Marketing Without Psychology Is Just Expensive Noise | Gee Ranasinha
Hi, everyone. This is Kumar Dattatreyan with Meridian Point. And today we're joined by Gee Ranasinha. He's the CEO of Kexino, an award-winning marketing agency that's challenging traditional approaches to marketing effectiveness. Gee argues that modern marketing has lost its way, focusing too much on data and technology while forgetting the human psychology that actually drives purchasing decisions. I can definitely attest to that in my profession and the people that I work with. As a professor of behavioral economics and marketing expert, he brings unique insights into how businesses can create more meaningful connections with their customers. So without further ado, let me bring Gee on stage. Hi, Gee. It's great to have you on.
Hello there, Kumar. Thank you for inviting me. Delighted to be invited.
Of course, of course. So I'm eager to talk. I've been looking forward to this conversation for, well, since we had that initial conversation a couple of months ago. And I'm going to start off by focusing on sort of the, I guess, the vision for your company, right? The blending of psychology and the marketing message, if you will. And really, you argue that it's lost its effectiveness by focusing merely on data. Can you sort of talk about how that shift happened and what you do to bring psychology back into the fold?
Sure, absolutely. I think that especially in the last, say, five years or so, we in marketing, the industry faces a significant effectiveness challenge. I think we as an industry continue to spend vast resources, you know, the stratospherically high percentage of our communications fail to connect with the people that we are aiming to influence. I think I read a, I think it was a survey from eMarketer about two or three months ago, maybe a bit more than that, actually. Anyway, the survey concluded that eighty-nine percent of all marketing is not noticed or remembered. Okay. So if we say just for the US, okay, which accounts for around forty-five, fifty percent of global marketing expenditure, right? So if for argument's sake we say the US is six hundred million dollars worth of marketing expenditure, right? That means we as in professional marketers and advertisers who think we know what we're doing and clients who are prepared to pay us are flushing away five hundred and thirty-four million dollars of client money straight down the toilet right? And I think this core invisibility is a fundamental barrier to effectiveness and which is actively preventing communication and influence from even beginning. And I think one of the drivers for all of this inefficiency is our industry's obsession with data, accountability, attribution, and easily measured metrics, okay? Which prioritizes efficiency over effectiveness and ignores the unpredictable, irrational, you know, fat tail value, if you like, derived from building fame and reputation over time, for example, okay? You know, we're focusing on quantifiable incremental gains, but we're ignoring the larger, potentially transformative opportunities that don't even get consideration because they don't fit the simple attribution criteria that we set out for ourselves.
So maybe you can give me and the audience some examples of metrics that are being tracked and what should instead be tracked? If there's a way to sort of quantify that, okay, what is more effective? How do you measure effectiveness, for instance?
Well, yeah, it's a very good question. And I think before we can do that, we need to actually define what effectiveness is, right? And not only that, but also to define what efficiency is, because this is one of the main reasons why we are where we are. So if we look at effectiveness, for example, so effectiveness is defined as how well we do to achieve a particular thing that we set out to achieve. How effective we were? How well we achieved that goal? Okay? Efficiency on the other hand is a ratio, right? Efficiency is about achieving a particular outcome at the lowest possible input and yet still achieving a known output. Okay? So it's a ratio. So a highly efficient system is reaching a target output with the lowest possible input. Sure. Which is a very different proposition. Yeah. Right? So from a marketing term, the efficiency would be sort of eliminating, eliminating friction and the marketing messaging, whatever that process. So it becomes super efficient. Efficiency assumes that all the component parts of the system are easily quantifiable, easily understandable. And the sum of the parts equal the whole. Sure. Which works in other areas of the business. It works in engineering, in mechanics, in R&D. Certainly for anything logical and rational and pragmatic, if you have a closed system or even an open system, by optimizing the efficiency of the parts within the system, you are pretty sure to be optimizing the system as a whole. But this is presupposing that we have perfect information within the utility of each element within the system. Okay? And we have perfectly communicable metrics and analytics to be able to measure the efficiency of the elements within the system. Sure. Right? Now, that works if you're talking about kilograms or meters or inches or pounds or gallons or whatever you guys over the pond tend to talk about, right? That's great, okay? So, you know, a kilogram in Virginia is the same mass as a kilogram in London as it is in Johannesburg or in Singapore or in Sydney. Right? That's great. And that's wonderful. And if you're an engineer, you know, happy days, wave the flag. It's all wonderful and great. The thing is, some of the influences, some of the levers that we pull within marketing are not so logical, pragmatic and quantifiable as the units that we'll be talking about in engineering or indeed pretty much any other area of the business, okay? Because some of the influences that affect a buying decision are not easily measured. Sometimes they're not measurable at all. There is no such thing as a standard SI unit of reputation, of fear, of anger, of regret. Yet these are all emotional dimensions, contextual emotional dimensions, that can affect the performance of a particular campaign or a particular message. So this is where there's a breakdown in communication, primarily usually at a senior level, between the marketing function and pretty much any other function within the business, because marketing can't communicate how to effectively measure effectiveness, if that's not too awkward a term, in ways that make sense to the language of the boardroom. Marketers don't speak board. Sure. We don't do ourselves any favors, right? The language of the board is the language of business, right? Sure.
But isn't it simpler than that? So you have a marketing campaign and your marketing campaign is to get people to buy your product. And so isn't it as simple as the effectiveness of the campaign as people buy more of your product? Or is it, or is there factors that, that I mean, again, in a perfect world, right? Couldn't you do that? Couldn't you just say, yes, this campaign is successful because it resulted in a three percent increase in sales?
And compared to what?
Compared to before the campaign was initiated.
Okay, so. The thing is about marketing is you can't measure at such a granular level, right? Firstly, there is inertia, right? What the sales effect of what we're seeing today is based upon what marketing has been doing yesterday, three months ago, six months ago, six years ago, sixty years ago, right? And in the same way as whatever we do in marketing today, we may not see a benefit for some time in the future, right? But it's worse than that because buyers come in and out of market at predetermined times within that buying cycle. And especially in B to B, for example, there's a well-repeated, well-understood study by the Ehrenberg-Bass Institute, Professor John Dawes from the Ehrenberg-Bass Institute, which is the biggest marketing research university in the world, commissioned by LinkedIn. In the B to B environment, ninety-five percent of the people who see our messaging are not ready to buy at the precise moment that they see our messaging. Now, they may be in the market tomorrow or next week or next year, right? But the point of our marketing in that instance is not to sell. The point of our marketing at that point in time is to create awareness, recognition, visibility of our brand, understanding of our brand, trust of our brand, so that when a buyer does come into market, we are one of the suppliers that they would possibly consider to purchase. Okay, so the effect of one campaign can't be directly attributed in such a causational aspect. You can't draw a straight line between the two dots.
It's more of an art.
Well, yeah. I mean, there's two forms of marketing, broadly speaking. So you have the brand awareness marketing, which is communicating brand values, communicating who we are, why we're around, what we do, how we do it, creating affinities, brand values, positioning, all of this sort of good stuff, right? And then there's sales activation type marketing. Sometimes it's called performance marketing, which I think is a stupid name because surely all marketing is performance marketing, right? You wouldn't do non-performance marketing, would you? Right? All marketing has to be performant, I would have thought. Anyway, performance marketing is typically buy one, get one free, free delivery, only available in blue while stocks last, you know, those sorts of things. It asks the customer and do something right? They need to do something. Yeah, right. You know who we are, you know what we do, I want you to buy now rather than buy tomorrow. Now yeah, firstly those customers may have bought anyway so we don't know the effectiveness of those sales activation work, but also the effectiveness of sales activation work is heavily influenced by the low touch continuous brand awareness work that we're doing continuously in the background, right? If you imagine a curve, you spend money on service activation, right? Campaigns, ads, whatever you do, okay? And then once you turn the faucet off, you drop back down again, right? Sure. And then you have to turn on the tap again to actually build those sales up again. If you have this brand awareness stuff going in the background, each time that sawtooth falls down again, it doesn't fall down to the same point because there's a residual awareness of your brand. So it actually increases the effectiveness of the sales activation stuff over the longer term. But if you're looking to turn this around in a quarter or even in a calendar year, then you are going to be disappointed because this is a long-term exercise. So it's not a question of doing one or the other. Because if I do a load of sales activation stuff, but you've never heard of my brand, you don't know about my product, you don't know why it's better, faster, cheaper, you don't know how it compares against the competition, the chances of you buying are probably very slim. Especially if you're in a category where the incumbent is very well known, advertises a lot, you're very familiar with that particular competitor, then I'm probably not going to get a look in, right?
Makes sense.
But if over time I'm chipping away, right, to actually increase your knowledge and awareness of my product differentiation, why I'm distinctive within my category and all this other good stuff, right? Then when you do come into market right, that point of market entry, where you know, point of market entry, POME it's called, point of market entry, the time when I'm from the point of when I am not a prospect to the point where I am a prospect, where I enter the market. So at that point of entry, if I'm familiar with your brand, product, service, whatever that may be, to the point where I would consider you in the handful of other possible contenders for my money. That's all marketing can actually do.
So it's really a multi-layered approach when you talk about marketing, especially the type, the way you advise your clients is that you need to have something running to build brand awareness, to acquire those eyeballs, if you will. And I'm familiar with the AARRR framework. I don't know if you've heard of that, the acquisition, activation, retention, something, and revenue at the end. Right. Right. And so what you're saying is you need to have several of these things running at all times and some that are more performance oriented to activate those people that maybe are more aware of your brand and what you provide and really sort of tap into their needs, their wants at the appropriate time. And a lot of times it's hard to attribute the effectiveness of a campaign in isolation with all the other stuff that a company may be doing. That's what I'm getting out of what you're saying.
Yeah, and I don't think you should. I don't think you should try to make such granular measurements at a campaign level. I think what a better strategy to do is to actually look at it as a channel, right? So if you're picking a particular channel, a channel of engagement, and then you run multiple campaigns across that channel versus another particular channel versus doing nothing if you can have a control as well, right? Because otherwise you don't know whether that uptick in sales would have happened organically, right? You need to have a certain level of control. And then you can make a more rational decision as to whether the effectiveness of that particular channel is worth doing in the future.
Sure.
So, you know, I'm sort of going back to what you said in the beginning of this call that, you know, hypothetically if a company's spending six hundred million or I don't know how you put it, but six hundred million and five hundred and ninety something is wasted. What are you doing differently that would reverse that or tip the scales more in the favor of this is effective and this is efficient, where and what are you measuring, if not sort of conversions or activations or whatever it might be?
I think if you look at the numbers, Kumar, right, today we're spending, in dollar values, we're spending more on marketing and advertising than we've ever spent since records began, okay? Yet the effectiveness continues to fall, right? So we've got all of this automation, all of this technology, technology, custom audience profiles, remarketing tags and cookies and AI and goodness knows whatever else. And yet we still haven't got a clue what we're doing, right? We're still trying to justify our existence to our client or our boss. And I think one of the reasons, I wouldn't say it's the only reason, but I think one of the reasons is I think that even today much of marketing still operates on an outdated model of the way humans make decisions. We're still treating buyers as some kind of rational machine rather than complex creatures that are driven primarily by emotion. The value of a product is subjective and is co-created through perception, heavily influenced by context and what things mean. But the point is it's not just about objective features, okay? So effective marketing messaging needs to address emotional drivers and help individuals feel good about their decisions, okay? Providing rational narrative to excuse themselves after that emotional choice is made. What do I mean by that? I mean that we buy whatever we're buying, okay? I don't care whether it's B to B, whether it's B to C, whether it's a small purchase or a purchase with multiple zeros on the end of it, okay? Whatever we're buying, whomever we're buying it from, we're buying emotionally. Sure. And then we're post-rationalizing logically, right? Which is why our marketing needs to address, are you familiar with system one and system two thinking? Daniel Kahneman type stuff, I don't know.
It's familiar, the terms, but I don't remember the definitional definitions. We can go into that.
The point is we buy emotionally, we buy instinctively, and then to justify our purchase we tell ourselves a story to create a rational reason as to the underlying motives for our purchase, okay? Very true. So what marketing needs to do, and unless anything, unless it's a commodity of course. Sure. Okay, yeah. I mean I don't know about you, I don't care which brand of paper clips I buy. Sure, right, yeah. But, you know, for anything else that has worth, and that includes B to B, okay? We are making a non-objective, irrational decision when we're choosing. You know, you go into B to B, whatever you're buying, software, hardware, middleware, whatever, okay? Nobody, I don't care who you are. Nobody is looking at the entire list of possible vendors and creating some huge big mother of all Excel sheets, right, with three hundred and twenty-five vendors and the features along the thing and putting it. No, nobody's doing any of that. Yeah. You're selecting the top three or five leaders in that category, it's always an odd number because of the way our minds work. We look better on odd numbers. It's why you should always do odd numbers for bullet points as well. But that's by the by. But whatever we're doing, we're buying emotionally, okay? So a big part of what marketing needs to do, which we used to know, but we seem to have forgotten, is addressing unease or discomfort. Okay? As humans whenever we experience unease or even anxiety, anxiety okay, often our default reaction is inaction, okay? So I think often in marketing, we focus too much on, you know, positive attributes, features, benefits, all of that sort of, you know, stuff. The bullet points, okay? Rather than looking at alleviating customer unease and discomfort. Sure. And by doing that, I think we're missing a primary motivator for behavioral change. Understanding the buyer's perspective, not just objective reality, but it's the perceived reality, because I think that's fundamental to value creation.
Yeah, because to your point, if when people make make a purchase decision for something that's not a commodity, and it's based on an emotional response, you want to be able to market to those emotional drivers, those emotional needs that the individual has, again, B to B, it's a company, they're looking for services. And you know, it's about the relationship that they build or you build with that company by, again, addressing their emotional needs is what I'm hearing.
I think much of B to B and B to C is the same. Obviously, apart from the fact in B to B, there's usually more than one person that you need to convince, right? There's more than one stakeholder. But I think in B to B, the biggest difference is that decisions are often heavily influenced by a desire to minimize the risk of blame. People don't buy the best product in B to B, they buy what they perceive as being the least risky.
Interesting.
Because, you know, if it's something for me, if I go onto Amazon and I go on there and I buy some, you know, some nonsense that I found on Amazon and I spend some money and, you know, the next day it turns up and I look at it and it's a piece of absolute junk. Okay. I just look at myself and go, oh God, okay. I got suckered in here, didn't I? Right. What a shame. And I put it down to experience and I move on. But if you're buying for your organization and you make a mistake by treading the path least trodden, it could cost you a promotion, it could cost you your job.
Yeah, good point.
Right?
Very good point.
And, you know, if, you know, it's the old adage from like, was it, fifty, seventy years ago, nobody ever got fired for buying IBM, right? You must have heard that saying.
Yeah. Okay.
So, you know, the point is we look at what our peers are buying, and unless there's a very good reason, we'll probably buy very similar to what they are. Even if there is another player within that category who's doing something better, faster, cheaper, whatever, but they're still unproven within the peer group that we're mixing with. Because we can't afford for it to go wrong. If it takes one day more to deploy than the incumbent, fingers will be pointed at us.
Yeah, that's a good point. Very good point.
So, Gee, are there examples of companies that are, I don't know how to say this, doing it better, sort of not focusing so much on the mechanics or the data, the metrics and focusing more on the emotions and what have they figured out? What are they measuring and why are they successful?
I think we're still measuring data. We're still talking about data. Sure. I'm not against using data to influence our decisions. I'm against being driven by data, because I think that's absolutely stupid. It's not data-driven marketing. We can't be driven by data. But we can use data to form decisions. We use it to form insights and make those decisions from the data. What I'm saying is that just because data isn't objective and numerical in the same way as data would be from a Newtonian physics-type perspective, an engineering perspective, doesn't mean it's any less valid. There's behavioral data, okay? There's ethnography, for example, where you actually look at customer buying patterns, you do customer research, customer surveys, this sort of thing, and you can build up. And you can't do that unichannel. It has to be across a number of different points because there is an issue with the veracity of customer surveys if they're all coming from a single channel. But that's a different subject. So the point is that we can still be guided by the results of our data. It's just a question of what we're measuring. Sure. And obviously that depends on, right, that depends on the business, depends on the product, depends on the customer, depends on the industry, depends on a hundred and one different things. It's, you know, it's unique to every particular business.
So are there companies that are doing that and are successful?
Absolutely. Yes. Yeah, I think there are. I think they're wide and numerous. I mean, certainly within our own experience, we have a number of clients which are, I wouldn't say they're ignoring the engineering data, let's call it. What I'm saying is where appropriate, they're adding in the behavioral side of that data to expand the possibilities to make a more rounded business decision. Because by adding that psychological aspect, that behavioural aspect, it increases the possible solution space to solving these business problems. It is right for everything, of course not. But there are specific touch points where introducing that psychological aspect and the levers that we have to influence buying behaviour, even down to things like pricing, distribution, all these sorts of things. These things are very context dependent. Sure. So we need to match up the articulation of our value with the perception of the expectations of our customer, which often we don't because we're looking at things either too closely or we're looking at things through a very logical and pragmatic lens.
Yeah, so you need kind of a balance there, right? So measuring both the psychological aspects of who you're trying to reach, really understanding what the target audience wants, you know, what motivates them, what drives them, and then also some of the hard data, the traditional stuff that people measure.
I have a bunch of questions here, but you've pretty much answered them all with the opening question.
I'm sorry, I do tend to rattle on a little bit.
No, it's great. So I'm curious, what have I, or have you not shared, and I not asked, that you think would be important for viewers to understand about marketing and really the understanding of how you can utilize psychology and behavioral behavioral psychology specifically into marketing to be more successful.
I think the marketing successes of the future won't be technologically based, will be psychologically based. Okay. And I think understanding buyer behavior, you know, we can call it behavioral science or behavioral economics, but at the end of the day, it's biopsychology, right? It's a rebranding, if you like, of biopsychology, right? But as an understanding of why and how buyers make purchasing decisions, we can turn human understanding into a business advantage, okay? So I think understanding that the way that we make decisions, and acknowledging that people are complex, emotional, and often defy logic, and that the value of something is not simply a conclusion of purely objective characteristics, but is heavily affected by how it's directly and indirectly perceived, is the beginning point. Yeah, okay. Because I think traditional approaches assume buyers are sort of rational actors with perfect information and making decisions based solely upon objective facts and price signals, but if that was the case then our marketing communication would just be a bunch of bullet points. We wouldn't need to do anything else, would we? Yeah, right. I've given you the facts, why aren't you buying? Okay. So I think behavioral science highlights that values are heavily affected by how we think of things. And our appreciation and enjoyment are influenced by perception and context, meaning the same thing can be viewed good or bad depending on how it's framed. You know, as Shakespeare said, thinking makes it so. Yeah. You know, you're Hamlet, right? Right. So this allows for the creation of values simply by changing what things mean, not what they are. Okay? Emotional response is driven by this meaning and emotionality. Emotions, obviously, ultimately drive behaviour. Sure. Now, obviously, there's other stuff in there. There's intuition, there's cultural aspects, there's socio-economic aspects that affect behaviour as well, right? As well as, you know, accepted factors such as, I don't know if you're familiar with things like cognitive biases and heuristics and that sort of thing, right? Yeah. So, like, understanding, you know, just understanding some basic, just a few cognitive biases, I think would really help. You know, confirmation bias, anchoring, availability heuristics, framing effect, you know, IKEA effect, Zeigarnik effect, you know, I don't know how familiar people are with these sorts of things.
We'll have to dig in in a future episode.
Sure, absolutely. No, I'd love to. But just having a handle on these sorts of influences and how we're much more ruled by the effects of compliance and conformity than we wish to consciously acknowledge. Okay? You know, addressing emotions first and then providing rational justifications is already a step in the right direction. Okay. I think.
That's really good advice. And certainly I've learned a few things, you know, in my efforts to market my company and, you know, the services that we provide, I think we tend to lean at least just a little self self reflection more on the logical reasons why people should use us rather than the emotional ones. So just even that self awareness that maybe examining what your messaging looks like and what sort of emotional levers is it pulling on or not? Maybe a good first step is just to sort of examine what you're doing.
You can start tomorrow by asking your existing clients or past clients two questions, right? Why did you buy from us as opposed to our competitor? Okay. And the really telling one is what almost stopped you from buying from us?
I like that. I like those. It's very simple.
Yeah, very simple. Yeah. And those two, the answers to those questions will just, those alone will already set you on a very interesting journey, I think.
Yeah, that's great advice. All right. Well, I think I will do exactly that and start asking some of my customers questions. They want us to succeed them all, right? They are our biggest advocates, right?
Yeah. And they will tell us. Now, you know, we need to preface all of this because there is, you know, the shill factor involved in that. They want to tell us what we want to hear. So sometimes getting a third party involved to ask those questions can give you more truthful results. You would have some kind of personal relationship, I'm guessing, with your clients. So they don't want to say your baby's ugly, right? So they may sugarcoat things. So having a third party ask those questions is not a bad thing either.
Yeah, good advice. All right, Gee, we're about at our time limit here. So thank you for coming on. And I would like to bring you back on maybe to dig into some of the psychology of marketing, like some of the finer points of it and how you've how you advise your clients to do things. I think the insights you've shared so far have been fantastic. So thanks for that.
Well, thank you. It was great to be on. I enjoyed myself immensely.
All right. I hope you all enjoyed this and we'll hopefully have you back on in a future episode. Thank you. Bye-bye.
All right.
