March 2017Marketing

Embracing Contradiction: Your Customers Aren’t Always Who They Say They Are

Embracing Contradiction: Your Customers Aren’t Always Who They Say They Are

Companies are collecting more data about their customers than ever before, and making significant business decisions based on it. But even when armed with massive amounts of information, trying to get a message across can still be frustrating.

“On the outside,” says professor Anindya Ghose, “it is very easy for businesses to get discouraged by consumers’ seeming resistance or inhibition to advertising. What lies beneath the surface is different though.” In his new book Tap: Unlocking the Mobile Economy, Ghose says the leveraging of mobile data, combined with his ground-breaking studies in randomized field experiments in different parts of the world, economics, and behavioral psychology, have unearthed knowledge that can help us better understand our customers, and ourselves.

He recently shared his insights with participants in Wharton’s Digital Marketing Strategies for the Digital Economy program, helping them understand how better to reach their customers online. A professor at New York University’s Stern School of Business and a globally recognized authority on the mobile economy, Ghose says typical consumer resistance to digital advertising can be explained by a few key behavioral contradictions.

“Humans have a tendency to say one thing and do another,” Ghose explains. “Perhaps most strikingly, we say we want to protect the privacy of our digital data. If we could hold onto data physically we probably would. But when you look at what people actually do online, it turns out it’s not really true. In fact, it is often the opposite.”

Based on research that led him from North America to Europe and across Asia, his observations help explain how the contradiction works. “Consumers expect brands and retailers to know a lot about them,” says Ghose. By “a lot,” he means who they are, where they are, where they’re going, where they’ve been, what’s nearby, what’s going on, what they need, what they’ve bought, what they’re interested in, and what they respond to. “If you specifically spell this out to people, they deny it. No one will admit that they want this much personal information known. But their actions tell another story: people are willing to share information as long as they find value in what they get in return from firms.”

Ghose says he expected to find cultural differences in the ways in which this contradiction plays out, but there were none. “It doesn’t matter if you are in Munich, Mumbai, New York, Seoul, or Shanghai. You’re more willing to share information than you say you are.” But that doesn’t mean there aren’t any differences.

“The amount of data people part with (consciously or inadvertently) depends on their age,” he explains. “There’s a big generation gap that I have observed across demographics in many countries. If you survey millennials and those in Generation Z and Y, nine out of ten say they are careful. Their stated preference is to protect their privacy. But if you explain why they should be more willing to share information, such as getting better offers from companies they regularly patronize, nine hands go up again. Their revealed preference is that they are more than willing to part with data to gain something of tangible value.” Ghose says the contradiction is less pronounced with Generation X and baby boomers. His global studies also show that “people in the highest income groups are more likely to redeem mobile offers and respond positively to mobile ads than others.”

A key takeaway from his research is how to fix what he says is a fundamental problem in the digital economy: companies are overwhelming their customers with too many messages. “The reason they send out 10 different messages is that they don’t know much about us, as astonishing as that might seem in today’s data-intensive economy. They’re throwing 10 darts in the air and hoping one will hit the bullseye. If consumers share more of their preference information, brands will know more about them and will in turn increase the relevancy of their messages and decrease the frequency. To get that information, keep in mind who you’re trying to reach, how much they’re probably willing to share, and what you can give in return.”