chief strategy officer corporate visions @triesterer · plan a. save 1 out of 3 plants and 2,000...

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 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

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://www.gsb.stanford.edu/faculty-research/faculty/zakary-tormala&ei=4weeVJK0OJOeyQTluoGoAw&bvm=bv.82001339,d.aWw&psig=AFQjCNHI0srJShUIlDjKMYeLStCKdjgk5Q&ust=1419729249092481



Why Change?

Customer Retention

Why Now? Why Stay?

Why Change?



YourSolution

Defeating the Status Quo Bias

Preference

Stability

De-stabilize their preferences

YourSolution


Preference

Stability


Cost of Staying same

Cost of

Action/

Change

YourSolution


Cost of

Action/

Change

Preference

Stability

Selection

Difficulty



Create enough Contrast


YourSolution

Preference

StabilityAnticipated

Regret

/Blame

Cost of

Action/

Change

Selection

Difficulty




Before and After Hero


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


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



Quality Improvement 10+%

Persuasiveness

4

5

6

7

8

StandardSolution

Value AddedSolution



Persuasion Improvement (10+%)


Unconsidered Need


Improved New Way

Story with Contrast



Clear Contrast


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


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





Plan A

2 out of 3 plants lost

along w/ 4,000 jobs

Plan B

33% chance of losing


66% chance of losing


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


Unconsidered Need


Improved New Way

Story with Contrast



Clear Contrast


Why Change?



Why Change?


Why Stay?


Preference


Regret

/Blame

Cost of

Action/

Change

Selection

Difficulty




YourSolution


Before andAfter Hero

Preference


Regret

/Blame

Cost of

Action/

Change

Selection

Difficulty






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?


Why Stay?


CHALLENGECHALLENGE


Corporate Visions

@TRiesterer


Why Change?


Why Stay?


Professor Nick Lee

Warwick Business School

Why Pay

Messaging Test


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?


Why Stay?


CHALLENGECHALLENGE


Corporate Visions

@TRiesterer


Why Change?


Why Stay?



Why Stay?


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


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


Why Stay?


Why Change?

Customer Retention

Why Now?

DEFEAT STATUS QUO BIAS REINFORCE STATUS QUO BIAS


Corporate Visions

@TRiesterer
