7 Reasons Why Customers Make the Decisions They Make
Have you heard about Aristotle's seven causes of human action?
They are certainly an interesting study of customer understanding!
A little background first.
In his book Rhetoric, Aristotle said: Now every action of every person either is or is not due to that person himself. Of those not due to himself some are due to chance, the others to necessity; of these latter, again, some are due to compulsion, the others to nature. Consequently all actions that are not due to a man himself are due either to chance or to nature or to compulsion. All actions that are due to a man himself and caused by himself are due either to habit or to rational or irrational craving. Rational craving is a craving for good, i.e. a wish-nobody wishes for anything unless he thinks it good. Irrational craving is twofold, viz. anger and appetite. Thus every action must be due to one or other of seven causes: chance, nature, compulsion, habit, reasoning, anger, or appetite.
So let's think for a moment how that applies to customer experience. I bet you don't have to think about that for too long, since Rule #1 in customer experience is "understand the customer." Understanding the customer includes listening, creating a customer journey map, and using other tools that will help you understand who they are, what their needs are, what jobs they are trying to do, what their painpoints are, and how you fit together. If you know customers well, it's much easier to meet, and especially exceed, expectations.
Aristotle also notes that all actions are due to either emotion or reasoning. I think we're familiar with that thinking in the world of customer experience. Reminds me of the left brain and right brain and how we need to engage both in order to gain executive commitment for our customer experience efforts.
O my. Perhaps Aristotle is our founding father! (Or not.)
He does go on to say, in not so many words, that target demographics are superfluous and if we focus on the seven causes, that's all we need to do. Think he knew about personas and/or jobs to be done?
Let's go back to the seven causes of human action, and I'll run through each one.
They are seven interesting ways to look at why customers make the decisions they make.
Chance: The things that happen by chance are all those whose cause cannot be determined, that have no purpose, and that happen neither always nor usually nor in any fixed way.
Perhaps the customer stumbled upon your product or service and decided to give it a try. There is no rhyme or reason for the decision/action.
Nature: Those things happen by nature which have a fixed and internal cause; they take place uniformly, either always or usually.
In this instance, the customer makes a decision or acts because of some force of nature, e.g., he's hungry, or simply because of human nature, i.e., it's what I do. A different type of force of nature might be your approach to corporate social responsibility. The causes that your brand supports are those that the customer supports, as well. Instant alignment.
Compulsion: Those things happen through compulsion which take place contrary to the desire or
reason of the doer, yet through his own agency.
Some irrational behavior drove customers to take this action, make this purchase. It was just so easy to do. It might be an impulse move/buy.
Habit: Acts are done from habit which men do because they have often done them before.
This one is probably pretty straight forward. I purchase from X because I've always purchased from X. There is comfort. security, and trust in consistency.
Reasoning: Actions are due to reasoning when, in view of any of the goods already mentioned, they appear useful either as ends or as means to an end, and are performed for that reason.
This means that people have a rational motive to do something. Oftentimes, the company has given them a reason or told them why they need the product.
Anger/Passion: To passion and anger are due all acts of revenge. Revenge and punishment are different things. Punishment is inflicted for the sake of the person punished; revenge for that of the punisher, to satisfy his feelings.
Some emotional response has triggered the customer to purchase or to interact.
Appetite/Desire: Appetite is the cause of all actions that appear pleasant.
In the absence of reason, appetite (or desire) takes over. I want, I want, I want. Just ask your kids! It's about the feeling that the purchase elicits.
Here’s Why Bitcoin Won’t Replace Gold So Easily
What a week it was.
First and foremost, I’d like to acknowledge the horrific mass shooting that occurred in Las Vegas, the deadliest in modern American history. On behalf of everyone at U.S. Global Investors, I extend my sincerest and most heartfelt condolences to the victims and their families.
The memory of the shooting was still fresh in people’s minds during last Tuesday’s Hollywood premiere of Blade Runner 2049, which nixed the usual red carpet and other glitz in light of the tragedy. Before the film, producers shared poignant words, saying that in times such as these, the arts are crucial now more than ever.
I had the distinct privilege to attend the premiere. My good friend Frank Giustra, whose production company Thunderbird Entertainment owns a stake in the Blade Runner franchise, was kind enough to invite me along. Despite the somber mood—a pivotal scene in the film even takes place in an irradiated Las Vegas—I thought Blade Runner 2049 was spectacular. Even if you’re not a fan of the original 1982 film, it’s still worth experiencing in theaters. Hans Zimmer and Benjamin Wallfisch’s synth-heavy score is especially haunting.
CNET recently published an interesting piece examining the accuracy of future tech as depicted in the original Blade Runner, from androids to flying cars to off-world travel read the article here.
Still in the Early Innings of Cryptocurrencies
Speaking of the future, I spoke on the topic of the blockchain last week at the Subscriber Investment Summit in Vancouver. My presentation focused on the future of mining—not just of gold and precious metals but also cryptocurrencies.
Believe it or not, there are upwards of 2,100 digital currencies being traded in the world right now, with a combined market cap of nearly $150 billion, according to Coinranking.com.
Obviously not all of these cryptos will survive. We’re still in the early innings. Last month I compared this exciting new digital world to the earliest days of the dotcom era, and just as there were winners and losers then, so too will there be winners and losers today. Although bitcoin and Ethereum appear to be the frontrunners right now, recall that only 20 years ago AOL and Yahoo! were poised to dominate the internet. How times have changed!
It will be interesting to see which coins emerge as the “Amazon” and “Google” of cryptocurrencies.
For now, Ethereum has some huge backers. The Enterprise Ethereum Alliance (EEA), according to its website, seeks to “learn from and build upon the only smart contract supporting blockchain currently running in real-world production—Ethereum.” The EEA includes several big-name financial and tech firms such as Credit Suisse, Intel, Microsoft and JPMorgan Chase, whose own CEO, Jamie Dimon, knocked cryptos a couple of weeks ago.
To learn more about the blockchain and cryptocurrencies, watch this engaging two-minute video.
Will Bitcoin Replace Gold?
Lately I’ve been seeing more and more headlines asking whether cryptos are “killing” gold. Would the gold price be higher today if massive amounts of money weren’t flowing into bitcoin? Both assets, after all, are sometimes favored as safe havens. They’re decentralized and accepted all over the world, 24 hours a day. Transactions are anonymous. Supply is limited.
But I don’t think for a second that cryptocurrencies will ever replace gold, for a number of reasons. For one, cryptos are strictly forms of currency, whereas gold has many other time-tested applications, from jewelry to dentistry to electronics.
Unlike cryptos, gold doesn’t require electricity to trade. This makes it especially useful in situations such as hurricane-ravished Puerto Rico, where 95 percent of people are reportedly still without power. Right now the island’s economy is cash-only. If you have gold jewelry or coins, they can be converted into cash—all without electricity or WiFi.
Finally, gold remains one of the most liquid assets, traded daily in well-established exchanges all around the globe. Every day, some £13.8 billion, or $18 billion, worth of physical gold are traded in London alone, according to the London Bullion Market Association (LBMA). The cryptocurrency market, although expanding rapidly, is not quite there yet.
I will admit, though, that bitcoin is energizing some investors, especially millennials, in ways that gold might have a hard time doing. The proof is all over the internet. You can find a number of TED Talks on bitcoin, cryptocurrencies and the blockchain, but to my knowledge, none is available on gold investing. YouTube is likewise bursting at the seams with videos on cryptos.
Bitcoin is up 350 percent for the year, Ethereum an unbelievable 3,600 percent. Gold, meanwhile, is up around 10 percent. Producers, as measured by the NYSE Arca Gold Miners Index, have gained 11.5 percent in 2017, 23 percent since its 52-week low in December 2016.
Look Past the Negativity to Find the Good News
The news is filled with negative headlines, and sometimes it’s challenging to stay positive. Take Friday’s jobs report. It showed that the U.S. lost 33,000 jobs in September, the first month in seven years that this happened. A weak report was expected because of Hurricane Irma, but no one could have guessed the losses would be this deep.
The jobs report wasn’t all bad news, however. For one, the decline is very likely temporary. Beyond that, a record 4.88 million Americans who were previously sitting out of the labor force found work last month. This helped the unemployment rate fall to 4.2 percent, a 16-year low.
There’s more that supports a stronger U.S. economy. As I shared with you last week, the Manufacturing ISM Purchasing Managers’ Index (PMI) rose to a 13-year high in September, indicating rapid expansion in the manufacturing industry. Factory orders were up during the month. Auto sales were up. Oil has stayed in the relatively low $50-a-barrel range, which is good for transportation and industrials, especially airlines. Small-cap stocks, as measured by the Russell 2000 Index, continue to climb above their 50-day and 200-day moving averages as excitement over tax reform intensifies.
These are among the reasons why I remain bullish.
One final note: Speaking on tax reform, Warren Buffett told CNBC last week that he’s waiting to sell assets until he knows the plan will go through. “I would feel kind of silly if I realized $1 billion worth of gains and paid $350 million in tax on it if I just waited a few months and would have paid $250 million,” he said.
It’s a fair comment, and I imagine other like-minded, forward-thinking investors, buyers and sellers will also wait to make huge transactions if they can help it. Tax reform isn’t a done deal, but I think it has a much better chance of being signed into law than a health care overhaul.
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