Using Behavioral Psychology to Win

Start-ups often ignore behavioral science and consumer behavior during product design. While data-science and predictive analysis has seen massive advancements in the last decade or so, 9/10 new product launches still fail within 6 months of launch. $100Bn + marketing spends go waste every year.

It is interesting to understand how customers take decisions – do we decide consciously based on facts and logic or do we decide unconsciously, based on emotions and intuition? 95% decisions we take are due to unconscious bias. Humans often make major financial decisions- like buying a house or relocating to a new job- with our hearts as much as our heads.

However, there is still an asymmetry in the way we treat creative, emotionally driven ideas vs the way we treat rational & numerical spreadsheets-driven ideas. Problem solving, product designing, and brand building should be a confluence of psychology, technology, and economics.

Product managers and marketers are expected to create exponential, intangible value and that is why understanding human biases and consumer behavior is of paramount importance. Companies like Google, and Tesla are as much a psychological success as technological. Google is a classic example of goal dilution theory – that explains that users believe that a brand doing 1 thing is better at it as compared to a brand that does that 1 thing and 1 other thing. While giants like Yahoo! & MSN were trying to be more than just a search engine by offering news, stocks and sports on the homepage, Google simplified that search experience. Tesla, on the other hand, highlights technological innovation & build quality more than environmentally sustainable transportation, because often, we assume that if something is better for environment, it is going to be worse in performance.

Harnessing data is a good practice but combining it with behavioral science could lead to interesting results. Hoping to see more openings for “Chief Behavior Officers”.