We believe we make decisions based on logic and common sense, especially when it comes to business or big purchases. We believe that our experience and education will protect us from all kind of marketing manipulations. So far is it from being true… We are all manipulated, pushed and provoked to certain decisions. Those of us who work in sales and implement the tricks of sales psychology sell and earn tenfold more than those who don’t. Loss Aversion
You won $100 and then gambled away $80 of them. What’s the feeling? Another situation: you go to the cinema, but in 10 minutes you realize that the movie is boring and you are wasting your time. What are the chances you walk off right away? According to the theory developed by Daniel Kahneman you wouldn’t feel that you won $20 in the first situation, you would feel you lost $80. Loss aversion also predicts that the chances that you would leave the cinema, even though you don’t like the movie, are very small. Loss aversion theory states that we prefer avoiding losses to acquiring gains of equal value. Loss is much more painful for us than the joy of potential gains that makes a fear of loss a valuable instrument to control the decision making process of your current and potential customers.
Tricks To Use Loss Aversion To Increase Your Sales
- Offer free trials. People don’t like losing things they already have, therefore many people would prefer to buy rather than lose the product they already have. - Emphasize the possible loss in you marketing communication (e.g. Use our app for 5 minutes a day if you don’t want to lose your mobility in old age or Don’t lose $100 every month on fitness. Download our free app instead)
Does $100 sound like a good price to you? What about $200? It is difficult to say whether something is cheap or expensive unless you have a frame of reference for valuing it. Anchoring is the tendency to perceive price according to the first piece of information offered when making decisions. Dan Ariely, a Professor of Psychology and Behavioral Economics who demonstrated a wide range of behavioral economics biases, conducted an experiment in 2006. He asked his students to write last two digits of their social security number. Then he showed a bottle of wine and said that these two digits are the pretended price of the bottle. When the students bid for the wine, people with high social security digits were ready to pay up to 346 percent more than students with low numbers. This experiment shows that the anchor price greatly affected their ability for unbiased assessment.
Practical Examples Of Anchoring
- Show expensive options first and then move to mid-range products. Even if the price of mid-range items is not very competitive, it will be considered cheap by your customers. You can also set very high initial price and discount it considerably during the negotiations. - Use multiple unit pricing when you plan sales. Instead of discounting one item (for example $2.99 instead of $5.99 per item) show customers how many items they will get for the given price (get 2 items for just $5.99!). The study proves that multiple unit pricing shows 40% better results than the single unit pricing because customers anchor the number of items in the pack and consider it tom be a very good deal.
How long are you ready to wait for your order in a restaurant? What about the delivery of something you bought online? Modern society is not ready to wait, if we want something we want it immediately. Instant gratification refers to our desire to get what we want without any delay, right now. Think about how often you see the words “now”, “instant” “right away” in marketing. The power of now dictates brands new rules of communication with their customers, the customers whose patience leaves much to be desired.
Instant Gratification Rules In Sales
- Show the final result. Even if you cannot provide instant gratification, you can help your customers visualize the final result. The tools like “Upload the photo of your room and see your walls painted in this color” or “See how this sofa will fit into your interior” work to fulfil the desire of your customers to see the final result. - Promise either instant solution or set a timeframe. It is true for any part of your relationships with customers: support, sales or delivery. Auto-responses, downloadable resources and bots will help you fulfil customer’s desire for instant gratification.
The Bandwagon Effect
Imagine you are exploring a new city as a tourist. You are looking for the place to eat when you see two local restaurants. One is full of people, the other one is empty. Where would you go? How often do you check the ratings or reviews when you choose a movie to watch or a software to buy for your business? The bandwagon effect refers to the customer’s desire to do something primarily because other people are doing it. You can use guerrilla marketing psychology tricks to show social approval of your products or services.
- Show that you are chosen by many. Be sure that your potential customers can easily find the reviews and ratings of your product online. According to the recent study, 73% of consumers say positive customer reviews make them trust a business more. Another thing the online buyer psychology teaches us is that testimonials and case studies are crucial for B2B buyers’ trust. - Right statistics is better than thousand words. If you show that 90% of your customers are satisfied with your product or that 85% of them would recommend your product or service to a friend, it is a valuable sign that your company is worth their money and time. Use statistical data in your email campaigns, social media and website.
Have you ever felt guilty about buying things? The research of customer behavior shows that the majority of customers experience regret, especially after the purchase of expensive items. This negative feeling might be caused by many different factors such as a fear of making the wrong choice or guilt over money spent. In order to save your customers from regrets (or what’s even worse – returns) you should sweeten the deal.
Ways To Prevent Buyer’s Remorse
- Offer a coupon for the next purchase. The coupon will add value to the current purchase and increase your chances to get repeat customers. - Surprise your customer with an unexpected compliment. Even a small thing can provide a “wow” effect and set a positive mood. - Use “money back guarantee”. It mitigates the buyer’s remorse as it gives your client a chance to change their mind. If there is no stress or a burden of responsibility, there are no hard feelings toward the purchase!