Want an easy way to increase your revenue?
Learn to get inside your customers’ heads. If you know how people think and make buying decisions, you will always be able to get more sales.
And here’s the first thing you want to know:
Everyone you’ve ever met, or will ever meet – your customers included – is a lazy thinker.
And we don’t mean it as an insult. It’s a stone-cold fact of human psychology.
We rely on shortcuts, patterns, and stereotypes to guide our thinking and decision-making. These biases are mostly invisible to us, and they work “behind the scenes” in our minds – even if we know they exist, and we understand exactly how they work!
If you account for them in your marketing, you will have a much easier time:
- Increasing conversions
- Getting more paying customers
- Maximizing customer lifetime value
In today’s post, we’ll examine 9 most common cognitive biases your customers have. We’ll show you how they influence their thinking – and how to adapt your marketing so it works with them, instead of trying to overcome them.
But first, some ground rules:
Word of caution: stay on the Light Side!
So… remember us saying that these cognitive biases influence your thinking even if you know you have them? It’s true, and nobody is immune – including you, or us.
And that’s why, before incorporating any of these in your marketing, we want you to use the Golden Rule. Ask yourself, “Would I be angry if someone did this to me?” If the answer is yes, maybe try something else.
Finally, needless to say, you shouldn’t use these tactics to sell a low-quality product, target people who can’t afford your offer, or trick your customers into overspending. But we know you would never do something like that, so we’re all good.
Now let’s dig in!
Anchoring bias / framing effect
When presented a piece of information first, and then another piece of information after that, people tend to rely on the first one more. So much so that they “anchor” their decision-making to that initial thing they learned.
This effect is absurdly powerful. For example, here’s a brief summary of one anchoring study…
Two groups of students were asked if Gandhi died before or after age 9, or before or after age 140. These “anchors” are not even remotely correct. But they still influenced the students’ guesses about the age of Gandhi’s death (average guess of 50 vs. 67).
Now, pranking students is fun, no doubt about that. But how do you apply this in marketing?
Ways to use it:
The best-known way to use anchoring bias in marketing is when you unveil pricing. For instance:
Your customer sees an outrageously high price on something, followed by a much more reasonable price. They will perceive the second price as much more favorable, because they are still thinking about the initial quote.
Here’s a couple of less common uses of the anchoring bias, namely:
- Starting a piece of sales copy with glowing customer testimonials. That way, your customers can’t help but think about your offer more favorably as they continue reading.
- Asking your customers to remember when they felt a certain way: unhappy, angry, ecstatic etc. This will make them more attuned to a particular emotion, and they will “anchor” their perception to it when thinking about your offer.
Example: Here’s how AppSumo does anchoring. Their bread and butter is negotiating great deals for entrepreneurs. So they never miss an opportunity to say how much something regularly costs, before revealing the massively discounted price. When their audience sees “$780/year” versus “$39 for life,” it creates a powerful anchoring effect.
Single option aversion
When you present people with too many choices, they become less likely to choose anything at all. But you probably know that, right? We’ve all read “The Paradox of Choice” – and if you haven’t, you should. It’s an awesome book.
What you might not know, however, is that the opposite is also true.
When you give people only one option, they are likely to start looking for alternatives. And that’s single option aversion in a nutshell – bad news if you only have one offer and could use some sales! Which describes most of us, really.
Ways to use it:
Don’t worry – there’s an easy way to defeat single option aversion. Instead of giving your customer just one version of your offer, present them with two or three. Think about valuable add-ons, or different service packages, or “basic” and “premium” versions of your product you could offer.
That way, you will subtly reframe the conversation going on inside your prospect’s head.
Now, instead of looking at a “yes or no” answer, they will be weighing option A versus option B (and maybe also C). This changes everything, and can boost your chances of closing a sale significantly.
Social proof / social influence
People tend to like and trust something significantly more if they know it’s already popular with others. This is doubly true if those “others” are similar to them – if they have the same background, likes and dislikes, similar challenges, and so on.
Even if you have “token” social proof – very short, generic testimonials with no names or photos – this effect still works. Here’s a great article by Peep Laja that delves deeper into the topic.
Ways to use it:
There are two ways to take advantage of social proof:
- Qualitative, when you focus on individual experiences and stories of a few key customers, and let that serve as a testament to how great your business is…
- …and quantitative, when you emphasize just how many people already trust you and do business with you.
Naturally, you can, and should, use both. A great testimonial and a detailed case study will have an even bigger impact when the person reading them knows that you have dozens, hundreds, or thousands more paying customers.
Example: Lots of companies rely on social proof to keep the sales rolling in – like Airbnb, for example, where people’s reviews often determine which properties get booked.
Fear of missing out
Also known as FOMO, fear of missing out is one of the most powerful drivers that cause people to buy products and services – even the ones they don’t need all that much!
We evolved to seize every available advantage. Our brain always assumes the worst – that we might starve, or be alone, or die. So it pushes us to make decisions on impulse any chance it gets.
Ways to use it:
The obvious – and most popular – way to take advantage of FOMO is by using scarcity and urgency to drive sales. But that’s like saying that the most popular way to build muscle is by exercising. It doesn’t really tell you anything!
So here’s a few things you can do to capitalize on your customers’ fear of missing out:
- Use time-sensitive discounts or coupons with an expiry date.
- Give away bonuses with orders over a certain amount… but only for a limited time.
- If you have a limited number of products for sale, or selling your services to a fixed number of clients, always remind people how many spots are left.
- Throw “clearing out the stock” sales on certain items.
- Create limited-edition versions of your products that will never be available again once they are sold out.
Example: If you’ve ever booked a hotel on Booking.com, you must have noticed those little notifications that say, “Last booked 5 minutes ago by a guest from [somewhere]” – or “X people are currently browsing this listing.” This is a very clever use of the fear of missing out and social proof in tandem.
When shopping for household items, how often do you reach for a brand-name cleaning product versus a generic one? Probably a lot. Sometimes it’s not even a brand you always use! What’s up with that?
That is attentional bias at work. Between something new and something familiar, people almost always go for the latter. Repeated exposure to something is enough to elevate it in our minds.
Ways to use it:
Repeated exposure to your message makes a customer more likely to buy from you eventually. That’s why tactics like retargeting can work extremely well.
You can also “prime” your potential customers by mentioning your paid offers now and again – in emails, blog posts, on social media, etc. You don’t even have to actively ask them to buy. The repetition alone can do the trick.
Example: Ever noticed how Amazon sometimes reminds you about items on your wishlist, or even stuff that you just casually browsed? That’s an obvious use of attentional bias right there.
Ben Franklin effect
This is a fun one. Here’s how it works:
If you want to get someone (who is not that into you) to like you more, you should ask them for a favor. That person would help you, and rationalize their decision after the fact. “If I helped them, they must be good.”
Better yet, it makes them more likely to help you again in the future – even more so than if you had done them the favor!
Ways to use it:
Obviously, you see how the Ben Franklin effect can help you with networking and business partnerships. President Franklin used this technique to turn his staunchest political opponent into an ally – long before the first scientific study documented the effect.
But you can also use it for a more mundane marketing purpose. Here are three simple applications:
- Asking your customers to leave a review of your product or service – on your own site or elsewhere. Podcasters do it routinely. So do ecommerce store, book authors, hotels, you name them.
- Asking people to donate to your favorite charity. If you feel weird hounding your customers for small favors (understandably), maybe you can ask them to do something on behalf of someone else. Not only is this for a good cause – it’s also great marketing!
- Make smaller requests – filling out a survey, sharing your content on social media, leaving a comment, etc. It seems trivial in the grand scheme of things, but it helps to develop a stronger relationship with your customers.
Example: Have you ever seen a company do a fundraiser with a charity (for example, Pencils of Promise like to team up with entrepreneurs for a good cause)? Or shopped on Amazon Smile? All that is Ben Franklin effect in action.
People tend to value things they created themselves – or helped create – much higher, even if their quality is inferior to something they could have just bought. That’s why IKEA furniture is so popular.
The scientific research behind this phenomenon is fascinating. You can read more about it here (it’s well worth your time). More importantly, this effect extends beyond IKEA – or furniture, or even physical products.
Ways to use it:
Involve your customers in the creation of your product or service. It used to be that people got paid to beta-test unfinished software – now they pay for the privilege of having first dibs on it, and having a say in the development.
But the IKEA effect works with more than just software. You already know it sells furniture. But it also helps with:
- Selling online courses – it’s extremely common to do a “minimum viable product” version of a course first, get the feedback from students, and relaunch the final version later.
- Selling partially prepared meals on subscription, like Blue Apron does.
- Selling craft beer – for example, BrewDog shares every detail of their recipes to encourage customer loyalty. And it works!
Sunk cost fallacy
People are more likely to stick with something if they have already invested time and money into it. Even if they are experiencing negative returns, they will use the time and money already spent as justification to keep at it.
This is a dark cognitive bias. People accumulate seven-figure gambling debts, suffer bad investments, and stay in failed relationships because of it. With your business, stakes aren’t nearly as high, so you shouldn’t feel bad about using it to your advantage. Just remember to stay on the Light Side of the Force!
Ways to use it:
When your customers want to get a refund, or cancel their membership, or unsubscribe from your email list… remind them what they are about to lose.
You can also have an “Undo” function of some sort – a re-subscribe button, or a discount in exchange for continuing with your product or service.
Note that this won’t give you the most loyal customers, but it will reduce churn and stabilize your cash flow.
Example: Groupon used to invoke a mild version of this with their famous unsubscribe page. You can see even more examples here.
If you had to choose between a 100% chance of losing $100, versus a 50% chance of losing $200 – which would you go with? Most people pick the latter, even though there’s 50/50 odds of losing twice as much money.
That’s how loss aversion bias works – people protect what they have to an irrational extent. And sometimes appealing to that fear of loss is even more effective than talking about a possible future gain.
Ways to use it:
One way to encourage a customer to make a purchase is to remind them about the cost of not taking action. Tell them that the longer they spend without investing in your product or service, the more it’s costing them, and the more they will miss out on. It’s a time-honored way to influence people.
In a similar fashion, when a customer wants to cancel a recurring payment for your product or service, it can be worthwhile to ask them, “Are you sure you want to cancel? We could pause the payments for you for a month, and then you might see if you need to use our product again.”
Examples: Cart abandonment emails in ecommerce run on loss aversion. Here’s a terrific list of examples.
Tactics will only get you so far
That’s all these tips are: tactics for increasing your sales by tapping into how customers think. They won’t make up for marketing to the wrong people, not investing in customer development, or lacking a sound marketing strategy.
However, if you already have all these things figured out, they might just help you grow your business faster, and get a few more paying customers. Enjoy!