Because multiple options are better than just one – Product Management Series

In my last article on defining and evaluating Influence Skills of product managers  (reminder – Influence Skills was rated as the most important quality in a survey) I mentioned the book Influence by Robert Cialdini. The book, in my opinion, is about influence tactics and not about building a longer lasting working relation based on trust and mutual value in a multi-encounter environment.

The book does present many tactics you can put to use when you are trying to break in or get what you want in some zero-sum games. In my opinion it does not help build an end to end process for win-win in outcomes in situations where you meet the same people over and over.

For instance using asking for a small act and then relying on escalation of commitment to get more and more of what you want does not sound to me like a mutual value-creation and fair value-share arrangement. As I wrote before, Influence is based on trust, mutual value-add and effective communication.

But that is just that, my opinion.

There are two invaluable tactics from the book that I recommend you use without compromising on mutual value and trust.

Because, Because, Because

The Influence book tells us about the effect of using the word ‘because’ in asking for an action from anyone. When asking for a favor/task  from others, a Harvard study found, you will have greater success if you explain the reason for your ask,

People simply like to have reasons for what they do.

For example,

“would you help me get the SKUs created in two weeks because of product launch”

In fact the study went a step further and tested just the use of the word ‘because’ even with illogical reasons and found that it had better effect than giving reason without using ‘because’.

Like saying

“would you help me get the SKUs created in two weeks because I am in a hurry”

I am not going to make a recommendation that you use ‘because’ with illogical reasons but stop with their primary finding about people like to have reasons for what they do and give a valid reason after ‘because’.  In fact this fits perfectly with my recommendation about showing mutual value and effective communication. Using ‘because’  helps us get the value message across effectively.

Options over Ultimatum

The second tactic that helps is giving your peers/customers/bosses multiple options and asking them to pick one over presenting them a single option and making it a ultimatum. Presenting multiple options changes the decision from saying yes or not to a single option to picking the best among the multiple options you present.

Here is a real life case study from the world of politics,

The WSJ article on  President Obama won the Health Care vote describes how he changed the conversation:

Mr. Obama’s most effective move may have been calling for a bipartisan summit on health care, shifting the conversation away from Democratic paralysis. Aides knew there was little chance they would reach a bipartisan agreement, but it forced Republicans to put ideas on the table, framing the choice as between two sets of ideas, rather than simply a referendum on one.

 It is easier for the people you work with to compare the merits of different options vs. deciding merits of picking or not picking the only available path you present.

I recommend you go one step further and present three options and invariably you will get the middle option.

Present multiple options because it turns a yes or no decision into informed choice among multiple options based on relative value.

Does Presence of Customer Reviews Drive Down Product Returns?

Does presence of customer reviews and the number of reviews drive down returns by customers?

According to Internet Retailer (thanks to Gerardo for the link), that is the case. The article says, reviews has helped Petco considerably

Petco’s approach to gaining more customer reviews has paid off. On average, products with reviews have a 20.4% lower return rate than products without reviews. The return rate continues to decline as a product gains more reviews. Products with more than 50 reviews have a 65% lower return rate than products with no reviews.

Since returns eat into profits, reducing returns goes directly to the bottom line – there is no question here. But can presence of reviews drive down returns? Is there a direct causal relation or is this just incidental correlation.

Commitment and Consistency Bias: If the  case of customers who took the time to write reviews I can see that their return rate will be much lower than the return rates among those who did not write one. This is the Commitment and Consistency bias (the book Influence by Robert Cialdini has very good discussion of these biases). When the customer “commits” by writing how good they feel about the product their internal system compels them to act consistently to their previous commitment. So they keep the product.

Reason doesn’t matter: This does not mater whether or not customers wrote the review because of their LOVE for the product or because they were paid in coupons or raffles. This does not apply to negative reviews, but according to one research, most reviews are positive reviews and there is generally high product ratings. On the other hand we could argue that those who returned the products are more likely to write a negative review.

Conformity Bias: Commitment and consistency bias alone cannot explain the drop in returns because this is still a small number of reviews compared to products sold. But another cognitive bias that could be at play is conformity bias. When customers make the purchase based on many reviews by “customers just like them”, they tend to confirm to those peer reviewers. This will compel them to “like” the product and keep it – all those positive reviews cannot all be wrong, if I do not like the product it must be me.  Again, Cialdini has chapters describing Conformity bias in his book.

Cognitive Dissonance: Intertwined with conformity bias is our need to assuage cognitive dissonance. People who buy a product by doing the research, reading multiple reviews and evaluating options believe they made a rational decision of buying the best possible product. But after buying the product if it turns out that it did not live up to their expectation they  suffer cognitive dissonance – a gulf between how their feelings before and after the purchase. Customers overcome that by convincing themselves that they like the product.

On top of these cognitive biases, it is possible that there exists another common variable that both drives up number of reviews and drive down returns – for example the product experience matches its promise.

There is one way to answer many of these questions and to find out whether or not number of reviews drive down returns. It requires doing two sample test, showing some of the customers the review,  suppressing it for others and tracking the respective return rates. If the return rates are statistically significant then we can declare presence of reviews drives down product returns.

Next step, if we do the experiments by showing different number of reviews we can even find the linear causal relation between number of reviews and returns.