Four years ago my eyes were opened to a brand building mindset courtesy of Gary V. As a performance marketer at heart, it was a fresh perspective listening to his keynote speech, and got me thinking more about brands, purpose and value and challenging my approach to strategy and proposals. It also got me thinking about decision making and how consumers make decisions.
Fast forward 18 months and I have evolved this interest and have begun to follow and participate in the field of Behavioural Economics.
This week I listened to a really useful and educational podcast from Rory Sutherland (courtesy of Let’s Talk Branding) who put this area of marketing into further perspective.
If your sales were currently failing, the economist view would be to do one of two things:
- Make the product/service better
- Drop the price
This viewpoint expects the customer to have perfect information and understanding and perfect trust in order to make a decision, and that it can only be one of the reasons above why you’re not selling. But if you believed this, then you could be doing your business a disservice.
Now, the behavioural economic perspective celebrates so many alternative solutions to the same problem, and would offer many more opportunities (using psychological solutions) to tackle it. And this is what I’ve become so fascinated with.
It is not only price or product that could be inhibiting sales.
I’ve been drawn to Richard Shotton’s book The Choice Factory, and was lucky enough to attend one of his workshops to hear the application of these cognitive biases in person.
The premise of the book, and the eventual EAST framework that Shotton promotes, is based on the notion that we are overwhelmed with the sheer volume of decisions we need to make every day, and as a result we don’t have the time to laboriously and logically weigh up each decision.
We often rely on instinct to make these decisions, and don’t analyse our own behaviour or stop and ‘think’ as much as we should. Our way of coping is to rely on short-cuts to make decisions more quickly (and hopefully with the least risk applied). Brands for example, have become one way marketers have created helpful short-cuts (otherwise known as heuristics) to aid faster decision making.
Unfortunately, short-cuts are prone to biases… and it’s within Shotton’s book that he identifies and explains 25 of the most common. It’s not my place to go through them in this post, but I will share some of my favourites to whet your appetite...
We are interested in something because others are, and we are prone to emulate the behaviour of others. To be really effective, when you state the popularity, it’s important to tailor the claim to the audience (make sure it’s relevant and resonates) plus don’t assume the scale is known. This is why reviews and stat based messaging appears so much in advertising.
Negative social proof
Social proofing comes with a health warning. Be careful not to make undesirable behaviour seem commonplace. For example, many social marketing campaigns still try and shock people with daunting figures about the scale of the problem that they're trying to solve. But whilst this may shock, it’s scale might mean that everyone else is doing it, so “I can too.” Or it may even put the thought on people’s radars that they hadn’t considered before.
Price holds power when it’s compared. In isolation it’s very hard to judge whether it’s cheap/expensive or value for money, so you have to set the comparison set agenda. I’ve written a couple of articles involving this topic as I find it so fascinating and an extremely powerful angle when optimising a conversion journey.
Pain of payment
Like price relativity you don’t have to change the price to make it more attractive, you can adjust some elements to make the price appear/feel less painful
- Make it cashless - when consumers pay by cash the cost of the good is far more salient, paying by card masks that sensation
- Amend visuals - remove currency signs from menus and it’s been known to boost sales in restaurants
- Adopt charm pricing - charm prices as figures ending in 9. Shoppers tend to think goods sold for £3.99 or £39 are better value than those with rounded prices.
- It’s also known as the left digit effect: Since we read from left to right, we give undue prominence to the first digits in a price but also, we have become accustomed to think charm prices are bargains.
- Adjust the time frame of the deal - the same deal could be communicated in different time frames to improve its attractiveness. For example, illustrate as an annual, or monthly, or daily, or even hourly price.
Rory used a really lovely anecdote in the aforementioned podcast about how he persuaded his ‘Sky’s not for me’ father to buy Sky TV by breaking the monthly amount into a daily cost (£0.60) and then also comparing to his newspaper consumption which was usually £2.00 per day. He’s now a very loyal and Sky TV advocate!
Admission of flaws is a good thing. Admitting a weakness is perceived as a tangible display of honesty, and therefore can make other claims more believable. This is why people are sceptical of 5 out of 5 star ratings, and those with 4.4 (ish) are more attractive; it’s why Stella Artois have been so successful with their ‘reassuringly expensive’ tagline; and it’s why Guinness adopted ‘good things come to those who wait.’
There are lots of different frameworks in this field, and during the recent Nudgestock festival, it was like playing Behavioural Science bingo. The same ones did keep cropping up though:
COM-B: Capability + Opportunity + Motivation = Behaviour
- Capability: Physical / Psychological
- Opportunity: Physical / Social
- Motivation: Automatic / Reflective
EAST: Easy, Attractive, Social, Timely
- Easy: avoid choice paralysis (otherwise known as Hick’s Law); label things to make them easy to identify with; start the process by getting your foot in the door (reduce risk early on)
- Attractive: Von Restorff effect (we’re hard wired to noticed what is distinctive); pratfall effect (we appreciate flaws); emotional rather than rational appeals
- Social: social proofing
- Timely: peak end rule (most important moments in shaping memories and recollection); nine-enders (people reaching new decades in their life); life events (a great time to change habits); avoid distracting situations and moments.
Google is due to release a new study in July entitled Decoding Decisions. It contains research from 1000s of simulated purchases to understand what cognitive biases improve purchase decisions and product/brand selection. Look out for that one. Here is a sneak peek of the slides they shared at Nudgestock this month (sorry they're screenshots from a YT video - you can watch the actual presentation here [2hrs 13mins in]).
Similarly, I found this study fascinating from Ogilvy Consulting UK on the effect of biases on consumers’ response to charity fundraising.
It transpires that if you change the envelope orientation from landscape to portrait this has the most impact on pennies donated, and similarly upping the paper weight/thickness can make a big difference. Same message, just a different execution... look how different the results are...
Plenty of people have talked about these resources but in case you’ve not heard about them here is a good starter list:
- The Choice Factory, Richard Shotton
- Alchemy, Rory Sutherland
- Thinking, Fast and Slow, Daniel Kahneman
- Nudge, Richard Thaler and Cass Sunstein
I hope this has sparked a similar interest in behavioural economics and will consider its application in your marketing strategy. I will certainly be continuing my enlightenment in this area, and will bring my knowledge to client briefs and implementation plans.