What behavioral economics can teach you about product development: The remembering self

If I could sit down with anyone for one hour and then have them pick apart the motivations driving users in my product, it would be Daniel Kahneman, the behavioral economist behind this TED talk and Thinking Fast and Slow. Although he hasn’t set out specifically to discuss consumer tech, gaming or any reach of the interwebs, his insights are real, verifiable and directly applicable.

One key insight is that human memory is significantly biased. And it is consistently biased. So much so that it’s helpful to consider two selves: an experiencing self (the one that fully experiences every detail, nuance, perfect moment as it happens) and a remembering self (the one which packages up that experience, culls through it, retains a few key nuggets and forms a “memory” of it).

Unfortunately, much to the chagrin of traditional economists, the memory is not an exact reflection of the actual experience (eg, people don’t rationally weight all aspects of an experience). Instead, we predominantly build “memories” based on the most extreme peak or nadir and the final moment (eg, “all’s well that ends well”).

How does he know? Kahneman studied this phenomenoa, in multiple controlled experiments. In one instance he studied experienced and remembered pain levels during colonoscopy exams. Each patient participating was asked to rate his/her level of pain every 60 seconds from 0 to 10, (0=no pain, 10=intolerable pain). They tested 154 patients and the procedures varied in length from 4 minutes to 69 minutes. Here is a sample chart from two patients:

behavioral economics experiment

Any rational person can see that Patient B had a much worse go of it. If you totaled the integral amount of pain experienced by Patient B, it would significantly exceed that of Patient A. But, Kahneman’s team consistently found the opposite to be true when they compared patients’ overall ratings of their experiences.  The Patient As of the world invariably described their experience as more painful.

What gives? Two factors drove this:

The Peak-End rule: The top predictors of how one will remember an experience are: the most extreme moments and the moments near the end. In repeated experiments, the patients’ overall evaluation of pain most closely correlated with the average pain in the final minutes and the peak pain experienced.

Duration neglect: The duration of an experience doesn’t factor into one’s overall assessment. This is kind of mind blowing, especially given the knowledge that we are prone to conflating length with value (eg a 3-day vacation is always better than a 2-day one!).

What does this mean for tech products?

1) Do one thing remarkably well. If extreme experiences will drive user’s memory/opinion/position on your product, your best leverage point is to do one thing very, very well to create this positive association. This has been uttered many times in many different ways. Ben Horowitz and Mark Suster have both written about being 10x better when creating a new product, but until reading Kahneman’s experiments I hadn’t seen evidence that demonstrated why it matters so much.

There are lots of great examples of companies delivering incredible experiences in a single category. I’d certainly place Uber in that category for delivering no questions asked, quick, reliable transportation from A-to-B; Kindle (non-Fire incarnations) for delivering an awesome reading experience (despite getting nearly everything else wrong as I posted here); and Instagram for their sole focus on photos and creating the best photo taking & sharing experience.

2) Make the “sign off” experience killer. Again, if a memory is largely dictated by the final moment, you can hack the experience to your benefit by perfecting the finale. There is a lot of focus on “on boarding” and providing a great experience off the get-go, but fairly little on the final moments of a user session. In the service industry, there are lots of great examples of this: the after dinner mint, United’s “PS” service from SFO to NYC where first class passengers were offered warm cookies just before landing, Gary Danko’s sending dinner guests home with a pastry for the next morning are just two examples. These are successful initiatives that appeal to the remembering self.

Square is a great example of nailing this concept. The receipts they send (your final moment in a Square experience) are beautiful, simple and elegant. I’m shocked that Apple and Amazon (two companies that do a staggering amount of transactions) haven’t followed suit yet. Currently, their receipts are cluttered and hard to read at a glance. One last good example is Top Chef’s Last Chance Kitchen which is a 10-minute “encore” competition where the chef that just got kicked off competes one last time (these segments are offered free on Bravo TV). Every a time a Top Chef episode ends I go through a little emotional roller coaster: excited to see who gets the boot, dismayed the entertainment is over and finally, thrilled when I remember there is a Last Chance Kitchen I now get to watch.

3) There is no value in adding “empty calories” to session length. In other words, don’t try to eke out additional minutes to your engagement metrics if those activities aren’t adding any new value to the user. Noah Kagan and the AppSumo team have a good YouTube post where they discuss the decision to significantly reduce email frequency (NOTE: AppSumo is a daily deals type of service tailored for businesses). They decided they didn’t want “empty calorie” emails that didn’t “wow” their customers.

There are no doubt innumerate other great examples that I’ve missed, but the key point is that when you design your product, consider not only the experience you’re delivering, but also the experience your user will remember.Understanding how they systematically differ (peak end rule, duration neglect) will help you optimize your product experiences for the human memory biases.

One thought on “What behavioral economics can teach you about product development: The remembering self

  1. Pingback: What behavioral economics can teach about PM’ing: the affect hueristic | Kivestu's blog

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