Transcription
So today I am joined by Tom Ridges from Herify. They are a great example of actually using behavioral science in the real world. And by the man who probably does need no introduction, recently referred to as a fashion icon in CAN, uh, the Tik Tok superstar and the advertising legend that is Rory Sland. So welcome to you both.
Uh, thanks Sam. So just quickly before we get into it, I just wanted to throw it to Tom just to give us a little introduction. So Tom, who are Herify and what do you guys do?
Yeah, I'll keep it very brief. Best way to think about us is Google Maps for word of mouth. So brands use our software to find where people are talking about them in the real world. So that's offline social influence, which leads to the phrase herd mentality. I'm sure you're aware of that. We're going to talk about that today. Hence Herdify. It's what we do.
Perfect. And in that session title, we were talking about challenger brands, Tom.
Yeah. So, can you just tell us what do you mean by the term challenger brand?
Yeah, it's an interesting phrase that gets thrown about. Um, and actually for us, it's more of a mindset. Um, you know, we work with a lot of brands who've, you know, hit 10, 20 million and and they're looking to do things differently. But we're also speaking to one of the oldest brands in the UK and they surprised us when they said they view themselves as a challenger brand. And this is why we say it's a mindset. You know, I think we were talking beforehand. I don't think anybody operates without constraints today. So, if you have to operate with constraints, if you have to make decisions on on where you're going to place your bets or who you're going to exclude, you're a challenger. And I think it's those that embrace the challenger mindset is really what we're talking about.
I mean, also, I mean, there's that great phrase which is you've got to start somewhere. Yeah. Okay. And you know, you weren't expecting a Chairman Mao quote, but you know, a journey of a thousand miles starts with a single step and actually where a challenger brand starts and when, incidentally, are unbelievably critical to success. And there are quite interesting cases of brands which are now immense, okay, which started intense and local. I mean, I'd argue most of the big, most of them. Yeah. I mean, you know, most of you are too old to remember this. But uh, when I was sort of 25, the only place you encountered Peroni was at Pizza Express. They wanted to establish, actually also drove San Pellegrino to a very large extent. Okay. They wanted to establish Italian credentials. They were only available there. Yeah. And that question of where you concentrate your effort to maximize the chance of maybe crossing some sort of threshold, contagious threshold is for those, sorry, don't want to bring a COVID flashback trigger warning here, you know, if you want to get R above one effectively, finding a place in which you can do it. I mean, I can dimly remember where you couldn't go on Facebook unless you're a graduate of the University of Cambridge here. Well, and that's how, that's how they started here. To be honest, it went downhill after that in my opinion. Um, but when you joined, or that's how they started in North America. That's how they started, Harvard, and then it was Ivy League, and they purposely restricted, yeah, anyone from other unions, but everyone's planting seeds until they had critical mass at the next college, at the next college, they went herd to herd to herd, and then it blew up. That gave them their tipping point. Now they can talk to everybody and everybody knows who they were. But if they tried to advertise, yeah. If they tried the advertising playbook and said, our target demographic is students, let's raise a billion pounds and target every student across North America. Probably would have failed, right? They used that local piece. So actually, there's a lesson there and it's, it it requires a different kind of maths.
Y, because one of the problems we have is that markets exist in complex interconnected worlds which are highly nonlinear. 100%. Okay. The problem is that marketers are judged by finance people who use the maths of completely linear, uh, accountability. Yeah. Now, one of the things I think that's really important about what you do is we need to go back and look at what good ideas failed, not because they were bad ideas to begin with, but either because they were launched in the wrong way or because the finance masters didn't have the patience to wait. Yeah.
I mean, you know, one of the most important things is nearly all new product adoption is a sigmoid curve. So, it's generally pretty flat to begin with. And by the way, most of you are too young to remember this, and there's a very dangerous effect which is we tend to look back on the past and concertina history a bit in our minds. So we kind of, I think my kids kind of assume there was a time like in black and white films where people didn't have mobile phones, and then they invented the mobile phone and everybody bought one. Mhm. Now, if you were born in 1965, 1970, you'll remember this weird early point in the sigmoid curve where all your friends said, "Why would I want to make a phone call in the street?" And there was genuine opposition and hostility, and it required a lot of marketing effort. Once it hit a certain threshold, once it hit a critical mass, then you're off to the races. But one of the problems I think that happens is that if you have a very proportionate idea to marketing investment, you underinvest in the beginning because you're obviously not getting many sales. And then just as the sales take off, you start advertising. Well, you may argue that amplifying those, you know, those natural network effects is a healthy thing to do. But there are cases where people either under, underinvest at the beginning or they fundamentally spread their, spread everything too thin.
That finding a, what, what was your example? I think you mentioned Bank of America launched its first credit card in one town. Is that right?
Yeah, I think it was 1968. They again, they could have launched over America, but they chose one town in California with 250,000 people because they knew, and Monzo have played this book here, right? You, you see the Monzo card, you wanted a Monzo card. They realize that people are more likely to take a credit card if they see other people taking a credit card first, right? That's the key thing that they, you know, this isn't new. I think this is it. I, I go back to Jeff Bezos's approach. You know, everyone's always looking for what's new, what's going to change. His philosophy is what's going to stay the same. And we're talking about human psychology that hasn't changed for millennia. We've been copying people since day dot. So it was the same for when we were finding food, and it's the same for how we find products today.
By the way, it's really important to note, um, this isn't irrational. Okay? Now, a lot of people think, and I think when we're trying to appear rational, we try and play down the extent to which we're influenced by the behavior of others. Because in order to look rational, in order to win an argument, you've got to pretend you've worked everything out from first principles. But if you look at it in an evolutionary context, in any case where we have imperfect information, which is real life, to be honest, okay, there are very few situations in real life outside sort of engineering and Newtonian physics where you actually can calculate and predict to a perfect level. When you have imperfect information, the most important thing is to avoid catastrophe. It's not to achieve, attain optimal perfection. It's to avoid disaster. And two really, really reliable ways of doing that which are ingrained in human instinct are habit and social copying. Okay? Do what I've done before because the fact that I'm still alive means that it didn't kill me last time. And if I, if I haven't done something before, do what everybody else is doing. So imagine, okay, you've arrived in a, in, you know, in a new tribe of 150 people and you have no idea about what to eat. Okay? Um, there are two pretty good things. Either eat the berries you've eaten in the past, or if everybody's eating the yellow berries and nobody's eating the purple ones, outsource your decision-making to everybody else by copying them.
And Mark has written very, very strongly on this. We are as humans weird in that we're a massive herd species which spends a lot of time and effort pretending that it isn't. And this is, by the way, hugely important, by the way, with everything from putting ice in cider, that when you make a behavior visible, you make it easily copyable. Okay. It's hugely important with the adoption of solar panels. Uh, because there's a lot of data that shows that once people's neighbors get solar panels, the likelihood that someone else does it goes up massively. Guinness, uh, has actually found that if you walk into a pub and there's someone visibly drinking Guinness, the likelihood that you'll order it goes up. I can't remember, but it's double-digit percentage. The likelihood that anybody orders. We're much more a herd species than we ever like to admit.
It's a, it's a perfect example there. I was actually going to ask you before, what does herd mentality actually mean, but you've jumped in there and you've explained it. So, I'd love to hear from Tom now. Obviously, you do some amazing work at Herdify. Can you actually give me an example of a brand or a story from someone that you've worked with of how not only herd mentality, but behavioral science actually works in the real world and a, and a success story that goes along with that?
Yeah, it probably helps bring some context as well to to what we're talking about. Um, I was going to talk about someone else, but I actually bumped into one of our lovely customers. I think Jess is in the audience somewhere from Abel and Cole. And Abel and Cole are what I call a typical challenger brand because I think I saw the stat, 90% of us have been to a supermarket in the last month, right? So, bear in mind, we went through a pandemic where we were forced to not go to supermarkets, right? We've sprung back to that. So most of our behavior is still not buying stuff online. So they've got competition there. They've also got huge competition in the category. You know, vegetable boxes are, or veg boxes are a big category. So working with them, how our model works, I won't go into our model. If you want to know how it works, find us on our picnic table. But by using their first-party data, finding out where this word of mouth, where this herd mentality exists, basically allowed them to do a number of things. One's really tactical, we, we, they used it to target their some advertising from door drops. Response rates were 168% higher versus the the typical audience. But then actually, we're now looking at customers who are more profitable, and then we're looking at rolling that out in other areas across the business. So it just shows that even how we buy vegetables is a behavior that we copy from people around us, friends or neighbors.
And of course, what's important is some of some of this will require physical intervention. For example, in an area where you have a lot of word of mouth, you have to be absolutely sure that the shelf facings are abundant. Yeah. Okay. Physical intervention is generally quite expensive. Therefore, you need fundamentally, you need to prioritize. But I was asking another thing, which is presumably you can also use your technology backwards. By which I mean, it's not just where to focus, it's also who to ignore. V selection. Yeah.
Yeah. Yeah. 100%. Yeah. Um, yeah, we have agencies work with a lot of the independent agencies and they use it exactly that. Who can we not talk to? I, I've always had a, just as a sideline, I've always had a fantasy to start an ad agency, uh, which is the complete opposite of an ad agency. The job is an agency which helps you lose your worst customers. Okay. So if you're an online retailer, you probably have, I know that Ardo has psycho customers who basically live on the sixth floor with no elevator and once every 3 months they order eight cases of bottled water. Okay. And the job of this agency would be to lose those people. I've, I've always thought that there is a role of advertising in the negative, which is, you know, if you're, if you're an online retailer, people who are path, you know, pathological returners, for example, are probably less trouble than they're worth. And so you can use this both for elimination and selection in a way. You upweight what's hot and downweight what's cold.
Precisely. You, you find the behaviors you want, you know, be that they buy a lot or they buy in a better way. That finds where those sorts of people are and where they're influencing each other. Like back to Abel and Cole, if you come to my house, there's always an Abel and Cole box on the kitchen table, right? So friends just know that I buy from that. So that's the behavior want to amplify, but you can amplify any behavior. By the way, anybody who's in the clickbait business, okay, I think you're also at the category level a really interesting source of PR stories. Okay. So for example, generally we know from clickbait that any information you can localize on Mail Online, you know, find out the 20 top postcodes in the UK for buying electric cars. Yeah. That kind of thing is kind of catnip. Yeah. Okay. So your ability not at the brand level obviously, because I assume that's proprietary, but at the category level to feed data in, um, I mean things, by the way, I mean things like electric car buying, I suspect are very, very, uh, network-driven. I mean, I'll be absolutely honest about this, okay? I wouldn't have bought an electric car, but my brother, who's an astrophysicist, bought one first, okay? And I had two choices: either go back to university and study electrical engineering, so you know what a kilowatt hour is, or go, well, my brother knows all this, he's bought an electric car, so it's probably okay, you know? And by the way, the fact that we do that, the fact that we outsource to people who with more expertise than us, with more experience than us, the fact that we actually are always, I think unconsciously looking for a social norm to form before we adopt a behavior, it's, by the way, there's another interesting issue here, which is it's not only risky being the first person to buy something. I mean, it's risky in absolute terms. It's also reputationally risky. Yeah. Okay. This seems incredible, but I was born in 1965. In the, I think it was about 1998, I told someone at a party that I ordered my groceries on the internet, and they laughed in my face. Okay. Um, and generally, I, I was the first person to have my credit card details stolen online in the UK, and there was a feature in the UK basically in The Independent basically treating me as if I, you know, I got what I deserved because I was obviously an idiot using this new fangled technology. And there's actually a picture of me which says, "Southern Sutherland: Still uses internet." Um, and so there are all kinds of reasons where we feel comfortable socially doing the things that other people do, and we feel uncomfortable doing. So, it's why it's very, very difficult being a niche car brand. Okay? Because if you know, if you buy a Ford and it breaks down, everybody thinks you're unlucky. If you buy a really obscure car and it breaks down, everybody goes, "It's your own stupid fault." Right? So, they're awful, incredibly strong. And I, I agree with you. I think because they're evolutionary, we can reasonably assume they're kind of constants. They're really, really strong forces which drive us both to follow a habit and B, social copying. By the way, um, it's very interesting. Do you notice an age difference here? I mean, there's definitely an age difference in terms of habit, by the way, which is people, when you get older, you get less experimental. And there are two reasons for that. One, you've got more experience to draw on. And being blunt about it, you have less future to benefit from something new. Okay. Yeah. So, this is why having teenage children when you're 50 is a pain in the ass because they always want to go on holiday somewhere different, and you always want to go back to somewhere you like. The last, anybody else. We went to Madeira last year. It was fine. I want to go to the Rio Carnival. Oh, sounds, you know. Okay. So, the these, by the way, are really, really strong, almost elemental forces in human behavior, and we tend to treat them as as a secondary. They're actually primary, aren't they?
They are. And on the age question, I'd be careful of ever giving definitives, but we've worked with brands on both ends of the spectrum, you know, older holiday companies, for example, and they respond the same. And we also did some work with, as part of the US election, of getting young voters to vote. Same thing. So both ends of the spectrum, the youngest and the oldest respond to this. They respond. Yeah.
And and it comes down to you've kind of, um, opened it. Sorry, Sam, I realize I'm railing off. Do you want to?
No, no, no. I was going to, I was going to let you keep going on that, but I was going to say what you were about to go into. It was that quote from the recent MAD Masters live session that we said, and it was essentially, make your customers and people around you feel less lonely, and you will ultimately win. So, I guess you recent that success going into 2025 and beyond.
Yeah, local, local matters. Um, for two reasons. Uh, the first one is, we all have the reason herd mentality works is we all have a threshold of copying. About 6% of us don't. So, these few guys here, they will make an independent decision. The rest of people won't. Well, there's 6% of people who operate more or less from individually. So, is this a neurodiversity thing? I'm really intrigued.
No, no, to be honest with you, it's a context thing. So, all of us operate in that level at different times. So, in some things in my life, I will make a decision. Very bold. Most of the time I won't. The, the point to illustrate there is the vast majority, and you need that, you know, explore, exploit. We need people. Yes. The waggle dance. We need people who are going to try new things. Uh, best example is the dancing guy. Everyone saw that video, right, years ago, 10 years ago. One guy in a field starts dancing. He's in that 6%. We then have a threshold of copying, anywhere from some people might see one person, some might need to see 100. The average is about four to seven. If you watch that video again, the first few people come in really slowly because there's a really low threshold. To be honest, everybody thinks they're stupid. Precisely. And then as the thresholds hit, tipping point, bang. That, that's why that works.
And to the point about location, I think it was in your book actually. Correct me if I'm wrong. 60% of our journeys are sub five miles. I think it was in Transport for Humans. So the point is, despite us coming to events like this and traveling, we spend the majority of our time very close to where we live, which means we get influenced by the people around us, which is why location is super important for us to hit those thresholds that enable mass adoption. Agree?
It's also a problem, I think, in that the obviously I'm not suggesting that, um, Londoners are less prone to herd behavior, but they're, they're less, they live less locally. So, it's probably a bit less geographical and it's more to do with where you work, who your, who your social media is. Yeah. And but I guess in London where you work and where you live are often more condensed as well. Often quite closely correlated. And we have clients who work heavily in London, it's the same, same thing. Same basically same effect, is it?
But I mean, actually, the, I always think the rest of the country, once I moved out of London, I realized this is actually much more local. In other words, people think much more locally. And by the way, I would actually argue that just, just something which I thought we should have tried, and I never persuaded BT to do it at the time, that when you, when you rolled out, for example, faster broadband, you should localize your advertising and make it say county-specific or area-specific, simply because any localized message is automatically more relevant to people, less likely to get ignored, and we attach greater importance to it because it's localized.
So one of the other things I think your, your software does, and your maths, what is it for the benefit of the nerds in the audience, is it regression analysis? What do you mostly do?
To no, so we work in complexity theory and network science. So we effectively, um, work out where these networks are when you can't see them. So we've basically had to, we've spent enough time training models of real-life networks, like social media things like that, that when you see those behaviors enough, you can then say, well, what are the behaviors that exist even when the connections aren't there, and then you can infer the connectivity effectively.
So how, what sort of, effectively, what sort of statistical it is? It's effectively statistical techniques that are highly specific to network science.
Exactly that. So if, if we're not using those, we're blind to a large part of what's probably going on.
That's, that's the best summary because I think obviously marketing is much more than just herd mentality, right? Although actually, um, one of the things I would say is real life is a medium too. Okay. If you work in marketing, you tend to have this idea that people go around in a kind of bubble and they don't think about brands at all. They're completely uninfluenced by everything they see until they see a bought media message, when suddenly they enter this state of persuadability. But Jeremy Bullmore's great quote is, "People build brands the way birds build nests, from the scraps and straws they find lying around." And the behavior of other people probably ranks pretty high, actually, in what influences you. Agree.
And I think that's the kind of the thing that's almost criminal here, that so many people spend so much time on the individual. What's the individual thinking? What does the individual look like? And they ignore the huge swades of influence that everyone else is putting on us, right? And if you can understand these networks, it's almost an unlock. You can unlock actually how humans make decisions. And that, that explains why as a brand, you might have an audience that look the same on paper, 40-year-old dads, whatever. But then one group is really responsive, and one is not. This group of dads are all talking to each other and advocating for your brand, either outwardly or just wearing the clothing. They're going to work more than this group. And it helps explain, it provides context to why things work differently.
Do you want my favorite, which I think is absolutely brilliant, network marketing story? Which is there used to be a company called Radio Rentals, which rented, it still exists actually. I think it's been, I think it's been merged into Box Clever, if I'm right. Okay. It rents TVs. I think the main market now is students. That was a mainstream thing in the 60s, 70s and early 80s, that because televisions were hugely expensive and difficult to repair, uh, you basically rented them. And they used to, um, when they delivered a new, what would have been 28-inch color TV, you know, it's a great cube, basically. Okay. They deliberately attempted to deliver to the person next door. Yeah. Accidentally on purpose. They go, "Ah, Mr. Johnson, it's your new 28-inch color television." And he'd go, "I'm not Mr. Johnson. He's next door." And they found that in a bizarrely high percentage of cases, the next door neighbor came into Radio Rentals within a week and ordered the same television. There we go.
So, I mean, you know, there's also that question of, you know, of of So, there's copying for reassurance, and there's also copying for status, isn't there? Yeah. Which is, you know, I mean, status. How many people have read that fantastic book, The Status Game, by, um, you'll remember his name in a second, British guy. Yeah. Fantastic book. But there's also that question which is that status goods require an audience that appreciates the status that they convey. Okay. And so in, you know, in certain, sort of, in certain brands. So do you work disproportionately with, you know, luxury goods brands to some extent?
Not disproportionately, but yes, because obviously they have a few more constraints on the type of advertising they can do. So it doesn't look cheap. Particularly, um, luxury brands who are not the Rolexes and the ones everyone knows about, you know, the rung below, because you're not going to spend £1,000 on a watch if people don't know it cost you £1,000. People don't know you spent £1,000 on a watch.
Got it. Yeah. Well, we are being told that we need to wrap things up. Uh, so we are going to finish on time, which is nice. But I wanted to say thank you very much. We should answer that lady's question over there though.
Oh, we do have a question. Sorry, because I think it's a really, really good question. If you could rebuild social media from scratch, what would you do differently?
So that, that's very, I, let me answer it first. I don't know if you need to rebuild it from scratch. What I would do, um, for all kinds of reasons, is I would put a limit on how much people are allowed to post. And the reason is that, uh, there is a small group of nutty people, okay, who, so who lit, in in a real world environment, if you're the guy in the pub who just goes on and on and on about a particular political subject. Okay. Right. Basically, you stop getting invited to the pub. Okay. Whereas in social media, there's no natural cap on the extent to which you can be a single issue fanatic. I also think if you limited how, how much people could post, you'd massively improve the quality through perceived scarcity because they'd actually think before they did something. And there's a lot of evidence that things like YouTube, which require more effort and investment for content production, generally are much lighter on polarization overall than things where you can basically be a keyboard warrior. So that would be my suggestion.
Do you have one?
It's a big question and we're going through it. I'll keep it very short. My other job is, uh, I've got two young girls and we're going through the thing as parents about trying to keep them off social media now. Jonathan Haidt spoke at Nudgeto last year about teen suicide rates going up, and having a daughter of that age, it scared the out of me, frankly. So, we're trying to pull them back. I don't necessarily have the solution, but I think the thing I think social media for my daughters would be better for is helping them maintain healthy relationships. Yeah. And removing the toxicity, because the problem is you get a lot of the, the ganging up side of things or people they don't know. We've had friends trying to be groomed. It's like, how do you bring it back to an extension of your social group and make that more connected? I don't have an answer to that, but nice. Thank you very much.
Well, to wrap it up there, essentially what we wanted to get out was that word of mouth is a very, very scalable method. And that line, it still sticks with me from that live session of, "Make people feel less lonely, and you will ultimately win." Uh, so Herdify have done a lot with us over the last few years. They're a massive sponsor of everything we do with MAD. They're not just a sponsor, they're an out-out partner now. They're located over in the Brick Lane Beach part of the show as well. So if you want to carry on this conversation with Tom, feel free to go over, meet the Herdify guys, and they'll be able to keep chatting with you. But thank you very much.
Thanks, sir. Thank you, guys.
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