The Limits of Familiarity when Selling

An Excellent Meal

This weekend, my wife and I had the best meal we’ve had for months. The tiny Italian restaurant served dishes inspired by the chefs’ experiences travelling in that country. The ingredients were local to Devon wherever possible and the service was a delight.

This weekend I also read about the ability of AI to reduce informational bottlenecks. The first example given was eating out. Imagine being able to engage with the chef at length in advance and have a meal designed specifically to your taste.

Politics was another example. While we are too busy to vote in referenda, imagine an AI that knew our preferences and voted on our behalf on any issue. These two examples completely miss the point of innovation and business success.

Cognitive and Collaborative

AI is excellent at pattern recognition. This means it’s great at recognising what consumers prefer and making similar recommendations. This idea is not new, but may now be applied to anything.

It’s marketing lore that we buy products that are familiar. Psychologists recognise two types of familiarity and our preference depends on our personality.

Cognitive familiarity is a preference for what we have done, liked or bought before. Collaborative familiarity is preferring recommendations from others. Netflix was one of the first to take advantage of this at scale.

When you switch on the app, you are greeted by recommendations based on both your previous viewing and what is trending right now. The first is cognitive familiarity and the second collaborative. My preference is the former, what’s yours?

At first Netflix employed people to label its content, creating multiple categories and making recommendations more accurate. AI is excellent at doing this. Shows should become more bingeworthy.

During its transition from DVDs to streaming, Netflix also aimed to delight customers in unexpected ways. This element of surprise is what goes missing, when the products and services we see are based on what we’ve done in the past.

A Limited Intelligence

Part of the enjoyment of a great meal is the delight in discovering new flavour combinations based on the chefs’ expertise. Often you do not know what you want until your imagination is fired by the description on the menu. Imagine eating every meal based on what your AI avatar decides you prefer that day.

The purpose of voting is to choose leaders. Most of us have little interest in the minutiae of politics and limited knowledge of the issues involved. Democracy is the ability to throw the bad actors out of office, not have individuals make every decision based on past preferences.

This is an important point about the existing limits of AI. New knowledge comes from conjecture, which by definition is forward-looking. Pattern recognition is backward looking and therefore incapable of knowledge creation. A world where personalised AI makes our decisions for us is, for the foreseeable future, a world without progress.

It is also a world without delight. While familiarity is important in marketing and selling, there must be a difference in what’s on offer for buyers to change behaviour and purchase what’s new. Netflix understands that more of the same becomes boring and hence its mission to surprise as well as satisfy.

Familiarity is important in creating a viral product. Once word of mouth takes off, then newcomers to a service will more likely buy what’s familiar. But recommendations only happen if you’ve surprised and delighted earlier customers.

For example, if travelling near Ashburton on the edge of Dartmoor on Wednesday through Saturday, then I recommend a meal at Amelia’s. I hope you are as delighted as my wife and I were.  

Questions to Ask and Answer

1. In what ways is my product familiar to buyers?

2. How do I build on that familiarity to supply something different?

3. What testing have I done to deliver a positive surprise to new clients?

I’m Simon Maughan and I write The Profit Elevator as a guide for B2B firms seeking faster growth.

I recently recorded five Go to Market Guide videos showing how to reach your target audience. Cognitive and collaborative familiarity are part of the programme, along with exercises to put everything into practice.

If you’d like to watch the videos, then reply to this email. If you found this letter valuable, please share it with a friend and a colleague.