Understanding How The Peak-end Rule Defines Customers’ Experiences
Is it possible to “rig” the mental triggers that control memory in order to induce positive experiences in our customers while magically erasing the negative ones?
One of the main points we try to address on this blog is the need for companies to look deeper into the customer decision process and understand from a scientific perspective how cognitive biases play a role in buying, loyalty and churn.
As CMO and editor in chief at Worthix, I made the decision to tackle this subject head-on. We have started a Podcast called Voices of Customer Experience, where we connect thought-leaders, behavior specialists, data-scientists and customer experience executives on a single platform to discuss these topics with more depth.
Between recording and post-production of episodes, I’m lucky enough to have direct access to some of the most brilliant minds in our field. Recent guests on the show who believe and preach behavioral analytics include Joe Pine (author of The Experience Economy), Ryan Hamilton (Emory University) and Larry Rosenberger (former CEO and research fellow at FICO).
Dr. Hamilton specializes in human behavior and decision making in the marketing spectrum, and during his podcast on How to Drive and Impact Customer Decisions, he brought up a topic that has been somewhat recurrent as of late in the Marketing sphere, the “peak-end” rule.
The peak–end rule is a psychological heuristic, or mental short-cut conceived by professors Kahneman & Tversky in 1999, in which people remember an experience, whether it’s negative or positive, largely based on how they felt at its peak and at its end, instead of judging the experience as a whole.
I read more on Professor Daniel Kahneman and found that he received the Nobel Prize for Economics in 2002, despite being a psychologist and having publically stated that he “never took a single economics course”. This is quite unusual, given the strict criteria used by the Nobel institute, and stems from the brilliance and the impact that Kahneman’s work has on today’s market.
One of Kahneman’s most notorious studies to prove the peak-end rule, which I approach somewhat reluctantly due to its nature, was conducted with colonoscopy patients in 1996 (yes, I know and apologize profusely).
Subjects were randomly divided into two groups. The first group underwent a regular painful procedure for the standard amount of time while the second group had the scope left in for an extra three minutes. During these last minutes, the scope remained unmoved, which caused a sensation of discomfort, but not pain.
The study found that, contrary to what we’d assume, the second group rated their longer procedure as less unpleasant than the group with the shorter but consistently painful procedure. These subjects in the second group were also much more likely to return to the same physician for future procedures since a less painful ending caused a more positive overall impression of the experience.
If you have time, I highly recommend that you watch Dr. Kahneman himself discuss the full study and its implications in the TEDTalks video below.
To summarize, Kahneman’s great discovery is that the brain processes memory through two separate and conflicting “selves”: 1) the “experience self” and; 2) the “remembering self”.
While the “experience self” processes the present and has a clearer notion of what actually happens, the “remembering self” is the story-teller that decides which memories from our experiences we’ll get to keep.
It also seems that while the concept of time and duration is a seemingly unimportant factor in the retention of memory, the ending is very important to the “remembering self”. The other moments are mostly lost forever. Kahenman expounds this concept by contrasting a week-long vacation versus a two-week vacation. Regardless of the duration, what is remembered is whether or not the experiences ended on a high note, rendering the duration of time periods meaningless.
For me, the greatest takeaway and potential of this study is for CX design and management. Thanks to Kahneman, it is now a proven fact that cognitive biases arbitrate what we retain from our experiences to a degree where entire portions of that experience can be “erased” from our memory while how we feel specifically during peaks and ends determines our entire perception of that experience.
So, if we apply Kahneman’s discovery to our customers’ experiences, we find that although we cannot choose which part our customers will consciously remember, we can magically “hack” memory by creating experiences that by design peak and end positively.
There are companies that do this organically, like Chewy, who delivered flowers and a condolences card to a customer whose pet passed away. Or Zappos, who encourages their customer service reps to empathetically connect with customers, like in this story.
But these are both companies in the retail industry. How does an organization with less access to customers, or even a company that is beginning its journey down the road to customer centricity create positive experiences?
On his blog, CX thought-leader and author Adam Toporek wrote: “One of the best techniques [for controlling this part of the journey] is to try to manufacture the emotional peak purposefully, to create it by design.”
World renown author and consultant Joe Pine said on our podcast that companies cause experiences as opposed to creating them, because customer experiences are created from everything perceived, felt and remembered by the customer. Therefore, he encourages companies to actually design time, or even stage an experience that causes memorability within their customers.
In layman’s terms, design customer journeys that go out with a bang. Deliver a grand finale, even if staged, to make sure your company is causing experiences that make your customers feel emotion and remember.
Don’t miss out on the best insight on behavior analytics, data science, and tech innovation for Customer Experience. Subscribe to my podcast: Voices of Customer Experience.
