The Customer Loyalty Loop Read online

  These biases conspire to create not just our perceptions of an experience but our memories of it, too. The dynamic relationship between cognitive bias, emotion, and memory is a critical part of the Customer Loyalty Loop. More important, understanding that relationship is the key to improving your customer’s experiences in ways that drive profits straight to the bottom line, and that’s a narrative we should all be able to wrap our heads around.

  The Memory of Experience

  Let’s continue with a bit more of the science before we dive deeper into the loop. Elizabeth Loftus is a well-known, highly honored psychologist.3 For the last 40-plus years, she has been researching something that is critical to each and every one of us, and a subject that has major implications for every aspect of your business, from marketing to customer service. Loftus is arguably the world’s leading researcher in memory. But Loftus isn’t someone who researches memory loss; rather, she investigates the process of remembering, which is critical to the Customer Loyalty Loop.

  Loftus’ research as well as that of others has highlighted something everyone could benefit from knowing: memory is unreliable. While most of us like to think that our memories are perfect recordings of events, the fact is that they not recordings of reality but highly individualized reconstructions that are subject to numerous sources of bias and distortion. As I have already mentioned, we invent our version of reality so it should be no surprise to learn that our memories are reflections of those stories, not a record of objective reality. Moreover, not only are those memories very individualized, but they can also be significantly altered by subsequent events. We’ll talk about this in a bit when we discuss how imagination impacts our sales and marketing efforts.

  In this chapter, I will examine the experience–memory–recall cycle. This is essential to the Customer Loyalty Loop. Companies spend a lot of money building their brand and creating a culture that supports a particular perception. However, that perception is going to be influenced by many factors, some of which are controllable by the organization and some of which are not. However, to give yourself the best shot at creating the impression, the brand, and the business you want, it is essential to understand the experience–memory–recall cycle.

  Creating the Experience

  The way we construct our stories, and our first memories of an experience, is a function of numerous factors. For example, we can only focus on one thing at a time, so when we focus to the left, we are missing what’s happening on the right. And what’s happening there might provide important clues that would influence the narrative. So, the first thing that shapes our story is where we focus our attention.

  Once our attention is focused, we receive sensory input, mostly from the focus of attention but also from other strong stimuli that might be present. So, for example, as you’re sitting at your desk focusing on the report you have to write, or as you’re reading this book, you might be distracted by a loud noise, a strong smell, or even an unexpected vibration (those of you who live in places where there are earthquakes will know what I mean!). When distracted like this, the intrusive sensory input is likely to dominate your perception and subsequent narrative. It has got your attention for a reason; your brain thinks it’s important as it is potentially a danger signal, and detecting danger is the brain’s priority.

  You’re sitting at your desk writing an important report and doing very creative work. As you are doing this, you hear a deafening noise and looking out of your window you can see that there has been a major traffic accident right outside your window. What you will remember about this moment is almost certainly going to be the traffic accident and not the great work you were doing (but hopefully someone else will point out how talented you are!).

  The human brain also works by focusing on contrast because contrast signifies change, and detecting change is a priority. As a result, the brain can be hijacked as it pursues contrast, sometimes at the expense of other important features in the environment. In their book Sleights of Mind, neuroscientists Stephen L. Macknik and Susana Martinez-Conde recount their experiences learning magic tricks and illusions. They show that most of these tricks use the brain’s natural mechanisms to fool us. The brain will fill in the gaps by creating illusions. For example, because the brain operates on contrast, if you show someone three red cards and one black one, the mind will focus on the black one first. If you withdraw the cards before there’s time to look at the red ones, the illusionist has a pretty good idea which card has been remembered.

  A classic example of how focus can influence perception is given by psychologist Dan Simons, as reported in the American Psychologist in 2006. In his talks, Simons performs the following trick. He has six playing cards projected onto the screen.4 He asks a member of the audience to step forward. As Simons covers his eyes and turns away from the screen, he asks the audience member to select one of the six cards and point to it, so the audience knows which he has picked. In this case, let’s assume it is the Queen of Clubs, but it could be any card. Dan then opens his eyes and says he will remove the selected card from the screen. With a click of the mouse, the screen changes, there are now only five cards left and, hey presto! The Queen of Clubs is no longer there!

  How did Simons do it? Did he secretly sneak a peek when the card was being identified to the audience? Was it all a prearranged deal, and the audience member was part of the stunt? These are standard explanations that people give when they see this trick, but they are both wrong. In some ways, the answer is simpler than that.

  No one notices that when Dan put five cards up on the screen after the audience has been alerted to the selected card, that they are five completely different cards from the original set! It’s not just the Queen of Clubs that is missing, all of the original set are missing! Very few people notice, however, because they are all locked on to the Queen of Clubs and not focusing on the other cards. Our focus and expectations will determine our perception. There is a famous study on inattentional blindness featuring a flight simulation game. Professional pilots in this simulation were relatively weak at detecting when they were about to land their plane on top of another airliner! This is because it is not their common experience and expectation to see another plane in this situation, and they were focusing elsewhere. Many subconscious processes like these hijack our perception, experience, and ultimately our memories.

  When we receive sensory information, we quickly interpret it with little if any focused analysis. Instead, our subconscious, past experiences, and expectations influence the story. For example, if I see smoke in the distance I might automatically assume that I smell burning as well. In that sense, the formation of our memories is based on associations and assumptions, of which we are not conscious, or at least conscious when they are occurring and influencing the story.

  In the September 11, 2013, edition of Scientific American, Melanie Tannenbaum uses just such an example in her recollection of the events of 9/11.5 Her recall of seeing the smoke from the Twin Towers from 30 miles away was always accompanied by the memory of the smell of burning. That was her enduring memory—until she looked at the numerous e-mails she wrote that day, not one of which had any mention of the smell of burning. It is an excellent example of how our memory fills in the gaps and uses unconscious assumptions that shape not just the narrative but the memory of it, too.

  Now think about how this works at every level of customer interaction. If I see an ad that features a person who looks a lot like my brother, my perception of the ad will be influenced by memories and feelings associated with my brother (fortunately, in my case, mostly good!). Obviously, this can work in an almost infinite number of ways. Whenever you present people with a stimulus, they can react in many possible ways based on their experiences and associations. Sure, you can go out of your way to make the stimuli as pleasing as you want (for example, play soft music), but there are always going to be some people who react to that stimulus contrary to your expectations. For some people, soft music has negative conn
otations.

  The Role of Emotion

  Previously, I mentioned how emotion not only influences the narrative, but it also affects the memory of the story. The example I gave was receiving a gift card either immediately after discovering you had been bad-mouthed or praised in social media. The emotion not only influences the experience, but it also influences the memory of the experience. To give another example, you go to the movies with your friends to see a romantic comedy. Just before you walk into the movie theater, you have an upsetting phone call with your spouse/girlfriend/boyfriend. In the first scenario, you are in the movie theater and are distracted. You’re thinking about the call and your relationship while your friends are laughing their heads off, which you find highly irritating. There’s a decent chance that you will encode this experience as frustrating, and your memory is likely to be that the movie sucked as a comedy.

  Now, back in the movie theater, let’s suppose that hearing your friends cracking up makes you smile. Laughter is infectious, which is why sitcoms use laugh tracks. Now you are laughing, or at least smiling, and it is tough to laugh and be mad at the same time. So this laughter takes your mind off the relationship issue. Now, rather than underrating the movie, you’re likely to overrate it! It must be a funny movie if it could distract you from your worries, right? But what about later when you recall this evening? The chances are that, regardless of how you felt at the time, if you now remember the association of the movie with the upsetting phone call, you will recall the movie as a disappointment.

  In a relevant 2011 experiment, researchers showed that the more relaxed shoppers were, the more they were going to spend. Relaxation implies that the brain is not perceiving a threat, and therefore it is more capable of thinking abstractly about the value of the object and is less “defensive” about everything, including spending money. The defensiveness that stress brings might inhibit everything, including reaching for your credit card.6

  As you experience events on a moment-to-moment basis, you are consciously but mostly subconsciously processing them. And after a few seconds, this experience is encoded into your memory. It’s believed by the experts that the different sensory components of the experience—the sight, sound, feel, taste, smell, and the emotion—are encoded in different parts of the brain. When you recall the event, those separate memories are recruited and put together as a whole memory. Imagine having a separate file cabinet for each of these memory components. As you try to recall the event, subconsciously you go to each of the filing cabinets and collect the information needed. Of course, there’s always the chance that you pick up the wrong file—a sensory impression that is similar, but belongs to another event.

  If you have ever been traumatized or have watched or read about someone who has gone through a trauma, you will often hear that traumatized person be able to recall the difficult event but with no emotion whatsoever. In fact, they might say something like, “I remember it, but I am numb.” This is because the emotional component of the memory has not been recruited, typically because it is too painful to bear. Sometimes the emotion is so overwhelming that it prevents the memory occurring at all, what is called repression. How memory is laid down in the brain makes subsequent recall susceptible to distortion.

  So, now you have a memory of an experience in your short-term memory. At some point, it is put into long-term storage in a different part of the brain. Because it has been consolidated, you might think that this longterm memory; even though it has been influenced by the processes described above and is likely flawed, nevertheless will now remain stable. For better or for worse, this is how you will always remember this experience. But not so fast.

  Remember Elizabeth Loftus, the memory researcher I referenced earlier in this chapter? She has been a leader in the field of how recall can be influenced long after the memory has been encoded as a long-term memory.

  If you had been a subject in one of Loftus’ classic studies, you would have seen a picture of a car accident and then later asked questions about it. If you were in one group, you would have been asked to estimate the speed of the cars when they smashed into each other. If you were in another group, you would have been asked to determine the speed of the cars when they hit. The chances are that if you were told that the cars “smashed” into each other, your estimate of their speed would be higher than if you were told that they had hit each other. Moreover, if you were told that the cars had smashed into each other, you were much more likely to recall broken glass in the picture than if you were told that the cars had hit each other, even though no broken glass was present in the photo.

  A lot of Loftus’ work has been on this misinformation effect. How things are presented, the stories created, and the metaphors used all influence perception, subsequent memories, and more important, decision making. In a Stanford University experiment, researchers found that the metaphor used to describe the crime in a particular city influenced suggestions for how to deal with the problem. When the metaphor used for crime was to describe it as “a wild beast preying on the city,” 75 percent of subjects suggested solutions that involve punishment and enforcement, like more prisons. When the metaphor was changed to a “virus infecting the city” only 56 percent suggested greater enforcement and 44 percent social reforms.

  The misinformation effect also demonstrates that following information changes the reliability of memory. Loftus observed a murder trial where there was conflicting witness testimony, and after publishing an article about it, she became a sought-after legal expert who has testified in many high-profile legal cases, like the O.J. Simpson trial. What she has discovered is that various factors can distort the subsequent recall of memory. For example, the memory of witnesses can be significantly influenced by information they have got either at the time of recall or in the intervening periods since the event.

  One aspect of this misinformation effect research has generated a lot of controversies and personal criticism of Loftus. In one study, in which the researchers created a false childhood memory of subjects being lost in a mall, 25 percent of subjects subsequently bought into the suggestion and recalled being lost in the mall as a real event that happened to them. Loftus then used this evidence to criticize certain forms of therapy, particularly where hypnotic techniques are used to retrieve memories. These techniques risk implanting false memories, especially of childhood abuse, Loftus argued. Interestingly, Sigmund Freud found himself in this predicament. Using fairly aggressive associative techniques, he believed that many of his patients were recalling experiences of childhood sexual abuse. However, when confronted with these “memories,” these patients denied having any such experience. Were they in denial? Was there another explanation for the discrepancy? Freud resolved the matter by creating the notion of infantile sexuality, that children have a repressed desire to have sex with their parents, which in retrospect is probably the least likely explanation.

  In any event, Loftus’ contention that leading questions by therapists could create false memories led to howls of protests from therapists. Given what we know about the human brain and its binary nature, we should expect this argument to descend into a simple battle of opposites even amongst supposedly ultra-rational scientists (i.e., that there’s no such thing as a false memory, or that all memories are false). Of course, what the research suggests is that memory is unreliable and can be influenced, not that it is always critically distorted.

  And talking of the binary brain, there is some relevant research that relates to choice and buying decisions. One of the difficult tasks for the brain is to scale a list of alternatives. It is far easier to see the world as a choice between two opposites, than say a choice between several things that vary in different qualities. The binary brain might be behind the finding of one researcher on buying decisions.

  Sheena Iyengar is the author of the book The Art of Choosing,7 and in one of her experiments, she found that when subjects were presented with more than 20 types of chocolate or wine, compared to a list o
f fewer than seven, they consistently chose the premium varieties. Moreover, they paid considerably more than the product was worth. One explanation for these findings is that when faced with many alternatives, we’re likely to simplify the choice by going to a binary solution and looking at the extremes. This would mean selecting either the most expensive or the cheapest. Moreover, we would overvalue those choices, making the “best” wines more expensive and the “worst” wines more affordable. Research of 63 wine auctions held in London between 2006 and 2009 confirmed this. People at these auctions overvalued the higher appraised wines and undervalued lower appraised products.

  The nature of the binary brain, the focus on change and contrast, the influence of emotion, the way events are presented, our past experiences, subconscious processes, and expectations all not only shape the experience but also fundamentally influence the memory of the experience. And it is the memory of the experience that drives decisions. Also, each time a memory is recalled, it can be influenced by context and the availability of information that has assumed importance.

  Melanie Tannenbaum, who was quoted earlier about her recall of 9/11, gives a great example of how subsequent input changes memories. She writes:

  John Adams and Thomas Jefferson both reported vivid memories at the ends of their lives where they recalled in graphic detail how wonderful it felt to sign the Declaration of Independence on July 4, 1776, the most momentous day of their lives. Except for one minor problem: July 4th was the day that the wording was approved by Congress. No one signed anything until August 2nd.