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Uncovering the Psychological Tactics That Drive Customer Purchases

If you prefer to watch a summary of this article, check out the video:  Uncovering the Psychological Tactics That Drive Customer Purchases

I see and hear many CX professionals with great intentions when it comes to improving touchpoints in the customer journey and the customers’ lives with their brands. However, I also realized that many are not sure how to develop intentional positive experiences with a clear understanding of how people react to stimuli and that in the end, it’s about making decisions. And this led me to write this article. I’m so thrilled that you’ve decided to explore the fascinating world of behavioral science. Let me tell you, it’s not just about understanding human behavior; it’s also about unlocking the secrets to influencing it. Isn’t that exciting? I’m about to introduce some compelling principles of behavioral science that can be used to shape customers’ decisions.

But before we dive in, let’s set the stage with a bit of context. Every day, people make countless decisions. From choosing what to wear, what to eat, and where to go, to making significant choices about health, finance, and relationships. Now, imagine if you could understand the science behind these decisions. Even better, what if you could use this knowledge to guide people toward making choices that benefit both them and your business? Well, that’s precisely where behavioral science comes in!

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Behavioral science is like a magical toolbox filled with an array of tools, each uniquely designed to help understand and influence human behavior. These tools, or principles, are based on extensive research and have been proven to be incredibly effective. In the context of customer decisions, they can be used to encourage positive behaviors, increase customer engagement, boost sales, and even foster customer loyalty. The art of influencing customers’ buying behavior is a fascinating field that combines marketing, psychology, and human behavior. When it comes to the world of marketing and sales, understanding the psychology of your customers is paramount to influencing their buying behavior. The human brain is a complex system, making decisions based on a variety of factors, both conscious and subconscious. By tapping into these psychological triggers, businesses can enhance their marketing strategies and boost their sales.

BUT WHY YOU SHOULD BE THINKING ABOUT IT?

There are several reasons why you should give the right importance to Behaviour Science and keep reading this article:

  • It allows us to tap into the subconscious mind of the customers. Most decisions people make are influenced by their subconscious mind. By understanding the underlying psychological factors, we can frame our products or services in a way that appeals to these subconscious inclinations, leading to a higher likelihood of a positive decision from the customer.
  • It allows us to incorporate elements of persuasion into our interactions with customers. This doesn’t mean manipulating customers, but rather highlighting the benefits of our products or services in a way that resonates deeply with the customers’ needs and wants. This persuasive communication can significantly increase the chances of a successful conversion.
  • It can help us create a more personalized experience for our customers. By understanding different customer behaviors, we can tailor our products, services, and communications to match individual customer preferences. This personalization can make customers feel valued and understood, leading to increased customer loyalty and repeat business.
  • It can enhance our product development process. By understanding what drives customer behavior, we can design products that meet customers’ needs more effectively. This not only improves customer satisfaction but also gives us a competitive edge in the market.

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SOME PRINCIPLES OF BEHAVIOUR SCIENCE

Now we are going to explore some of the powerful principles of behavioral science, such as the scarcity principle, the anchoring principle, the reciprocity principle, and many more. Each principle will be explained in a simple, easy-to-understand manner, along with practical examples of how they can be applied to influence customers’ decisions.

As you dive into this exciting journey, I want you to picture each principle as a key. Each key can unlock different aspects of human behavior, and when used correctly, can open the door to endless possibilities. So, are you ready to turn these keys and uncover the secrets to influencing customer decisions?

Let’s dive in, shall we? The world of behavioral science is waiting to be explored! After all, understanding is the first step to influence. And remember, every decision is an opportunity to learn, grow, and influence. So, let’s start influencing!

  1. The Principle of Reciprocity

This psychological concept refers to the human instinct to respond to a positive action with another positive action. In the context of customer behavior, this means that when a business offers something of value to a customer (be it a free sample, a discount, or exceptional service), the customer is more likely to reciprocate by making a purchase.

Brands like Sephora and Glossier often include free samples with online orders. This not only delights customers but also introduces them to new products they might want to purchase in the future.

  1. Scarcity and the Fear of Missing Out (FOMO)

Scarcity creates a sense of urgency and can significantly influence buying behavior. Limited-time offers flash sales, and exclusive products can trigger the fear of missing out (FOMO), pushing customers to make purchases they might not have considered under different circumstances.

Many e-commerce websites use scarcity tactics to drive sales. For instance, Booking.com often shows messages like “Only 1 room left on our site!” or “In high demand – only 3 rooms left!” to create a sense of urgency and encourage immediate booking.

  1. Social Proof

Humans are social creatures and tend to follow the actions of others, especially when they’re uncertain. This is the principle of social proof. Testimonials, customer reviews, and influencer endorsements can provide the validation a potential customer needs to make a purchase decision. It’s also why influencers and celebrity endorsements are so effective – they leverage the trust and admiration people have for these individuals.

Companies like Amazon and TripAdvisor use the power of customer reviews to encourage more purchases. By showcasing customer reviews, photos, and ratings, they provide social proof that others have used and loved their products, making new customers feel more confident in their purchases.

  1. The Halo Effect

The Halo Effect is a cognitive bias where the perception of one trait (i.e., a company’s popular product) influences the perception of the company’s other traits (i.e., its lesser-known products). By promoting and maintaining high-quality products or services, businesses can leverage the Halo Effect to boost sales across their entire product range.

Apple is a master of the Halo Effect. Their sleek, minimalist product design and packaging immediately give the impression of high quality, leading consumers to perceive their products as superior.

  1. Anchoring

Anchoring refers to the human tendency to rely heavily on the first piece of information (the “anchor”) when making decisions. Retailers often use this principle in pricing strategies. For example, showing the ‘original’ price next to the ‘sale’ price makes the sale price seem like a bargain, even if it’s not significantly lower than the average price of the item.

Retailers like Kohl’s and Macy’s often show the “original” price slashed next to the “sale” price. The higher original price acts as an anchor, making the sale price seem like a fantastic deal.

  1. The Decoy Effect

The Decoy Effect is a phenomenon where having a third, less attractive option makes one of the other two options seem more appealing. For instance, a small popcorn might cost $3, a large popcorn $7, and a medium popcorn $6.50. The medium popcorn seems like a better deal compared to the large one, and customers are more likely to go for the medium option, which is more expensive than the small one but seems more valuable compared to the large one.

A prime example is Netflix, which implemented this strategy in its pricing plans. By introducing a decoy option – a slightly more expensive plan with additional features – alongside its standard plan, Netflix was able to make the latter appear as a more attractive choice.

  1. The Power of Storytelling

Humans have been telling stories for as long as we’ve been around. Parents tell stories to help their kids fall asleep at night, coaches tell stories to inspire their teams to win the championship, and your friends tell stories just to put a smile on your face. Why? Because people remember stories better than they remember most things. Stories make you feel something and connect emotionally. Storytelling is a potent tool in marketing because stories are naturally engaging and memorable. They stimulate emotions, create connections, and often stay with us longer than plain facts. By incorporating storytelling into your branding or specific product descriptions, you can foster an emotional connection between your customers and your products, making them more likely to purchase.

When telling your brand’s story, a powerful slogan goes a long way. Nike is arguably the best example of this with its thirty-five-year-old “Just do it” slogan. Perhaps one of their best storytelling examples is their Dream Crazier ad. Featuring famous examples of powerful women athletes, Nike tells its customers, especially females, that “it’s only crazy until you do it.”  The advertisement’s story spoke to so many people that it boosted Nike’s revenue by 31% and added $6 billion in value to the brand. When your brand makes people believe in themselves, they’ll believe in you.

  1. Framing Effect

Framing is such a wide topic that it deserves an entire article just to explore it better. The process of decision-making involves a lot of cognitive effort. Due to the limitations of working memory, rational decision-making can become tedious. To avoid the complexity, the human brain tends to take shortcuts to conclude. The tendency of the human brain to automatically take these shortcuts is known as heuristics. Heuristics is considered one of the primary factors that lead to the framing effect. The framing effect is a cognitive bias in which people react differently to a particular choice depending on whether it is presented as a loss or as a gain. For example, customers are more likely to purchase sunscreen if the advertisements emphasize the benefits (e.g., “Protects your skin from harmful rays”) rather than the potential losses (e.g., “Prevents skin cancer”). Another good example is the following scenario:

Susan is shopping for groceries, though she has to be on the lookout for her blood sugar level when choosing which groceries to purchase. Susan has a chocolate craving. In the snack aisle, she pursues the different chocolates: one is labeled as having ‘90% sugar-free’, whereas the other is described as having only ‘10% sugar.’ Susan picks the chocolate that’s 90% sugar-free over the one that contains 10% sugar.

  1. Consistency and Commitment

People value consistency and often feel compelled to behave in ways that align with their previous actions. This principle can be used in a variety of ways, such as encouraging small commitments that can lead to larger purchases down the line. For example, offering a free trial can lead to a paid subscription, or asking customers to follow your brand on social media can increase their likelihood of making future purchases. Cross-selling is another excellent example of this effect. This is not to be confused with upselling, think of the used car salesman who encourages you to pay for a better model than you want, instead cross-selling is where you show people items that would go well with their current purchase. This is more like the ‘Often

bought with’ section that you see on eCommerce stores. You’ll also get these offers regularly appearing when purchasing larger ticket items such as electronic goods, then offering the aftercare package.

  1. The Endowment Effect

The endowment effect refers to a circumstance in which we value something more once we feel we own it. Marketers can leverage this by allowing customers to personalize products, offering free trials, or implementing ‘try before you buy’ schemes. The more a customer feels ownership of a product, the more likely they are to buy it. This effect can be better explained under three different psychological categories:

  • Ownership & Belonging – People are unwilling to part with what they own once they have fostered a sense of attachment and belonging. And this attachment can happen within the first few seconds of placing that object in their hands!
  • Loss Aversion – When we own something we are more inclined to think of the loss of selling it over its actual selling price. Losses are perceived as worse than gains (also called the “asymmetry around the neutral point” or: gains = happy; losses = miserable).
  • Status Quo Bias – Rather than taking the risk of loss or change, people are psychologically more inclined to keep it the same.
  1. The Paradox of Choice

While it might seem counterintuitive, offering too many choices can overwhelm customers and lead to decision paralysis, reducing the likelihood of a purchase. By curating and simplifying options, businesses can make the purchasing decision easier for customers, which in turn can increase sales. A good number of options is usually 3.

Apple is renowned for its sleek product design and limited product line. They offer only a few variations of each product, simplifying the decision-making process for consumers. By doing so, Apple taps into the paradox of choice, making it easier for customers to decide on a product.

  1. The Mere Exposure Effect

The mere exposure effect is a psychological phenomenon where people develop a preference for things simply because they are familiar with them. This is why businesses often benefit from repeated advertising and maintaining consistent branding, in billboards, magazines, social media, etc. Company branding also appeals to this effect as the intention is to create a sense of familiarity.

  1. Confirmation Bias

Confirmation bias is the tendency to search for, interpret, favor, and recall information in a way that confirms one’s pre-existing beliefs or values. Marketers can use this to their advantage by reinforcing positive beliefs that customers already have about their products or services. It’s why customer testimonials are so effective – they allow your customers to hear from people who are similar to them and share their values, making them more likely to agree with and buy into what they’re saying.

Toyota’s marketing often emphasizes their vehicles’ reliability and long lifespan, values that their target market already holds. By confirming these beliefs, they reinforce the idea that a Toyota is a smart purchase.

  1. Labour Illusion

Labor illusion refers to the phenomenon where individuals perceive products or services as more valuable when they believe that more effort or labor has been invested in their creation or delivery. This cognitive bias can influence consumer preferences and decision-making by causing individuals to assign greater value to items or experiences that appear to involve a higher level of effort, even if the actual quality or utility of those items or experiences is not necessarily higher. It has significant implications for various domains, including marketing, product design, and service delivery. By understanding the influence of labor illusion on consumer preferences and decision-making, decision-makers can design marketing strategies, products, and services that effectively account for this bias and leverage it to enhance perceived value. For example, highlighting the craftsmanship involved in producing a product, providing information about the time and effort invested in service, or making the process of work more transparent can help capitalize on the labor illusion and increase consumer satisfaction and willingness to pay.

A clear example of this effect comes once again from Apple. One of the most effective tactics Steve Jobs used to instill confidence in Apple products was to emphasize the amount of work and effort he put into their development. By highlighting the countless hours, weekends, and years dedicated to perfecting Apple devices, he invoked the psychological effect of the labor illusion.

  1. Reactance Theory

Don’t tell me what to do! The teenage years are infamously known as the most difficult and frustrating time for parents. Teenagers are known to not listen to anyone, be reckless, and do stupid things. Some of the most popular films and TV shows are about teenage rebellion – Rebel Without a Cause, West Side Story, and Footloose. Even Shakespeare’s good old Romeo and Juliet features two teenagers rebelling against their families’ desires. “Teenage” has become a cultural phenomenon of its own. This causeless rebellion against advice or instruction can be explained by reactance theory. This theory posits that when an individual feels that their freedom or control is being threatened by advice, they are motivated to protect their autonomy.

An example in business could be if a consumer perceives that a salesperson is pressuring him/her into the purchase of a specific product. reactance may be aroused. The reactance effect would motivate the consumer to reassert their freedom by not purchasing the promoted item.

I imagine that you might be thinking about how to avoid it, correct? Well, it’s all about preserving freedom. Here are a few things you can do to preserve the customer’s sense of freedom and avoid triggering reactance pushback:

  • Offer multiple choices, outlining the pros and cons of each. You can tell customers which one you prefer (using language such as “I would recommend”) but make every effort to acknowledge that the customer is in control of the ultimate decision.
  • Use tentative, ambivalent language when you present your recommendations.
  • Use the power of suggestion instead of telling others what to do!
  1. The Ostrich Effect

The ostrich effect, also known as the ostrich problem, is a cognitive bias that describes how people often avoid negative information, including feedback that could help them monitor their goal progress. Instead of dealing with the situation, we bury our heads in the sand, like ostriches. This bias is based on the myth that ostriches bury their heads in the sand to avoid danger. In the context of decision-making, the ostrich effect can lead us to make poor decisions because we are not considering all the available information. In the context of customer relationships, negative news can have a significant impact on customer engagement. When things are going poorly, people are more likely to disengage from your brand or product. This means that it’s important to be mindful of negative news and how it might impact your customer engagement.

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CONCLUSION

To wrap it all up in a joyous bow, the people behind designing and implementing enhanced experiences for customers need to be aware of how a customer makes a decision. Once we are able to influence positively these decisions, that’s when we start improving CX.

These are just a few of the many ways that understanding psychology can help influence customers’ buying behavior. By leveraging these principles, businesses can craft more effective marketing strategies, drive sales, and build stronger relationships with their customers. Understanding the psychology behind buying behaviors isn’t just about making a sale—it’s about creating an ethical and authentical better customer experience. After all, a happy customer is a loyal customer!

Remember, when we understand the ‘why’ behind our customers’ decisions, we are in a better position to meet their needs and exceed their expectations. And that’s a joyful venture worth undertaking! So, let’s celebrate the wonderful world of behavior science!

#customerexperience #cx #behavioralscience

Link to original article:  https://www.linkedin.com/pulse/uncovering-psychological-tactics-drive-customer-jo%25C3%25A3o-pereira-q53hf

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