the career that I took on when I left the military. I became a consultant looking at customer experience, customer service and the customer journey and really those sales skills and the way in which we deliver messages and how we engage empathetically and use psychological skills to engage with our customers was actually born within the military. I think now over the past 12 years, I've been very, very fortunate to have worked as a self-employed consultant delivering CX, CS and very many customer focused solutions. Right about three years ago that boiled down to a tech solution I created. I was delivering sales training at the time and I, I couldn't understand why when I would revisit the company, I was I had delivered the sales training to a few months later why some people were doing it exceptionally well and they brought all the behaviors and all the competencies that I had I'd hoped to pass on. And some people weren't doing as well perhaps as they could. And I wanted to try and find a way to create a level of accountability so that the persons who needed the help will they could be identified and the persons who were doing well could be identified. So I created Raggit. Raggit is a relatively simple premise. It's a feedback app that allows anybody who downloads the app to review any customer service or customer experience provider in any business anywhere in the world. In simple terms, if you could open the Raggit app, walk into your local fast food restaurant, receive a particular level of customer experience, and then review that individual member of staff by name and give them a review and immediately that that staff member receives a ping on their mobile phone or their manager who subscribes. Look, get the email and we create real time data, real analytics from real customers on that customer experience. What it does is it creates the global repository of staff performance. And really, I think that is the key deliverable when it comes to influencing the customer experience and the customer journey is making sure that the staff, your front facing customer experience experts, they are accountable for the service that they deliver, because very often as managers or leaders, we introduce as much as we deny a level of bias, we favor some staff or we tend not to engage with with all the stuff. Were in actual fact they're the persons who are translating the strategy, the other person who are delivering the product, and the other person who have the biggest amount of influence in the business.

Steve:
Fascinating. Thank you for that great introduction. And you said a bunch of stuff there that I want to unpack as we continue our dialog. But, you know, it's interesting that you referenced your military experience because if you really look at the kind of the the structure of organizations, the earliest big organizations were military. You know, the military was around very early on, way before there were large businesses or large not for profits or big governments even. You know, a lot of our lingo and a lot of our thought process really does come from the military. I've always been fascinated with this idea of we talk about having direct authority or giving people orders, but it doesn't really work in most organizations. And I think it probably didn't really work in the military. You know, a lot of it is, you know, the the relationships that leaders have with those front line people and how you coach them and how you motivate them, right?

Richard:
Yeah. You know, the military works on a hierarchical leadership system and an almost dictatorial or I'm loathe to use the word directorial, but that's the model right? Now you are obliged to agree with your immediate line manager and linear system. I Like the point that you brought out, which is that some of our existing heritage and our understanding of trade and market and the way in which we engage culturally with one another has to come from from the military, and that has to come from our expansion as countries.

Steve:
Let's talk a little bit about behavioral economics. And again, I think I got it just based on our early conversations and stuff. But what does it mean to you and how would you describe it to somebody that's new at this?

Richard:
That's a great question. I'm going to try and do this enormous field of both psychology and fiscal economics justice. But I'm very conscious that I am perhaps still starting my own journey to let someone look at it and see where we go. It's often said that behavioral economics is an investigation or a study into the psychology of decision making and ultimately how that the consumers decision making affects the economics and the purchases and so on. I first became aware of behavioral economics around about 10, 12 years ago when I started an undergraduate course in behavioral studies. And the course that I was studying looked at behavioral analytics, the social anthropology of group activities and and how marketing can influence decisions. And that led me down the rabbit hole to a very kindly being asked to contribute towards two of the CX books that you mentioned at the very beginning, CX 2 and CX 3. Now the study of behavioral economics is a vast field and I have a greater understanding of the psychology of it. There are very many people I think it would be able to give you a better understanding as to how it affects the economics. But for me, the real value, the real understanding and my real passion comes in identifying the psychology behind our rational and irrational decision making and how that affects our purchasing.

Steve:
So give me a couple of examples, if you could, just of kind of the rational and irrational.

Richard:
Yeah, certainly. But what a great leader. Let me see if I can expand on this for you. You know, if we look at perhaps some of our largest supermarkets and this translates whether you're in the US territory or in the UK or a mayor or CPAC, most supermarkets have identified most of these larger chains have identified that if they perhaps channel the footfall, so if they very purposefully align some of the shelving and some of the rows and the packaging of materials and where the bread and the meat and the milk in the cheese section is, then, in actual fact, that can be a real difference in our purchasing decisions. And I know that sounds odd because we have perhaps or perhaps unconsciously, have already identified that every time I enter a supermarket, roughly the bread will be in the same area and roughly the cheese and the bread and the milk will be in the same area. And it might appear random, but in actual fact, it is very cleverly manufactured as a very clever manipulation of our unconscious behaviors, of our emotions, of the sights and sounds and smells that we identify and the influence that that has upon us. For example, it became increasingly understood back in the early 1950s that if bread was packaged in either blue or brown coloring, the cellophane wrapper was blue or brown then people would be more inclined to buy it because blue and brown on the color spectrum, on the color wheel are earthly warming colors. And we feel that bread is an ephemeral product that we have baked ourselves. And it's a handcrafted solution that is as cheap and readily available. And blue and brown packaging unconsciously brings us to the point where we feel warm and safe and an alliance that products. They tried to package bread in different colors and you may see some variants of this next time you go to your supermarket, but they tend to be less they tend to sell less well than blue and brown package. And in the same way that that confectionery that sweets and candy is a very often packaged in reds, yellows and blues, some of our more primary colors, because they draw our attention to them, we see greater sales if they are manufactured in that way as well. It's a really interesting story.

Steve:
Yeah. And like the grocery is a tough business, you know, and a lot of what they sell, they don't make a lot of money on. So, you know, in order to be successful in that business, you you really do have to provide an outstanding experience to customers. And so it's not just about, you know, kind of the what's good for the store, but it's also what's good for the the consumer. Right. You know, if you feel good about the, you know, your purchase and the people you're buying it from, you know, there's some benefits that the consumer gets from that, too, as well.

Richard:
Yeah, there absolutely is. And that's another great part of behavioral economics for me is that there are very clear distinctions between our understanding or our acceptance of risk and reward. Let me let me perhaps give you an example of a high street or a high profile coffee shop of your choosing. Well, when we walk into that coffee shop, very often the flooring is made of wood and that the mood lighting has been created for us that are soft furnishings that make us feel welcome and warmed. There's a coffee smell that has perhaps been directed towards the door through some of the air conditioning units. But also what's great is that when we have a look at the pricing board, so the way in which the the coffee and the supplementary items are presented to us, very often it's done in a perhaps confusing manner. Some of the the font or the calligraphy or the like, the language in the way that it's written and the pricing structure can be a bit difficult to identify, particularly if you're stood in front of the the barista and they're looking forward to serving you quite quickly. So what we identified, anybody that has looked closely into behavioral economics is that our eyes are very naturally drawn to the imagery that is presented to us. And you will see very often when you go into a coffee shops that as well as the confusing language and the heavily detailed wording, there are very simple images of the size of the cups and the very simple pricing underneath. And when we look at risk and reward, I know that there is a very famous example of a high street coffee shop that the many companies use now for their pricing model that identified that if the medium sized cup was somewhat closely aligned in price to the larger size cup, then people were more likely to feel that they would get a better or a greater reward if they actually went for the larger cup that they felt that their behaviors or their approach to buying coffee was at risk or that that money was at risk or that they would be at a loss if they chose the medium or the smaller size cups. And that the simple pricing structure and the simple iconography that was created has very purposefully steered us towards buying a larger cup, really exciting.

Steve:
I think a lot of good marketers have kind of used that good, better, best technique. You know, I think of like buying computers or buying cars and things like that. This is really a science. I mean, I've joked around with people throughout my career that, you know, what we do is not rocket science, but it is science, you know, and there's a reason why consumers want different choice and they want different products. And and that's one of the wonderful things about our free market economy, is that if you want to buy a car that just gets you a back and forth to work and to do your errands, you can buy that car. If you want a really high performance, specialized car, you can buy that. And it's the power of consumer markets and the ability of people to figure out how to deliver that value to customers.

Richard:
Yeah, and that's great. But what it actually lends us to consider is that that's the illusion of choice. You know, in behavioral economics, we look very closely at the rational and the irrational brain. The car that you have driven to in the office today is not the most economic. It is not… it doesn't have the best green policy. It perhaps isn't somewhere in the top five in terms of road safety. So when you start to question why you bought that car, I would imagine that there was an emotional and an irrational decision that went behind it. Perhaps it was the salesperson who asked you to sit in the car and imagine the wind rustling through your hair. Or maybe it was that it simply looked nice or the collar was attractive to you. We don't make as consumers very often rational decisions. If we did, we wouldn't go out and buy coffee from an overpriced store.

Steve:
Go to the gas station, right?

Richard:
Of course, because the gas station, so that is an enormously important part of behavioral economics. How do we as CX professionals identify whether a customer is going to make a rational or irrational decision? What are the self-serving behaviors that that customer will bring to your business when they walk in? Because primarily nine times out of 10, your consumer wants the best deal that they can for themselves.

Steve:
Yeah, for sure.

Richard:
In our shops and in all businesses, in our consultancy practices, it's important to identify what the customer is looking for, but also how we might nudge that behavior so that there is an economic balance as well, so that we have a sustainable fiscal impact for ourselves as well as making sure, and I think you alluded to this earlier, as well as making sure that the customer feels that they won…

Steve:
Yeah.

Richard:
…because if you tilt that delicate balance, if you steer the journey towards the precipice of the customer feeling unhappy or disvalued or that they have lost in some respect, you either won't get to say we definitely won't see the customer again. It's a very difficult balance.

Steve:
I want to take a break here and tell you about Walker's newest report, "Deliver More Value with X- and O- Data," which provides a practical framework for integrating experience data and operational data to drive better decisions. You can download the report for free at cxleaderpodcast.com/xoreport.

Steve:
Richard Jordan is my guest here on the The CX Leader Podcast this week, and he's the CEO of Raggit and one of the contributing authors to a new book, Customer Experience 3. We've had a fascinating discussion about how behavioral economics makes sense for CX pros. Richard, I love the idea of the buyer and the seller trying to find the mutual value there. And, you know, oftentimes as sellers, we don't have to make excuses for our value and we should be trying to really help the customer satisfy the need that they have or solve the problem that they have and what they might have thought they were going to buy coming in, you know, with with our expertise, with our guidance and our knowledge of what we're providing. You know, we kind of owe that to the customer to make sure that they understand that.

Richard:
I don't think as long as the customer doesn't feel like they are being sold to excess sold, at which I was recently asked to have a look at a product, and I felt like the person who was delivering the solution to me was very overtly reading from a script. They had perhaps revised that it had no immediate benefit to me. And when the script had finished, I thanked them very much for the time and said, look, I'm not interested in that person who's perhaps left in a position where they didn't realize that there was no reward for me in that product, that there was no engagement, that the customer journey or the customer experience hadn't been considered. And you're quite right. We have to find that win-win scenario. We do that in our business life and we ensure that in all our engagements that there is an equal measure of benefit.

Steve:
Yeah, I mean, I think that's important for our listeners to understand is that, you know, we're not talking about, like tricks to play on customers, but we're trying to help them find the right solution for their product and also make sure that we're getting them the best thing that's going to solve that. So something you said earlier I want to go back to, but this kind of this concept of how you use behavioral economics to help the front line employees, because I think this is interesting to our listeners in particular, because our CX pros a lot of times what they're trying to do is communicate what the customer wants back to those front line people and create a culture that really is customer focused. So can you talk a little bit about that, how you use feedback, how we could use behavioral economics just to help, you know, particularly at scale, if you have a lot of front line employees that are interacting with customers on a on a large basis.

Richard:
Yeah, certainly. That's a great question. I'll talk very briefly about how Raggit introduces that. But there, of course, there are very many people who operate in this field. If you receive poor customer service or if you experience a poor customer journey, you will perhaps have a look at some of the existing online platforms in which to deliver your your feedback. But very often, of course, that feedback gets lost in a digital soup. Certainly for me, the person at the front line who has to live with that experience, will they very rarely get to hear about that complaint? If I complain about somebody in a fast food restaurant on Twitter, the chances of that person in that fast food restaurant, that crew member hearing about that are remote. So with Raggit and are a couple of other solutions that do something very similar, the person who delivers that experience finds out instantly how that customer experience and the metrics and the data and the Qualtrics that come from that are pretty significant in terms of some of the strategic leadership in that business, being able to identify where there are challenges and specifically what the customer disliked about the experience of the interaction. So we're talking here, I guess, about the immediacy of identifying where the customer feels that they have either experienced something that created dissatisfaction or where they feel like they have benefit. And that I think in identifying the behavior and identifying the emotions that are present at the very moment is crucial in creating your CX strategy. Because when you when you deliver feedback online or you do it at home or you deliver it perhaps two hours after the experience, it can become diluted. We bring bias. We perhaps forget this, some of the detail that was in that experience. So for me, the real power comes from delivering immediate feedback and then identifying what the customer felt, their emotions, the behaviors that were demonstrated at the time.

Steve:
Richard, we've reached that point of the podcast where I ask all of our guests to provide their take home value. This is your tip of your marching orders to our listeners today as they go back to their jobs and their offices and or their Zoom meetings as they they might. And what can they take from today's podcast and apply that's going to help improve their organization's customer experience?

Richard:
Well, thank you so much, Steve, and thank you for the opportunity to join you today on The CX Leader Podcast. It really was my pleasure. I think the key take home that I would like to offer to anybody subscribing to this is that we very often ask for our customer's feedback. We ask consumers and anybody who interacts with our business or interacts with our staff or our personnel for their observations. There is real value, I think, in also identifying the behaviors and the emotions of the person felt at the time of the interaction, because not only are we asking our customers perhaps to identify what they liked or what they disliked about the service, it becomes almost a closed question or a closed feedback loop where we get limited responses. But when we start to identify some of the intrinsic or ephemeral behaviors and the emotions and the values that were targeted in that interaction, then we really start to understand the voice of the customer. As CX professionals. Sometimes we can be at risk or at fault of perhaps predicting or identifying what our customers feeling or what they felt at the time that they engage with us without necessarily fully putting ourselves in that frame of reference. You've heard the expression walk a mile in somebody's shoes before you understand them. There is never a more important reason to do that than in a CX professional role. So if you are perhaps trying to understand the voice of the customer, if you are perhaps trying to understand exactly why a customer purchased your good or why they felt like they were detrimental, where there was some risk aversion or whether they were willing to step outside of their comfort zone, then wherever possible, put yourself exactly in that frame of reference. Look at the world from that point of view. Look at some of the filters by which they see the world. There is real value in diving deep into the soul of our customer. And if we do that at any other level than than really, really understanding them, than we are at risk perhaps of never understanding and never really listening to the voice of our customers.

Steve:
Awesome. Richard, thanks so much for being a guest on The CX Leader Podcast this week. If people would want to continue the dialog, could you tell them how they might be able to get in touch with you and also talk about how they might find Raggit?

Richard:
Yeah, certainly. Thank you so much. So as with very many people, I am available on LinkedIn. Please do reach out to Richard Jordan at the CEO of Raggit. If talking about delivering immediate feedback has triggered something within you, if you can identify that there is real benefit in understanding your customers perceptions at the time of the engagement and not with the feedback after the event. And please have a look on both the iOS and Android or Apple and Google Play stores. Download the Raggit up. It is entirely free for everybody at all times. If you wanted to give a red, amber or green "rag" analysis, "Rag" review or "Raggit" the customer service that you experience all the customer experience, then please download Raggit. You can subscribe to monthly reports of your staff performance. You can create a CV, you can invite feedback from your customers. And then when you when you apply for your next role. Well, rather than just referring to LinkedIn, which is the profile you created to sell yourself, your next employee will be able to have a look at your Raggit profile and identify exactly what your customers thought of you. If you're a business owner and you would like monthly reports on your staff performance, please do check out the Raggit app.

Steve:
Well, I'm going to download it right after we get done taping this podcast. And it's Raggit, R, A, G, G, I, T. Also I want to pitch the fact that you are one of the contributing authors of the new book, "Customer Experience 3." And people can find that on Amazon or other major book retailers. I have a copy and I've been looking at it and we're working our way through some of the authors on the podcast. So really happy that you were one of the ones we got on. And we're also going to post a link on The CX Leader Podcast to the book, too. So I appreciate that. It's a great read, wonderful advice for CX pros, and I highly recommend that everybody check that out. And if you want to talk about anything else you heard on this podcast about how Walker can help your business's customer experience, feel free to email me at podcast@walkerinfo.com. Be sure to check out our website, cxleaderpodcast.com, to subscribe to the show and find all our previous episodes, podcast series, and contact information, you can drop us a note, let us know how we're doing or suggest an idea for a future podcast. The CX Leader Podcast is a production of Walker, we're an experience management firm that helps companies accelerate their XM success. You can read more about us at walkerinfo.com. Thanks for listening and we'll see you again next time.

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