On Brain with Terry Wu: Part 1

Neuromarketer and recent Think & Link host, Terry Wu, sat down with Capsule to thoughtfully discuss the inner workings of human cognition and decision making. So thoughtfully, in fact, that we had trouble deciding on how to parse down his insightful responses. So we didn't. Below is Part I of Capsule's two-part interview with Terry on brands and brains.

What initially attracted you to the field of neuroscience? Why did you make the jump from neuroscience to Neuromarketing?

In 2003 while working at the Department of Neuroscience at the University of Minnesota, I started one of the first two Search Engine Optimization (SEO) companies in the Twin Cities. Building my SEO business got me into marketing.

During the early days of SEO, having a website that ranked at the top of Google was all you needed to generate leads and sales. Back then, most businesses didn’t know how important it was to have well-optimized websites. Then, gradually, more and more businesses realized that Google was the ultimate battleground to win new customers. At the same time, consumers had become more sophisticated and they didn’t just call or buy from the first website they found. After attracting visitors from Google, the question had become, “Now what?”

SEO is not the end game of marketing, but the beginning. If a well-ranked website can’t convert traffic into leads and sales, it doesn’t have much value. I started my research on how to best design websites and create content for high conversion.

Conversion optimization ultimately requires understanding how the brain makes decisions and what cues consumers respond to. When it comes to online conversion, there is a lot of mindless A/B or multi-variant testing. Such testing can go on forever. But if not guided by science, such testing can create very misleading results.

For example, a politician wants to pick a photo that will help him win the election. What photos would you choose to test? You can do an A/B test of a sad face vs. an angry face. You may find that the sad face is better received among voters. But, if you understand the brain and emotion, you will choose to test photos of his smiling faces. Or you can choose to test the same smiling face while varying the colors of his clothes or ties.

Conversion optimization depends on the combined knowledge of neuroscience, psychology, economics and marketing, which is exactly what Neuromarketing is. Ultimately, Neuromarketing is about understanding how the brain makes decisions and what influences consumers’ decision-making. This is how I got into Neuromarketing.

What well-known brands currently use Neuromarketing tactics to significant effect?

Amazon is arguably the king of Neuromarketing. Its website employs numerous Neuromarketing techniques to nudge and motivate its customers toward a buying decision. Many of its techniques are based on human cognitive biases. These biases can make the prices seem lower, help customers compare costs, persuade customers to take immediate action, and reduce perceived risks in making a purchase. These biases are highly predictable and very effective in persuading customers. The power of Neuromarketing is seen in Amazon’s tremendous success.

Large companies, including Google, Apple, PayPal, Frito-Lay, eBay, and many others, are using Neuromarketing.

You cite that 95% of consumer decision making is unconscious. Does the “rational consumer” actually exist? Are we just mindless buying drones with little to no control over our purchasing decisions?

Rational consumers do exist. We are all capable of making rational decisions. What makes us human is largely due to the highly developed frontal cortex we have. This part of the brain doesn't fully mature until our mid-20s. Our frontal cortex is much larger than that of other mammals. That part of the brain is the gatekeeper of our emotion-driven behaviors. It can overrule our impulsive decisions. Just because it can doesn’t mean it always does, though.

Whether our buying decisions are rational depends on whether we buy what we need or what we want. When we focus on what we need, more buying decisions are rational and logical. For example, John needs a car to commute to work. He needs to buy a car based on affordability. After comparing prices and options between Nissan and Mazda, he buys a new Nissan that costs $15,000. The purchase is consistent with his goal of buying an affordable car. So, the decision is rational.

In contrast, when what we buy is what we want, more buying decisions are irrational and illogical. For example, Joe wants a car that will impress his country club friends. His intent is driven by his emotions and desires. Joe ends up taking out a big loan to buy an expensive Maserati. He surely has impressed his rich friends and that makes him feel good. However, the huge car loan has caused financial problems for him and that makes him feel not so good. So, the decision of buying the Maserati is not rational or logical.

Very often, we are simply not aware of how emotion influences our decisions. A very long-held belief in neuroscience and psychology is that emotion and cognition are independent of each other. That belief was only put in doubt around 20 years ago. In his book “Descartes' Error: Emotion, Reason, and the Human Brain”, neuroscientist Antonio Damasio presented ample evidence supporting the notion that we need emotion to make rational decisions. He found that patients with damage to certain parts of the emotional brain or the Limbic System had trouble making rational decisions, even though they had normal cognitive capacity and emotional experiences.

Very often, even rational decisions have many emotional elements. This is because we don’t have access to all the facts needed to make a completely logical decision and our brains can’t analyze all the information. Wherever we lack facts, emotion often kicks in and nudges us toward certain decisions without our full conscious awareness.

Be on the lookout for Part II of Capsule's interview with Terry Wu as we delve further into the nuts and bolts of Neuromarketing.