University of Arkansas

Walton College

The Sam M. Walton College of Business

Bonus Episode | Paco Underhill Answers Marketing Student Questions

Paco Underhill
May 10, 2021

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On this bonus episode of It’s a Customer’s World podcast, host Andy Murrary invites Paco Underhill, founder and strategic advisor for Envirosell and author of Why We Buy: The Science of Shopping to answer University of Arkansas Walton College professor Molly Rapert’s marketing students' questions. Students were given the opportunity to ask Paco questions about his book Why We Buy, retailing in 2021, and career advice. Professor Rapert uses Paco’s book in class so it was a unique experience for students to be able to ask the author of their textbook a question.

As the conversation begins, Molly Rapert explains how and why she uses Paco’s book in her classroom. She details just how many students his book has reached just with her class alone. Paco thanks her and explains the reach of the book worldwide and how he feels about that reach. Molly then introduces the topics the students will be asking questions about. Students begin asking questions and Paco answers them. 


Episode Transcript:


0:00:07.6 Andy Murray: Hi, I'm Andy Murray. Welcome to It's a Customer's World podcast. Now, more than ever, retailers and brands are accelerating their quest to be more customer-centric, but to be truly customer-centric, it requires both a shift in mindset and ways of working, not just in marketing, but in all parts of the organization. In this podcast series, I'll be talking with practitioners, thought leaders and scholars to hear their thoughts on what it takes to be a leader in today's customer-centric world.


0:00:50.0 Andy Murray: Well, welcome everybody to this special episode of It's a Customer's World, and it's a special episode because we're going to do something that I've been looking forward to for a long time, and that is, have a panel discussion of students with a guidance from Molly Rapert to the marketing professor for Walton College of Business, University of Arkansas. And they have been working diligently with us over the whole course of It's a Customer's World to produce great questions from students that have really ignited some great insight and conversation. And today, I am so pleased that Paco Underhill, who I just introduced, is with us today, he graciously volunteered his time to entertain and engage the students with his insight. I am really looking forward to this. I know Molly has been a long-time fan and user of Paco's great work through the class, and just for me to say it one more time since I've said it, I think, in the first time in the podcast interview, Paco's work really shaped my career and how to think about shopper marketing and the insights and the power behind behavioral insights. And so, it's a real privilege to welcome Molly and Paco on the screen into the podcast. So, Molly, over to you.

0:02:10.2 Molly Rapert: Thank you so much. I honestly cannot think of any place I would rather be than meeting with these two gentlemen today. Andy is such a staunch advocate and supporter of my class, which would not be at all the same experience without your investment in my students and myself. And Paco Underhill, what a day for me to meet you! This is my seventh copy of your book that I've had in my office, I've given away copies over the years. And I want you to know that when I first threw away the textbook for my class in the year 2000, and searched for something that would be better, your book is what I landed on, and I have no idea how many students have come through my classes, both at the undergraduate and the graduate level here at the Walton College of Business and in Paderno del Grappa, Italy, through their MBA program that have read your book, and that you have formed their careers and their thinking, so honestly, I'm so happy to be here today, and thank you for this investment of time.

0:03:15.7 Paco Underhill: You know, Molly, that book is out in 28 languages, and it is used in design schools and MBA programs all across the planet. I had no idea when I sent that book off to the publisher that it would get the kind of response or have the legs that it has, meaning that I've upgraded it at various points over the years, but still, it sells between 60,000 and 100,000 copies a year, 20 years after its first publication, so thank you, Molly, thank you. And if it has made you smile and made you giggle and made you think, that was what my intention was, not to show how smart I was or pretended to be, but to entertain.

0:04:07.5 Molly Rapert: Well, I think my favorite place that I've ever used it was teaching an MBA course in Ljubljana, Slovenia, and to introduce them to your work was just great and fun for me, so thank you for today. I'm so happy for you to meet my wonderful students, I love the jobs that you all have, but I have the best job, which is mentoring and educating Walton College Marketing majors. And we have 11 students here today, they'll be asking questions in three categories. First, they'll ask questions about why we buy, and some of these iconic concepts that you introduced, then they'll be asking about your amazing career and life and advice you might have for them, and then we'll wrap up looking at retailing in 2021. So, I'm so happy to get started, and thank you again for your time. I'm delighted to bring Reed on the screen, Reed spent last summer interning at Walmart corporate headquarters, and he has a question about one of my favorite Paco Underhill concepts.

0:05:09.6 Reed Fraser: Yes.

0:05:10.5 Paco Underhill: Hey, Reed, how are you?

0:05:13.4 Reed Fraser: I'm wonderful. How are you doing?

0:05:14.9 Paco Underhill: I'm all the better for looking at you, bro, here.


0:05:18.8 Reed Fraser: Thank you very much. Well, like Dr. Rapert said, my name is Reed Frazier. I am a senior in the honors college, double majoring in marketing and supply chain with a minor in business analytics. And I'm from Allen, Texas. And so, my question for you, Mr. Underhill, is, you talked about the decompression zone and why we buy, and so I would love to know if there's a similar decompression zone in the e-commerce world, specifically through the Internet and a company's website?

0:05:49.2 Paco Underhill: Okay, okay. Reed, first of all, my name is Paco, not Mr., okay? Alright, and you can call me Paco any time except early in the morning.

0:05:58.8 Reed Fraser: Okay.

0:06:00.2 Paco Underhill: Alright, okay. Let's think about something here, Reed, which is that if you think about people shopping in Amazon, the overwhelming majority of people that go to Amazon have been there before. Okay?

0:06:15.1 Reed Fraser: Sure.

0:06:16.2 Paco Underhill: And therefore, there's a degree of familiarity to, "Where do I go? And what's my process? How am I going to go? What's the order in which I do things?" But, Reed, one of the challenges that we face in the broader Internet world is about how we sell durables as opposed to consumables, and that the difference, for example, if you think of somebody going to an Amazon website or a contractor going to a Home Depot or a tractor supply Warehouse, where the protocols of getting you in the door and getting you to where you want to go is really critical. One of the problems in the broader world of internet research is that most of the data is created by click stream data, which is there is a record of what you did, and based on that, I can make some presumptions about what I might communicate to you or what I might sell you. But Reid, one of the things that both of us know and you particularly having worked in supply chain and having interned at Walmart, is that understanding where you're winning is really important. But in order to win quick, easy victories, understanding where you're losing is critical, and that therefore, one of the keys that we have been working on, or I've been working on, and over the past five years, my largest clients have been global technology companies. Okay?

0:07:58.0 Paco Underhill: And one of the keys there is understanding the difference between the novice and the expert user. And that if we think about that decompression zone, part of what it translates to in the broader e-commerce world is where does somebody land first, and what did they do, and what's their confusion index, and is there a way for me to adjust what the language or the images are? The other issue, Reed, is if you think about a technology store. Let's pull telecom, Verizon, T-Mobile and let's go back to your great state of Texas. If I have somebody who's logging on from Austin, I can make some assumptions about what their digital literacy is. If I have somebody logging on from El Paso or Uvalde or maybe even Allen, that there is some assumptions there about their digital literacy that I can't make. And one of the keys to our future in the broader digital world is figuring out if there is a way not to have an infinite set of buckets, but that I have control over that landing strip, and I called it a landing strip or a decompression zone. And I think one of the challenges which we are facing in the broader world of e-commerce is that we need to find a way to be able to localize, and that it is in an infinite set of buckets.

0:09:54.6 Paco Underhill: But I can have somebody who's walking into a store in Dubai, and walking into the identical store selling the identical hardware and software in Albany, New York, and the mindsets of the two sets of customers are completely different. And part of what we're trying to do, and this is something for you that's gonna be really important for your career in analytics is, it isn't the scale of the pile of data that I create, it is the functionality and the usability of it. And that one of the things that makes analytics in the e-commerce world really exciting is that you can make a really minor change in a web site, and you know often within minutes, if not a day or two, whether it works or whether it doesn't. And that for you as a researcher business-person, that that combination of art and science is going to be something that drives your career and the degree to which you can work with a creative person or creative staff, the web design teams, and be able to get them to both rely on you and to recognize that you're not telling them what to do, but again, as I said to Taylor, a good analyst is a good coach, not just a quarterback. Makes sense, bro?

0:11:31.8 Reed Fraser: Makes sense, 100%.

0:11:33.4 Paco Underhill: Alright. Well, thank you. That was a great question.

0:11:36.4 Reed Fraser: Thank you.

0:11:38.8 Molly Rapert: My next student is not from Arkansas or Texas, but he's from your neck of the woods. I have got Wei joining us, who's from Brooklyn, New York.

0:11:47.7 Weibin Lin: Hello. My name is Wei Ben. I'm from Brooklyn, New York. Yeah. And I'm on a senior major in marketing. So my question is, so I was fascinated to learn that you are a professional environmental psychologist, so I strongly believe that our surroundings do influence our behavior. So I'm just wondering what initially inspired your interest in environmental psychology?

0:12:11.8 Paco Underhill: Okay. I am an Asian-raised American. English is not my first language. I grew up in Southeast Asia. And growing up, I had a terrible stutter, meaning that my speech was very, very clumsy. And we moved every two years. We moved Jakarta, Medan, Kuala Lumpur, Manila, Seoul, and with an odd two years in Warsaw. And every place along the way that we moved, I had to rely on my eyes to figure out what the rules were. So that the idea of watching, because I often got teased really badly for my stutter, which has gotten better as I have gotten older, but there are many people who have known me over the years that have pointed out that I took a coping mechanism to a handicap and turned it into a profession. And I have a secret for you. Do you know something? In my schooling, I never took a side course, ever, I took sociology, I took urban planning, I took geography courses, but my first teaching job was teaching in a doctoral program in Environmental Psychology at City University where I taught field work, and it was really, really fun. And it's one of those places where understanding that what people say they do and what people actually do are often really, really different.

0:14:11.1 Paco Underhill: And one of the exercises I would do at the start of one of the courses that I taught is, our building was right across the street from a park in New York City, and I would take a student and I would go, "I want you to walk outside now and come back in 30 minutes having walked through the park, and tell us everything that you saw and everything that you did in the park," and then the person would leave and I'd pull out another student, and I'd go, "I want you to follow that person, and I want you to report everything that that person looks at and does." And then when both of them would come back to the classroom, I would contrast what the person reported that he did versus what the person who observed what he did, and we'd talk about what those differences are. And I think in the broader world of marketing, part of what this creates is the understanding that if I use the tools of media research, which are asking people questions, that what people's response to a question and what they actually do are often different. And that one of the challenges that we face as marketers and as researchers is to use multiple technologies and multiple methodologies to be able to get to the answers that we're trying to get to. Does that make sense?

0:16:00.5 Weibin Lin: Yes, it does, thank you.

0:16:01.4 Paco Underhill: Okay, alright.

0:16:04.2 Molly Rapert: Thank you so much. I'm delighted to bring in a fellow Oklahoman, Caitlin Collison.

0:16:10.9 Caitlin Collison: Hi, my name is Caitlin. I'm a senior, I'm studying International Marketing and minoring in Spanish. And my question is, what is the most important piece of advice you've ever received?

0:16:23.2 Paco Underhill: What's the most important piece of advice? Well, don't quit. Caitlin, let me just tell you something, I'll just relate something, which I think I've written about before. But in the summer or the spring of 1986, I was in my mid-30s, I was 34-years-old, I had been trying to launch my business for almost eight years, and I'd won some successes, I'd gotten some work from CBS Records, I'd gotten some stuff, but I still hadn't gotten it consistently. The company that was working with me went bankrupt, my father was in a terrible accident and crushed his pelvis, I came back to my New York City apartment, and there was an eviction letter taped to my front door, and it wasn't that I hadn't paid my rent, but the landlord wanted to clean out the building. And my girlfriend was frustrated with me and said, "When are you ever gonna get a real job and start doing what you do?" And I couldn't have been more depressed, I couldn't have been more challenged. And I had one more pitch, and I climbed in my battered car and I drove out to New Jersey, and I made my pitch and I was calm, 'cause I'd been beat up and I walked away with a half a million dollars worth of work, and it was...

0:18:11.4 Paco Underhill: The world changed. And as soon as I had that half-a-million-dollar contract, I got other contracts. And that next year, the IRS came to see me, they audited my tax return and they went, "Mr. Underhill, your income changed three decimal points in one year. Can you run through it?" And I ran through it, and at the end of the audit, Caitlin, the IRS person said, "You know what, Mr. Underhill, we owe you money, not... " Okay? And I've never been audited since. So, part of what my advice, Caitlin, is that, never give up, keep trying, and even if you fail once, just learn from it and go try it again. Okay? And, you know, if you're a good Oklahoman, you need to step back every once in a while and listen to that musical, because Oklahoma had some songs that were really good about recalibrating and re-thinking. Alright, Caitlin? You promised me you'll do that?

0:19:33.5 Caitlin Collison: I will, thank you.

0:19:34.6 Paco Underhill: Alright, Caitlin.

0:19:36.9 Molly Rapert: Alright. So, I appreciate your transparency, watching my students navigate this COVID era and what that means for a changed marketplace, that is so helpful to hear that in your story, thank you.

0:19:49.8 Paco Underhill: Okay. Well, thank you, thank you, Molly.

0:19:51.8 Molly Rapert: We are clearly in our section of careers and life advice, and I'd love to welcome Even Gonzales to this meeting.

0:19:58.9 Andy Murray: Okay.

0:20:00.4 Molly Rapert: Awesome.

0:20:00.5 Paco Underhill: Alright, Even, talk to me.

0:20:02.0 Evan Gonzales: Hey, Paco, my name is Even Gonzales. I'm a Senior Marketing and Management student in Walton, and I'm from Springdale, Arkansas. So, my question for you, you may have just answered, and maybe you could just elaborate, but my question is, what stage of your career would you consider to be the most formative in your life?

0:20:26.4 Paco Underhill: Okay. You know, there is a point at which in the 1980s that my career was taken off, and I managed to form a company, I took on employees, we were a testing agent for prototype stores. But one of the very, very interesting and insightful moments was when I realized that the knowledge base and the methodologies that I've been using on retail, I could take to a variety of other places, and that the transition between looking at a store or a bank and looking at an airport, or looking at a doctor's office, or looking at how a museum works, were all things that would add to my knowledge base or add to our collective knowledge base, and would serve as a way of my enriching my teams by giving them different things to look at. I think one of the things that I have always believed in is if the only thing that we do is the same thing over and over again, we start to get tired, and one of the things I have relished in my career is being able to change gears and to change speeds, and whether that means to be able to change countries, Even, or to be able to change the venues that were the focus of our attention.

0:22:13.3 Paco Underhill: I had the choice in the mid-1990s, do I focus on the US or do I focus on the broader world? And I made the choice to focus on the broader world, so that our first office wasn't in LA or wasn't in Dallas, Texas, our first office that we opened was in Milan, Italy, and the second office was in Mexico City. And part of what was a key to our success also was that it wasn't a deal breaker, but if you look at my staff in our peak year, which is 2012, 2013, a remarkable number of them were bilingual, meaning that I often hired people who spoke another language, and people who had a sense of adventure. I can remember the guy who heads our office now, his name is Liam O'Connor, he went to Tulane, he's bilingual in Spanish, but you would never know what to look at him, but he had a great sense of adventure. And I can remember we got a job that spilled over our transom, and I called Liam into my office and I said, "Liam, here is a ticket. You're, in 10 days, you're going to fly from New York to Moscow.

0:23:51.6 Paco Underhill: You're gonna change planes in Moscow and go from Moscow to Ekaterinburg. From the airport in Ekaterinburg, at the gateway to the Urals, you're gonna make your way to the train station, and you're going to take the overnight train to Novosibirsk, and our client is gonna meet you at the train station, and we're going to look at a telecom store in Siberia," and I can remember Liam's grin, Liam's grin, I mean, he loved that adventure, it meant more to him than if I'd come and said, "Oh, we're gonna double your salary," but he got to have adventures, and do you know also what it meant, Even? Was that while he was away from home a lot more often, when he would come home and tell people the stories about what he did, the girls loved listening to him, [laughter] and Liam ended up with a really fantastic wife. So, that's part of what my key is here, is that up for adventure, up for the change of venues, and don't always stay locked in the same thing.

0:25:16.3 Evan Gonzalez: I love hearing about that, and I think that really applies to me personally as well, 'cause I'm planning on going to grad school in Europe, I'm also half Colombian, and so that idea of gaining a global perspective and having skills that revolve around knowing other countries and being bilingual is something I really care about, so that was awesome, thank you.

0:25:41.2 Paco Underhill: Well, good. And one of the business schools that I have worked with often is the ESIC, which is based in Barcelona, and they have campuses in Madrid and campuses in Lisbon, and they are very actively interested in students just like you.

0:26:05.4 Evan Gonzalez: Awesome, I'll definitely look out for that.

0:26:07.5 Paco Underhill: Yeah, go check it out, bro.

0:26:09.4 Evan Gonzalez: Awesome, thank you.

0:26:10.2 Paco Underhill: Alright.

0:26:11.6 Molly Rapert: Well, I'd love to ask my students to all come on the screen for one last shot, we might try and get a photo, if that's okay. And I have copious notes from today, I just can't thank you enough, Paco, this is a joy for me, 30 years of teaching, and I can't believe I'm on a call with Paco Underhill. And thank you, Andy, for all that you've done to make this possible.

0:26:35.7 Paco Underhill: Andy, thank you.

0:26:37.7 Andy Murray: I loved it. It's a great insight. I hope everybody got as much out of this, I did, I learned a ton of things already, that, like you, Molly, I've got a pad of notes over here, so I really appreciate, Paco, your time, and I appreciate the students for the engagement, excellent questions, and thank you, Molly, for all the work you've done to make this happen. There's a lot of logistics behind the screen, the scenes, Paco, that Caitlin and others did, it's not easy to get this group together, [chuckle] that's for sure, but thank you.

0:27:05.9 Paco Underhill: My pleasure. I look forward maybe the next time to doing it in person. Okay?


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