
Sign up to save your podcasts
Or


‘Tis the season, and there are just a few more days for retailers to get their hands on the money in America’s wallets. This year, the gap between rich and poor is widening. As much as 50% of all spending comes from the top 20% of families. With inflation still hovering near 3% and unemployment rising, BBTW asked MichaelAaron Flicker, the author of “Hacking the Human Mind: The Behavioral Science Secrets of 21 of the World’s Most Successful Brands,” how brands keep consumers spending…
You wrote a book called “Hacking the Human Mind” - how do companies do that when it comes to getting you to empty your wallet at Christmas?MichaelAaron Flicker: We have a lot of subconscious influences on what drives our purchase decisions. The holidays are like the SuperBowl for all retailers. They want to get you to spend, and they want to get you to spend now. It’s empowering for consumers to understand how they do it, because then they can be aware when they’re making more of an emotional decision than they otherwise might have realized. Daniel Kahneman said, ‘Thinking is to humans like swimming is to cats. They can do it, they just prefer not to.’
There’s an inherent conflict when it comes to holiday shopping: Consumers, especially now with rising inflation, unemployment, and an uncertain economic outlook, don’t want to spend much. But retailers — and the overall economy— need us to spend more.MAF: We want to get people to make responsible choices, but brands must get people to make decisions to buy. So, there’s lots of psychological insights that they’re using to get that done. The top 20% of consumers are exerting incredible buying power right now. Brands and retailers are focused on them, trying to capture as much of the pie as possible. For consumers to be aware of what’s going on, I think it’s helpful to understand some of the psychological tactics that brands use.
The number one thing you see a lot of retailers using right now is scarcity: There’s only so much time left in this offer, or there’s only so many pieces left. The study that explains the emotional side of this comes from 2010 bySuzanne Shuat UCLA’s Anderson School of Management. Researchers offered participants a gift voucher worth $6 for a free coffee and cake at a local cafe, and randomly gave participants one of two vouchers, one expiring in three weeks and the other expiring in two months. The research showed that when the expiry date was two months away, only 6% of the vouchers were redeemed, but at just three weeks, 33% of the vouchers were redeemed. A lot of these lightning sales on Amazon$AMZN ( ▲ 2.48% ) are playing with, you’re so worried that you’re going to miss out. That fear of missing out on the deal really drives a lot of consumer behavior.
What other tactics do they use to get you to spend?There are two broad ways people get what they want in life, through other people, what we could call social connectedness, or through money. By focusing the buyer on the nostalgia, it boosts the sense of social connectedness, and the importance of money wavers. It explains why Pumpkin Spice Latte is such a moneymaker for Starbucks$SBUX ( ▲ 4.94% ) . It creates this nostalgic moment for them, 21 years and running, where it just prints money for Starbucks.
What’s changed this year?Social targeting allows marketers to create the feeling of a “movement” that is happening everywhere, even when it’s not. Through social platforms, brands can target consumers with multiple messages that “everyone’s buying this” with things like influencers, content creators and ads that have lots of likes and comments — even when it’s targeted to a relatively small group of people. Behaviorally, that’s enough. Humans don’t need statistical proof of popularity; we rely on perceived consensus. When a shopper sees repeated signals that “people like me are doing this,” the brain treats it as social proof and it has a very strong effect on a person’s action.
So social proof gets turbocharged by targeting. Showing early signals of participation, excitement, and discovery to the exact consumers most likely to be receptive to that behavior drives results. And marketers hope to compress the adoption curve: so that it feels like something is “taking off” almost instantly.
And then, once social proof is established, all the other holiday biases we discussed become dramatically more powerful through what we call “bias stacking.” Scarcity doesn’t just mean “limited supply” — it becomes “limited supply and everyone’s already grabbing it.” Urgency isn’t just about door-buster, 12 hour left deadlines — it’s about the rush to participate and not be left out. Time pressure, loss aversion, and FOMO stop operating independently and start reinforcing one another.
How do consumers counter this?If we as consumers realize that being shown emotion in commercials is appealing to our subconscious, our sensibilities of wanting to connect with the story happening in the commercial…brands are doing that to lessen the evaluation of the cost and to increase the social connectedness with the brand.
What about the famous new Year’s resolutions?There is this idea of fresh start effects. At New Year’s, where there’s a fresh start to the year, and people reset, it also happens on your birthday. If you move to a new home, the fresh start effect is in place. The ability to reset your habits has a surprising effect on your openness to try new brands or your openness to try new things. In 2018. in the United Kingdom, the West Midlands police wrote to 2,000 repeat offenders that now would be an ideal opportunity to make a fresh start and abandon your life of crime. When the police try the fresh start letter after the birthday of the criminal, the response rate jumps 56% in their willingness to call a hotline, largely because it’s their birthday.
So how do we “hack” back?The number one thing we would recommend is taking a beat, taking a breath and say, “what’s really driving my urgency in this moment? Is the urgency coming from a deal I’m worried I’ll never get again?” Or is my desire that my spouse really wants this, and that I was going to buy it anyway? Pick apart what’s being emotionally driven and what’s being rationally driven. By just taking a step back, imagine explaining the purchase to your spouse, and right away, you have to be more logical. And if you can’t explain it, maybe you ought not do it.
(This interview was edited for length and clarity)
—Peter S. Green
Big Businesses mentioned this week:$WBD ( ▼ 2.13% ) $PSKY ( ▼ 0.31% ) $NFLX ( ▼ 0.83% ) $ORCL ( ▲ 0.88% ) $PEP ( ▼ 0.47% ) $WMT ( ▼ 0.72% ) $DIS ( ▲ 1.12% ) $GOOG ( ▲ 1.91% ) $F ( ▲ 0.08% )
The usual suspectsWhat do you think of Big Business This Week? Tell us how you really feel in this survey!
Car TalkGet Big Business This Week in your inbox every week—and read it before everybody else! Sign up today.
TrumplandiaYou’re clearly into smart people talking about even smarter things. Lucky for you, that’s literally our whole deal atCheddar. We interview the brightest minds in business, finance, and tech. If you’d like more in-depth analysis from interesting people, lcheck out ourwhere to watchpage and turn us on 24/7! Your wallet will thank you and so, more importantly, will your mind. But also your wallet. Remember that.
By ‘Tis the season, and there are just a few more days for retailers to get their hands on the money in America’s wallets. This year, the gap between rich and poor is widening. As much as 50% of all spending comes from the top 20% of families. With inflation still hovering near 3% and unemployment rising, BBTW asked MichaelAaron Flicker, the author of “Hacking the Human Mind: The Behavioral Science Secrets of 21 of the World’s Most Successful Brands,” how brands keep consumers spending…
You wrote a book called “Hacking the Human Mind” - how do companies do that when it comes to getting you to empty your wallet at Christmas?MichaelAaron Flicker: We have a lot of subconscious influences on what drives our purchase decisions. The holidays are like the SuperBowl for all retailers. They want to get you to spend, and they want to get you to spend now. It’s empowering for consumers to understand how they do it, because then they can be aware when they’re making more of an emotional decision than they otherwise might have realized. Daniel Kahneman said, ‘Thinking is to humans like swimming is to cats. They can do it, they just prefer not to.’
There’s an inherent conflict when it comes to holiday shopping: Consumers, especially now with rising inflation, unemployment, and an uncertain economic outlook, don’t want to spend much. But retailers — and the overall economy— need us to spend more.MAF: We want to get people to make responsible choices, but brands must get people to make decisions to buy. So, there’s lots of psychological insights that they’re using to get that done. The top 20% of consumers are exerting incredible buying power right now. Brands and retailers are focused on them, trying to capture as much of the pie as possible. For consumers to be aware of what’s going on, I think it’s helpful to understand some of the psychological tactics that brands use.
The number one thing you see a lot of retailers using right now is scarcity: There’s only so much time left in this offer, or there’s only so many pieces left. The study that explains the emotional side of this comes from 2010 bySuzanne Shuat UCLA’s Anderson School of Management. Researchers offered participants a gift voucher worth $6 for a free coffee and cake at a local cafe, and randomly gave participants one of two vouchers, one expiring in three weeks and the other expiring in two months. The research showed that when the expiry date was two months away, only 6% of the vouchers were redeemed, but at just three weeks, 33% of the vouchers were redeemed. A lot of these lightning sales on Amazon$AMZN ( ▲ 2.48% ) are playing with, you’re so worried that you’re going to miss out. That fear of missing out on the deal really drives a lot of consumer behavior.
What other tactics do they use to get you to spend?There are two broad ways people get what they want in life, through other people, what we could call social connectedness, or through money. By focusing the buyer on the nostalgia, it boosts the sense of social connectedness, and the importance of money wavers. It explains why Pumpkin Spice Latte is such a moneymaker for Starbucks$SBUX ( ▲ 4.94% ) . It creates this nostalgic moment for them, 21 years and running, where it just prints money for Starbucks.
What’s changed this year?Social targeting allows marketers to create the feeling of a “movement” that is happening everywhere, even when it’s not. Through social platforms, brands can target consumers with multiple messages that “everyone’s buying this” with things like influencers, content creators and ads that have lots of likes and comments — even when it’s targeted to a relatively small group of people. Behaviorally, that’s enough. Humans don’t need statistical proof of popularity; we rely on perceived consensus. When a shopper sees repeated signals that “people like me are doing this,” the brain treats it as social proof and it has a very strong effect on a person’s action.
So social proof gets turbocharged by targeting. Showing early signals of participation, excitement, and discovery to the exact consumers most likely to be receptive to that behavior drives results. And marketers hope to compress the adoption curve: so that it feels like something is “taking off” almost instantly.
And then, once social proof is established, all the other holiday biases we discussed become dramatically more powerful through what we call “bias stacking.” Scarcity doesn’t just mean “limited supply” — it becomes “limited supply and everyone’s already grabbing it.” Urgency isn’t just about door-buster, 12 hour left deadlines — it’s about the rush to participate and not be left out. Time pressure, loss aversion, and FOMO stop operating independently and start reinforcing one another.
How do consumers counter this?If we as consumers realize that being shown emotion in commercials is appealing to our subconscious, our sensibilities of wanting to connect with the story happening in the commercial…brands are doing that to lessen the evaluation of the cost and to increase the social connectedness with the brand.
What about the famous new Year’s resolutions?There is this idea of fresh start effects. At New Year’s, where there’s a fresh start to the year, and people reset, it also happens on your birthday. If you move to a new home, the fresh start effect is in place. The ability to reset your habits has a surprising effect on your openness to try new brands or your openness to try new things. In 2018. in the United Kingdom, the West Midlands police wrote to 2,000 repeat offenders that now would be an ideal opportunity to make a fresh start and abandon your life of crime. When the police try the fresh start letter after the birthday of the criminal, the response rate jumps 56% in their willingness to call a hotline, largely because it’s their birthday.
So how do we “hack” back?The number one thing we would recommend is taking a beat, taking a breath and say, “what’s really driving my urgency in this moment? Is the urgency coming from a deal I’m worried I’ll never get again?” Or is my desire that my spouse really wants this, and that I was going to buy it anyway? Pick apart what’s being emotionally driven and what’s being rationally driven. By just taking a step back, imagine explaining the purchase to your spouse, and right away, you have to be more logical. And if you can’t explain it, maybe you ought not do it.
(This interview was edited for length and clarity)
—Peter S. Green
Big Businesses mentioned this week:$WBD ( ▼ 2.13% ) $PSKY ( ▼ 0.31% ) $NFLX ( ▼ 0.83% ) $ORCL ( ▲ 0.88% ) $PEP ( ▼ 0.47% ) $WMT ( ▼ 0.72% ) $DIS ( ▲ 1.12% ) $GOOG ( ▲ 1.91% ) $F ( ▲ 0.08% )
The usual suspectsWhat do you think of Big Business This Week? Tell us how you really feel in this survey!
Car TalkGet Big Business This Week in your inbox every week—and read it before everybody else! Sign up today.
TrumplandiaYou’re clearly into smart people talking about even smarter things. Lucky for you, that’s literally our whole deal atCheddar. We interview the brightest minds in business, finance, and tech. If you’d like more in-depth analysis from interesting people, lcheck out ourwhere to watchpage and turn us on 24/7! Your wallet will thank you and so, more importantly, will your mind. But also your wallet. Remember that.