What Every Startup Needs To Know About The Psychology Of Choice
Published: Apr. 13, 2016
There are two types of people in this world, or at least in my New York City neighborhood: Those who get bagels from David’s, and those who get bagels from Bagel Boss.
Both bagel shops sit on one side of First Avenue between 15th and 16th streets. They’re just about next door. So if you live within a six-block radius of that stretch of sidewalk, chances are you’ve got an opinion–in some circles, they’re the House Lanniser and House Stark of the local bagel world.
Bagel Boss (left) and David’s (far right), the House Stark and House Lannister of East Village bagels.PHOTO: BRIAN SCORDATO
You wouldn’t know it just by looking, though. The shops are nearly identical. Sure, you’ll hear people talk about David’s being fluffier or Bagel Boss tasting fresher, but I don’t buy it. There’s only one substantive difference: Bagel Boss is kosher. If you want a bacon, egg, and cheese , you’re going to David’s. Anything else, and you’re good at either spot.
I’ve even brought friends who prefer Bagel Boss some bagels from David’s, and they’ve never noticed the difference. Why the heck would I do that? Because I’m firmly House David’s–I wouldn’t be caught dead in Bagel Boss.
The reason all this matters is because I care–deeply–about a bagel place. And for anyone who makes stuff and sells it, that’s a pretty big deal.
People think they want choices. They don’t. Choices increase anxiety.
Ask any entrepreneur and they’ll probably tell you it’s getting harder to forge meaningful relationships with customers, as choices for just about everything multiply. That makes the little anomalies–products that elicit real emotions–really important.
So let’s talk bagels and behavioral science.
EVERYTHING IS RELATIVE, OR CAN BE
A big part of an entrepreneur’s job is to notice things other people miss–to understand the motivations behind the series of decisions that lead a customer to take some sort of action, with that action hopefully being to buy your thing. Your understanding of how your users feel during that process is what differentiates your business. The better you know that differentiator, the better your product will be.
I get a toasted everything bagel with scallion cream cheese from David’s every Sunday. This delicious decision is far more complex than you’d think. Here’s my “bagel decision flow”:
I wake up. It’s Sunday morning and I’m hungry.
I live in New York — the breakfast world is my oyster.
Nevertheless and without fail, I return to David’s, over and over.
Why? People think they want choices. They don’t. Choices increase anxiety. Choices also create opportunity cost. When I have too many choices, my breakfast becomes great only if it’s better than how good I perceive the place we didn’t go would’ve been. The last thing I need is brunch FOMO.
So when Sunday starts with an open-ended question like, “Where should we eat breakfast in NYC this morning?” my mind starts cranking away at how I can lower the stakes of that decision. It’s Sunday morning. I don’t want stakes.
I unconsciously scramble for some way to make a quick, stress-free decision. I search for what psychologists call “relativity.” Here’s how Dan Ariely explains it in his book Predictably Irrational: The Hidden Forces That Shape Our Decisions:
Humans rarely choose things in absolute terms. We don’t have an internal value meter that tells us how much things are worth. Rather, we focus on the relative advantage of one thing over another, and estimate value accordingly.
It’s tricky for me to directly compare a bagel shop to an upscale sit-down brunch, a breakfast burrito truck, a diner, and cooking eggs and bacon at home. It’s easy, though, for me to compare David’s to Bagel Boss.
I’m conditioned to choose between two easily comparable choices, and these literally could not be any more straightforward: The conversation goes from “We could do bagels, or brunch, or maybe a truck — could also just make stuff?” to “Are you a David’s or Bagel Boss person?” David’s is able to push me down the decision funnel, removing the competition. And I’m confident that my David’s bagel was better than a Bagel Boss bagel would’ve been.
“We don’t have an internal value meter that tells us how much things are worth. Rather, we focus on the relative advantage of one thing over another.”
As a business, the key is to insert yourself into that type of conversation with your customer as early as possible–to create a trigger that reminds them you exist and you’re the right decision. To understand that there will be something your customers do already that they’re comfortable with, and being close to that — with a very clear, key differentiator — will make that switch decision easy.
David’s does this by accident, because Bagel Boss happens to be next door and not serve bacon. You, however, can do it on purpose.
THE ART OF REINFORCEMENT
But if the way people make decisions partly accounts for why I go to David’s so much, it doesn’t explain why I’m so passionately loyal to it.
It starts while I’m in line. David’s is a quirky, not-quite-Soup-Nazi-but-not-quite-not-Soup-Nazi establishment. There are always a lot of people waiting impatiently and looking at their phones. This creates an uncomfortable, crowded-but-silent atmosphere, raising the stakes on your ordering technique. If you screw it up, you get yelled at.
You’re then rushed to the front of the line where you pay — cash only — as your bagels are made and tossed down the assembly line. The process is pretty awful. But I know that. It’s awful, but it’s my awful. This process makes me feel like an insider as much as watching my 16-year-old cousin rip through Snapchat makes me feel like an outsider. Each quirk within the David’s ordering process is subtly hinting that I wouldn’t understand the flow at a different bagel shop.
Further, there’s a study that claims a huge contributor to strong, lasting relationships is constantly choosing the person (or company) you’re with over a viable option. Each time I choose David’s, my emotional tie with the place gets stronger. First, I was hooked with the trigger of bacon, then locked in by the quirky bagel flow. Each bagel reinforces that decision and deepens my love.
KNOW HOW YOUR CUSTOMERS ALREADY DO THINGS
Your customer’s current process will be unique. Understanding it and building a product that works hand in hand with what they do already is crucial.
Take the legalization of marijuana (I realize I’m writing about weed and bagels, but here we are)–you can now buy it legally in many cities where you couldn’t before. This means startups are flocking to automate the process, building delivery portals and so on — all great things.
But lots of states haven’t legalized delivery yet, even though you can legally buy marijuana from a dispensary. So plenty of other startups are sitting on their hands until delivery becomes legal.
If you ask me, those are the startups that don’t know their customer. The process for people making their first marijuana purchase will be new and uncomfortable. It’ll be like the first time you’re in line at David’s times 1,000: The last thing they want to do is go to a dispensary and ask a bunch of questions.
A startup called Stemless lets them learn a bit about what they may want, then order online so the only in-person interaction is picking up–genius. (Full disclosure, Stemless went through my company, Tacklebox Accelerator, though I’m not an investor.) Only startups that don’t adequately know their customers try to reinvent their existing ways of doing things.
The Temptress: Black Seed, serving Stumptown coffee.PHOTO: BRIAN SCORDATO
WHY I NO LONGER GO TO DAVID’S
I’ll never forget the day I broke up with David’s. It was a brisk, fall Sunday in 2015. I asked a friend if they wanted to hit up David’s for breakfast.
“Have you heard about Black Seed? Just opened up. They have Stumptown coffee.”
There’s something important I hadn’t realized about my Sunday morning decision flow: The one thing I think of before food is coffee. Little did I know that that was the true decision driver. So when Black Seed framed the breakfast conversation around coffee before it even got to food, David’s was in trouble.
Frame the conversation in a way that allows your customers to easily opt into whatever you’re building. Help them skip to the bottom of that funnel they want no part of going through.
If you’re building a concierge travel app that helps people find destinations, advertising on a flight aggregator is too late. People already know where they’re going, they’re just closing the logistical loop. You need to be in the conversation when the trip is a twinkle in your customer’s eye, when they’re having dinner with friends who just got back from vacation — or however these trips are born.
Then, you want to frame the conversation in a way that allows your customers to easily opt into whatever you’re building. Help them skip to the bottom of that funnel they want no part of going through.
I liked David’s more because Bagel Boss exists. It helped me create relativity around a complex decision. But Black Seed ultimately won the Sunday Breakfast Battle by entering the conversation earliest with delicious coffee.
Figure out what your Stumptown coffee is and get in the conversation with your customers as soon as the decision flow begins. Next, understand the nuances of their process so you can reinforce their actions, not change them.
Nail this, and you’ll sell a whole bunch of bagels.