How do the best companies create a customer experience that generates joy, happiness, and fond memories? To answer that question, it’s useful to understand how our brains create memories.
Nobel-winning economist Daniel Kahneman explored this subject in a study about how people remember pain during a colonoscopy. He asked subjects to rate their discomfort during the procedure. Kahneman’s team then compared the patients’ “remembered” pain experiences with data recorded during the procedure.
The team found that subjects rated the pain of their entire experience based on only two points. First, the intensity of pain at its worst point, and last the pain at the end of the procedure.
Kahneman theorized that because our brains can’t remember every moment of an experience, they use mental shortcuts (called heuristics) to pick out what’s important — in this case, pain. One of the most important heuristics is emotion — the more intense and more recent the feelings, the more memorable the experience.
These findings are the foundation of the psychological principle known as the Peak-end Rule.
What is the Peak-end Rule?
The Peak-end Rule states people that judge an experience based on how they felt at its peak and its end, not the average of every moment. And that’s true whether the experience was good or bad.
For brands, this means customers will remember their whole experience based on only two moments — the best (or worst) part of their experience, and the end.
People that judge an experience based on how they felt at its peak and its end, not the average of every moment.
That’s great news because, according to science, there’s room for error in your experience. To transform people’s memories of your brand, you only have to perfect two moments — the peak and the end. Let’s take a look at three example of how brands are applying this concept in the real world:
1. IKEA: Peak-end Rule in its TaskRabbit Acquisition
IKEA customers have to assemble its furniture themselves — which is a double-edged sword. Sure, the IKEA Effect helps them feel more bonded to the product. But building furniture is also frustrating and mentally draining.
To ease this pain point, IKEA acquired TaskRabbit in 2017. TaskRabbit is a platform for hiring people to do odd jobs, like constructing furniture.
Now, for a reasonable fee, IKEA customers can pay a TaskRabbit worker to build their furniture.
But what does furniture assembly have to do with managing a customer experience? It’s all down to controlling the best and worst parts of an experience. In other words, the Peak-end Rule.
How the Peak-end Rule Improves the IKEA Experience
Assembling flat-packed furniture is relatively easy, but it can still be challenging. Many a relationship has ended with an argument about how best to put together an IKEA table. Because building furniture is the end of your experience, it punches above its weight.
Acquiring TaskRabbit gave IKEA more control over the peak and end of their experience. Also, the brand can now gather more data about this critical part of the customer journey.
When TaskRabbit workers visit customers in their homes, they can collect first-person information about how people use IKEA products. These interactions will provide valuable data for IKEA as they continue to innovate their brand.
2. IKEA Part 2: The Peak-End Rule in Cafe Placement
There are two places you can buy food in IKEA stores — the main restaurant, usually located in the middle of the experience, and a small cafe just outside the checkout area. This cafe sells cheap treats like ice cream, muffins, and hot dogs.
As we stated earlier, the Peak-end Rule says that people form opinions and memories of your experience from only two points — the peak and the end.
We’ve already talked about how the very end of IKEA’s total experience is when customers assemble their furniture, but what about the end of IKEA’s retail experience? After all, people won’t want to come back to shop in the store if it’s a nightmare.
That’s where the cafe comes in. The last thing you do in an IKEA store is pay for your items. And if the store is doing its job you might be shocked by your total.
Instead of leaving customers with the emotional shock of the bill, IKEA gives them a place to enjoy a low-priced snack. And even if a customer doesn’t buy something, the smell of muffins, hot dogs, and other tasty treats can help soften the emotional blow from spending more than they intended to at IKEA.
3. Walmart: The Peak-end Rule in Customer Hosts and Greeters
Walmart stores have had Greeters at their door for decades, saying “hello” and “goodbye” to customers. Although Walmart found Greeters made customers feel welcomed, they’re also adding a new position in some stores — Customer Hosts.
Customer Hosts have responsibilities that include making cart runs, cleaning spills, and lifting heavy items for guests. While there’s controversy around replacing Greeters with Customer Hosts, these roles perform similar functions from an experience point of view.
Greeters and Customer Hosts help during the emotional peak of a customers’ experience and the ending. Having an employee there to manage these two moments has an outsized impact on customers’ memories and opinions of the experience.
The Impact of the Peak-End Rule
The peak-end rule is like the 80/20 principle of customer experience. 20% of your experience drives 80% of what people remember. And the more unforgettable the experience, the better the customer. For example:
• They’re loyal. Customers who had a “very good” experience are 3.5x more likely to repurchase.
• They’re advocates. Customers who had a good experience are 5x more likely to recommend the company.
• They drive revenue. Temkin also built a model to estimate how “a modest improvement in experience would impact the revenue of a typical $1 billion company across in 20 industries.”
The bottom line
So how can you apply the Peak-end rule to your own business? Ask yourself:
- Where do our customers feel the best, and the worst, in our experience? If you’re struggling to figure this out, I recommend creating a customer journey map to understand users’ emotional experience.
- Where does our experience actually end? Many brands make the mistake of “ending” their experience too early. For example, in eCommerce, the purchase experience or the product unboxing are considered “ends” for the customer. But what if they need to return an item, or your delivery partner loses their package? Again, a customer journey map is critical for identifying the actual ending of your experience.
Want to learn more about the Peak-end Rule?
Check out the resources below, or join the Choice Hacking newsletter:
- Check out Episode 103 of the Choice Hacking podcast here.
- Read more about the Peak-End Rule in "What is the Peak-End Rule?"
- Read more about how IKEA and Walmart apply behavioral science in my book series, Behavioral Science in Action.
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