Using psychology as part of your marketing strategy can help you increase conversions and reduce buying cycles.
As a marketer, you’re faced with a particularly daunting challenge in a pandemic. Despite longer buying cycles and decreasing demand, you’re still tasked with driving growth—and you must do it now. In a time of difficulty, you can leverage these four psychological drivers to help your business gain traction:
- Anchoring Effect
- Goal Gradient
- Social Proof
- Loss Aversion
Navigate to your customer’s mind and drop anchor. With the anchoring effect, you’re able to influence customer behavior based on the order in which you introduce information. Since customers tend to attach more weight to the first piece of information in a sequence, they inadvertently alter their perception of value shortly thereafter.
According to Amos Tversky and Daniel Kahneman, the psychologists who introduced the phenomenon, “different starting points yield different estimates, which are biased towards the initial value.”(1) How do you apply this concept to a realworld situation? If you’re offering a specific product, you can minimize the resistance to purchase by introducing a higher-priced alternative before you present the lower priced item.
The bias works because your customer’s brain starts assigning value to the second option relative to the initial data point. In marketing, the key is to introduce the first item (or group of items) at a significantly higher price point; but with only a slightly better benefit than the second option. Anchored to the first price point, your customers now see the second item as too good to pass up.
In 1984, Robert Cialdini, Professor Emeritus of Psychology and Marketing at Arizona State University, introduced the concept of social proof – and the marketing world has never been the same. In his seminal work, Influence, the Psychology of Persuasion, Cialdini highlights how people tend to “view a behavior as more correct” when others are engaging in the same behavior. In short, people seek validity from others – and once they see it, they’re more likely to take action.
How valuable is social proof in marketing? According to the Spiegel Research Center at Northwestern University, online reviews dramatically influence purchasing behavior. In fact, displaying positive reviews on your website can increase conversions by 270%!(2) Are you making good use of your reviews?
Depending on your business, you might need to adapt your approach to social proof. If you’re a local service provider, for example, you might focus on getting testimonials that sing your praises—and place them on your website. If you’re a technology company on the other hand, you might create case studies to showcase how others benefit from your product. Once you provide proof that other people like your business, your potential customers are more likely to give your company a try.
Do you like to win? Of course you do. But at what cost? When it comes to choosing between a gain or avoiding a loss, you’re likely to do more work to avoid the loss than seek the gain—no matter how much you like winning. In 1979, Tversky and Kahneman developed prospect theory, a behavioral model that introduced the concept of loss aversion. With loss aversion, people tend to place a greater emphasis on a loss compared to a gain of equal value.
How can you leverage this principle to facilitate bottom-line success? Imagine you work for a SaaS company and you’re evaluating whether to offer a discount or provide a free trial to acquire new customers. By understanding the implications associated with loss aversion, you can see that you’re likely to achieve better outcomes by offering a free trial of your software, allowing your users to become dependent on your platform. After all, customers are more reluctant to give up what they have (or what they need) than to exert energy to acquire something new.
In 1932, behavioral psychologist Clark Hull observed that animals run faster as they approach a food source. The observation eventually led to the goal gradient hypothesis – a postulation with big implications for marketers and UX designers today. Do you want to shorten the buying cycle? Do you want to increase your form conversion rate on your website?
In a study published by the Journal of Marketing Research, researchers observed a significant behavioral change among participants who had a coffee card to collect stamps. In this study, each stamp brought the cardholder closer to the goal of receiving a free cup of coffee. As the participants earned more stamps, they began to make purchases more frequently. In fact, the purchasing behavior was accelerated by 16%, shaving five days off the buying cycle.
Using goal gradient as a psychological driver on your website can also do wonders for accelerating conversions. If you’re a B2B company with a complex quoting system, for example, you can create a progress bar to highlight that your prospective customer is one step closer to completing the purchase. After all, once you allow your customers to see the finish line, they’re likely to race across it to achieve their goals.
As you work to generate business in an uncertain economic environment, you can be certain that cognitive biases and psychological drivers continue to influence behavior. The key is to adapt each principle to fit your industry – and to drive behavioral change ethically.
Opinions expressed in this article are those of the guest author and not necessarily Marketing Land. Staff authors are listed here.