How Chief Behavioral Officers are Changing the Norm of Companies

Soon every consumer industry will look into hiring a CBO. Here’s why.

Why do people buy? 

Why would a customer choose this product over the other? 

How do I get closer to my customers? 

These are questions that every business is facing. Consumer culture today is changing. Your customers want to be understood rather than be fed a steady sales diet. 

Business behemoths are selling benefits over products - we’re looking at you, Nike. Some even have the mission to be Earth's most customer-centric company.

So what do you do?

You hire a Chief Behavioral Officer. Or, you take on the role yourself. 

Recently, there has been an increased interest in bringing behavioral psychologists into companies. 

Hence, the rise of the Chief Behavioral Officer. 

 

What is a Chief Behavioral Officer (CBO)?

 

CBOs can help identify the business goals and challenges that can be reached and resolved through the application of behavioral science. With their extensive knowledge, the CBO will close the gap between scientific and business communities, bringing psychological principles to business and marketing strategies.  

Behavioral psychology derives from the assumption that everything humans learn is through interaction with their environments. This form of psychology has always had an influencing role in business, especially when it comes to marketing. Consumer and behavioral psychology has helped provide valuable insights into the reasons why customers make the decisions they do.

Bloomberg predicts that the top jobs for the next decade will be behavioral scientists and data analysts. In industries dealing with consumers, there will be more of a push to understand current behavior states to enhance or improve desired behavior. 

“Humans have the tendency to want to improve, which means they are going from one behavioral state to another. For all industries dealing especially with consumer data, CBOs have an important role to fill.” (Joris Fonteijn, CBO at Crobox).

So, CBO: buzzword, trend, or future necessity? At this point in time, it’s all three. However, the sure thing is that hiring a CBO will change the norm of companies. 

 

Why is a chief behavioral officer beneficial to companies?

 

In the end, aren’t we all just searching for answers? We’ve been conditioned since infancy to question why. From the days of probing anyone who will listen about why things are the way they are, to the years of education where having a sense of curiosity was ingrained.

Now, throughout adulthood, there is always the search to understand how our business decisions will affect the future... 

• How will our target audience respond to this advertisement? 
• Can we design our webshop better to optimize conversions?
• Where should we distribute our message?
• Can we leverage customer data and turn it into actionable insights?

Although the CBO doesn’t always directly impact these things, they will be your go-to guy or gal for all things concerning consumer behavior. In effect, the CBO advocates “for the human at the center” of everything. Their role is a healthy balance between behavioral and data science, with a strong tendency for taking a crossover approach.

For businesses looking to thrive in an increasingly demanding digital age, hiring a CBO will ensure the intersection between data science, behavior, and actionable insights. In the long run, however, hiring a CBO to have oversight at a higher level will help the business become more customer-centric. This is necessary to stay ahead of the curve. 

 

Companies with Chief Behavioral Officers

 

A few companies with CBOs sitting at the decision-making table are:

• Google
• Facebook
• Microsoft
• Uber

You may have heard of them. 

Next to these tech companies, Banks like Lloyds, UBS, and Barclay’s also have a behavioral science team. That’s because, traditionally, banks are seen as alienating, elitist, and “not-for-the-customer”. So to re-instill trust in their consumers, banks have turned to behavioral officers.

UBS now has emotionally driven ads that take into account their customers desires, needs, and personalities, which obviously resonates with their customers since they are being tweeted about online:

 

UBS ad retweeted by a female customer: from customer to advocate

 

UBS ad retweeted by male “academic-activist”. UBS is making people think, becoming a source of information.

 

Coca Cola also recently hired a Director of Behavioral Science (in other words, a CBO). The role requires a niche set of skills and has yet to be universally defined. The insurance company Lemonade, for example, hired Dan Ariely who is a world-renowned behavioral economist.

But retailers still have a long way to go in this space, and behavioral insights are often left up to marketing departments to make sense of.  

 

Behavioral psychology’s influence on Chief Behavioral Officers

 

“You need to find different ways to look at behavior in a more valid, and factual way. It’s always about asking why, why, why, to get the bigger picture of the consumer” (Joris, Crobox CBO). 

Have you ever read the book Influence by Robert Cialdini? If not, I can heartily recommend it. This book covers the six “Weapons of Influence,” which are the psychological responses that individuals experience in given situations. Cialdini does an excellent job of bringing the reader through countless scientific studies, their findings, and ways in which the principles apply to daily life.

Weapons of Influence

 

This book (along with others like Thinking, Fast and Slow and Nudge: Improving Decisions about Health, Wealth, and Happiness) has been making waves in the marketing field for years. It’s inspiring marketers and other executives to go back to school for MSc and Ph.D. programs to get specialized in behavioral psychology and economic theories. With this new wave of qualification, the supply side of CBOs is meeting the increasing demand.

In recent years, there has been a heightened focus on measuring behavior rather than just attitudes and intentions. While attitudes have been cited to lead to intentions, the gap between intentions and actual behavior is daunting (and honestly, every researcher’s primary limitation).

This is where a CBO comes in, to look into the behavior of the customer and explain the reasons behind their actions. 

To close the gap between people’s intention and behavior, principles from behavioral economics are being used to understand consumers’ behaviors in response to marketing. By focusing on behavioral change, rather than attitude change, companies can formulate more effective campaigns.

CBOs, therefore, need to have a good grasp of psychological principles. Yet, according to our own CBO here at Crobox, it’s not enough to read the books or learn all the tools and cognitive biases. You also need to be empathetic. 

“You need to have a lot of empathy for people. It’s about putting yourself in people’s skin, trying to think for them, trying to become them so to speak,” (Joris, Crobox CBO).

A CBO will apply their wealth of knowledge to business objectives. They will be able to use psychological and economic principles that are backed by empirical findings to formulate design, copy, and placement that is optimized to your desired business goals. Plus, they will be able to provide you with the reasons why this is effective. No more gut feelings leading your company into the unknown.

 

Understanding people and empathizing cartoon 

 

Data science’s influence on Chief Behavioral Officers

 

A CBO’s role is also heavily influenced by data science. This relationship is logical, as data has become the centerpiece of all businesses. It no longer matters if your product is physical based or in the cloud, customer data is readily accessible. 

Because of the capabilities that data provides, CBOs and their teams can develop experiments to test certain theories and (almost) instantaneously see behavioral results. 

Again, no more fuss with intentions and attitudes, but direct results based on behavior - oh, the luxury! These experiments, which are often based on a grounded theory approach, bring the world of academia to practice before your eyes.

 

CBOs make data more human

 

Crobox’s CBO makes data more human by using his background in psychology. How? By bringing a more human context to data and by explaining behavior from a psychological perspective.

The CBO should master putting him or herself in the customers’ shoes. The process starts by asking “what is my current behavior?”. For eCommerce shoppers, this means understanding what the customer will see when they shop from your homepage to PLP to PDP and on to checkout. 

 

 Foot Locker PLP with psychological product tags

 

For example, Foot Locker partnered with Crobox to place product tags on their shoes based on Cialdini’s psychological principles. So if a customer buys a shoe with a “New” tag, this shows that they respond to Novelty. 

On the other hand, if they pick the Foot Locker icon product tag, which infers an “expert”, special shoe, this means that they respond to Authority and Novelty. This is the case because the product has both tags, but generally webshops will have one tag and one correlating segment. These decisions will say a lot about who your customers are as people.   

Tracking customer clicks is the first part (with loads of experimentation to get the right data), but understanding what these clicks mean is where Crobox’s CBO will come in. 

Once data is collected on a wide range of webshop visitors, the CBO can determine (using segmentation) how certain demographics respond to certain psychological product tags best, therein tailoring Foot Locker’s marketing campaigns to these segments. 

“No human being will be the same compared to another, but we do follow certain behavioral shortcuts in our decision making. You need to understand cognitive biases to predict behavior” (Joris, Crobox CBO).

This means that with a trusty CBO inspiring their marketing campaigns, Foot Locker is now able to use customer behavior insights to get a bigger picture of what their customers like, their interests, and even their personalities (see: psychographic marketing). 

 

Tom Fishburne cartoon - A/B testing is key to experimenting with psychological product tags for eCommerce. 

 

It’s crucial that your CBO has an overview of all the touchpoints that your customers have with your webshop, which areas or messages cause friction, which draw attention, and what information would facilitate going from one step to the next. The CBO can thus help retailers optimize every single touchpoint their customers have with the webshop and products, as well as bringing them through to checkout. 

Using data to identify gaps in consumer behavior, and coupling this with a deep understanding of normative behavior and shopping goals, our CBO can inform retailers which product messages or labels make a difference, or even which create a negative effect. 

For eCommerce, this is the difference between underperforming and overperforming products:

1. If a product is underperforming, the CBO can answer why and help to optimize the product. 
2. If it’s overperforming, then the CBO will help identify how to push this product in further campaigns that will resonate the best with those customer segments. 

“With the help of psychology and data, we can identify which products are important for which target audiences and then drive purchases to that particular product by setting up campaigns” (Joris, Crobox CBO).

CBOs make data more human because they create actionable ways to use this data to facilitate the shopper’s experience. The downside of data is not being able to empathize with your customers. A CBO is able to bridge the gap between empathy and data-driven marketing. 

 

How to take on the role of Chief Behavioral Officer

 

The movement towards a theoretical, hypothesis-based approach to data is already upon us. In Smallwood’s Resisting the Siren Call of Popular Digital Media Measures, he calls for data literate and vigilant marketing analysts to use a grounded approach to their data strategy.

“Understanding theories is the backbone, but having a scientific mindset will be beneficial to finding your customers’ truth.” (Joris, Crobox CBO). 

This and, as was previously mentioned, having an empathetic mindset to be able to put yourself in your customers’ shoes. CBOs resist the typical sales-y approach in favor of a more subtle one that relies on emotions, cognitive biases, and triggers (see BJ Fogg’s Behavioral Model). 

CBOs also think in the long-term:

1. How do I foster consumer empathy?
2. How do I approach this consumer like a friend rather than a person I want to sell too?
3. How do I make sure the CLV is enhanced?

“It’s like playing chess with people’s behavior because you are trying to understand all the different moves a person can make.” (Joris, Crobox CBO).

Nobody is saying it’s not hard work. But if your company is still strides away from hiring a CBO, what’s stopping you from taking on the role yourself? With the number of resources out there, there is more than enough opportunity to employ those skills learned in university or practice to take a behavior-based approach. 

This starts by educating yourself on the latest psychological principles and upgrading your strategy to set things in motion. With that in mind, here are a few books to get you started (some of these have already been mentioned):

1. Influence: the psychology of persuasion (Robert B. Cialdini): marketing to the masses by understanding customer behavior (see our post on Scarcity, and Social Proof, straight from Cialdini’s playbook).
2. Thinking, Fast and Slow (Daniel Kahneman): cognitive biases, and how our brain makes decisions (we wrote an article about cognitive biases in cryptocurrency for more of this). 
3. The Small BIG (Martin, Goldstein, Cialdini): how small changes can actually result in a large, positive upheaval of behavior (in line with this, we analyzed climate change inaction from a psychological lens).  
4. Predictably Irrational (Daniel Ariely): again, understanding cognitive biases, or how we make irrational decisions (see our post on the irrational consumer for more insights into consumer culture and decision-making).  
5. The Tangled Mind (Nick Kolenda): how sensory elements reshape our decisions and perceptions of the world. His website has a host of courses that can help you on your way). 

Academic publications or partnerships are a good way to understand human biases, making your experiments more credible, and enriching your overall understanding of your customers. 

 

Eye on the Future

 

Even though behavioral psychology has been around for decades, we are still at the outset of its potential. Especially with the proliferation of technology and data resources, the coming years will give birth to some cutting-edge capabilities for marketers and business professionals.

Not only the growth of data and behavioral science but also neuromarketing is now on the rise. Virtually every company has either directly or indirectly used the principles of neuromarketing (think eye tracking, package design, colors, pricing, etc.). 

As the potential for this technology grows, so do the insights they provide. A future in which all of these elements come together is not far. Being prepared and quick to adapt to these changes will ensure your competitive advantage. 

My key takeaway for any of you looking to take on the CBO role yourselves would be to do your research, read a lot, take a human approach to data, and empathize with your consumers.