Marketing would be straightforward business if humans were robots who rationally calculate the best option for them. In real life, things are more complicated. Successful marketing requires in-depth understanding of how people make decisions.
Irrationality is an integral part of being a human. We keep on making decisions that are not based on thorough reasoning. Cognitive science has shed light on what kind of underlying logics explain our seemingly irrational behavior. During the last 40 years, scholars have identified almost 200 cognitive biases that affect human behavior. Understanding how biases work can turn sporadic actions into predictable behavior, helping digital marketing to achieve better results.
We discussed cognitive biases and their use in digital marketing in a blog post a while ago. The three biases mentioned in that post are just a tip of an iceberg. Here are three more extremely interesting biases that can be useful for your business.
Buying a home can be an overwhelming project. You need to follow the real estate websites, dig through loads of information and compare different areas and homes. Finding the perfect one can take years. And still, no matter how well you are prepared, making the final decision to place an offer is a massive step and a financial risk. I went through all this some time ago and it was indeed exhausting (though rewarding too). One might think that after that I would like to forget everything that’s related to buying a house. No. I have spent hours of searching for homes that are for sale in the same neighbourhood and reading online message boards about the pros and cons of the area - just as if I was still searching.
This is called choice-supportive bias. After making a decision, we do our best justifying ourselves it wasn’t a mistake by looking for information that supports our choice. The purpose of my post-purchase information search was simply to tell myself I bought a good home at a good price in a decent neighbourhood. I wanted to see homes that are more expensive than mine, definitely need a comprehensive renovation and have a tricky layout too. Choice-supportive bias is a very human trait and it’s quite helpful for our mental well-being, especially when the purchase was expensive.
The need for positive feedback is also something you cater to in digital channels. When a customer has bought something from you, make sure you let them know it was a good decision. Thank you for your purchase type of emails are common, but often they miss the chance to tap into choice-supportive bias. It’s a shame because that is a moment when the customer is particularly willing to hear and learn positive things about your service and your brand. Probably more so than in any other situation. Don’t let it go to waste.
People give irrationally great value on things they have built themselves. I still use a trivet I made 15 years ago. It’s not necessarily the best match with the decor of my kitchen but using it makes me proud in a way no design product ever could. I believe most of us are familiar with this phenomenon.
The bias is called IKEA effect for obvious reasons. In addition, it has actually been studied with IKEAs products. In a 2011 study participants who had built a simple IKEA storage box were willing to pay more than double for one compared to non-builders.
Seeing the fruit of one's labour is a very basic human need. It makes us feel competent and successful. As the previous study shows, this feeling can have a remarkable effect on customer’s thoughts and actions, even when we are talking about something as simple as building a cardboard box.
To make IKEA effect work for you, invite your customers to take part in the creation process. Do you sell your products online and want to increase customer satisfaction? Give them a chance to customize their purchase. In addition to customers being happier, it’s quite likely they are ready to pay more for a product with their personal touch.
The IKEA effect can also play a big role in customer engagement on your website or mobile apps. When a customer feels they have contributed to creating the digital experience, they are more likely to keep using your service. There are countless examples. Spotify and self-curated playlists. Bitmoji characters in Snapchat. Facebook profile pages. All these require a little labor, but afterwards the user feels they have achieved something. Just make sure that it’s easy enough to participate and get things completed.
Paradox of choice
In theory, increasing the amount of options customers have should increase the chances of satisfying their needs. Logical, right? That, however, doesn’t mean doing so would increase your sales. In fact, research shows the opposite.
In 2000 Sheena Iyengar from Columbia University and Mark Lepper from Stanford published a study that has become probably the most famous example of the choice paradox. They did an experiment in a supermarket with gourmet jams. In the first part there was a display table with 24 different jams. The people who sampled the jams got a $1 discount to encourage an actual purchase. On another day, there was a similar table and similar discounts were given. The only difference was that this time there were just 6 kinds of jams. But that made a significant difference in sales. The table with 24 jams got more attention from customers passing by but the sales were much higher when there were just six different jams available. The experiment has been replicated in different contexts and the results are similar: having too many options can be overwhelming for customers. Offering less choice can increase your sales.
Miller’s law, says that on average the maximum number of objects a person can hold in short-term memory is seven, plus or minus two. The optimal amount of options depends a lot on context. Some cases it’s definitely much less than seven, sometimes more. Still, this number can be used as a warning sign. If there’s more options, it’s likely that comparing them gets complicated for customers and the decision-making becomes more difficult.
Less is more. But that doesn’t necessarily mean, you should narrow down your product or service catalogue. Instead, you should think about the way you present that catalogue to the customer, especially in the situations where they should be able to make a purchase decision.
Zalando, German online fashion giant, has a product assortment of over 300 000 items. Still, when you open their store, you face a surprisingly limited amount of clothes. It feels more like stepping into a boutique on a side street rather than a huge department store. A couple of highlighted product categories. Just two or three items on one row in the catalogue. But everything you see is there for a reason. With the help of demographics and purchase and browsing history, the assortment is customized to match with the customer’s preferences. Because of sophisticated personalization, the optimal amount of options can co-exist with an almost endless range.
Choice-supportive bias, IKEA effect and paradox of choice are just a few examples of numerous cognitive patterns all of use day-to-day. As the cases above show, many digital marketing success stories draw on behavioral psychology. Knowing how the decision making process works helps to make your digital business a winner too.