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Cognitive biases can have a significant impact on decision-making, the reality is humans are not as rational as we might think they are. These biases occur when we prioritize our perceptions or beliefs over reality, and even simple changes like a product's color can affect a consumer’s choice of whether to buy a product or not.
Many people are unaware of the influence that cognitive biases have on their decision-making processes. Marketers can benefit from insights into cognitive biases that can be leveraged for success in any digital marketing strategy.
This article provides insights into six cognitive biases that can be leveraged for success.
1. The Mere Exposure Effect
Here is an example of the Mere Exposure Effect. A study by Professor Charles Goetzinger demonstrated that repeated exposure can transform hesitation into curiosity and friendship. Goetzinger had one of his students attend each class in a black bag, with only their feet visible, and he observed how the other students reacted over time.
Although the black-bagged student was initially treated as an outcast, the other students eventually became curious and began chatting with him. This study is notable for demonstrating that familiarity leads to contentment.
How To Use This Tactic To Increase Sales
- Retargeting is an effective advertising strategy that targets individuals who have already visited a company's website. These ads are more effective than traditional display ads since they only appear to individuals who have shown interest in the product or service before. A study found that retargeted campaigns generated 10 times higher click-through rates and 70% greater conversion rates. Retargeting enables companies to target warm leads and overcome the challenges of generating interest from "cold" leads.
- Enhance sales, and repurpose your content in various creative ways such as turning a blog post into an infographic, video, podcast, or slide presentation. By doing so, your content will be visible in multiple places, increasing the likelihood of it being viewed or purchased by a wider audience.
- Frequent exposure can improve social media performance. To increase engagement and reach, consider using the "mere exposure effect" by resharing content. Studies have found that 68% of people who saw an article once would like it after being exposed to it again.
2. Loss Aversion
Did you know that people prefer not to lose something they already have than to gain an equivalent value? Here is an example: Loss aversion is a phenomenon that was discovered by psychologists Daniel Kahneman and Amos Tversky in 1979.
It refers to the tendency of most people to find it more difficult to lose something they currently possess than to gain something new. This is a hardwired trait in all of us. For example, if given the choice between receiving $10 or losing something they already have, most people would find the latter option more challenging.
How To Use This Tactic To Increase Sales?
- Research suggests that providing individuals with the opportunity to experience your product or service before making a commitment results in stronger ties than solely relying on a distant purchase agreement. To cultivate lasting relationships, offer free trials or samples of your product or service, allowing potential customers to experience and develop a fondness for it.
- Offering customers a sense of exclusivity and high value for a limited time can motivate them to act quickly and make purchases now instead of later. For instance, by advertising only 50 free T-shirts available today, customers may feel compelled to buy even if they don't currently need a new shirt. By providing a limited-time offer, you can encourage consumers to buy now or risk missing out.
- A countdown timer or limited subscription can effectively convert a hesitant prospect into a willing customer. By displaying the remaining hours until the product becomes unavailable, the sense of urgency encourages them to take action. Adding a countdown timer to your marketing campaign can create a time-sensitive atmosphere, which can motivate people to act quickly and avail of the fantastic offer before time runs out.
3. The Compromise Effect
Here is a great example of the Compromise Effect. In a 1992 experiment, participants were given a choice between two 35mm Minolta cameras: a Maxxum 3000i priced at $169.99 and an X-370 priced at $239.99. In the first phase of testing, participants were split 50/50 between the two models.
However, in a subsequent round that included a third "compromise" option priced slightly higher than the cheaper model but still affordable, 57% of participants chose the middle-ground option.
The study found that adding a compromise option can significantly increase sales, as only 22% selected the lowest-priced camera and 21% selected the highest-priced one, reducing the potential for buyer's remorse.
How To Use This Tactic To Increase Sales?
- Options are crucial for effective decision-making. Having a range of choices available is essential for making the best possible decision. It's important to consider that some people may prefer moderate options, rather than extreme ones, to avoid disappointment or regret later on. Choosing what's best for your own needs and wants is ultimately the most important factor to consider.
- Creative pricing not only attracts customers but also has a hidden benefit. Placing a compromise option in the middle draws more attention, making it more likely to be considered first. This saves customers from purchasing less appealing, more expensive options and leads to better decisions.
4. The Framing Effect
In a study, participants were asked to choose between two programs to reduce an outbreak of an unnamed disease in the U.S. Both programs could save a certain number of lives, while 600 people would still die due to the outbreak. Program A could save 200 lives, with no risk involved, while Program B had a 1/3 chance of saving all 600 lives if implemented correctly. The study found that 72% of participants chose Program A, while 28% chose Program B.
How To Use This Tactic To Increase Sales?
- People tend to be more risk-averse when it comes to losing what they already have, rather than gaining something new. To motivate customers to take advantage of your offer before it expires, framing it as a limited-time opportunity that they might miss out on could be more effective.
- Frame your offer in comparison to something similar and mention the value of what they will be getting. Wordplay is a big part of this so keep that in mind. It is all about the way you frame things that change a buyer's perspective.
5. The IKEA Effect
The IKEA Effect suggests that involving consumers in the creation of a product can increase its perceived value, even if they didn't initially care for it, which can reduce the likelihood of rejection. This principle can be applied to digital marketing strategies to improve their effectiveness.
How To Use This Tactic To Increase Sales?
- Involving consumers or existing clients to get in on the process of building your products is a great way to keep them engaged and excited. Consumers can be involved by committing time to a product’s development, giving input and ideas during its creation, or improving their favorite brands with new features.
6. The Salience Effect
The Salience Effect is an example of the way humans have a tendency to buy products that stand out from the competition. In other words which looks the best or most impressive or performs better. A marketer can capitalize on this bias by designing or branding their unique offerings differently or uniquely by making them more memorable to the consumer. If a product has a unique feature that separates it from the competition, it is more likely to be purchased. Using words such as "unique, exclusive, special" can be useful for marketers in exploiting this bias and boosting sales.
How To Use This Tactic To Increase Sales?
- According to a study of 2,000 consumers. It is crucial to have a well-designed and unique website. 32% of consumers trust a website based on its appearance. If you want your visitors to convert you to a high-quality design, user experience (UX), and customer experience (CX). This tactic also applies to physical product packing as well.
In Conclusion
Developing a marketing plan involves figuring out how to take advantage of cognitive biases and use them to your benefit. To determine which tactic will work best with your target audience and goals, you first need to consider their demographics. If you execute these tactics in a genuine way they are more effective. When you find the balance of which cognitive biases will work for your target audience you will see the advantages a little psychology can bring to a business.
