Psychology in Marketing

Psychology in marketing – the ultimate weapon to supercharge your growth

Are your marketing/growth team using the principles of psychology? If the answer is no then you’re probably leaving a lot of money on the table.

Knowing how and why customers are making a conversion decision is the biggest step you can make in the journey to creating customer-oriented marketing and product decisions – the strategy that has fuelled all major brands, including helping the likes of Amazon, Netflix and Booking.com reach their multi-billion valuations.

Why is it so important? Well, the simplified formula for growth looks like this:

Number of experiments run per year x winning rate x average uplift

While the real formula is far more advanced, even from the simplified version you can probably see, how important the win rate is. The above applies to the whole funnel – Acquisition, Retention, Referral, etc.

If only there was a reliable way to outperform competitors in the % of experiments won, you’d set up your company for pole position in the race for your customer’s hearts (and wallets), right?

Guess what – that’s what psychology in marketing is all about – increasing your odds of succeeding in an experimentation program, through the use of hypotheses that have been validated through years of research by Nobel prize winners.

But before we move on, I’ll let you into l a secret…A secret that’ll change the way you perceive yourself, your customers, your co-workers, and the very fabric of your world (don’t think I’ve oversold this?)!

Are you sure you’re ready to start your journey?

morpheus gives you a choice

I’m glad you made it down here.

Ok, maybe oversold it a little, but here’s the secret:

Humans do not make rational decisions.

Or at least they don’t make them the majority of the time. We all make a large proportion of our decisions in an unconscious, subjective manner, and then post-rationalize what we did with some great logical thinking (and yes, this has been proven true by countless pieces of research like this one).

You, me, your customer, friendly Sally from down the street – we’re all affected by past experiences and cognitive biases, forcing our decision making away from the purely rational. Whilst past experiences are (to a large extent) unique to each individual, cognitive biases affect all of us.

And you know what? Scientists are so awesome, that they have already done a lot of the hard work, identifying a tonne of these biases. The official Wikipedia page has more than 194 identified and researched biases.

Behavioral psychology & neuromarketing

You’ve probably even heard of the early behavioral experiments in animals, which date back to the famous (and frequently referenced) Pavlov’s dog study from 1897.

pavlov's dog study

Image Credit: Hannah Greiner

With this experiment, Pavlov proved that it was possible to alter the dog’s brain-behavior through conditioning. By showing food to a dog on multiple occasions with an associated trigger, a bell ring, he conditioned a response. When the food was removed, and just the bell rang the dog responded by producing Sativathe very same response it had when food was present. Amazing!.

This experiment is largely regarded as the trigger for a host of further studies in humans, culminating in John B. Watson’s publications “Psychology as the Behaviorist Views it”, which is widely considered the birthplace of behavioral psychology.

Fast forward to the age of advertising and more widespread adoption of psychology in sales & marketing, which started with a 1984 publication by Robert Cialdini, “Influence: The Psychology of Persuasion. The 6 principles initially described in the book (now there’s 7 of them) have become a bible for marketing & sales persuasion techniques of today.

You’d be surprised, how many salespeople & marketers in your everyday life use those techniques to influence you. It doesn’t matter if they’re car salespeople, property managers, etc. Most of these guys have either incorporated those techniques through their professional training. Not to mention large consultancy practices like Ogilvy that use behavioral science to solve everyday business problems

Understanding the psychology of prospects in marketing continues to expand, incorporating various medical techniques. Eye tracking, EEG (Electroencephalography), GSR ( Electrodermal activity) IRT (Infrared thermography), and more. – corporations and scientific researchers are now using it all, with one goal in mind – to understand what’s driving our human decision-making process.

For example, below you can find an eye-tracking study, that helped to determine the best placement for Google Search Ads

google search ads heatmap

Image Credit: Flickr.com

Such studies allow for direct measurement of our attention response to different visual stimuli. It can be applied to both the analysis of traditional marketing campaigns (like billboards, labels etc.) and to improve on-site persuasion through conversion rate optimization.

It doesn’t stop there. Through the use of functional magnetic resonance imaging (fMRI), it is possible to measure brain activity in response to different marketing materials. Prospects are shown a different variation of the ad, and scientists measure which parts of the brain are engaged as they process the information.

MRI scan analysis

Image Credit: Wikipedia

System 1 and System 2 – the foundation of psychology in marketing

While using fMRI and a team of scientists to analyze the experiment would be overkill for most companies, there is a ton of research that is freely available and can be used to increase the efficiency of growth & marketing experiments.

One of the simplest and most elegant theories to help understand your customer’s decision-making process is that our brain consists of 2 systems, theory developed by Nobel-prize winning research psychiatrist, Daniel Kahneman.

According to his psychological theory, our brain consists of 2 different systems, each system being responsible for our behavior under different circumstances.

– System 1 – the primitive part of the brain wired for survival and governing instinctive reactions. Think of it as an animal part of you – that helps you react in dangerous situations, solve easy puzzles and handle well-known situations

– System 2 – the abstract-thinking part of our brain. It switches on when we’re facing with complex tasks, like creating a marketing strategy or product roadmap, making life-changing decisions, etc.

Here’s a question for you: which system do we use for the majority of the time?

System 2 – the reasonable, organized guy, right?

Wrong.

Based on the research, we tend to spend 90-98% of the day driven by System 1 (the numbers do vary a little), which makes it the ultimate decision-maker in most cases. Why not system 2, you ask? Using system 2 j is extremely energy-consuming, and we as humans want to conserve our energy = so we avoid turning it on unless it’s absolutely necessary.

It’s taken a while to get here – but this is why you should focus most of your time marketing to system 1 (for most products, maybe not if you’re selling a highly complex ERP with a subscription of millions of dollars/year – which is a niche case).

This theory has been built on by many other researchers, being the subject of a number of Ted talks and incorporating more aspects of the animal brain’s instinctive behavior and the influence it has on decision making, specifically in marketing.

Quick tips to persuade the animal inside of us using behavioral science:

To summarise all the ways you can use Kahneman et al’s observations about the system 1 or animal brain would be an enormous undertaking.

Instead, we’re giving you a few insights to help you to influence your users’ thought processes and make the most of their biases, by tailoring your approach to the animal inside all of us:

1.“I am the center of the world” – speak a benefits-oriented language

The animal brain has evolved to help us survive and that makes it extremely egocentric. It doesn’t care for your company’s mission, your achievements, or your team.

It cares only for its own benefits. Whether this is saving money through your e-commerce, looking beautiful thanks to your high-fashion clothes or acquiring better customers, and making more money through your SaaS product.

And when it comes to decision-making, the animal brain is in the driving seat.

Stop talking about feature and specifications in the most prominent places of your ad space/Landing Page. Start talking about benefits and how your product/service will improve your consumers’ lives’.

we make users cool by adding our product

Image Credit: Momoko Price

Action points:

  • Revisit your ads, Landing Pages, and emails. If your message can’t answer “why do I care?” from your users’ point of view, you probably need to work on it some more. Search for places where you use feature-oriented copy and turn those into benefits.
  • Make sure your product/service is built around bringing your users value – and clearly communicate this at each stage of the customer journey

2. “Don’t make me think” – you only have 5 seconds to grab customers’ attention

Here’s the thing – system 1 is easily distracted, and likes to put as little effort into decision-making, as possible.

According to research, Internet users now have a shorter attention span than a goldfish. And conversion science has proven you only have around 5 seconds to grab users’ attention.

If you fail in the first 5 seconds – you may as well not have bothered with the rest of the cool LP design, ad, or whatever else.

That’s why it is so important to craft clear, attention-grabbing, and benefit-oriented copy & design – especially at the beginning of the user journey.

clear and understandable hero section brand24

Example of a clear and understandable hero section from brand24

Action points:

  • Make your message as clear as possible. Avoid using jargon and technical language unless you’re confident it’s the language your users would use
  • Make your Landing page easily understandable (especially the hero section)
  • Craft a strong, clear USP, that will help to easily understand the scope of your product/service and will differentiate you vs the competitors
  • Use a hierarchy of information and white spaces to make it as easy as possible to spot the most important information of your LP

3. “Reading is exhausting” – use visuals, videos, and infographics

You probably remember that one time in school, when you’ve had to read some super long book assigned by the teacher. It probably wasn’t fun, right?

That’s because reading long-form content is tiring, it requires focus – and we’ve already learned that system 1 doesn’t like to put in the effort.

To make it easier for your users to understand the benefits of your product, use visuals. According to research, the human brain processes images 60 000 times faster than text. And people tend to remember 80% of what they saw – compared to 20% of what they’ve read.

speed of processing by medium

Credit: iDashboards UK

Action points:

  • Break down a long-form copy using explainer visuals
  • Use infographics and data storytelling to help your customers understand more complex data
  • Test using video – explainers and before & after creatives to help your customers understand your product/service

4. “I need to be provided with constant stimulus” – use contrast and changing design patterns to grab & keep the attention

Spotting danger (predators) used to be the number one priority for survival as early humans. This is why System 1 is wired to search for contrast in our environment.

To capitalize on it, use the power of contrast and design patterns to influence your users’ attention. Differentiate your brand from your competitors, through design and UX.

However, remember to make user always feel in control of what’s going on the website – enacting too many moving elements, or too clunky design is an easy way of evoking stress and irritation.example of using a visual cue

Example of using a visual cue (arrow) to help guide user’s attention by Sage Intacct

Action points:

  • Use visual cues – arrows, highlights, contrasting colors – to help users in spotting key areas in the conversion funnel
  • Differentiate visually from your competitors
  • For ads with a background that can be predicted – use contrast to grab users’ attention (this is especially applicable for Facebook ads or any other social media). If you know that the background is going to consist mostly of white and blue, head to the color calculator and pick contrasting colors for your next ads test
  • Use before and after images, testimonials, etc. There’s a good reason why every single supplement ad you see around utilizes this effect

Cialdini’s Principles of Persuasion

If you were looking for an ultimate book, that will teach you the foundations of psychology in marketing – Influence: The Psychology of Persuasion is the right place to start.

Nowadays, you won’t find a single sales/marketing training that doesn’t use Principles from Cialdini’s book. This is how extremely influential (pun intended) this book has become.

The 6 principles I’m about to describe can be used to optimize almost every step of the funnel – from acquisition to conversion, retention, and even referral.

1.Repriciocity – we like giving back

This principle states by initially giving something to your prospects, you greatly increase the likelihood of them becoming your customers.

So it’s no surprise that content marketing proved to be such a powerhouse in the last few years. By providing guides, tutorials, and generally being helpful to your audience, you’re making them more prone to return the favor when it comes to purchasing time.

uber referral program

Source: growth-hackers.net

Action points

  • Prepare a list of questions related to your expertise, that your audience might be interested in. Prepare a content that is helpful and insightful, and address the problems your potential customers have
  • Turn your best content into a gated form, like downloadable guides, to give value, but also – generate an owned channel of information distribution to your customers
  • Offer free consultations, webinars, and meetups. The more you give, the more you can receive

2. Commitment & Consistency – we tend to continue what we’ve already started

This principle is also known as “foot in the door” and it works on the premise that once an individual makes a small commitment, it’s far easier to ask for a bigger one.

This happens, because as humans, we have an immense internal need to continue what we’ve already started – whether it’s a bad relationship or wearing that old pair of shoes..

You might capitalize on that principle by using multiple-steps forms, sending samples of your product, or getting someone on a free consultation call, before asking them to sign a deal.

Action points:

  • Analyze your funnel and search for places where you can make it easier for the customer to make the first step. It could be leaving contact details or making a purchase
  • If you’re generating leads, test using multiple-steps forms and freebies
  • For e-commerce companies provide deals and promotions or even create a special category of products with the sole purpose of generating as many customers as possible at almost zero profit

3. Social proof – we like using products validated by other users

Ask yourself a question – would you rather pay for:

  1. A product already used and rated by thousands of people around the world
  2. A new product from a freshly formed company you’ve never heard of

You’d choose the 1st option 100 out of 100 times.

amazon product ratings

Number of real-users reviews is one of the key factors, that drives the use of Amazon platform

We, humans, are social creatures. We tend to trust and follow other people – especially if there’s a lot of them. Evidence of this, taken to the extreme, is the lemming-like rush of Black Friday’s discount store stampedes.

This principle is the sole reason you see reviews on each of the LPs across the Internet – many of which are actually fake.

Action points:

  • From the very first day of running a business, actively acquire reviews and testimonials from your repeat customers. You can use sites like trustpilot.com, Google Maps, or use automated tools like ratingcaptain.com.
  • Go beyond your LP with social proof – use it in Paid Ads (Social Media, Display), create downloadable case studies and include them in your PR strategy
  • Use tools like proofly to add live Social Proof layer to your product

4. Authority – we tend to trust recognizable and those with (perceived) knowledge

Navigating the information overload that washes over our brains on a daily basis is extremely tough. We respond by constantly seeking guidance from other people and companies – especially on topics we’re not familiar with.

This need is so strong we tend to agree to do morally unacceptable things when faced with authority. Like in the Milgram experiment where participants were asked by a doctor to use electric impulses to inflict pain to other people (spoiler alert: they did it, , even though the final shocks would’ve been fatal.)

instagram influencer

We tend to follow well-known people – even if they do not have expertise in a certain subject, or they might be dishonest in their referrals

Action points:

  • If you are a smaller company/startup with little brand recognition – you can establish trust by “borrowing authority” through displaying logotypes of companies you do work with, or even tools you use
  • Influencer marketing really works, because of the Authority principle. Don’t hesitate to use this channel, but do it with caution
  • Getting some experts in your field to talk about your brand – even on a short video. If your company is striving for trust, try to get some famous people to talk about you
  • Establish your expertise through your content (blog, videos, SM), to influence your prospects

5. Scarcity – the less of it is available, the more we want it

Have you ever heard about the album called “Once Upon a Time in Shaolin” by Wu-Tang Clan? There was only one copy produced worldwide, which was sold for a record 2 000 000$ to Martin Shkreli,

With a promise, there are no other copies in existence and no more to be produced – the only person in the world with this album is the buyer.

Sounds crazy? It is. it’ works for more than just Wu-Tang Clan albums, and it works on much smaller scales – that’s why there’re so many “limited collections”, “limited offers” and “time-gated offers” out there – you’ll notice it next time you’re in your local shop.

booking scarcity tactic

Booking.com has mastered the use of scarcity for increasing the number of bookings made

Action points:

  • Test including limited-time promotions, one-time webinars, and limited-time content
  • Display countdowns, quantity in stock, current demand and other information suggest the offer will end soon
  • Use waitlists before your product launch – the Robinhood app’s success is a great case study on how to do this well.

6. Liking – we prefer to buy from brands we like

While it might sound obvious, we prefer some people and companies over others. And we’re more likely to buy from the ones we like.

Liking is caused by sharing the same values or simply being physically attracted to somebody or something.

The liking principle is used to build brands, and appealing to your customers through the content you produce. Try to match the tone of voice used by the customers and use the psychology of color to match the use cases of your product/service.

Netflix is a company that’s exceptionally well with using customer voice, and being simply cool

Action points:

  • Identify your ideal audience, their needs, and fears. Speak to them using their language, and in line with their beliefs
  • Create an extended “About us” page, where you can share your company’s values, show your team and things that do get you excited
  • Don’t be all about sales – funny cat gif on Social Media from time to time can’t hurt. Jokes aside – try to post things that can really engage your customers
  • Create Facebook Ad campaigns that target only friends of your fans, which uses social proof to increase conversions

Other notable techniques and cognitive biases

1.Hick’s law

The time it takes to make a decision increases with the number and complexity of choices.

Hick’s law basically states the more choices we have, the less likely we are to actually make one – and the slower the decision-making process is. (System 2 gets involved and it all gets too much)

hick's law curve

Image credit: WhatIS.com

Action points:

  • When designing Landing Pages, don’t overwhelm users with things to do – especially in the hero section.
  • Plan 1-2 main conversion paths on your website, and try to effectively lead users through them
  • When you’re in paid acquisition mode – focus on clear design and strong CTA, instead of cluttering design/copy

2. Facial distraction

We have a specialized area in our brain with the sole purpose of recognizing faces. They are natural attention grabbers and can be used to help guide your users.

model face

Image credit: Pixabay.com

Action points:

  • Try using close-ups of faces in your ads and Landing Pages – especially in situations, where your main goal is to capture the attention
  • If you have a specific piece of design you want to lead prospects attention to – try to use a face that looks directly at the desired element, to lead users attention there
  • On the other end of the scale, test clearing faces from all the steps of the journey that are focused on pure conversion (like forms). They require a lot of attention and focus – and faces can prove to be an unhelpful distraction

3. Endowment effect

We tend to (often irrationally) overvalue things we already own – even if s they don’t have objective value.

endownment effect

Image credit: Kent Hendricks

Action points:

  • Test the return-for-free policy
  • Test switching your business model to subscription-based. Once a user subscribes, it takes a lot of effort to leave – and in this case, the inertia can actually help you out
  • The same principle as above relates to trials. As soon as you have a user on a trial the likelihood of her/him converting into a paid user skyrockets. Try testing a different funnel, where you provide a free trial

4. Mere-exposure effect

The more you’re exposed to something, the more likely you are to both remember it, and like it.

I guess you’ve had a situation when you’ve heard a song on the radio multiple times, and only after x times, you started to like it. This is merely the exposure effect in action – probably the oldest law of marketing, used by the richest companies before the Internet was a twinkle in the eye of Tim Berners-Lee.

Thankfully, due to advanced tracking and analysis, you can get a remarkably similar effect at a fraction of the cost, if you’re smart about your remarketing strategy. The more relevant you are with your remarketing ads (and thus – mere-exposure effect), the better results you’ll get – so having clear, consistent messaging and designing ads specific to the buyer journey will help you make the most of this effect.

Try using catalog remarketing, where you show your customer exactly the product he was browsing for, or focusing on entire categories (like gardening) for e-commerce. Use topical clusters (for example “The Ultimate Facebook Ads guide”, if the prospect has browsed through your “Facebook Ads Managed Services” subpage”.

As video views both on Facebook and Youtube are extremely cheap, you can easily use them, to warm-up the prospect, increasing her/his post-conversion likelihood of becoming a paying customer, while potentially increasing LTV.l

Action points:

  • Prepare an extensive retargeting strategy – even if you don’t usually do paid ads
  • Try more in-depth retargeting that goes beyond just your page visits – retarget users who have engaged with your content on Social Media, E-mails or even read about your company from paid PR content
  • Post on a regular basis on Social Media, send newsletters and keep producing content to engage and re-engage.
  • Think further than just conversion campaigns – use low budget video views/engaged content goals, and warm-up the prospect before asking her/him to convert. It’ll help increase their value, and take some work off your sales team’s shoulders

The bottom line – ethics

Some of these techniques sound borderline manipulative, right? So – where’s the border between successful use of psychology in marketing and abusing people’s behavior?

Well, the fact is, this is the reality for most people. Without even realizing it, most people subconsciously use a lot of these techniques anyway. Through our past experiences, and other people’s actions we’ve learned what works in social and sales interactions to help us get out the way. It’s not about dishonesty, it’s about communicating as effectively as possible in a given situation.

A good rule to follow is the one formulated by Nir Eyal in his book: “Hooked: How to Build Habit-Forming Products”. This is what’s called the “regret test”.

If users would regret taking the action, the technique fails the regret test and shouldn’t be built into the product, because it manipulated people into doing something they didn’t want to do. Getting people to do something they didn’t want to do is no longer persuasion — it’s coercion.”

We want to persuade, not to coerce.

With honest interactions and responsible use of these techniques, we are simply allowing users to consider our brand/product at the right time for them.

Summary

Years of extensive research have provided us with hundreds of psychological studies, that can be used to improve the win rate of your growth & marketing experiments.

And by increasing the overall win-rate of your experiments, you can supercharge your growth, profiting from the compound rate of a higher experiment win ratio.

However – you must remember these are tests.

Testing these well-established principles in your own environment, with your own prospects is the only reliable way to find uplifts for your business. The framework is there to find the right levers for your prospects – you just need a methodical approach and a little patience to find the winning combinations.

Try categorizing experiments by the cognitive bias used, to find the common patterns for your audience, and then to double-down on winners.

And never stop learning – the knowledge base for psychology in marketing is developing on almost a daily basis, whilst the psychological theory will not change, your consumers’ needs, the competitive market, and your brand will – continuously testing and learning will help your business to stay agile, poised to make the most of what we know about human psychology as your environment changes.