The word ‘alchemy’ isn’t a word I often use. I’d associate it with images of wizards, wands, and potions. But in the context of business, Rory Sutherland explains it as;
“…the science of knowing what economists are wrong about. The trick to being an alchemist lies not in understanding universal laws, but in spotting the many instances where those laws do not apply. It lies not in narrow logic but in the equally important skill of knowing when and how to abandon it.”
To illustrate this concept in practice, let me take you on a journey. Last weekend I purchased these plant food spikes.
I was stood staring at the options in the hardware store trying to decide which one to purchase when a couple of thoughts ran through my mind:
- Which brand is best? There were two main options; Miracle Grow and Jobes.
- Which one is the best quality and will help my plants grow best?
- Which one is the best value?
Here were the answers I came up with:
- Best brand? I’ve known about Miracle Grow for years and have always assumed it’s one of the top brands. I’ve never heard of Jobes.
- Best quality? I had no clue. I couldn’t answer this question because I know nothing about plant food quality, what plants need, how much food plants need, etc. I’m pretty much a clueless gardener and work through trial and error.
- Best value? Miracle Grow was more expensive and included fewer spikes. Jobes won out here.
I had pulled the Miracle Grow spikes off the shelf to purchase but made a last-minute switch to Jobes. I started to think about what had caused this last-minute switch when Miracle Grow seemed like the better option?
Why did I ultimately skimp out for the cheaper, unknown brand that pushed quantity over quality? It’s not like I’m particularly price-conscious over a product that costs a couple of dollars.
Well, I’ll tell you.
It wasn’t necessarily the fact that I got double the quantity of plant food. I don’t think that alone would have convinced me if the only indication of this on the packaging was this fairly subtly mention.
What ultimately changed my mind was the giant red square that consumes almost half of the box (visually showing the “free half”) with the copy “THIS MUCH FREE!” lining every side.
I was fully aware of the tactics being used. Initially, when looking at the box, I thought, “Ha! How stupid. Way too aggressive. That won’t work on me.” The packaging is so “in your face,” and their sales strategy is so pushy and obvious.
But then at the last second, I fell for them. Jobes won me over. I couldn’t resist getting something for free. My last thought about it as I was walking to the counter with my head hung in shame: “Dammit, I’ve been outplayed. Nice work, Jobes. Nice work.”
Here’s where the quote from Rory Sutherland about alchemy comes into play. In real terms, I’m not getting anything for “free” and despite knowing this it still influenced my purchase decision. Why?
Pioneers of behavioral economics Daniel Kahneman and Amos Tversky found that humans systematically make choices that defy clear logic.
I knew logically that Jobes likely compensated for quantity in other ways. I had several reasons not to buy Jobes and I thought the packaging was a bit of a turn-off. But I still bought it. The Jobes packing made me think I’m getting something for nothing, simply by adding some text and a brighter background around part of the product. It’s so easy but hugely impactful- and a reminder not to conflate complexity with potential impact, overlooking simple or more “magical” solutions.
Irrelevant attributes in buying decisions
It’s this same alchemy or irrational thinking that leads beauty brands to promote a range of ingredients most consumers will likely have never heard of. I’d wager that most consumers don’t know why or even if “collagen and glycerine” help your hair be fuller? Or what “micellar technology” has to do with shampoo?
While I’m not sure if or how these elements help my hair, it’s likely these ingredients are what researchers refer to these as “irrelevant attributes” - “either an objectively irrelevant feature that does not provide any physical-chemical-technical utility or an attribute whose contribution to the product is so trivial or marginal that it must be regarded as irrelevant” (Brown and Carpenter 2000).
Yet, research has shown such irrelevant attributes;
- Increases consumer’s attention
- Increases perception of the uniqueness of the brand
- Increases perception of increased price fairness of the brand
- Has a positive effect on the attitude toward the brand
- Leads to a significantly higher intention to buy, and here’s the alchemy, even when the consumer is told about the irrelevance of the attribute.
A note on “best practices”
As optimizers, we can lose touch with the concept of alchemy - what works when it shouldn’t, logically. We can think too much like economists, not alchemists, as Rory would say.
Consumer behavior is complex and that’s why you should be cautious of applying “best practices.” It’s why user research and experimentation are so crucial to understand consumer motivations and validate solutions.
I’ve seen numerous tests that in theory “should work” but don’t perform when tested. Or vice versa e.g sometimes adding friction to a process can help improve an experience.
Forgetting alchemy is a detriment to creativity and limits what we as optimizers can achieve.
How can you use alchemy in experimentation?
- Making the economist part of your brain explore ideas that seem illogical.
- Conduct user research to uncover user motivations.
- Read up on psychological principles in consumer behavior and cognitive biases and think about where such biases might be affecting customers.
- Don’t be afraid to experiment with ideas that go against “best practices”.
- Think about what and where “economists” are wrong. Think more about “where laws do not apply” as Rory says.
- Think about purchase decisions where consumers abandon logic - what are their motivating factors and what influences them?
Alchemy is more valuable today than ever. In my experience, few people are prepared to override their own logical thinking in business or go against the grain, when approaching experimentation ideas that might appear on the surface to go against what’s promoted as being the “right way.”