Professor Ryan Hamilton on COVID-19 consumer decision-making (two years later)
On this episode of TELUS International Studios, we're joined by a returning guest: Professor Ryan Hamilton of Emory University and the co-author and co-host of The Intuitive Customer, a book and podcast series by the same name. Ryan joined us back in June 2020, where we first discussed the impact of COVID-19 on consumers and brands around the world.
We caught up with Ryan to see what's changed since then. Tune in to hear us break down his most recent research on the science of decision-making, how cognitive exhaustion has impacted our everyday lives and how the customer journey will be influenced by COVID-19 for years to come.
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Click here to listen to the previous episode with Professor Ryan Hamilton.
Click here to check out The Intuitive Customer podcast.
Intro: TELUS International Studios where customer experience meets digital transformation.
Patrick Haughey (PH): And you're welcome back to TELUS International Studios. I'm your host, Patrick Haughey. And on this episode, we are joined by a returning guest. You might remember back in June 2020, we had Professor Ryan Hamilton from Emory University on the series to talk COVID and to predict how it would change things like how we lived, worked, purchased goods, and conducted business. Jump to two years later. We know a lot more about COVID, so we wanted to catch up with Ryan to hear what has changed since we last spoke. Ryan is the co-host of the Intuitive Customer podcast and co-author of the Intuitive Customer Book. Be sure to check out the description of this episode to hear the June 2020 episode as a refresher, and to see where else you can find Ryan and his podcast. But for now, let me reintroduce Professor Ryan Hamilton.
PH: Ryan, we last spoke in June 2020. We were in the midst of the full throes, the early throes of COVID and various lockdowns and everything like that. We had a really interesting conversation at that time. And I'm guessing for an expert in consumer behaviour like yourself and someone who loves the science of decision-making, this must have been a very fascinating period of time to observe.
Ryan Hamilton (RH): Researchers talk about shocks as if they're a good thing. So economists, especially they want to, they want to look and see what happens during shocks. So that's a time of transition, a time of change, because you can really tell during disruptions. What is different and how it's different. And boy has this been a shock. So everything changed and then everything changed back, and then everything changed again. So yeah, we've had a series of shocks over this time. It hasn't been fun to live through, but yeah, from a research perspective, sure, that's been interesting.
PH: Well, back to the back to the covered part of that, and again, back to something we spoke about a couple of years back before we move on to the present and the future was that is the way that brands, companies, businesses had to speak to their customers during the early days of the pandemic. And dare I say these awful words. We're all in this together. Ok? We heard it time and time again. Various versions of it during every commercial break and you made a prediction at the time is that this is short-term. We're going to get back to normal marketing communications more quickly than you might think. Has this happened?
RH: That was one area where I can confidently say, I think I was right. I'm sure we could find lots of things that I said on the show last time that may or may not have panned out. But yeah, that happened real quick. That was a real quick change. And in fact, looking back on it, it's been interesting how little COVID has affected messaging and communications. Hmm. After that initial change, like even watching ads today, I'll occasionally see some character in a commercial wearing a mask, but mostly it's as if the commercials exist in a non-COVID world. And I think that's understandable. Like, it's an unpleasant topic. It's politically fraught. And so I think that advertisers mostly have wanted to just kind of avoid it entirely and project a sense of normalcy. And I think that that resonates with most customer segments. And so brands move in that direction. But yeah, people want to feel normal.
PH: There you go. And so have we snapped back to what normal was in terms of marketing communications before the pandemic? Or again, these awful words, but they just flow naturally. Is there a new normal in relation to that marketing communication?
RH: It's hard for me to say for sure, because normal changes so rapidly, especially in advertising. Advertising tends to be very trendy. I want to kind of chase whatever the latest is. I will say I've noticed kind of a desire for nostalgia. So the Super Bowl recently aired in the United States, which is like the big I call it, the High Holy Day of marketing like this is the most expensive ad day. And there was so much nostalgia in the Super Bowl ads. There's so much calling back to, you know, celebrities and entertainment properties from the eighties and nineties and kind of reminding people of how things used to be. And again, I don't want to claim that that's a direct reaction to COVID because there have been waves of nostalgia go through advertising in the past. But it would be consistent with this idea that we kind of want to feel comforted, that we want to feel normal, that we want to look back on a time that was simpler. So I think that there are new normals that are coming through. How much of it can we claim as a direct result of COVID that I'm less sure of? Yeah.
PH: And of course, you know, that's where we wrap up the nebulous world of marketing, communications and advertising because it's so mercurial. However, what we can probably get a bit of our teeth into more firmly is the shift to how customers want to interact with companies and that has become very digital and the digital platforms that have evolved the rise in e-commerce and even in terms of communicating from a customer experience perspective and where we've seen things leap forward very quickly, haven't we?
RH: Yeah. And it's been kind of this stagger step, which has been really interesting to me. So obviously, the trends long before COVID was in the direction of digital, more and more people getting more comfortable with digital and doing more transactions online. And then we had this sharp spike where everything was locked down and people were forced to engage with companies digitally, you know, forced to order their groceries online for the first time and all these kinds of things. What's been interesting? And so, you know, we saw that trend accelerate and all that's true and all, that's good. What's been interesting to me has been the snapback where there was just so much desire to reengage in person. So my own little micro-industry is in higher education and man students were just clamouring to get back to the classroom in person and this idea that once we go digital will never, never go back, that doesn't seem to have happened. Again, I'm not trying to discount the trends in the direction of digital. It's obviously much larger than it was pre-pandemic. And once people kind of learn how to do these things, they'll continue to do them. But people wanted to get back into restaurants. They wanted to go grocery shopping again. They've wanted to re-engage in person. And so it was interesting to see kind of that rapid increase and then kind of the rapid snap back. And I think we're still on a higher trend line than we were pre-COVID, and it'll continue to increase over time. But it's also spoken to me about the importance of interpersonal interactions and how much people value that physical experience as well.
PH: Well, is there now, in that case, almost a greater burden on companies because we've now not back to the desire for interpersonal. But also has there been an expectation created among consumers of the digital interaction that they do want to have when they choose to have it? So now companies most present provide both in really high quality.
RH: Yes. So customers' expectations have definitely changed. And I believe that there's even some, some TELUS International research suggesting that people have are like kind of over this and expect everybody to have gotten it right by this point. You know, there is some data showing that people were pretty reasonable in their expectations of companies at the beginning of COVID, like kind of understanding like, "Oh, the world's in turmoil. I understand if I need to wait an extra three days for this package" that kind of thing that's not going to last forever didn't last forever. And so, yeah, now people's expectations have updated where we expect that their in-person experience is going to be good. We also now expect that the digital experience is going to be good. So yeah, that is a burden on companies where they kind of need. They don't have as much shade, as much shelter as they used to because we're no longer in a transition period. We're now in kind of the new normal and people should be up to speed.
PH: Yeah. Well, look, you know, I think you've portrayed very, very clearly that it's a tricky world when you're dealing with customers, there's the segmentation, there's the, you know, political views, what side you fall on and there's the kind of wanting the digital and wanting the interpersonal. So can we put a little bit of science on this? Because I know decision-making is something that you have been looking at very closely in the last while and obviously ever every consumer makes a series of decisions. Is there something in maybe tell us about a bit about the research you have been doing and how maybe companies can apply a little bit of science around decision-making to maybe trying to figure out what route they should be going?
RH: Sure. There's a lot of great theory that we can draw on when we're trying to figure out how COVID and just kind of related goings on might affect the way people make decisions. There are a couple of big bodies of research that we can draw on. One is related to the effects of just kind of stress and cognitive depletion in general. So we've all had to do a lot of emotion regulation, which is cognitively depleting. We've had to do a lot of stress management. We've had changes in our schedules. All of these things are drawing down on the resources that we have cognitively. And the research tells us that that will tend to make us less good at self-regulation. So in other words, that we won't have as many resources available for self-control and that can lead to things like cheating on our diet, being unable to adhere to our goals as well emotional outbursts. So unfortunately, you're seeing a lot of this in the U.S. where people are really snapping at employees. And again, it's not like everybody's doing this, but it doesn't take very many angry shoppers to really ruin a clerk's day. And unfortunately, that's happening more, see it in airlines, especially where people are, just are not being well-behaved on airplanes like they used to be. And I think that all of those are just kind of symptoms of this general depletion that we're having. And so I think that's one body of research we can look at.
RH: There's another interesting body of research on existential dread. So, it's called the terror management paradigm and the idea is that when we're facing times of great uncertainty, times when death is salient, but also times of disruption. So, you know, economic uncertainty, there's a lot of talk of potential war. All of these things are destabilizing to us. And psychologically, what we do is we tend to latch on to aspects of our self-concept that extend beyond ourselves. So larger ideas, you know, things about family or church or nation or political affiliation that kind of ground us. And some of that can be very positive. But it can also lead to greater adherence to things like conspiracy theories and things like that because we want to feel like we're part of something bigger than ourselves. So that's another. And then the third body of research that I point is to, is just in the general area of distrust. People just don't trust other people like we did pre-pandemic, and I think that's affecting a lot of things. I think that there's a lot of mistrust in institutions that, you know, didn't start with COVID, but I think has been accelerated by it. So if you want, if you're a company, I think focusing on trust and building trust with customers is going to be even more important now than it was in the past because of what's been going on.
PH: And then in relation to those decisions, you know, you talked about you talked about the fatigue that COVID has added for various reasons, emotional reasons. But I read an interesting statistic around your research that the average adult makes more than 35000 decisions every day. And I would imagine at a time in a time of COVID, those decisions are exponentially greater because we're thinking about our safety, we're thinking about making choices in relation to do we go there or do we not or how do we behave when we are there and all of these things from a marketing perspective? Is there an onus then on companies now not to be adding to those numbers, those ever-growing numbers of decisions that customers have to make by throwing information at them, by really kind of giving them too much information in order to make a decision about buying their product? Do they have to go a different direction now?
RH: Sure. If you ask people, they will always tell you that they want more information and that they want more options. Empirically, though, if you look at the way that people make decisions, it is really easy to overwhelm people. It's very easy for us to get too much information and then just kind of walk away from it or slip into an easier mode of decision-making where we just don't engage. And so, yeah, smart firms will make things easier on people to the extent that they can, and it's acknowledging that everybody's in kind of a depleted state and is going to be looking for things to be easier. Firms that can allow customers to make decisions in an easier way, particularly if it's an easier way that doesn't actually limit their real choices. So if I can present you with a set of options and say, go ahead, pick one, or if I can present you with a set of options and allow you kind of a decision tree to very easily find which of these options is the best for you. I've just reduced the burden on you as a consumer without taking away your freedom of choice, and consumers tend to really respond well to that. We don't like being restricted. We don't like people telling us that we can't choose something we want to, but we also get overwhelmed very easily. And so to the extent that companies are able to respect the cognitive limits that are placed on consumers now and this kind of difficult time, then the better position they'll be in to serve those customers well.
PH: And I'm going to ask you for an example of this. And if you don't have one to hand, that's fine. We'll move on. But based on what you just said, are there any companies or and you don't even have to name the names, but an example of someone doing this right who has reacted to the current challenges and is doing it well?
RH: So this isn't related to the current challenge I can see. I can think of a more recent example, but there are companies that have done this well for a long time. So there's kind of a trivial example that I like to use is there's a soda fountain machine called the Coca-Cola Freestyle, where you know, they're in a lot of movie theatres in the U.S. and in restaurants where you can select any soda that Coca-Cola makes, right? And so there's hundreds of different options in this soda machine, and then you can combine flavours, too. So there's literally millions of. Different drink combinations that you can have there instead of just giving you a menu of hundreds of options. Coca-Cola gives you a decision tree on this touch screen. And so it's like, do you want a fruit flavoured drink or do you want a cola or do you want to diet? And I think there's one more. So you choose one of those and then it brings up another, you know, set of options that's six or seven different brands within that category. And there's another set of options and then now you're at the drink. So you make three simple decisions instead of having to endlessly scroll through. So I do think that it's more important than it's been in the past because people have fewer resources to devote to it and firms that are good at respecting people's freedom of choice and then making that choice as easy as they can. I think that'll be beneficial to them.
PH: Ok. Just before we leave the decision-making part and just wrap up. I wanted to switch just your thoughts in relation to decision-making and the burdens you've just described from the consumer to the employee. So the company is, you know, the challenges within their own companies now, forget about the customers for a moment, but within their own companies, what are we seeing in relation to the burden that you've just described in relation to decision-making during COVID?
RH: Oh, I'm so glad you asked because I've been trying to preach this for a long time where, you know, I'm a consumer behaviour researcher, I'm a consumer psychologist, but there's no like special part of psychology that exists in our brains for consumption choices. All there is, is just psychology. It's just this is the way our mind works. And so many firms will focus on what can we do to improve our customer experience? And then just absolutely abuse their employees and, you know, ignore that those are also people and they are operating under the same psychology. And so, yeah, all the tools that we apply to make our customers like us more. Those same tools are available to us to try to understand our own employees and improve their lives and improve the loyalty that they have to us. So, yeah, I think that there's huge opportunities there to improve the lives of our employees. We're in the midst of this great resignation, this recalibration of the relationship between labour and management and especially in the U.S., I think it's empirically long overdue. If you look at wage stagnation in the U.S., but it's more than about just wages. You know, the prevailing theory now is that a lot of the great resignation that's going on is people just reevaluating their lives and recognizing that there's more to life than just working. And so to the extent that employers don't make adjustments, they are going to continue to struggle and they're going to start losing out to employers who do respect the humanity of their employees a little bit more and recognize that there's a lot of non-financial ways that they can improve the lives of their employees. In addition to the financial ways that they can. So yeah, you can nudge your employees just as well as you can nudge your customers. And I think that there's enormous benefit to be had to companies who respect that and get ahead of it because I think that's the direction that we'll all be forced into. And boy, if you can get ahead of that curve, I think that that would be great.
PH: But what you're saying is that the same psychological principles apply to how you've been approaching your customer segmentation, et cetera, for years and years. You can simply turn that inwards and have some positive results.
RH: Absolutely. Yeah. And I love the idea of segmenting your employees or segmenting the employee marketplace and recognizing, like, "Oh, this is our target employee and it's a person with this set of, kind of, needs and experiences." But if you do that well, then it's not just these are the people who can do the job. We now understand these people. And so in addition to their being able to do the job for us, we can now uniquely offer them benefits because we understand them that again, maybe nonfinancial, but that will make them kind of uniquely happy and therefore, loyal to us and willing to do a better job and willing to recruit other people like them, like all of those kinds of benefits. Everything we do on the consumer side, there's the opportunity to do that on the employer side, too. We can improve our customer experience. We can improve our employee experience too in ways that can financially benefit the firm. So, yeah, it should be a win-win.
PH: And just finally on this, do we actually have are there statistics or any kind of research in relation to how the cognitive exhaustion of COVID has impacted buying habits across industries like tech, for example?
RH: So I'm not aware of any stats yet. There's usually lag by several years when we can actually get the data and start to analyse it. Sure. But you can see kind of microtrends. So one of the big indicators that suggest that this is happening is kind of a move towards entertainment and relaxation and kind of recuperation types of technology where you know, to the point you were raising earlier, people just want things to be easier or are they really valuing technology and products and services that allow them to recuperate from the stresses that they're seeing? You know, in the early days of COVID, you saw a lot of movement towards hobbies, and that might be seen as one reaction to this. Suddenly, you know, we're all terrified and we've got time on our hands. Let's occupy ourselves doing something productive so that that can help. And I'll be interested to see how that hobby trend continues as people move back into kind of work and normal life. If they see that that is a valuable part of their lives that they want to continue to take advantage of, or if that was more of, kind of, a temporary need that was fulfilled. But yeah, so things that help us recover, things that help us make our lives easier, things that are distractions, games, entertainment, those kinds of things would all be consistent with this idea that we're exhausted and we need a break.
PH: Yeah, that's really interesting. And again, one, we have to catch up in 18 months again and see what played out. This is, this could go on for years, Ryan. This is really interesting stuff and just a couple of final quick questions. Are there some examples of changes that companies have made for their customers over the last couple of years that sort of started out as short-term solutions, but then transformed into long-term solutions that changed how we spend our time and money.
RH: So I'll try to give you some specific examples if I can come up with them. But in general, I think that the biggest change that successful companies have made has been in terms of flexibility. So if you look at, I was looking at in preparation for a talk, I was looking at retail sales in the U.S. over the last five years and it was very flat. It would bump around a little bit. And then, you know, the COVID pandemic hit and everything was locked down and it dropped off a cliff. And then there was the initial wave of openings and it shot way back up. But it didn't settle back down, so the story since that initial shock has been one of volatility where, you know, I assume in response to kind of local conditions and shutting down and opening up, but there's continued to be these large changes in retail spending from month to month. Based on the changes in the ground. And so I think that firms that are successful have made changes in order to be more nimble and to recognize that they're going to need to be able to respond more quickly to changes. I think one specific area where retailers are, where companies have started to do this well, those that survived, is in the restaurant space. So obviously restaurant business model has been the same for thousands of years. Then now, all of a sudden, we can't meet together in person. And so the restaurant model changes completely. And those that have, you know, sadly, a lot of restaurants did not survive that, the pandemic. But those that have survived have changed rapidly in ways that meet the needs of their customers right away. So in some cases, it's a lot more outdoor dining. In some cases, it was a lot more kind of delivery on demand through DoorDash and these other services. I think that firms that recognize that nothing is as stable as it used to be, and so are we equipped to handle whatever is coming next and to change rapidly? I think those are the firms that are going to continue to do well.
PH: And what has been fascinating is the firms that have started up in order to plug into that need for agility. And we've seen almost a whole other segment of companies that are there to facilitate flexibility.
RH: Absolutely, absolutely. Yeah. Where we've started to see problems is where firms pivot rapidly. But expect, then, that the new direction is permanent as opposed to the new normal is change, at least for a period of time. And so they made a number of long-term bets based on an assumption about the way the marketplace is going to be permanently. And now that's really coming around to bite them. Whereas, you know, if I look at the local restaurant down the street from me, they did not make these kind of permanent long term bets, but instead, you know, made themselves leaner and more nimble and able to roll with things and are doing surprisingly well in response to that.
PH: Yeah. So don't pivot. Just remain agile.
RH: Yeah, agility will be the key for the next several years.
PH: Ok. And Ryan, finally, in anticipation for our third interview in around two years' time, it's predictions time. You know, you've given a good insight into some of the trends and where things are going. So just if you'd like to leave us with one or two, maybe predictions of things that we should be watching out for in the next couple of years that business leaders that the managers and team leaders should maybe be aware of or maybe on the watch out for.
RH: So Yogi Berra, who is a baseball player who said a lot of crazy things, had a famous quote where he said predictions are difficult, especially about the future. And that's where I come in any time I've tried to lock down on predicting the future. My best guesses are, we're going to see more of the business fundamentals change in the next few years than we have seen change in the last 40 or 50. You know, the lessons from previous pandemics seem to be that large societal changes happen in the years after pandemics, more so than during the pandemics themselves. We're all just kind of scrambling to survive during the pandemics. But you know, researchers have pointed to changes as basic as like architecture. The way that we structure houses were really influenced based on or we're really influenced by waves of disease and how people responded to that. You know, hand-washing was not a thing really until, you know, a couple of hundred years ago when people realized that we needed to respond to some of these disease outbreaks. So we're not done with COVID, we're starting now. And so I wish I could be more specific as to the direction of those changes. But those changes are coming and probably starting in the next few years rather than ending in the next few years.
RH: Among these other kind of big fundamental changes, I think that the relationship with labour is going to is just starting its kind of readjustment. So whether it will continue to be a big wave of resignations that just continue to roll throughout or whether it'll be just kind of a more permanent adjustment in the power balance between management and labour? Again, I wish I could. I could say for sure, but I don't see that going away quickly. And then the third one, I think, is supply chains. So we've had, you know, leaner and leaner supply chains, and we all understand the reasons for that and the advantages from it. But we also saw some of the major drawbacks to that. And so I do think there will be kind of that push towards more redundancy and slowing down of these supply chains in order to build resiliency because I don't think the changes are going to be done. I think we're going to continue to see increased volatility on a lot of different fronts for at least the next several years. And that's going to cause some, some really big. I mean, academically exciting changes, whether they're exciting as we all lived through them will be less clear. But yeah, well, change will be the call word.
PH: And it points back to, you're saying that it's the people who are agile, it's the companies that are agile or who are going to survive and thrive. But also finally, from a psychological perspective, it's the people with flexible psychology or who can adapt to certain scenarios very quickly from a psychological perspective that are going to be the best new leaders, the best new managers, as as well as having the empathy that you need to see people through those changes.
RH: Absolutely. Yeah, it feels hypocritical of me to say this being very physically not agile. But yeah, we should all develop our agility.
PH: Well, keep going to the gym and that will change very quickly, Ryan. Professor Ryan Hamilton, thank you so much for joining us TELUS International studios today. It's been fascinating.
RH: It's been my pleasure. Thank you.
PH: And thank you very much for joining us on this episode of TELUS International Studios, I hope you enjoyed that interview with Ryan Hamilton. If you did and you think other people should hear it, please share this episode with a friend or a colleague. Hit Subscribe if you're listening on Apple Podcasts or follow if you're listening on Spotify and while you're there, please give us a review and a rating. It really helps us get the episode out to more people just like you. And of course, if you would like to find out more about TELUS International and the global and disruptive brands with whom we work. Check out telusinternational.com, and until the next episode. Take care.