At its core, marketing is about persuasion. As a marketer, you’re always looking to influence prospective and current customers to act in ways that benefit your brand. That can be making a purchase, opening your app, consuming a piece of ad-supported content, or whatever else furthers your business goals. To do that well, you need to understand your audience and what drives their behavior.
But what if even your customers don’t fully understand why they act the way they do?
Gary Belsky, columnist and author of Why Smart People Make Big Money Mistakes and How to Correct Them, explored this issue, and its implications for marketers, during his keynote address on behavioral economics earlier this month at the inaugural LTR conference in New York City. “That’s essentially what behavioral economics is about,” Belsky told attendees. “It’s about studying [the] ways in which we make decisions,” and identifying situations where people are being motivated by factors that aren’t apparent at first glance.
Our Minds’ Two Decision-Making Systems
According to Belsky, when it comes to making decisions, each one of us effectively has two separate systems operating in our brains. System one is essentially automatic, making it possible to do all sorts of things–drink water, drive a car–without much conscious thought. On the other hand, the system you’re probably more familiar with (system two) is a slower process built on conscious thought, requiring a significant amount of focus and effort to reach conclusions.
People make approximately 35,000 decisions a day. System one makes that possible–without it, making decisions would take so long that we’d spend the entire day picking out what socks to wear and what to have for breakfast. But because so much of that decision-making happens without our explicit knowledge and is impacted by factors we don’t consciously notice, we often don’t realize why we make the decisions we do.
That makes things tough for marketers, who have to take both systems into account when they’re reaching out to customers. To help out, Belsky highlighted a number of unconscious behavioral factors that can impact how customers respond to your brand and its outreach:
1. Status Quo Bias
Change is scary. And system one is even more leery of it than your conscious mind. So when you’re making a decision, you’ll usually lean toward the status quo option (if there is one), even if making a change might be more logical.
For marketers, status quo bias can make it harder to convince your customers to change their established behavior–or that they should switch to your brand from a competitor. It’s not impossible, of course, but overcoming this effect can take significant effort. To reduce the impact of status quo bias, consider making the case for new products or services in isolation, rather than highlighting that they represent a change from what your customers are used to.
2. Regret Aversion
Avoiding regret is a powerful motivator for most people. We’re afraid that we’ll end up regretting a particular decision–and we feel worse when a bad outcome results from a choice we made, instead of as a result of inaction. That can make it hard for people to make even really positive, necessary changes.
That means that customers who are uncertain about a particular purchase are going to be especially hesitant to pull the trigger and make a decision. One way to address this issue is by making the decision feel less final, say by allowing customers to easily return items they’re unhappy with. Another is social proof: “If you can convince people that this is what other people are doing,” Belsky told attendees, it allows them to “offload their regret. And if you can get people to offload their regret, you can get them to do a lot of powerful things.
3. Choice Conflict
How many choices you offer someone has a major impact on the way they respond to those choices. If people are picking between 24 different kinds of chocolate, they’ll express more interest than if you offer them only six options to choose from. But the individuals who are given only six choices are more likely to make a purchase and more likely to be happy with the selection they made.
Author and columnist Gary Belsky presenting at the LTR conference
“We often think, in a consumerist society,” Belsky said, “that the more choice, the better.” But our behavior suggests that “what we actually want is the illusion of choice and a trusted screener.” Brands that build trust with their audience by focusing on establishing a durable customer/brand relationship are well positioned to fill that “trusted screener” role, making future persuasion easier.
4. Channel Factors
We all intend to do things that we never get around to. People often fail to follow up even on high-priority actions because obstacles in their way discourage them. Maybe they want to make a purchase, but aren’t willing to navigate a five-page online ordering process; maybe they never update their content preferences because setting them the first time took an annoyingly long time. However, studies have shown that removing these obstacles, known as channel factors, can significantly increase the chances that an individual ends up carrying out an action that they’ve expressed an interest in.
This is a big one. The easier you make it for customers to carry out the action you’re trying to encourage, the more likely they are to actually do it. Obvious, but incredibly important. And the first step toward addressing the channel factors that are reducing your customers’ conversions and engagement is knowing what they are. Keeping a close eye on customer feedback is a good way to get insight into what is (and what isn’t) working for the people you’re trying persuade. User testing is another.
5. Feature Fatigue
When people are deciding on a purchase, Belsky noted, they often “choose the product … that has the most features.” But while “people are attracted by the features,” these same feature-heavy options “are also the products that are often dropped quickest.” That’s because using a product that has more features than you really need can make customers feel overwhelmed, or that they paid for features that they don’t actually use.
So while playing up your offering’s many features may help attract interested customers in the short-term, you’re increasing the odds that people will regret their purchase. That means that, for most brands, keeping your promotional outreach focused on the features that each customer is most likely to value is going to be a smarter strategy over the long haul.
6. Trade-Off Contrast
When we’re evaluating a product, we don’t do it in a vacuum–the other options available to us have a big impact on how we perceive that initial item. That means that giving people new choices can cause them to change how they feel about the original options they were given, even if they aren’t interested in selecting one of the new choices.
Because people tend toward the middle ground when choosing among various options, you can influence the decisions your customers make by carefully curating what choices are available to them. For instance, including a luxury item in a message can actually increase the odds that customers choose the next-most-expensive option, rather than the cheapest one.
TL;DR
Behavioral Economics for Marketers @ LTR by Appboy from Appboy
When it comes to reaching your customers, it’s not enough to appeal to just their conscious mind. To get the most value out of your marketing, your brand needs to take into account the many unconscious behavioral factors that impact the way that decisions are made. This kind of “framing is hugely important,” Belsky said. “It’s a language issue, it’s a positioning issue, but it can make a world of difference.”
Business & Finance Articles on Business 2 Community(99)
