Why did Shoes of Prey fail? Because it listened to customers
Shoe retailer Shoes of Prey toppled over like Bambi in heels last week. And no wonder, because the founders trusted what their customers told them.
Shoe retailer Shoes of Prey toppled over like Bambi in heels last week. And no wonder, because according to chief executive officer Michael Fox, the founders trusted what their customers told them.
In outlining the reasons Shoes of Prey failed, Fox pointed to a yawning gap between customer intent and actual behaviour: “While our mass market customer told us they wanted to customise …what they were consciously telling us and what they subconsciously wanted … were effectively polar opposites.”
And, “despite all the right trends towards personalisation and our success within the customisation niche, contrary to our market research the mass market fashion customer just didn’t respond as we expected”.
The problem? Most market research — whether it’s sending a survey to your customers or a full-blown qualitative and quantitative study — is based on what people say, not what they do. That means:
- They say they want a better way to cut GLAD Wrap but freak out when the cutting bar is moved;
- They say the new flavour Coke is better, but revolt when the original formula is replaced;
- 50% of Victorians say they eat healthily but only 7% eat enough vegetables; and
- 60% of Americans say they’ll vote but only 40% do.
Humans are faulty forecasters
As we’ve seen with Shoes of Prey, this chasm between intended and actual behaviour can destroy a business. It’s not that customers lie, it’s just they can’t tell you the truth because humans are faulty forecasters.
There are two key reasons for this.
Firstly, when you ask people about future behaviour, they answer as if they are responding for a stranger. This psychological distance makes it difficult for them to accurately empathise with their future self, leading them to be overly optimistic about the likelihood they may or may not do something.
‘Would you customise a shoe that’s right for you?’ ‘Of course! It’s what I’ve always wanted!’
Secondly, when you ask people a question, typically they answer using their ‘system two’ brain. System two is deliberate, fact-loving and logical thinking.
People use this when dealing with an unfamiliar, difficult and/or unexpected situation (like, I don’t know, market research). So when asked a question like ‘would you spend time conceptualising and customising a shoe?’ they answer ‘sure’.
The problem is, back in the real world, your customers spend most of their time in ‘system one’ land, where intuition, habits and emotions rule. When given the chance by Shoes of Prey, did they actually bother to customise shoes? No. As Fox writes: “We learnt the hard way that mass market customers don’t want to create, they want to be inspired and shown what to wear.”
Unless your research is tapping into system one, you are unlikely to be getting an accurate picture of likely behaviour.
How to ensure research is not rubbish
Market research can have a place, but don’t expect it to provide robust forecasts on customer behaviour. Sure, it might make you feel you have ‘listened’ to your market, but realise you are paying (a lot of money) to feel better rather than get real answers.
To make sure any research you pay for is not rubbish:
- Be sure to interrogate your research team about how they will get to real rather than intended behaviour; and
- Use it to spark hypotheses.
Think of market research as the starting point rather than the conclusion. Listen to what people have to say but take it with a huge grain of salt.
What you should be doing instead
If market research won’t give you answers, how can you anticipate what people will do? That’s what you and every other business really want to know.
‘If we do x, how will our market respond?’
For that, there’s behavioural economics.
You can use an understanding of the hard-wired biases and heuristics governing behaviour to anticipate how people will respond. Behavioural economics is based on observation and experimentation, so it avoids a lot of system two distortion, and through it, we finally have a way to bridge the ‘say versus do’ divide.
It’s available to you now by the way, so there’s no need to commission new and expensive research. Get started by checking out the backlog of articles I’ve written to see how it can be applied to everyday business issues.
Despite the best efforts of his team and with the hope of investors, customers and staff dashed, what would Shoes of Prey’s chief executive officer do differently?
“There are customer research methods that enable you to peel back the layers of psychology to understand what a customer truly wants. While this type of customer research is difficult to get right and the results aren’t always clear cut, if I’m ever attempting to change consumer behaviour again, I will do this.” I pray you will too.
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