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Buyer psychology is at the heart of marketing. It’s how making results happen. There are 100s of buyer psychology stories out there. In this article, I’ll share my favorite ones.
Behavior science is like DC lobbyists. Hidden from the spotlight but definitely pulling strings behind the scene.
retailer business is fascinated by the sway of behavioral influence. But few even understand this invisible force, and fewer still use it effectively.
And let me tell you. Those who use it win, and their competitors don’t even know it’s being used against them. That’s one of the nice things about this science. Unlike flashy marketing which is instantly copied (rendering it totally ineffective) it’s impossible to reverse engineer someone’s buyer psychology strategy.
Ok, enough talk. Let’s look at some mind-blowing buyer psychology stories:
Rock Bottom, restaurant and brewery, wanted to measure customer word-of-mouth. The surprising finding of this study was that the heavy loyals didn’t bring in a lot of new sales. One explanation is that these people had already done their buzzing prior to this campaign and had already exhausted their reach. The light loyals brought more business, but it was nonloyals, for whom Rock Bottom was totally new, who brought in the most. In fact, each word-of-mouth discussion by a non-loyal yielded incremental category sales of $192. (Source: Anatomy of Buzz Revisited). The lesson here: all of your competitors (and likely you too) and obsessed with giving special service to old loyals. But the group that could bring the most new customers are people who’ve recently discovered your brand and fallen in love with it. And we have a playbook for these people.
Williams-Sonoma, known for premium kitchen gear, once offered a fancy breadmaker for $279. They later offered a somewhat larger model, pricing it at $429. Guess what happened? The $429 model was a flop. But sales of the $279 model nearly doubled. When just the $279 model was on display it felt expensive (people didn’t have a point of reference for it). Once the $429 model was added, the $279 was no longer seen as such an extravagance. It could be rationalized as a useful product that did nearly everything the $429 model did, at a bargain price. Adding another price point, even though hardly anyone chose it, increased the price consumers were willing to pay for a breadmaker. Welcome to the power of price anchoring. Is there room to apply price anchoring on your site? Yes, there is.
Lesson: this strategy isn’t so much about creating 2 prices as much as it is about the idea that buyers don’t really know how much an item costs. They calculate that based on what else they’ve seen online and the stories we tell.
Caesar’s Entertainment (the casino) noticed something peculiar: the majority of first-time visitors to their properties didn’t return. There are a number of reasons why a customer may not return but a big one is their first visit experience. If the customer has an experience they like, it GREATLY increases their chances of becoming a regular (thus making Caesar’s Entertainment a lot of money).
In the casino business, a bad experience is when a first-time visitor loses more than they expect. Since Caesar’s knows the distribution of winning/losing for each type of game they know when the first time visitor is on the losing tail of the distribution (bad experience). This raises a flag in their monitoring system. It’s important to note that most casinos would do nothing for this customer. But at Caesar’s when this event is triggered a manager walks to the customer and asks how they are doing. The customer says they are having a terrible time and the manager apologizes and offers her a free dinner, a hotel room, or a limo ride (for example).
To study the bottom-line impact of this strategy Caesar’s made the offer to only 50% of first-time visitors who were losing heavily. This allowed them to compute the difference. And not surprisingly, that small shift in first visit experience greatly increased customer lifetime value.
Lesson: be mindful of the hot prospect user experience. This is a critical stage of the purchase funnel and any emotional disturbance can cause the user to abandon.
Buyer Psychology Story 4
As retailers, we love giving buyers more choices. Hey, if 96% of my site visitors aren’t converting we should just keep more product types on the site. The more we add to the site, higher the chance the user would find something they like.
Psychologist Sheena Iyengar ran an experiment.
On one day she set a jam stall with 24 different kinds of jams.
Then, the next time she reduced the number of choices to 6 jams.
Iyengar found that while the bigger display generated more interest, the sales generated by the smaller display was 10x higher. That’s right, 10x higher.
If an employer offers a retirement plan where they contribute a portion, take it. It’s a no brainer. Only, it’s not what most people do. A study in the US of investment records from Vanguard showed that for every 10 investment funds a sponsoring employer offered its employees, the participation rate fell by 2%. When offered 50 funds, this resulted in a 10% lower participation rate. So more choices made it harder for employees to make a pick. Choice overwhelmed. How many products do you list on your category page? How many features does your product page list? What we think of as choice (a good thing) may be paralyzing your visitors from pulling the trigger.
Bob Moesta is a curious person. He was involved in home building and selling condos. His condos were designed based on the stated needs of their target audience (ranch style, 2 bedroom, 2.5 bath, granite countertops, hardwood floor, etc.) But still, a big percentage of interested people didn’t pull the trigger.
Bob wanted to understand why.
He discovered people who were moving into this condo were moving from bigger homes and were anxious about the downsizing process. They simply didn’t know how to pack up 20 to 30 years of stuff that had been collected. Important, nostalgic stuff. They didn’t know how to purge collected memories. So people would say things like, “Boy, we don’t know how we’re going to downsize. We’ll need to cancel on the condo because we need another year to figure out how to downsize”.
Here is what Bob did: he raised the price of the condo and included (in the price of a condo) moving plus 2 years of storage. Result? Sales went up 17%.
Lesson: you need to think about your products not in terms of what they literally are but in terms of what they do (emotionally) for the user. So, for example, an air purifier is more than just its MERV rating, it’s a protection bubble for a family against allergens and bacteria. You should apply the same thought process to your product and use that to craft a better story.
Buyer Psychology Story 6
As marketers, we intuitively realize that buyers often don’t know what they want. This is why surveys and focus groups can be so challenging. But I’ve never really thought about why buyers don’t know what they want. Turns out, there is an evolutionary reason for this. And the book Alchemy by Rory Sutherland has a beautiful example. It’s the story of the hare (excerpt below):
In evolutionary terms we are better off not knowing; we have evolved to deceive ourselves, in order that we are better at deceiving others. The theory is that if all our unconscious motivations were to impinge on our conscious, subtle cues in behavior might reveal our true motivation, which would limit our social and reproductive prospects.
Robert Trivers gives an extraordinary example of a case where an animal having conscious access to its own actions may be damaging its evolutionary fitness.
When a hare is being chased, it zigzags in a random pattern in an attempt to shake off the pursuer. This technique will be more reliable if it is genuinely random and not conscious, as it is better for the hare to have no foreknowledge of where it is going to jump next: if it knew where it was going to jump next, it’s posture might reveal cues to its pursuer. Over time, dogs would learn to anticipate these cues – with fatal consequences. Those hares with more self-awareness would tend to die out, so most modern hares are probably descended from those that have less self-knowledge.
In the same way, humans may be descended from ancestors who were better at the concealment of their true motives. It is not enough to conceal them from others – to be really convincing, you must also have to conceal it from yourself.
What applies to the hare and dog also applies to the online retailer and the shopper. Our psychology is primitive.
This is why instead of running surveys you are better off experimenting with marketing ideas.
A little about us
Thank you for reading this article. We are Frictionless Commerce and over the last 11 years, we’ve thought about just one thing: how do we get online shoppers to convert? We’re fascinated by buyer psychology. Once we’ve understood how your site visitor thinks we use our 9 point copywriting process to convince and convert them.
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