Ep. 578 – The Art of Research with Susan Fader: What is Narrative Economics and how to Utilize it in Your Business Strategy

My guest today is Susan Fader, keynote speaker and founder of FaderFocus. 

Susan has run FaderFocus as a Business Strategist & Transformationalist Catalyst specializing in Qualitative methods and strategic consulting.

She helps clients achieve focus and get “unstuck”, reframing their energies, their confirmational biases, and the traditional ways of segmenting their customers. 

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In addition to the certification, all the courses you complete will build toward your graduation.

If you are looking to achieve your full potential, check out MSMU’s programs at: broad.msu.edu/marketing.

HubUX is a research operation platform for private panel management, and qualitative automation including video audition questions, and surveys. 

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Jamin Brazil: Hey, everybody, I’m Jamin. You’re listening to the Happy Market Research Podcast. Our guest today is Susan Fader, keynote speaker and founder of Fader Focus. Susan has run Fader Focus as a business strategist and transformationalist catalyst specializing in qualitative methods and strategic consulting. She helps clients achieve focus and get unstuck, reframing their energies, their conformational biases, and the traditional ways of segmenting their customers. Susan, welcome back to the Happy Market Research Podcast.


Susan Fader: I’m very happy to be here and talk with you again.


Jamin Brazil: The Michigan State University’s Master of Science in Marketing Research Program delivers the number 1 ranked insights and analytics degree in three formats, full-time on campus, full-time online, and part-time online. New for 2022, if you can’t commit to their full-degree program, simply begin with one of their three-course certifications, Insights Design, or Insights Analysis. In addition to the certification, all the courses you complete will build towards your graduation. If you’re looking to achieve your full potential, check out MSU’s program at broad. msu. edu slash marketing, again broad. msu. edu/marketing. Hub UX is a research operations platform for private panel management, qualitative automation, including video edition questions, and surveys. For a limited time, user seats are free. If you’d like to learn more or create your own account, visit hubux.com. Before we get into the core content, I wanted to talk briefly about your speaking. You have been a speaker since I’ve known you anyway, various industry events, but more recently you’ve been brought in for corporations to talk to them and their off-sites. I’m just curious, is this a trend for your career, and what are they bringing you in for?


Susan Fader: They’re bringing me in for really my original thinking of reframing how you think about business challenges, because a lot of businesses are like these cars that are stuck in the mud and the tire keeps spinning and you’re doing the same thing. They need to think differently about their businesses. They’re coming out of the pandemic. The whole dynamics of their categories, who their buyers are, how they talk to them has changed. And they want to make sure when they are thinking about business strategies that their baseline assumptions are correct, and that’s where I come in. I help them reframe how they think about what the business challenge is, what the opportunity is, and how to look at things more from a customer perspective than how business units are set up.


Jamin Brazil: It’s funny. It is in every way becoming a better listener. I’m just constantly amazed at how when we do that, we can connect more, and obviously on a one-to-one framework, but I think it works really well from a brand framework as well. Anyway, we’ll dive more into that momentarily. So this is the third time that you’ve been on the show. The first time was on contextual intelligence. The second was on cognitive demographics, and today we’re talking about yet another new thing for me, narrative economics. What in the world is narrative economics and what business question does it address?


Susan Fader: So narrative economics is really about stories. When you think about in the business world of storytelling, it really is seen as an output of how you deliver findings or how you talk to the board of directors or CEO, and you have to have a story that has beginning, middle, and end, and you’re delivering conclusions. Narrative economics is about storytelling as input. It’s about hearing what people are thinking about, and it doesn’t have to have a beginning and middle or end. It could be a song, a poem, a sermon, a joke, but gives you insight of what people are thinking. That’s what narrative economics is, and it’s about storytelling. I can give you a little more background if you want.


Jamin Brazil: So it’s about storytelling, and so that’s the narrative component of it. But then you have the economics, which is usually, at least from my point of view, is framed on whether that’s usually market conditions or what drives overall economic outcomes.


Susan Fader: So let’s step back. Behavioral economics, system 1, system 2, has become really, really big, and behavioral economics came out of the world of financial economics. What social scientists did, they recognized something that was in the world of financial economics, and they adapted it, and businesses and market researchers adapted the world of behavioral economics to something that we use, and the underpinning of behavioral economics is that people are irrational, and they make irrational decisions. When Robert J. Schiller, who’s a Nobel Prize winner in economics, came out with narrative economics in 2018, and I read the paper, and I realized, “Wow,” this was an idea that we really have to take into business, just the way behavioral economics was transformed. And I have been, for the last five or six years, the drumbeat of we have to incorporate narrative economics. And my take is narrative economics should be viewed as the insider, the person who’s being studied’s perspective of why the choice or decision may be rational to that person, and therefore it reframes how we look at behavioral economics. Behavioral economics, we have to now recognize, and this is what I really feel, is we’re making a judgment call on whether a person is rational behavior, we’re the outsiders, and we’re doing a judgment call on whether they’re being rational. Narrative economics gives us the backstory and the perspective of why the behavior might be rational to the person, but not to the observer. And that’s why I think narrative economics is so important that we integrate into any business strategy or any business thinking that we are doing.


Jamin Brazil: In all transparency, a little out of my depth, my understanding of economics is very much one of a hobbyist, as opposed to an academic. But at least my remembering of behavioral economics is really around scarcity and why humans or what rather humans will wind up choosing, and that driver ultimately is what is going to improve them the most or be the best thing for them from their point of view. And so then, as I understand it, as you’re describing it, narrative economics really feeds the why framework they’re making that specific choice.


Susan Fader: Yes, it does. And again, the thing we have to recognize is people rationalize behavior to themselves, even if it’s irrational. But again, then it’s a rational decision on their point. But it also gives us the context of how they’re making the decision in the missing link, because a lot of times when we’re judging consumer behavior, obviously we’re the outsider, but at the same time, we don’t have the context of what’s going on, of how they’re making it, what other things are impacting. I’ll give you an example. When in the Rust Belt, when all these factories were moving to Mexico and all these people were losing $40 an hour jobs and they were offered the opportunity to move, the company would move them and the people wouldn’t move and they were left in areas that had no jobs, and you were like, “Why wouldn’t these people move?” They’d rather be unemployed than have all these benefits and $40, $50 an hour jobs. That’s irrational. However, if you think of a person’s personal hierarchy of value, and the biggest thing to them is family, and all their family lives in that 15 mile radius, then they’re going to choose not to move, even though it’s going to negatively really impact their life. Because to them, family is more important, being around family. So that’s a rational decision. But if you think about all the articles we’ve read about, how could these people not move? That’s an outsized job. So that’s why, if you understand the narrative of how they’re talking, and that’s why listening to podcasts about any particular- there’s podcasts about anything, of every demographic. So if you listen to people talking on podcasts, or if you read biographies, or people- J. D. Vance, who was just elected Senator in Ohio, was Hillbilly Elegy, gave insight of growing up in the Rust Belt from Appalachia. And Tara Westover, her book about educated living off the grid in Utah. It gives you insight of what their lives are, and what their decisions were, and where they ended up. And that’s very important. And I don’t think enough business people do that, that they really listen to the stories. It’s not a dissident bit, it’s really hearing the context of their life, and how, and understanding why they make decisions the way they do.


Jamin Brazil: Totally. And it’s interesting that you can leverage digital frameworks, you said podcasts, but it could be other things too. It could be like TikTok channels, or hashtags, or what have you. But really as inputs to help inform your point of view of an audience or a segment. And it’s interesting because you’re basically consuming monologues, or one side of their point of view of whatever it is that they’re talking about, what they care about, what drivers are, what annoys them, all that sort of stuff.


Susan Fader: It’s also getting back to research and conversations. A lot of times, we’ve talked about this before, there’s more stuff than can fit in the guide, the 15-page guide, than you have time to talk, have a conversation, and it’s this question-answer structure. What you really need to do is devote the first 10-15 minutes of any research interaction you have, allowing the person to share a story. If I am doing research with healthcare profess- doctors, I’ll ask them in two or three sentences, tell me why you became a doctor and why your specialty. And they’d light up, and they start sharing, you’ve touched them, and gotten into a personal aspect of who they are, and it gives me context of how to have a conversation with them. But if you’re doing a consumer project, don’t assume you know everything because you’ve already interviewed this profile 40 times before. The person you’re talking to, a lot of their decision making is automatic. So what you need to do is just kind of get them to share their perspective. If you’re talking about making dinner, you have a food product and it has an integral part of dinner, you might say, “Tell me the story of what you like about making dinner and what you don’t, and tell me in five sentences. And or give me three descriptive words about how you feel about making dinner.” You kind of give them a framework because most people don’t know how to tell a story anymore. And so if you give them- and say, you have to give them a framework. So if they give you the three words, you say, “Tell me why those three words.” And you get tremendous insight into how they’re feeling as opposed to what do you like, what you don’t you like. So the three words can really jumpstart the conversation. And in ancient Greece, if a guest was at the table at the meal, their obligation was to share a story with the host to tell something about themselves. And that was belief you really get to know someone that way.


Jamin Brazil: Oh, that’s so interesting. I recently did a study, for my blog, on a Lazy Boy and I asked a question that was a video question. So people would respond, give me their answers via video. Tell me about your most memorable experience on a Lazy Boy piece of furniture. And it was so emotional, the response, we had 350 people that qualified to take the survey. And their stories impacted me so much this year for Christmas, I’m requesting a Lazy Boy recliner.


Susan Fader: Because it was emotional, you asked about them. It was a broad question so they can interpret it whichever way they wanted. It could be memorable, could have been how it was delivered, or a memorable could have been how they made a repair on it. You didn’t put any constraints on what story they were going to do. And most research would say, “Tell me about the delivery process. Have you had any repairs? Tell me.” So that kind of guides them, but you were broad so that they could bring any story they wanted from any aspect of the relationship. And that’s a key to narrative economics.


Jamin Brazil: And what was so interesting on the- I will pick on this study a little bit more, is that you’re right in the things that surfaced, I don’t think I would have ever pulled it out of a survey, unless I had asked the question. One of the interesting thing was I asked- I got 350 responses. So even if I had just done a handful of one-on-one interviews, I don’t think the findings would have surfaced like they did, but some of the things that surprised me were the experience with the store at the store was so- my sales rep was the favorite most memorable part of having the furniture, with the furniture, which you is counterintuitive. You think it would be something else. And that was- one of those was a story of one of the sales reps saying, “Hey, I’ll come out to your apartment and check it out, and let you know what I think would be a good layout for you,” just kind of for free, going out of their way to do that kind of stuff.


Susan Fader: So that that’s very interesting. You said counterintuitive. That’s like you were going to set, you would normally set guardrails on what you think a memorable story should entail. And that’s what many businesses do. So if you had set the guardrails and don’t tell me about the sales experiences, tell me about your experience having one, you would have missed out. And narrative economics, again, is about them sharing a story with you from their perspective and you not guiding them by the hand on what story they should tell.


Jamin Brazil: So we’ve already kind of stepped on this next question, but I’m going to ask it anyway because I would really like to flesh it out more. How does narrative economics connect to consumer insights?


Susan Fader: It’s exactly what we just did. It doesn’t put constraints on what you’re going to hear. A lot of times when you start- think about it, when you’re asked a very direct question, it’s like you put blinders on and the consumer says, “Oh, they only want me to answer X, Y, and Z. Therefore, I’m only going to answer X, Y, and Z.” And you’re kind of putting tunnel vision on the consumer, not allowing them to really tell what they’re thinking. You’re guiding the conversation. You want it to be unguided, at least at the beginning, so they contextualize it and then you react to how they’re telling the story. And that’s how you’re going to get a lot more out.


Jamin Brazil: So qualitative, obviously, in nature, do you see it play out in quant-research?


Susan Fader: That’s exactly what you just did with 350 Lazy Boy. The key is with AI, you really in quant to not have an open-end video right now is, I think, ridiculous. And I think you actually should start quant surveys with an open-end.


Jamin Brazil: So on point.


Susan Fader: Because that’s how you start understanding their perspective. And then if you want to do a cross-tab, you do a cross-tab of the answers based on their perspective. Because, again, businesses tend to segment customers based on what their business unit needs are. But customers might segment themselves differently, put them in groups other than what you would see them in, and by putting an open-end at the beginning of a quant and using AI to help you figure it out, I think you would get a lot more insight from your quant.


Jamin Brazil: It’s funny, I’ve been saying this for years, a survey is really just a conversation at scale. And finally, technology is getting to the spot where it can analyze unstructured data, because nobody speaks in Likert scales.


Susan Fader: Right. No one speaks in Likert scale. And the other issue is talking about data and talking about quantifiable data, when you think about Google searches, people tend to search the top 10 or the top five ways things are categorized in that category. But if you think about it, data is historical and that’s looking backwards. And if you do that, you don’t see what the emerging trends are. Because something as simple as brushing your teeth, I went to a Google presentation and they said there was over 100,000 ways that people talk about brushing your teeth. So if you only do the top 10, you’re going to miss something. So that’s also happy conversation will help you understand what other things you should be looking for in Google searches beyond just the top 10.


Jamin Brazil: Oh, that’s super insightful. I talked to you a little bit about a project. I didn’t intentionally do narrative economics, but it may have had some overlap. Do you have a specific or a favorite project where you leverage it for a customer?


Susan Fader: Oh my God. It’s like asking me who my favorite child is and I have lots of children. I think it’s hard to- your most favorite, because I work in so many different categories and I’ve had so many interesting conversations and people who have totally surprised me. I didn’t expect them to say something, but I think one of the most moving ones I had was a project I did with evangelical Christians and I was hired by a group. Let me just backtrack from it, this was at a time right after the Supreme Court had ruled same sex marriages was legal and marriage that was legal in 50 states. However, in 37 states, it was still legal to fire someone because of their sexual preference. It was still legal to evict someone from their home if they were renting if they were homosexual. So the objective here was to try to get those laws off the books in those states and not have evangelical Christians, basically to have them not fight it, not that they need to be advocates, but that they shouldn’t be against that move. So what we need- 


Jamin Brazil: De-escalation of the issue?


Susan Fader: Well, trying to figure out where the minefields were, in terms of communicating and messaging to the public in terms of voting and de-escalation, what can you say? How can you say it? Where can you say it? And I did. I must have done 50 one-on-one interviews and we also did groups and I had them tell stories things, we had an exercise, I’m not going to go into detail, but they came in and they were prepared to tell a story and then we talked. And I cannot tell you how many times during these interviews people broke down and cried. And the thing was they’re very adamant that a marriage was between a man and a woman. And anything that referenced, this was in the case with the wedding cake and everything and that was the minefield, you couldn’t go anywhere near that. But when you started hearing that people could be evicted from their homes because what they were doing in the privacy of their bedroom, that was not right. And one person said, “As long as they’re not,” I’m not going to use the word that they use, but on the conference table, why do I care what they do in their bedroom? How can you throw someone out of their home or how could you fire someone? And it was this understanding, this emotion where we were able to separate this thing that had been so tightly woven together, where homosexuals are destroying America because of marriage. “Oh my God, they’re just like me, they need to live in a home, they need a job. How could you do- what would Jesus say?” And then at the end of some of these interviews, people would tell me the stories of how a child had come out to them and they didn’t speak for them for years and years and what wasted part of their lives and would I go out with a drink with them afterwards? They were very emotional interviews and you could just see the battle people were having with their beliefs and family and just everything. And that really, really stuck with me. And that was something where it was really about having them tell us stories, this narrative economics approach.


Jamin Brazil: And in that, those stories then informed, in this case, the evangelicals point of view on the specific issue of gay marriage and also the specific messaging landmines that need to be either avoided or addressed for easier legislative adoption.


Susan Fader: Right. So what happened was in the beginning was this open-end where they told us the story and then we actually showed them concrete print ads and television, online ads that we could do and how they responded to images. But we had the context, as opposed to when you start out just showing them advertised and they go, “I like that because that’s a pretty color.” Here we had a context of what was emotional to them and they were able to reference that. It came like a lie detector test because they had told the story from their guts and they then were able to really be articulate where the communication was working and where it had gone off the rails. And so we got very clear findings as opposed to a beauty contest where you usually do when you show them concepts or ads.


Jamin Brazil: Super interesting stuff. Well, I appreciate the explanation of narrative economics, a new thing for me and I’m definitely going to be diving into it. The application to research seems just amazing and I appreciate the tips that you gave, specifically the three words as a way to get participants to start framing up their stories.


Susan Fader: Right. And you tried the word should be descriptive words, adjectives, or adverbs. You really don’t want nouns. You want emotional. You want to know how they’re feeling and sometimes a little hard, but let them give you the words and then tell me the story behind the words. You said this word, this word, or this phrase. Help me understand. So you’re not going to say, “Tell me this word, tell me,” they’ve given you a framework of, they have now have a framework and now they can start telling you a story.


Jamin Brazil: So how do you frame the initial question?


Susan Fader: I’m going to give you a term and I would like you to give me three distinctly descriptive words or phrases that capture how you feel or think about what I’m going to say to you right now.


Jamin Brazil: Oh my gosh. I love that. Oh, awesome. Perfect. Great. I appreciate the clarity and the tactical and the strategy point of this has been super informative podcast, Susan. Thank you very much.


Susan Fader: Appreciate it. So you can see how from when I do this corporate speaking, how it’s reframing how people think about business challenges.


Jamin Brazil: To say the least. Our guest today has been Susan Fader, keynote speaker and founder of Fader Focus. Susan, thank you very much for joining me on the Happy Market Research Podcast today.


Susan Fader: It was a pleasure, as always.


Jamin Brazil: Everyone else, I hope you found as much value in this as I did. As always screen capture, share on social media, tag me and I will send you a t-shirt. Have a great day.