What can we Learn from Loyalty Cards?

Open your wallet.

Go ahead. Open your wallet. Or your purse. I’m conducting an experiment.

I am prepared to wager that in there – along with the photograph of your children and the credit cards – are two or three loyalty cards. I don’t mean your Tesco Clubcard – I mean the ones that are stamped. The loyalty cards from coffee shops, bakeries and your enterprising local burger restaurant.

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…And I’m prepared to make a second wager: that all those loyalty cards – that need eight or ten stamps before you get your free bagel or burger – have just one or two stamps on them. That you thought, ‘hey, that’s a good idea, I’ll do that’ and then quickly lost interest.

You’re not alone: that’s archetypal human behaviour – but according to an article in the Harvard Business Review it’s behaviour that may offer business owners and managers an insight into how to improve results from their teams.

Interestingly, it flies in the face of most current business thinking, especially when it comes to setting and achieving goals.

The modern trend is towards flexible working. As I wrote recently, the evidence suggests that teams allowed to work flexibly are both happier and more productive. And unsurprisingly, the vast majority of people have a preference for flexibility when it comes to goals. As the HBR puts it, ‘Adopting a somewhat elastic approach to setting goals allows us some future wiggle room.’

But it you want to achieve a major goal, then the article suggests you’re much more likely to do so with a rigid and restrictive structure for the necessary steps.

And this is where loyalty cards – and yoghurt – come in.

Professor Szu-chi Huang and her colleagues in the marketing department at Stanford University conducted research on the effectiveness of loyalty cards at a local yoghurt shop. It was the standard offer: a free yoghurt after six purchases.

There were two separate offers – the ‘flexible’ one, where customers were free to buy any yoghurts they liked, and a far more restrictive one, where customers had to purchase specific yoghurts in a specific order.

Unsurprisingly, there was far more take-up of the ‘flexible’ offer. Rather more surprisingly, those customers opting for the restrictive offer were nearly twice as likely to complete six purchases and get the free yoghurt. (And before you think it’s just one yoghurt shop near Stanford University, YesMyWine, the largest imported wine platform in the world, has reported similar results with special offers.)

The academics at Stanford suggested that the result was because customers responded to not having to make a decision: that in our ‘information-overload, decision-fatigued’ society people will appreciate something that gives them the chance to make fewer decisions. They go on from that to draw a conclusion for business: that once a goal has been decided on, managers should be rigid in the steps needed to accomplish it – in effect, take any decisions away from the team.

I’m not so sure. First of all I’d argue that people who sign up for a ‘restrictive’ offer are more committed in the first place and therefore more likely to ‘see it through.’ Secondly, my experience of managing large teams suggests that the real answer is “it depends.”

Specifically, it depends on the experience and capabilities of your senior team. If you’re looking to achieve significant change and/or achieve a major goal then, yes, there needs to be a detailed, step-by-step approach with a list of actions and a series of deadlines.

But if you have a ‘details guy’ in the team, my advice is delegate it to the details guy: it’s almost always better to ‘trust and delegate.’ But if you don’t have a details guy, then the actions and deadlines become your job: what’s absolutely certain is that they cannot be left to chance.

So there I am, disagreeing with learned academics at the world’s third-ranked university. I’d be fascinated to hear your views on this: and yes, let’s discuss it over a coffee. I can’t miss a chance to double my number of stamps…

 

 

The Long and Winding Road

Monday night, and I’m watching the Channel 4 news. There’s a story about small music venues closing all over the UK. But I’m only half paying attention, if that.

The reporter mentions the Cockpit in Leeds, a venue that’s hosted any number of famous bands and artists – White Stripes, Kaiser Chiefs, Amy Winehouse among many. We’re closer to home: I pay slightly more attention.

And then along comes James Bay, bemoaning the fact that artists today simply aren’t playing enough hours of live music. “After all,” he says, “The Beatles played 10,000 hours in Hamburg.”

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At which point my ears really prick up.

Did the Beatles really play 10,000 hours in Hamburg? If you’re on stage for 50 hours a week, that would take four years – and according to Wiki, they were only in Hamburg from August 1960 to December 1962.

But it doesn’t matter – because the 10,000 hours myth has received another boost. In his book Outliers, Malcolm Gladwell put forward the theory that it takes 10,000 hours of practice to achieve mastery in any field. Matthew Syed gave it extra weight in Bounce.

And now, 10,000 hours is accepted corporate wisdom.

Exactly as the Mehrabian Myth once was. Do you remember that? Sitting in a room while some genius at the front told you that 93% of communication is non-verbal. Thirty seconds of thought by an intelligent eight year old would tell you that it can’t possibly be true, but millions of men in suits have lapped it up, very often paying good money to do so. Anyway, here’s 3:30 of YouTube which busts the Mehrabian Myth once and for all and let’s never hear from it again…

…Because now we have the perceived wisdom of 10,000 hours.

Yes, if you do something for 10,000 hours you’ll obviously become very competent. Will you master it, become world class? Almost certainly not.

Consider golf. I remember reading a story about Greg Norman. I’ll paraphrase the quote, but it went along these lines: I’d practice every day. Six or seven hundred balls a day. I’d practice until my hands were bleeding and I couldn’t hold the club any more.

Now I occasionally go to the driving range – and about 100 balls is my limit. But even if I did hit ‘six or seven hundred balls,’ even if I did put it in 10,000 hours, would I master golf? Could I turn pro or – sadly in not that many years – play on the Seniors’ Tour? No, because I don’t have the X-Factor. The show may be going downhill but the name is exactly right: it’s the X-Factor, not 10,000 hours of practice, which sets a world-class performer apart.

The X-Factor is the dedication, the drive, and the sheer bloody-minded will to win. That’s what makes someone practice for 10,000 hours. It isn’t the practice that sets Greg Norman and me apart, it’s the will to win – and a fair sprinkling of natural talent.

I haven’t played golf for 10,000 hours – not yet, anyway – so let’s turn to three things I most certainly have done for 10,000 hours: been a husband, been a parent and been the owner of TAB York.

Have I mastered any of them? No. I’m competent, sometimes I think I might even be quite good, but have I mastered them? No, absolutely not.

A family and a relationship are constantly evolving and changing. You master one level as a parent, your children immediately move on to the next level.

Business is just the same. New clients bring new challenges. Existing clients – and their businesses – develop and change. Different goals emerge, plans and personal circumstances change, different challenges come to the fore.

And yes, the will to win is important in business, but so is the will to go on learning. As Stephen Covey put it, to constantly Sharpen the Saw. That, of course, is where TAB comes in: where the experience and wisdom of your fellow Board members can make such a big difference. After all, there are far, far more than 10,000 hours round that boardroom table