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Tim RiestererChief Strategy Officer
Corporate Visions
@TRiesterer
http://cvi.to/ContentJam17
Why Change?
Customer Acquisition Customer Retention
Why Stay?
Customer lifecycle messaging
Customer Acquisition
Customer lifecycle messaging
Why Change?
Customer Retention
Why Now? Why Stay?
Invisible forces that shape human
decision making
Neuroscience Behavioral
EconomicsSocial
PsychologyDecision Sciences
How people frame value and make choices
Methodology
Existing, Proven Science Concepts
Exclusive Simulation Testing
Frameworks and Skills
Research Partners
Zakary Tormala, PhD Margaret Neale, PhD Nick Lee, PhD
Stanford Graduate
Business School
Stanford Graduate
Business SchoolWarwick
Business School
Customer Acquisition
Customer lifecycle messaging
Why Change?
Customer Retention
Why Now? Why Stay?
Why Change?
Customer Acquisition
Customer lifecycle messaging
YourSolution
Defeating the Status Quo Bias
Preference
Stability
De-stabilize their preferences
YourSolution
Defeating the Status Quo Bias
Preference
Stability
De-stabilize their preferences
Cost of Staying same
Cost of
Action/
Change
YourSolution
Defeating the Status Quo Bias
Cost of
Action/
Change
Preference
Stability
Selection
Difficulty
De-stabilize their preferences
Cost of Staying same
Create enough Contrast
Defeating the Status Quo Bias
YourSolution
Preference
StabilityAnticipated
Regret
/Blame
Cost of
Action/
Change
Selection
Difficulty
Cost of Staying same
De-stabilize their preferences
Create enough Contrast
Before and After Hero
Defeating the Status Quo Bias
YourSolution
Why Change Story Model
Unconsidered Need
Flawed Current Approach
Improved New Way
Story with Contrast
De-Stabilize Preferences
Cost of Staying Same
Clear Contrast
Before and After Hero
Professor Zak Tormala
Stanford Business School
Why Change Story
Messaging Test
Test Scenario
• Small business owner facing difficult economic times with three specific business problems:– Sluggish sales– Slow customer payments– Increasing costs
• You need a $10 Million line of credit to help sustain you through the projected recession
• You are going to meet with a bank and here their pitch for you business.
Four Test Conditions
• Standard Problem/Solution/Credential Pitch
• Problem/Solution w/Value Adds Pitch
• Problem/Solution w/Unconsidered Needs Pitch
• Why Change Model Pitch
Uniqueness
2
3
4
5
6
StandardSolution
Value AddedSolution
UnconsideredNeeds Last
UnconsideredNeeds First
Uniqueness Improvement 50%
Quality
5
6
7
8
9
StandardSolution
Value AddedSolution
UnconsideredNeeds Last
UnconsideredNeeds First
Quality Improvement 10+%
Persuasiveness
4
5
6
7
8
StandardSolution
Value AddedSolution
UnconsideredNeeds Last
UnconsideredNeeds First
Persuasion Improvement (10+%)
Why Change Story Model
Unconsidered Need
Flawed Current Approach
Improved New Way
Story with Contrast
De-Stabilize Preferences
Cost of Staying Same
Clear Contrast
Before and After Hero
GainLoss
Value2-3X stronger preference to avoid loss vs. acquire gains = “Loss Aversion”
Prefer taking risk that might mitigate a loss = “Risk Seeking”
Outcome
Prospect Theory
Why Change Story Test #2
Executive Emotions
Test Scenario
• You are an executive at an automotive manufacturer facing some difficult economic times.
• Your CFO has presented you with a plan for how to reduce costs involving plants and people
• There’s an outside vendor with a plan that presents a risky plan with some significant upside if it works
Plan A
Save 1 out of 3 plants
and 2,000 jobs
Plan B
33% chance of saving
all of the plants/jobs
66% chance of saving
none of the plants/jobs
Status Quo framed as a “gain”
Plan A
Save 1 out of 3 plants
and 2,000 jobs
Plan B
33% chance of saving
all of the plants/jobs
66% chance of saving
none of the plants/jobs
Plan A
2 out of 3 plants lost
along w/ 4,000 jobs
Plan B
33% chance of losing
none of the plants/jobs
66% chance of losing
all of the plants/jobs
Status Quo framed as a “gain” Status Quo framed as a “loss”
74%
26%
55%
45%
More than 70% increase in “persuasive power”
Plan A
Save 1 out of 3 plants
and 2,000 jobs
Plan B
33% chance of saving
all of the plants/jobs
66% chance of saving
none of the plants/jobs
Plan A
2 out of 3 plants lost
along w/ 4,000 jobs
Plan B
33% chance of losing
none of the plants/jobs
66% chance of losing
all of the plants/jobs
Status Quo framed as a “gain” Status Quo framed as a “loss”
74%
26%
55%
45%
More than 70% increase in “persuasive power”
System #2 (Slow)
Designed for Analysis
Rationale, Logical
Justifies Decisions
System #1 (Fast)
Designed for Survival
Emotional, Intuitive
Makes Decision for Change
Craves
Contrast
Why Change Story Test #3
Contrast Study
3
4
5
6
7
8
Future Only Current then Future(Same Screen)
Current then Future(Separate Screens)
Current and Future(Side by Side)
+13.40%Represents innovation and
a clear improvement
Product Perceptions
3
4
5
6
7
8
Future Only Current thenFuture (Same
Screen)
Current thenFuture (Separate
Screens)
Current andFuture (Side by
Side)
+14.06%Willingness to switch and
willingness to pay more
Attitudes and Choice
3
4
5
6
7
8
Future Only Current thenFuture (Same
Screen)
Current thenFuture
(SeparateScreens)
Current andFuture (Side by
Side)
+14.63%Interest and likelihood of
making a purchase
Purchase Intent
Why Change Story Model
Unconsidered Need
Flawed Current Approach
Improved New Way
Story with Contrast
De-Stabilize Preferences
Cost of Staying Same
Clear Contrast
Before and After Hero
Why Change?
Customer Acquisition
Customer lifecycle messaging
Why Change?
Customer Acquisition Customer Retention
Why Stay?
Customer lifecycle messaging
Preference
StabilityAnticipated
Regret
/Blame
Cost of
Action/
Change
Selection
Difficulty
Cost of Staying same
De-stabilize their preferences
Defeating the Status Quo Bias
YourSolution
Create enough Contrast
Before andAfter Hero
Preference
StabilityAnticipated
Regret
/Blame
Cost of
Action/
Change
Selection
Difficulty
Cost of Staying same
De-stabilize their preferences
Create enough Contrast
Before and After Hero
Defeating the Status Quo Bias
Reinforce
Reinforce Reinforce
Reinforce
REINFORCING
YourSolution
Why Stay Story Model
Document Results
Review Prior Decision Process
Mention Risk of Change
Highlight Cost of Change
Detail Your Competitive Advances
Reinforce Preference Stability
Reinforce Anticipated Regret and
Blame
Reinforce Perceived
Cost of Change
Reinforce Selection Difficulty
Why Stay Story
Messaging Test
Situation Background
Small business owner, hired firm to promote retirement plan
After two years the contract is up for renewal
Started at 20% participation, goal was 80%, achieved 50%
Turnover down, but not sure if attributable to program
Reminded that they did a thorough investigation originally reviewing multiple competitors for the program
Tested messages to Provocative Why Change vs. Reinforcing Status Quo
Three Test Conditions
• Reinforce Status Quo Why Stay Model Pitch
• Provocative Why Change Model Pitch
• Provocative Pitch with Price Increase
Attitudes
4
5
6
7
Status Quo Point of View Point of View + UpsellReinforce
Status Quo
Provocative
MessageProvocative
Message w/Upsell
Statistically Significant Improvement 9.63%
4
5
6
7
8
Status Quo Point of View Point of View + Upsell
Intention to Renew
Reinforce
Status Quo
Provocative
Message
Provocative
Message w/Upsell
Statistically Significant Improvement 13.27%
Switching Likelihood
4
5
6
7
Status Quo Point of View Point of View + UpsellReinforce
Status Quo
Provocative
Message
Provocative
Message w/Upsell
Statistically Significant
Decrease 10.61%
Why Stay Story Model
Document Results
Review Prior Decision Process
Mention Risk of Change
Highlight Cost of Change
Detail Your Competitive Advances
Reinforce Preference Stability
Reinforce Anticipated Regret and
Blame
Reinforce Perceived
Cost of Change
Reinforce Selection Difficulty
Why Change?
Customer Acquisition Customer Retention
Why Stay?
Customer lifecycle messaging
CHALLENGECHALLENGE
Tim RiestererChief Strategy Officer
Corporate Visions
@TRiesterer
http://cvi.to/ContentJam17
Why Change?
Customer Acquisition Customer Retention
Why Stay?
Customer lifecycle messaging
Why Change?
Customer Acquisition Customer Retention
Why Stay?
Customer lifecycle messaging
Professor Nick Lee
Warwick Business School
Why Pay
Messaging Test
Situation Background
Small business owner, hired firm to provide and promote health and wellness benefit program. Your contract is up for renewal
Started at 20% participation, goal was 80%, achieved 50%.
Turnover down, but not sure if attributable to program
In addition to the renewal, your vendor is asking for a 4% price increase in the new two-year contract.
Tested six different price increase messaging approaches to determine most effective.
Six Test Conditions
Same Opening Documents Business Results to Date
Introduce Unconsidered Need
Improved Capabilities w/ Anchor
Improved Capabilities No Anchor
Improved Capabilities Timed Discount
External Factors No Control
Reinforce Status Quo Bias
New opt-out
approach and
new services
New features
that increase
performance
Adds 8% but
we will share
cost - net 4%
increase
Will cost 4%
more, but
should see
payback 1 yr
Same 4% Price Increase Rate In Every Case
New features
that increase
performance
Adds 4% to
the cost of
the contract
New features
that increase
performance
Adds 8% to
cost but you
get 4% timing
discount
Must pass
along outside
cost increase
Adds 8% but
will split the
difference to
make it 4%
Deliberately
reinforce and
highlight new
features
Will be adding
4% to cost of
contract
Least Favorable Attitude
Most Favorable Attitude
18.8%
Least Likely to Renew
Most Likely to Renew
15.5%
Least Likely to Stick With
Most Likely to Stick With
14.4%
Most Likely to Switch
Least Likely to Switch
16.3%
Most Likely to Consider Competitive Offers
Least Likely to Consider Competitors Offers
7.6%
Put your customers at risk by challenging them
• Lowest favorable attitude
• Least likely to renew• Least likely to stick
• Most likely to switch• Most likely to look at competitive offers
• Lowest performer in 5 other areas: (least credible, lowest confidence, least innovative, least trustworthy, least compelling)
• Most unique and unexpected
v
Price Increase with Anchor
and Form of a “Justified” Discount
Why Change?
Customer Acquisition Customer Retention
Why Stay?
Customer lifecycle messaging
CHALLENGECHALLENGE
Tim RiestererChief Strategy Officer
Corporate Visions
@TRiesterer
http://cvi.to/ContentJam17
Why Change?
Customer Acquisition Customer Retention
Why Stay?
Customer lifecycle messaging
Customer Acquisition
Why Stay?
Customer lifecycle messaging
Why Change?
Customer Retention
Why Now?
Latest test
DEFEAT STATUS QUO BIAS REINFORCE STATUS QUO BIAS
Professor Nick LeeWarwick Business School
Why Now
Story Framework Test
Situation Background
You are an executive at a food processing company that cleans, sorts and packages vegetables.
You have traditionally served large vegetable producers using large-scale equipment that can process several tons of vegetables per hour.
However, the most promising growth market is organic and specialty food production, and unfortunately, you do not have equipment suitable for the small batch requirements of this “small-producer” market.
You will be meeting with a company that makes smaller-scale, more flexible equipment that could help you enter this new market, and they present the following story as to why you should buy their equipment.
Test Conditions
We created six messaging elements:
• Business Issue: External factors and business initiatives
• Loss: Details about your loss to be avoided
• Gain: Details about your potential positive gain
• Unconsidered Needs: Introduces unsuspected threats
• Heavy ROI: Hard #s with detailed ROI breakdown
• Change Story: Business change story with light ROI
Test Conditions
We created six different frameworks with different messaging configurations:
1. Business Issue + Loss + Heavy ROI
2. Business Issue + Gain + Heavy ROI
3. Business Issue + Unconsidered Needs + Heavy ROI
4. Business Issue + Loss + Change Story
5. Business Issue + Gain + Change Story
6. Business Issue + Unconsidered Needs + Change Story
Results
1% higher
Results
1% More
Results
4% Increase
Results
2% More Urgent
Results
9% More Likely
WHY NOW STORY MODEL
Business Issue
Unconsidered Needs
Solution Response
Business Impact
Identify a key industry trend and
align it with a company’s
acknowledged strategic initiative
Show the Unexpected Flaws Or Limitations with their Current Approach
That will Keep them from Responding Effectively
Present How You Can Resolve the Unconsidered
Needs and Enable them to Realize
their GoalShare a Preliminary
Calculation of Quantified Impact Your
Solution will Provide
Customer Acquisition
Why Stay?
Customer lifecycle messaging
Why Change?
Customer Retention
Why Now?
DEFEAT STATUS QUO BIAS REINFORCE STATUS QUO BIAS
Tim RiestererChief Strategy Officer
Corporate Visions
@TRiesterer
http://cvi.to/ContentJam17
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