Editor’s note: This article was first published in October 2015. The Cristiano Ronaldo endorsement example and the closing promise to cover other biases soon date from 2015.
If there’s one thing we’ve made clear in previous articles, it’s that we are all victims of our own brains, which are not as rational as we like to think. Errors in the way we process information (biases) are used by marketing professionals with astonishing effectiveness.
And of course, if we understand how our customers’ brains work, bearing in mind that they process information the same way we do, using certain techniques in our own business can help us increase sales.
1. Expensive equals good
Nothing is more true than this, even though it doesn’t have to be true at all. Robert Cialdini gives an example in his book Influence: a jewellery shop had a batch of pieces it couldn’t sell to tourists, even though they were reasonably priced.
The owner told her staff to cut the price of the jewellery in half, but the employee understood the opposite: that she should double it. To everyone’s surprise, the jewellery soon sold at twice the price. Why? Cialdini explains that the tourists wanted to buy their partners a present, but they wanted something of quality. The low price made them feel guilty, because they didn’t want to give their partner something cheap.
As soon as the price went up, the quality went up too in the buyers’ subconscious (even though it was exactly the same).
I have actually seen this happen myself, even with a housing development. At the height of the property boom, the builder had 12 homes he couldn’t sell for 120,000 euros. His solution was to raise the price to 200,000 euros; some buyers negotiated and ended up paying 180,000. The result: after the price rise, all 12 homes sold in less than three months.
2. The puppy dog technique
Pet shops know better than anyone how effective this technique is. They let you take a cat or a dog home for a week, and you can bring it back with no obligation if you don’t want it. Of course, they know that 95% of customers won’t return the animal, because by then they’ve grown attached to it.
This technique is now used in many industries: you’re told you have 7 or 15 days to try the product at home and can return it with no obligation. Hardly anyone sends it back, because in those first few days they’ve already got used to it. Commitment bias also comes into play here: it makes buying something quick and irrational, and even if we never use it, loss aversion makes us reluctant to part with it.
It’s typical childhood behaviour. Children don’t want a toy until you tell them you’re going to give it to their cousin. Then they throw a tantrum, because now they do want it.
3. The contrast principle
There’s a well-known experiment in which you put one hand in very hot water and the other in ice-cold water. After a minute, both hands go into lukewarm water. The hand that was in the ice-cold water will feel as if the lukewarm water is boiling, while the hand that was in the very hot water will feel as if it’s almost freezing.
The perception of the new temperature doesn’t depend on the current temperature, but on the previous one.
The contrast principle is used in sales techniques, although some shop assistants don’t use it correctly.
If a customer walks into a clothes shop wanting to buy an expensive suit, shirts, ties, underwear… what would you sell them first? Many shop assistants think that if they sell the suit first, the customer will be more reluctant to buy anything else after spending a large sum of money. Nothing could be further from the truth.
Applied to sales, the contrast principle says you should sell the most expensive product first and the cheaper products afterwards. Why? Because if you sell a suit for 500 euros, a 47-euro shirt and 20-euro ties then look very cheap compared with the price of the suit.
If, on the other hand, we sell two 47-euro shirts and three 20-euro ties first, the 500 euros for the suit can seem like a lot of money because of the contrast principle.
4. The contrast effect plus the anchoring effect
As we explained in previous articles, we don’t choose according to what we need, but according to the other options available to us. So if we want to sell a particular product, we’ll achieve that through the other options we offer the customer.
Many companies use this trick. They bring out a 400-euro model (expensive) and a 300-euro model (mid-range). They fill the shop window with these high- and mid-priced models, and in the middle, in a strategic position, they place a 150-euro product. The anchoring effect makes that price look like a bargain compared with its “neighbours”.
If we also put “Special offer” and “Limited stock” signs on that product, it’s sure to fly off the shelves. That way you steer customers’ choices as you please. Many manufacturers launch a high-end version of a product not to sell that version, but to drive sales of the mid-range and entry-level versions. And if someone does buy the high-end model, the margins will match or exceed the cost of the high-end units left unsold.
Estate agents use this trick too. If they plan to sell you a particular house, they first show you two others: one in very poor condition, and another, in good or bad condition, with a sky-high price. When you get to the third, you’ll see a very well-kept house at a reasonable price, because your brain is unconsciously comparing it with the previous two. From there, it’s just a matter of using standard sales techniques to speed up the buyer’s decision.
(See: 11 tricks shops use to make more money)
5. Reciprocity, and how to turn a prospect into a customer
Nothing is as effective as the power of reciprocity: feeling obliged to return a favour. If a company gives someone a gift, even a small one, that person is more likely to remember the business when it’s time to spend money.
Sometimes, to turn a prospect into a customer, all we need is a hook product on which we probably won’t make much money (or any at all). But if we get that person to buy from us and join our customer database, a high percentage of those people will come back and buy again, provided we’ve looked after them well. It’s like investing in advertising, but putting it straight into the customer’s hands.
6. The availability bias
We are more likely to buy or sign up for something if a recent event has made us feel the need for it. Numerous studies have found that life insurance sales rise astronomically after a major accident that has been on the TV news.
In the same way, there’s nothing more effective than selling security systems in a neighbourhood where there have been three burglaries in the past week. The salesperson doesn’t need to create the need. The customer already has it.
That’s why, in our business, we should keep an eye on news that might create a need for our product and use it to our advantage while the event is still “hot” in people’s minds, because they’ll be more inclined to buy.
7. Cognitive ease
If people can easily remember the name of your company and your products, you’re more likely to outsell your competitors. Daniel Kahneman, in his book Thinking, Fast and Slow, gives the example of listed companies: those with easier-to-remember names rose much more after going public than those with more complicated names.
In the case of listed companies, though, prices later settle back down, because the companies’ fundamentals end up mattering more than their names. A clear example of success with products is the simplicity Steve Jobs used for his product names, even creating a sense of familiarity with the famous “i” in front of most of them.
In fact, Jobs played his psychological cards very well: cognitive ease, familiarity, simplicity, and expensive is better than cheap, although in this last case it seems Apple products are not only expensive but also good quality.
8. How a website looks matters more than its content
Research by Elizabeth Sillence showed that users decided whether a website was trustworthy based on how it looked rather than on its products or content. At the very least, if users didn’t find the design appealing, they would soon leave the site, even if its content was much better than that of other sites.
Design is the first filter a user applies before going any further. A bad first impression of a site’s design and navigation, together with the font size and a complicated or odd name, means losing a potential customer. Content is the second filter.
Since most businesses’ growth is now more tied to the internet than ever, a website’s design and navigation should be studied carefully: if customers have to trust your site in order to buy, a bad impression will stop them from completing the purchase.
9. If an expert says it, it must be true
The truth is that we don’t usually judge a particular message, but rather the person delivering it. That’s why ads used to show people who looked like doctors (but weren’t) to sell us health-related products.
What better than an athlete like Cristiano Ronaldo recommending protein shakes, or an investigative journalist telling us certain yoghurts are perfectly safe to eat? It works.
We associate products with the image of the person presenting them. Big companies, advised by marketing experts and psychologists, know they could save a lot of money by hiring a nobody for an ad, but they also know that even if they have to pay a celebrity millions, sales will shoot up. Are we really that simple? Of course. More than we can imagine.
10. Social proof
There’s a Spanish saying: “Where does Vicente go? Wherever everyone else goes.” Our brain takes the simplest route and tells us: “If everyone has one, it must be good.”
What’s the quickest way to turn a book into a bestseller? Tell people it’s already a bestseller. What’s more, if everyone says it’s good, even if it’s a lousy book, new readers won’t want to contradict everyone else and will assume it’s good.
The clearest example is the famous film The Godfather, the best gangster film ever made. Just try telling anyone today that it’s a dud, when everyone still says it’s a masterpiece.
That’s why now, since lying is to some extent prohibited (you can’t say a book is the best-selling in the world if it isn’t), books are billed as “a New York Times bestseller”, or…
“THE BEST-SELLING BOOK of the week in the new authors category.”
In a business it’s usually simpler: all we need are a few straightforward messages along the lines of “After selling out, we’ve managed to get 100 more units at 10% off” or “100,000 people in this city have trusted our services.”
These techniques can move mountains if we know how to adapt them properly to our business. Combining them with other changes, when we have used them in different companies, we have seen sales increase by between 15% and 30% within a few months. It’s a matter of finding the right way to apply them.
We’ll soon look at other kinds of biases that influence our decisions and that we can use to our advantage.
Featured image: Vasyatka1, CC BY-SA 4.0, via Wikimedia Commons.
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