CodeBreakers^®

Understanding cultural coding saves career and helps improve internal communication (international pharmaceutical company)

Newly promoted European executive at global pharma company was facing “career limiting” challenges managing Asian subsidiaries, while reporting to American bosses. We applied a simplified cultural coding model to bring out the different communication styles needed to manage the situation. The Executive’s ‘Hi Context / Active’ style was a good match to his European peers’ similar style before. But it fit neither with the Japanese ‘Hi Context / Reactive’, nor with the American ‘Lo Context / Active’ approach.

“Hi Context” is a communication style where you assume the other person has the needed background (high level of context) to understand your messages. It is typical of cultures in Central and Eastern Europe. “Lo Context” makes no such assumptions. It is more of a “Nordic style”, prevalent in Germanic, Scandinavian and Anglo-Saxon cultures. These cultures make no assumptions about your understanding of the background to the messages you are sending.

“Active” style means focusing on the messages you send. “Reactive” means focusing on messages you receive. Eastern cultures are strong in the reactive domain, while Western cultures focus on “pushing” their messages out - ‘active’ style. To note, lo context and reactive styles can accommodate hi context and active styles - but not the other way around.

In our discussions we designed a ‘Lo Context Reactive’ communication approach for the Executive, which would accommodate both the Japanese and American styles, while keeping his own management approach consistent.

Within one month all issues about his ‘management efficiency’ disappeared and career progression resumed. Based on his success, the Executive was asked to share his cultural insights with his peers internationally, to improve the Company’s internal efficiencies.

Investment Products and Positioning Development (Financial Institution – Canada)

Understanding hidden emotions about money helps company become #1 among new investment customers

The Company was a market leader in home loans and wanted to establish itself as a place where you bring your money to invest, not only as a place where you borrow to buy a house. Traditional segmentation techniques (demographic, psychographic, funds available to invest, etc.) were used to identify whom they should target, with what messages. But results were disappointing.

Using codebreaking approach we came upon a significant insight: people differentiate between “white money” and “black money” - and they would only bring their “white money” to banks. “White money” is what comes in regularly, in small amounts, which they worked hard for - like their salaries. “Black money” is what comes occasionally, but in larger amounts - like bonuses or stock market gains. People “feel” differently about these two types of monies and use them differently.

Most people would either spend their “black money” (vacations, a new car, summer home) or give it to investment advisors to “play with and multiply it”. People have no problem risking and losing their “black money”. But they would want to protect their “white money” for the future. They worked hard for it and they don’t want to lose it. And banks are the best place to secure their white money’s future.

The Bank realized that traditional segmentation focused them on the wrong audience. It is not the ‘total available funds to invest’, but the ‘total white money available to save’ that mattered. “Black money” is usually a bigger part of available investment funds than “white money”. Therefore, targeting based on ‘total funds available to invest’ will make you focus on those people who are less likely to become your customers. The Company needed to shift attention to those who were willing to deal with a bank.

As a first step, the Bank refocused on those who had the most “white money” - even if it was less than the total available in the “black money” segment. Further codebreaking research revealed additional insights about how these people feel about their money. The Bank used these insights to target their emotional drivers of “securing my future” and “I worked hard for this money” to build the right communication strategy. They wrapped all of this in an overall “peace of mind” reassurance - ‘we guarantee that, with us, your money will work as hard for you as you have worked for it - so you can have a peace of mind about your future’.

The new approach catapulted the Bank into #1 position in new money inflows, from #7 position, within 4 months.

Moving from “what we know” to “what they don’t tell us” helps company scale up to get banking license (non-bank financial institution – Asia)

Asian non-bank financial institution needed to demonstrate operational capabilities on a larger scale, to step up and get a banking license. They had already recruited the best sales people in their region and optimized their ”finder-keeper” customer acquisition model. (Meaning: the new customers you acquire for the company remain “yours” to nurture and get more business from - thus providing excellent customer service and also increasing your income.) While everybody was happy with the status quo, they hit a plateau - and did not know why.

Feedback from both sales people and customers have been very positive. But our in-depth interviews with sales people revealed an issue they were not communicating. They were getting increasingly stressed over their inability to focus on new sales, as they successfully built their client portfolios. With more existing customers they had less time to get new ones, because they had to deal with the many issues from current clients - even if this did not result in new sales.

Sales people did not admit this problem to Management. They were afraid it would look like they are “losing their edge” or that they “don’t care about customer service”. They internalized the issue and tried to live with the stress thus created. Based on this insight the company changed its sales model to “hunter-farmer”: sales people acquire new customers but these new customers are then taken care of by others in the organization. This gives time back to Sales to do what they do best: sell.

Customer research suggested that the most important thing to clients was getting concrete, useful advice and immediate, effective action on any issues, every time. The company thus created a service process with dedicated service teams for different clusters of potential issues to guarantee the service customers said they wanted. At this point we intervened again.

While customers rationally claim they want efficient problem resolution, we hypothesized that emotionally they would rather have the same person answer the phone every time, to build a connected feeling. Our prediction was that the emotional desire for ‘belonging’ was more important than the rational desire for ‘speedy service’. The company ran two pilots: one with the rational approach, one with the emotional focus.

Follow up customer satisfaction research showed the ‘same person answers the phone’ approach as the clear winner. Emotionomics won over economics…

Region-specific cultural insights help company design winning, uniform brand positioning across 15 countries

This big regional bank in Central and Eastern Europe wanted to have a uniform positioning for itself across all its markets. Consumer research was clear cut: the most important thing about a bank was that it should be stable, dependable. The second most important thing was “value” - defined as rates and fees. The third was service quality -defined as …?

Our first insight was that while being secure was important, talking about it was counter productive. Any bank that claims to be secure raises issues - “Why are they saying that? What’s wrong with them? What are they hiding?” So, while research would suggest to claim “we are the safest”, in-bred skepticism in CEE would make that message hurt you. But you would never learn that from consumer research.

The second insight came from the Business. Getting into a price war benefits no-one. Any rate or fee advantage is short lived. It is not a solid basis for a long-term positioning.

The next three insights again came from deep understanding of how customers think - as opposed to what we think about them. “Superior service quality” had appeal. But ‘service’ meant something different to customers than to the bank folk working on ‘service quality’.

First, “service” to consumers includes everything. Product, convenience, rates, branch cleanliness,… everything is thought of as part of ‘service’. Second, superior service is not what bank executives define as such. Investment advice, tax planning, birthday notes are not it. Calm, friendly but respectful behaviour by branch staff, quick advice / help with simple issues is what it means. And, third insight, consistency is the most important thing. Whatever level of service you’ve got, as long as you get it consistently, it is thought of as ‘superior’.

Armed with these “personal biases driven insights” it was easy to build a stand-out positioning. “It’s easier with us. We take the frustration out of your banking. Every day, every time. With no exception. We promise it. We guarantee it”. The positioning resonated with customers in every one of the 15 countries the Bank operated in. And it still resonates. It remained unchanged because it keeps beating all other positionings. Year after year.

De-coding Buyer psychology allows start-up to charge 50% higher prices and sell more services at the same time (computer animation studio – Europe)

What can be better than getting the same high quality services, but at half the price? Apparently a lot. The Company had a built-in, sustainable pricing advantage by using free lance contributors from Eastern Europe. Their clients loved their quality work. Their prospective customers kept encouraging them to offer significant discounts to gain their business. They did all of that. And they still could not expand the business.

We asked them why they were offering such deep discounts. They told us: “because we know that everybody wants to save money”. “Are you sure? Have you asked them? Did you try to understand WHY they are saying what they are telling you?” It was obvious something was missed. But what?

We did a series of one-on-one telephone interviews with their customers to gain insights. It quickly turned out that a 50% discount was too much. Clients were suspicious. “Are they using child labour?” one of them asked. Of course, they would never tell them this. It also turned out that some of their clients (advertising agencies) actually LOST money if they sourced animation cheaply. But they are not allowed to tell their suppliers this. Many agencies work on a “cost plus” model, meaning they add some percentage fee on top of their costs. The lower the costs, the less those percentages mean in absolute dollars.

Finally, it became obvious that the hiring decision for subcontractors rests not with the purchasing area or production, but with the Creative Director of agencies. And those creative people would hate to have an image that cheap price motivates them. To them it’s creative quality and nothing else. They are “above” price discussions. They will just let the production folk beat their chosen supplier to within budget on pricing. Once again, these personal feelings and preferences would not come out in business discussions or standard surveys.

With these insights it was easy to build a “behavioural business model”. The company raised its prices to within 25% of industry average. They changed their web site and sales focus to deliver the message of quality creative execution. They changed their branding, adding the “Creativity. Enabled.” slogan. They invested in on-line project tracking so that “you can see every day how your best ideas are coming to life”.

Growth trajectory was reestablished within half a year - and with much more profitable pricing!

Deep-diving into clients’ cognitive filters lets Company boost loyalty by 20% - with “counter-intuitive” process and product changes (Mortgage lender – North America)

A large North American mortgage lender was facing challenges. First, its newly acquired customers were staying with it less and less. Second, a commodity market was developing - rates were becoming the deciding factor for taking a home loan, igniting a price competition. And, to top it off, a recession was looming, threatening a collapse of housing markets (and, hence, mortgage lending). Which way out?

We first did a large scale predictive modeling (big data analytics) study of mortgage (home loan) customers. The most significant insight was that those customers who ever set foot in a branch were much less likely to leave than those who never went to bank premises. It turned out that something “magical” happens when people realize they are dealing with a ‘real bank’ and not just a remote lender. It creates loyalty.

The Company has long ago optimized its new customer acquisition model, to bring in new clients via real estate agent recommendations and an outreach sales force. This cost much less than acquiring the same customers through branches. But these same customers were 20% more likely to leave within a year than those the company got the ‘old fashioned way’. Loyalty was missing.

We proposed to make the acquisition process ‘less efficient’ and insert a step where new clients had to visit a branch to sign some papers. And voila, retention rates increased by more than 20% overnight, as newly acquired ‘remote’ customers started to feel as ‘real clients’. Even though the only change for them was a less convenient on-boarding process.

We next looked at breaking out of the commodity conundrum. Research told us that customers wanted flexibility in their mortgages. They wanted to be able to pay it off faster, or delay payments if needed, to carry it with them to a new house they bought, or offer it to people who bought their current home. Of course, all this flexibility had enormous costs. Or so the ‘bankers’ said.

Our insights revealed that although people claim to want to have and use flexibility, less than 2% of them actually do when it is given to them. They get used to a regular monthly payment and routine is hard to break - even if it would be to their advantage. Based on these insights the Company ran a pilot of a fully flexible mortgage offer.

Results showed that not only less than 2% of people used the benefits, but that the more it was to their advantage to use them, the less likely they were to do so. So the Company’s prediction of increasing costs in a downturn were rational - but totally wrong. The Company introduced their “flexible mortgage”. No competitor followed because they were afraid of the costs. The Company successfully broke away from the commodity market. And the rest of the competition never knew how they did it.

De-coding psychological biases helps getting true picture of smoking habits and designing non-smoking programs (Non-profit organization – Europe)

The Organization wanted to understand dynamics of quitting smoking and the human characteristics that make someone successful at it. With this, they were hoping to design better programs to help people quit smoking or avoid getting hooked on tobacco altogether. Unfortunately, existing research gave contradictory statistical results about kicking smoking habits. It also did not provide any insight into why people smoke and why they may want to quit.

De-coding psychological drivers revealed significant insights. First of all, it showed that standard research about smoking habits don’t give a true picture. Most smokers believe quitting is only a matter of will power. (It is not: nicotine addiction is not only psychological, but also physiological. That’s why overcoming it usually requires medical help.) So if they cannot quit, it is because they are “weak”. And most people don’t want to admit weakness to themselves. So they will lie about it, even in an anonymous research.

Another insight we unearthed was that smoking is the “perfect rebellious behaviour” among young people. It goes against their parents’ advice. It complies with peer pressure. And it does not interfere with studying, driving and is not breaking the law like underage drinking.

Based on these insights a new research was designed. When asking people if they quit smoking, an extra option was added to the standard yes/no answers: “I did not quit altogether but am now smoking much less than before.” We of course knew that this answer was admitting that they could not quit. Statistics show that those who reduce their smoking but do not fully quit will slowly slip back to their previous cigarette consumption level.

But this answer gave everyone the option to admit they could not quit - without actually saying so and feeling bad about it. We then simply added results from these answers to the “No” answers. This way we could establish how many people were successful in quitting and what their characteristics were. So we could work on developing targeted messages for the rest.

Based on the research and on the insight about “rebellious behaviour” it became obvious anti smoking intervention needs to happen at a very early age. And the message should not be medical, fact-based, authoritarian, knowledgeable or rational. That would only make the psychological satisfaction from smoking more appealing to youngsters’ rebellious streak. Instead, tailored messages need to come from “peer culture”. To put it brutally, and not very PC: “If you smoke, it shows you are low-class. Only losers smoke. They have nothing better to show off with.”

Understanding emotional drivers of “irrational fears” helps Company upgrade its marketing and sales processes in 20+ countries (top 3 services company – global)

A significant Management insight postulated that more than 80% of marketing programs could be improved somehow. But, because nobody likes to talk about failures, these “improvement learnings” are never captured. The decision was made to create a “Failure Database” to collect (and reward monthly) the “best failures we can learn from” from all their marketing teams across the globe.

The idea was universally supported by all teams. Yet, when implemented, not a single entry was posted for 6 months. Our investigation revealed that while everyone honestly supported the idea, deep seated, hidden and irrational fears prevented them from acting on it. The only way to take the fear out of admitting ‘failures’ was to mandate a templated post analysis for every marketing event, specifying that at least 3 positive and 3 negative learnings had to be analysed.

We took away people’s fear of looking bad by volunteering information, by forcing the analysis, by mandating the reporting, by making it two-sided (good and bad) and by specifying the exact number of learnings that needed to be found and analyzed. That is, we took away their choice of what to do and how. While this went against conventional wisdom, it worked. It actually dropped the stress level associated with those decisions and reporting of failures and learnings from them skyrocketed.

This learning about how to reduce the emotional strain associated with free choice was taken further. Eastern Europe presented a unique challenge in terms of sales force motivation. Our investigation showed the key issue was ‘fear of selling’. “Sales” was a dirty word. Lots of people applied for the Company’s sales positions and rationally wanted to do a good job. But emotionally they were afraid, which created performance reducing stress.

Giving them no option but sell would not work here. We had to find other ways. We first had to identify and agree the issue: fear-of-selling, as unusual as it sounds for self-proclaimed sales professionals. We then had to find a way to take their deep seated, hidden, emotional fear away. And do this without interfering with their self esteem.

We discovered that sales people wanted to help clients but felt that selling an offer to them would be like forcing something on them. This created their cognitive dissonance and emotional fears. With this understanding we built a sales philosophy for the Region that said: “You should focus on helping your customers, by giving them good advice. But giving them advice means nothing if you cannot help them to act on that advice. So allow them to act on your advice by letting them take the right offer from you, which can make their desires come true.”

Employee engagement and happiness scores among Sales increased double digits, motivation went up and sales efficiencies increased from bottom 50% to top 30% in the global range.