BEHAVIOURAL PSYCHOLOGY  FOR BUSINESS GROWTH

Anchoring - Humans who buy specific products, usually remember what they paid for them. Especially if they are repeat buyers or if it’s their preferred brand. If you're a Levi Jeans customer and know that it costs you ₹ 3500 for a pair, a 25% discount sale is going to make you feel ecstatic. Why, because you already see the value of the brand, you already have an anchor for its price and now see the communication for additional value.

 

Decoy Offers "Nudge Theory" - Marketers know that offering 1 choice is never an option. It’s a take it or leave it scenario with a 99.9% likelihood of failure. Offering 2 choices is hardly an option. Why, because it will force customer to take the cheaper option. However when offered 3 choices (even if one of the choices is Dead on Arrival... because it makes the other choices more attractive and logical) marketers have a winner.

 

i.e. 

Digital Magazine Subscription: ₹ 1000/-

Print Magazine Subscription; ₹ 2500/- 

Print + Digital Subscription: ₹ 2500/- 

 

It is almost guaranteed that Choice 3 will be the chosen option. Why, because humans see the choice as a free digital subscription Vs. The most expensive choice.

 

Environmental Effect - A popular practice especially in the fashion retail space is Lighting and Warmth. Successful marketers know that a brightly-lit store that has a warm ambient temperature induces prospects to stay longer and be willing to pay a higher price.

 

Foot-in-the-door - Successful marketers know that most humans don't have a problem doing something that is small; that doesn't require too much of their time, effort or money. Fact is that they are more likely to say Yes, if they feel that 'the ask' is not too much. What is interesting from a psychological behaviour viewpoint is that once they have accepted doing a 'small ask' they have a greater likelihood of agreeing to do a bigger ask the next time. Why, because the person asking has become someone that they are familiar with. 

 

Frequency "Baaser-Meinhof Phenomena" - The human mind is constantly bombarded with information. Our short-term memory is actually short. When we see/ hear things more frequently, our minds tend to recognise and unconsciously keep an eye out for it. For marketers the frequency illusion offers an incredible opportunity to nurture prospects across the marketing and sales funnel and convert them into paying customers.

 

Loss Aversion - People don't like losing what they have gained (even if they got it for free or it was free for a limited period of time). Chances are that once prospects have experienced or have become accustomed to a limited time, free premium solution they will be willing to pay to continue to have it. This psychological behaviour offers marketers an incredible way to convert prospects into paying customers.

 

Peer Comparison - "Keeping up with the Joneses" is a strong behavioural driver. If 3 out of 5 cars on the road are Hyundais, it must be a good car to buy because there are so many people who bought it. Every alternative villa has solar panels on their roof tops to reduce electricity consumption. I must have one too.  Right?

 

Social Proof (The "Me Too" Effect) - Humans are social animals that thrive in community settings. While there are those who are proactive consumers (early adopters of new trends/ products and solutions); a majority of people prefer to follow the pack Vs. be the experimenter. Marketers who provide social proof have a greater likelihood of converting prospects into paying customers.

 

Priming - People who are actively searching for a value proposition (i.e. Savings or Safety or Luxury etc.) tend to gravitate to communication with products that fulfill this want.  Marketers who design their web pages to carry the colour green (colour psychology), have images of saving money (brand imagery), carry social proof of Savings etc., have a greater likelihood of converting prospects who are primed towards 'Saving'.

 

Reciprocity - Humans behaviour revolves around reciprocity. Someone does something nice for you; you in turn want to do something nice for them. Marketers who give a little something for free before asking for something, tend to get a lot more since the prospect has already got something from you without asking for it.

 

Scarcity - It is human nature to want what is rare or limited; therefore make a quicker decision to buy and be willing to pay more for it.  It is also in our nature to rate and value limited products higher. How much would you be willing to pay to get a face-to-face, one-on-one, 1 hour with Jeff Bezos or Elon Musk? How much more would you be willing to pay if there were only 3 slots being offered? Chances are that, a million dollars would seem like a steal for the discerning few.

 

Surprise Rewards - People who knew that they would get a reward for completing a task are not only less likely to be happy but invest less time in the task than those who got a surprise reward for the same task. The psychological reasoning and behaviour behind it is actually quite simple - the first did the task for the sake of the reward; the second did the task because they wanted to do it without additional motivation, however they were pleasantly surprised and maybe even thrilled with the surprise reward. Marketers who leverage a surprise reward system build loyalty and trust with customers.

 

Verbatim Effect - People live with information overload and it is almost impossible for them to remember every single detail. They therefore tend to remember the gist of the information that they consume with very few details Vs. remembering word for word.  Marketers who can aid in condensing vast amounts of information into a few simple sentences automatically help customers get the gist.

 

Conclusion

It is not uncommon for Marketers to design and structure their campaigns around the outcome that people make decisions by conducting research and weight the options to come to a logical solution. However customers frequently think illogically and act irrationally during their decision process as they rarely take the time or make the effort to fully learn all the facts before taking action. It must be noted that there has been a significant impact that the health pandemic has had on human behavioural psychology.

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