Influence your customers using psychology
Why do we buy one product, but not another one? When is the price of a product adequate and other times inadequate? Our decisions are influenced by factors, which we don’t have under our complete control. Psychology gave marketing tools, how to use them in practice.
Imagine you are a real-estate agent and your job is to estimate the value of the house. You go check it out and you get a leaflet with the proposed price of the house. You inspect the house in detail and won’t let yourself get influenced by the price on the flyer; you are an expert in the end. You consider the real condition of the property; the market situation and then you say your estimate. Even though consciously you don’t consider the price listed on the flyer, your brain forces you to adapt your estimate to this price.
This effect is described in psychology as anchoring. The psychologists Northcraft and Neale done a similar experiment: people were tasked with assessing a property. This first group was handed a leaflet with significantly lower price than the market price of the house and the second group received a leaflet with a higher price. Even though they were not supposed to consider the leaflet and estimate the price on their own, people in the first group estimated on average a lower price than the people in the second group. And they all said the price on the leaflet did not affect them in any way and that they ignored it.
Anchoring is the reason why all sellers tell the price first. If you start to handle, either consciously or subconsciously, you are circling around the price the seller anchored in you.
An expert succumbs as easily as a layman
Succumbing to the initial information (anchor) is an attribute of our brain. Stated experiment was performed again with professional real-estate agents, who make their livelihood assessing properties. The result was similar. The price on the leaflet affected the estimate of the experts just like the laymen without any experience, even though they did not wanted to admit it.
If we are looking for an answer, our brain has the tendency to start with the last information it has received. The further away we want to get from the anchor, the bigger mental effort it requires. Mental effort costs energy, which our brain saves, especially if there is lack thereof. Several studies (Epley, Gilovich) have confirmed that under the influence of alcohol or stress, the anchoring effect is stronger.
The anchoring effect in marketing
Marketing frequently borrows tools from psychology and anchoring is one of the best-documented phenomena. It finds its use wherever there is work with number data. For example price, attributes and pros of a product or consumer data. How many hours a year do you spend vacuum cleaning? You probably aren’t exactly sure. However if the marketing of the robotic vacuum-cleaners salesman anchors you correctly, you will believe him, it’s a lot and that the robotic vacuum cleaner will return you the missing free time.
However how strong is the anchoring in an online environment? Will it manifest itself also during an impersonal visit of a webpage? Can anchoring change even what we know for certain to be true?
When searching for an answer to these questions we have performed an experiment in Magritt. We have created an online personality test to which we have brought 2784 unique visitors from the USA using PPC advertisement. In the test we asked them how many hours per day do they sleep. The majority of us know how many hours do we sleep. We know when we go to sleep and know when we get up.
Despite this, using a simple anchoring as much as 13.1% more people said that the sleep more than the average, when compared to the results of the control group. In the control group only 4.1% said they sleep 9 and more hours. We could say that by anchoring a part of the participants extended their impression of the duration of their sleep.
If I overload the E-shop using large numbers, can I sell more expensively?
No. Before the mentioned experiment we performed another experiment. We have mentioned the anchor in a random, unrelated context. This time the anchoring effect did not manifest itself. Participants with and without anchoring were anchoring about the same.
This means that for the anchoring to manifest itself, it must be relevant and related to given context. It is not sufficient to mention a large number before the price of the products in the e-shop, it won’t affect the customer and he won’t begin to view the price as more acceptable. To achieve this the anchoring data has to be part of the information the brain is processing in the same block as the price of the product.
Use in practice:
Your E-shop or shelf in the shop can bring upon the anchoring effect. However the anchoring has to be relevant. Here are two examples:
In an E-shop with lighting first emphasize how much it costs to change conventional light bulbs for three years and then state the price of a LED light bulb with a three year life cycle. The customer will anchor himself with the higher price and the price of the LED light bulb will look more favorable and affordable.
On the shelf in your store (or a restaurant men) place the average cheaper product right next to the more expensive luxurious one. The task is not to sell as much of the luxury product as possible, but use it to anchor the customer to view to cheaper product as more valuable and preferable. At the same time the cheaper product doesn’t have to be objectively cheaper. But in given moment the customer compares it to the more expensive product, which serves the role of the anchor.
Where are the boundaries of morality?
Anchoring can be viewed as manipulation and indeed there is a very thin line between the moral and immoral use of this phenomenon. Is it right to use the innate feature of our brain to support sales? If these methods are used by the competition and are a standard of advertisement practice, am I morally responsible for their use?
The opposing argument could be that if I won’t use them, I will consciously weaken my ability to be competitive in the market. History shows that all tools and techniques are valuably neutral. Only their specific use with a specific purpose makes them the subject of ethics.
About the Author
I have working experience ranging from start ups to corporate fortune 500 companies (CBRE) I combine an analytical mindset with a creative, out-of-the box way of thinking. I have worked for Lion&Lion (major digital agency in southeast Asia) where I was part of the Marketing and Facebook Advertisment teams. Helped a lot of start ups for fun mainly with business and marketing plans, market research and branding.