Technologists now need to be psychologists

**This article was taken from The WIRED World in 2016 --_our fourth annual trends report, a standalone magazine in which our network of expert writers and influencers predicts what's coming next. Be the first to read WIRED's articles in print before they're posted online, and get your hands on loads of additional content by subscribing online._

One of the many aspects of Uber which often surprises people is that not only does the passenger rate the driver, but the driver also rates the passenger. Recently, I was surprised to learn from an Uber driver that my own current passenger rating (4.9 out of 5) is, in the eyes of the driver, "better than a 5.0".

I asked him why. "Because it shows you have used Uber a lot," he explained. "Someone with a 5.0 may be completely new -- and have a 5.0 rating by default. Or they may have only made one journey. Anyone can manage not to be an arsehole on one journey. If you've made 50 journeys and only been a little bit of an arsehole once, that makes you a much better bet."

To me that showed a pretty high degree of statistical nous (though perhaps I should not be surprised; it is perfectly possible that your London Uber driver was formerly a mathematics professor at the University of Irkutsk).

But there is a lesson here for anyone involved in business. The nature of any business relationship unavoidably changes over time -- because the balance of probabilities changes. Any non-anonymous transaction involves more than the exchange of money; it also entails the exchange of an invisible and unquantified mental "trust currency". If I keep an Uber driver waiting on my first ever journey, the likelihood that I am a bad customer is quite high; on the other hand, if I force a 20-minute wait after a long, unblemished record of punctuality -- well, he should probably forgive me that one.

You could call this currency "the benefit of the doubt". Over time, we expect businesses to which we have been repeatedly decent to reflect that in their treatment of us. Loyal repeat customers believe that, with each transaction, the seller should add a mental credit to the favour-bank. If this tacit rule is broken, and the favour-bank proves to be empty, moral outrage may cause the scandalised customer to defect -- even at some cost to himself.

Commitment devices -- Amazon Prime, Ocado on Demand, Asos Premier, or indeed the institution of marriage -- provide a useful means for one party to a relationship to signal that they are prepared to commit to something lasting, rather than a series of one-off transactions. Far more businesses, I suspect, need to discover their equivalent of Amazon Prime.

Not all business relationships are like this. If I buy a newspaper at a motorway service station, I regard that as an anonymous, stand-alone exchange -- what you might call "transactional capitalism". On the other hand, the relationship I have with my local pub landlord or Uber is different. There I expect the sum of my past transactions to be reflected in the conduct of future business. This is, in effect, "relational capitalism".

When you understand "relational capital" more clearly, you see business differently.

Suddenly, you understand why the most common opening to letters of complaint (say to a phone or cable company) is the sentence "I have been a customer of yours for X years", even though in strictly economic and legal terms (contracts are usually for 12 months) this information is completely irrelevant.

You understand why a customer complaint which is handled well can result in the customer becoming more loyal than they were before the problem. (Your reserves of corporate decency have been tested and not found wanting.)

You understand why BA Executive Club members felt somehow violated when their "Tier Points" were reset to zero every year. You had flown with the airline ten times a year for 15 years, yet at the end of each year your status was effectively reset to "random tourist". The airline now records and displays your "Lifetime Tier Points" when you log in. (Disclaimer: British Airways is a client of Ogilvy, of which I am vice chairman.)

You know why it matters so much to people that a publican or restaurant owner greets them by name. Recognition matters. Nothing can be gained from doing favours for an amnesiac.

It is vital that the nature of this tacitly understood mechanism is better appreciated by the people who design software and technology. Currently, the focus is on the efficient processing of individual transactions. Yet digital transactions are recorded -- and customers know this; they thus expect loyalty to be recognised. The design of online businesses needs to reflect this.

Take Uber's Surge Pricing. If Uber recognised lifetime customer value, it would not impose this so indiscriminately. As the behavioural economist Shlomo Benartzi and I concluded during a long dinner, Uber could simply offer customers one "out" every 20 journeys -- customers could use these to cancel out surge pricing on critical journeys. This would reduce the outrage which Uber recently aroused during the Sydney hostage siege.

The same goes for Uber's minimum fare. If I spend £200 a month on Uber cars, it seems unfair if I am not entitled to take a £5 journey once in a while. Not every day, but sometimes.

Or, let's take a trivial but illustrative example from parking at my home town of Sevenoaks.

In the early days when I moved there, a man at the car park took your money as you drove in. He gave you change from a £10 note and -- if he knew you -- he would very occasionally allow you to park if you had no money, on the understanding that you would pay him back the following day. That was good. Then came the next -- and worst -- phase of technology. A stupid pay and display machine which demanded seven pound coins. And entailed a walk back to your car to fix a sticker in your windscreen.

Now you can pay by mobile phone. That's better. But there is one thing missing: they know I spend £500 a year parking there. I know that they know. Yet if I forget to pay -- something which unavoidably happens once a year -- they fine me £30. No warning note. No "We notice you forgot to pay -- you owe us £4." Just a straight fine -- just as someone would get who had parked there illegally who had never previously parked there legally. These fines, imposed by the council, are blamed by local tradespeople for destroying businesses in the town centre.

This violates all instincts of fairness. A better system might be to offer me an Amazon Prime scheme where I pay £50 a year and save £1 a day on all parking. With the benefit that you are given one or two moments of grace every year at moments of memory loss.

When you design things for efficiency, the thing that gets lost is the need for forgiveness -- for the-benefit-of-the-doubt.

There is one huge problem with ruthlessly efficient businesses. People really don't like them. Just as we design physical objects to fit the evolved shape of the human hand, we need to design experiences to fit our evolved psychology. In 2016, more and more technologists will find they have to be psychologists as well.

This article was originally published by WIRED UK