Why The Customer Isn’t Always Right

The type of rationality assumed in economics is limited. One can generate solutions to theoretical problems, but the actual human behaviour is far messier. Each human has limits. Limits around what information is available, their own mind in processing that information, and the amount of time they have to think it through. Herbert Simon coined the term “bounded rationality” to explain this. At the level of tic-tac-toe there are perfectly rational solutions; at the level of Chess and Go it goes beyond rationality; in life itself most is (seriously) guessing.

This talk of bounded rationality is relevant because it stresses how absolutely contextual and embedded choice-making and game-play is. The model may run that each customer is able to choose from among choices and always in their self-interest, but what choices are available and how they can make them limit such a choice. (We all have the theoretical choice, for example, to move to a nicer country forever but because of incidentals of being born to this home, one feels connected. Most do not go despite the ‘choice’). To the contrary of celebrating great media diversity and supermarket shopping abundance, customers are overwhelmed by too much choice on the one hand, and restricted by circumstances on the other.

Because having to choose from numerous items means there are fewer—logical and empirical—grounds of comparison for making the right choice. Instead of sampling each of the teas and concluding you like X tea best, you buy some at random, usually the cheapest or respectably economical, and carry on enjoying that tea. Rather than try every kind of tea in the store, we stick with what is familiar. Rather than try every kind of tea in every store, we stay with, for example, Yorkshire Tea.

Rather than import the various teas from abroad, customers choose what is there, familiar, and financially viable. Often it is the norm of a social group which decides for the customer: English tea, or American coffee, or high-class aspirant Twinings. Somewhere out there, there could be the tastiest tea that a customer has never had access to but, hypothetically, would enjoy far more. Their ‘favourite tea’ and therefore ‘best choice’, including choice of food retailer, or even country, would be proven wrong. The very same for customers who do not like, say, coffee but haven’t had it enough to test, or sampled coffee so long ago that their taste receptor reports are outdated.

In fact, when it comes to a customer declaring the best movie, best song, or best streaming service, they fall into what Immanuel Kant called universalising aesthetics. We think of it as the best or most beautiful objectively, though it is not. What one claims by favourite movie, is the favourite movie one has seen and recalls fondly at the time of speaking. At other times, it may become unfavourite. Exposed to other films, it may become seconded or unfavourite yet again. And much of the time it is group-fashion or conformity which brings together consensus. For instance in the most popular music streaming service, Spotify, which has lower quality sound than its rival Tidal, but has a most-popular monopoly which causes customers to never try alternatives.

It should not be lost on you that much the same is true of choosing a soul-mate. (Or, even a job or referendum vote). Yes, hypothetically there could be an optimum match but they are not local. This is why it is ridiculous when people say “there are billions of people out there—find your ideal!”. When was the last time anyone was able to interview and analyse billions of people who already found them equally special? Parameters like feasible geography, appropriate age, mutual attraction, compatible values, and even mood and singleness and stage setting when you both encounter each other, limit it down to very very few. The choice of a boyfriend, girlfriend, or other, is made not just by you but by them and by the circumstances which embed you both.

For the choosers of a product count as three. The choice is made by economic circumstances, the provider, and the customer. Never the customer alone. Hence the customer may be wrong about a product; no customer abides by the perfect economics model of making rational free-choices about the very best products. Indeed, you could flip the chooser dynamic. Do customers choose Netflix, or does the inevitability of Netflix choose them? When choosing a show to watch does one choose from all the options or merely the ones on-show? Mostly it is the ones Netflix allows you and, because of your advance payments, coerces you to watch. The medium of a streaming service often precludes programs—that could well be better—which are on services one has not, or economically cannot, subscribe to.

In this sense, choosing between Amazon Prime Video, Netflix, and Hulu is akin to shopping for pizza. The best pizza to your unique mouth maybe In Lidl but you only ever go into Aldi or Waitrose. Most likely Aldi because it’s cheapest for most; or Waitrose because it’s the best quality. Yet all along you miss out on that Aldi pizza,the best choice.

A similar cultural phenomenon operates in customer choices around the best movies for them—is it the best movies for their authentic selves or of all time? Or the most popular movies up for rewards in this year’s cycle? Customers, similarly, enjoy wearing cheap clothes because of what is unavailable to them as much as what is available: only description, not direct experience of the harsh underpaid labour involved.

There is a difference between how the economics of buying and selling is, how it is modelled to be, and how it ought to be.

Therefore to the contrary of the dogma that the customer is always right, the education of consumer tastes may be most important in altering economics. Indeed, perhaps more education between a.) need b.) want and c.) fancy, is vital.

Putting what customers say they do not want on the same level as what they buy with their credit cards. Such was the thinking of crafts-movement founder, entrepreneur and socialist designer William Morriss.

If you make high-quality goods and pay your workers’ decent wages then competition will always be able to undercut the goods and make lower-quality goods with sadder workers. As the first in the essentialist movement, Morriss claimed each customer needs to assess what they really want and value, and the higher price or sacrifice required for it. To the contrary of encouraging consuming, and the boastful consuming – called conspicuous consumption by economists – William Morriss recommended we “have nothing in your houses that you do not know to be useful or believe to be beautiful”.

Having little of the truly beautiful and useful is better than much of the okay. The customer may be, and often is, wrong. That does not mean they cannot be less wrong in future and change the cycle of economic limitation, retail provision, and fleeting consumder demand which leads to an abundance we spend much of our future time forgetting – or throwing away.

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