Connect with us

MARKETING

How marketers can use cognitive biases to influence customer decisions

Published

on

How marketers can use cognitive biases to influence customer decisions

You’re not rational — and neither are your customers. In an effort to make efficient decisions, the human brain takes shortcuts. As such, your customers rely on a variety of heuristics and cognitive biases to make decisions efficiently. And they don’t even know it. 

The utilitarian theory of economic behavior, postulated by 19th-century philosopher John Stuart Mill, suggested that all economic decisions were rational. It was a rational thought at the time, but it failed to consider how the brain worked in real-world situations. 

People, including your customers, tend to make decisions that don’t always make sense, often succumbing to the biases lurking below the surface. As a marketer, you can yield more influence by understanding how your customers’ behaviors are influenced by cognitive biases and psychological processes that lead to better — and sometimes worse — decisions. 

In this article, let’s explore three cognitive biases you can use to shape how customers think about your product or service while interacting with your brand. 

Cognitive bias 1: The framing effect 

In the article, the researchers presented findings from a study in which participants were given a choice about a life and death scenario.

Given the stakes, how did the researchers frame the different treatment options? The first treatment was framed around saving 200 lives whereas the second treatment was framed around a 1/3 probability that 600 people would be saved along with a 2/3 probability that everyone will perish. 

Which outcome do you prefer? If you’re like most people, you selected the treatment as the life-saving option, which is likely to result in 200 saved lives. But do you see something unusual about the treatment options? Regardless of which treatment you selected, 200 people are likely to survive and 400 are likely to perish (and only the first treatment, the one you selected, will certainly result in the death of 400 people). 

Despite offering “equal expected value” according to the researchers, participants overwhelmingly selected the first treatment (72% to 28%). The impact of the framing effect was starting to come into focus. 

Today the framing effect is alive and well. And marketers are making good use of it. In a world with COVID-19 concerns, household cleaning items are using the framing effect. In an industry with a projected global value of $46.9 billion by 2026, the Reckitt Benckiser Group, the maker of Lysol Disinfectant Max Cover Mist, claims that 

the disinfectant “kills 99.9% of viruses and bacteria.” Would you be more or less likely to buy the same product if it claimed to allow 1% of viruses to survive? 

The good times are not limited to cleaning products. Mission Foods, for example, found success by labeling its large flour tortillas as 95% fat-free. That certainly sounds a lot better than offering a tortilla that’s loaded with 5% fat. How about Haleon, the maker of Sensodyne toothpaste? Using a combination of three cognitive biases (social proof, authority, and the framing effect), Haleon claims that nine of 10 dentists recommend Sensodyne. That’s more appealing than a message claiming that only one of 10 dentists don’t like Sensodyne. 

How are you communicating your product or service? Remember, your customers unknowingly evaluate your value proposition based on how you frame it. And you don’t need to highlight statistics or numbers to do so. You can use the framing effect when you craft your message relative to what’s important to your audience — and then you can watch it take hold. 

Read next: Using psychology and better data practices to get customers closer to purchase

Cognitive bias 2: The decoy effect 

The decoy is all around you — and you probably don’t even know it. What’s even more interesting is that it can guide your customer’s decision at the time of purchase. Known as asymmetrical domination, the decoy effect pertains to an intentionally placed offering intended to increase the probability of selecting an alternative option. 

The Economist, a British economic and world news publication used the decoy effect to drive sales to its preferred subscription tier. Consider the following offers: 

  • Digital-Only Subscription: $59
  • Digital and Print Subscription: $125 

To nudge buyers towards the higher price point, the marketers at the Economist added another option: 

  • Print-Only Subscription: $125

Yes, the new option was priced the same as the digital and print version, but it didn’t include access to digital content. As you might imagine, the print-only option was never intended to solicit any real consideration. Instead, it was a decoy. 

Dan Ariely, a former professor of psychology and behavioral economics at MIT, learned about the pricing strategy at the Economist and wanted to learn how the decoy effect influenced behavior among his students. Using the same pricing tiers as the Economist, Ariely surveyed his students to select one of the subscription options. What happened? A whopping 84% selected the most expensive option for the $125 bundle, whereas only 16% selected the digital-only offering at $59. 

But did the decoy really play a big role in nudging students towards the $125 bundle? To find out, Ariely surveyed a second group of students. After eliminating the decoy, the percentage of students who selected the $125 bundle dropped from 84% to 32%. As such, Ariely discovered that participants became significantly more likely to choose the higher-priced option in the presence of a decoy. 

How can you create a decoy in your line of business? As you think about leveraging the decoy effect, you must keep in mind that you want the price of the decoy to be close enough to the preferred item while offering dramatically inferior features. In other words, you want the decoy to be significantly less feature-rich than the preferred option but only slightly more feature-rich than the least expensive option. 

Imagine that you work for a streaming service that’s considering a new pricing strategy for access to its content library. The audience to whom the service appeals enjoy consuming exclusive movies, documentaries and podcasts on the platform. And according to new survey data, customers are willing to pay around $10 per month for access to your content. But your business strategy requires you to nudge a percentage of your customers into a higher price tier. 

How could you use the decoy effect to increase the price your customers are willing to pay for a monthly membership? You can start by creating an introductory tier that aligns with the survey data and offer access to a limited library of movies at $9.99. Next, you want to focus on the desired price point, which is, say $14.99. At this price, your customers can access all movies, documentaries and podcasts. 

Knowing that most customers like to consume each type of content equally, you can create a decoy that offers access to all movies for $13.99. After all, this is the decoy. As you can see, the decoy offers an expanded version of the first offer but doesn’t provide access to the various types of content your audience wants. As a result, your customers start to perceive the $14.99 option as a value choice — even though it represents the highest price point. 

The goal is to use the decoy effect to nudge your customers towards a specific choice. Once the decoy is in place, your customers begin comparing the company-preferred option (the bundled option in the Economist example and the $14.99 option in the above scenario) against the decoy. And if you create a large enough gap in value while maintaining a small enough gap in price, you might find yourself with more high-paying customers. 


Get MarTech! Daily. Free. In your inbox.


Cognitive bias 3: Frequency bias 

Frequency bias is something that can alter perception over time. When a person encounters something new, whether a new word, a slogan, an idea or a product, frequency bias posits that the person perceives the new thing to appear more frequently. It might seem like the new item is everywhere. Have you ever been introduced to a new product and noticed more of the same advertisements at every turn? 

According to Anina Rich, a Professor in the School of Psychological Sciences at Macquarie University in Sydney, Australia, frequency bias is related to working memory-driven attentional capture — a process by which specific environmental stimuli attract your attention because it’s now occupying a space in your mind. Interestingly, the new word, phrase, idea, or product that’s occupying your mind is likely occupying it below the level of consciousness. As Rich puts it, “what you are thinking about unconsciously guides you to relevant information in the environment.”2

Frequency bias is particularly relevant in marketing within the context of a larger campaign. Do you have one marketing channel through which you can more easily capture your customer’s attention — and then carefully place your message in other areas that can draw upon this subconscious phenomenon? 

By understanding that people perceive repetitive information with greater frequency after initial exposure, you can be more diligent in how you build your multichannel marketing strategy. Specifically, you can develop a strategy in which you emphasize capturing attention across a highly engaged channel, thus setting the stage for your message appearing everywhere during the course of your campaign. 

Read next: How anthropology can drive insights from your customer data

Conclusion 

Cognitive biases constantly pull the decision-making strings inside your customers’ heads. Do you see yourself as a marketing puppeteer? As you attempt to build a rational marketing strategy, you might want to remember that your customers don’t always make rational decisions. And that understanding must inform part of your marketing strategy. 

1Amos Tversky, Daniel Kahneman, “The Framing of Decisions and the Psychology of Choice,https://www.science.org/doi/10.1126/science.7455683

2Anina Rich, “What Is the Baader Meinhof Phenomenon?, https://lighthouse.mq.edu.au/article/july-2020/What-is-the-Baader-Meinhof-Phenomenon


Opinions expressed in this article are those of the guest author and not necessarily MarTech. Staff authors are listed here.


About The Author

Jade Bunke is the vice president of marketing at National Technical Systems and is a leading authority in marketing science, messaging and demand generation. As a marketing scientist with expertise in buyer behavior, Bunke blends creative marketing with aspects of cognitive neuroscience, social psychology and behavioral economics to yield optimal results.

Source link

Keep an eye on what we are doing
Be the first to get latest updates and exclusive content straight to your email inbox.
We promise not to spam you. You can unsubscribe at any time.
Invalid email address

MARKETING

Why We Are Always ‘Clicking to Buy’, According to Psychologists

Published

on

Why We Are Always 'Clicking to Buy', According to Psychologists

Amazon pillows.

(more…)

Keep an eye on what we are doing
Be the first to get latest updates and exclusive content straight to your email inbox.
We promise not to spam you. You can unsubscribe at any time.
Invalid email address
Continue Reading

MARKETING

A deeper dive into data, personalization and Copilots

Published

on

A deeper dive into data, personalization and Copilots

Salesforce launched a collection of new, generative AI-related products at Connections in Chicago this week. They included new Einstein Copilots for marketers and merchants and Einstein Personalization.

To better understand, not only the potential impact of the new products, but the evolving Salesforce architecture, we sat down with Bobby Jania, CMO, Marketing Cloud.

Dig deeper: Salesforce piles on the Einstein Copilots

Salesforce’s evolving architecture

It’s hard to deny that Salesforce likes coming up with new names for platforms and products (what happened to Customer 360?) and this can sometimes make the observer wonder if something is brand new, or old but with a brand new name. In particular, what exactly is Einstein 1 and how is it related to Salesforce Data Cloud?

“Data Cloud is built on the Einstein 1 platform,” Jania explained. “The Einstein 1 platform is our entire Salesforce platform and that includes products like Sales Cloud, Service Cloud — that it includes the original idea of Salesforce not just being in the cloud, but being multi-tenancy.”

Data Cloud — not an acquisition, of course — was built natively on that platform. It was the first product built on Hyperforce, Salesforce’s new cloud infrastructure architecture. “Since Data Cloud was on what we now call the Einstein 1 platform from Day One, it has always natively connected to, and been able to read anything in Sales Cloud, Service Cloud [and so on]. On top of that, we can now bring in, not only structured but unstructured data.”

That’s a significant progression from the position, several years ago, when Salesforce had stitched together a platform around various acquisitions (ExactTarget, for example) that didn’t necessarily talk to each other.

“At times, what we would do is have a kind of behind-the-scenes flow where data from one product could be moved into another product,” said Jania, “but in many of those cases the data would then be in both, whereas now the data is in Data Cloud. Tableau will run natively off Data Cloud; Commerce Cloud, Service Cloud, Marketing Cloud — they’re all going to the same operational customer profile.” They’re not copying the data from Data Cloud, Jania confirmed.

Another thing to know is tit’s possible for Salesforce customers to import their own datasets into Data Cloud. “We wanted to create a federated data model,” said Jania. “If you’re using Snowflake, for example, we more or less virtually sit on your data lake. The value we add is that we will look at all your data and help you form these operational customer profiles.”

Let’s learn more about Einstein Copilot

“Copilot means that I have an assistant with me in the tool where I need to be working that contextually knows what I am trying to do and helps me at every step of the process,” Jania said.

For marketers, this might begin with a campaign brief developed with Copilot’s assistance, the identification of an audience based on the brief, and then the development of email or other content. “What’s really cool is the idea of Einstein Studio where our customers will create actions [for Copilot] that we hadn’t even thought about.”

Here’s a key insight (back to nomenclature). We reported on Copilot for markets, Copilot for merchants, Copilot for shoppers. It turns out, however, that there is just one Copilot, Einstein Copilot, and these are use cases. “There’s just one Copilot, we just add these for a little clarity; we’re going to talk about marketing use cases, about shoppers’ use cases. These are actions for the marketing use cases we built out of the box; you can build your own.”

It’s surely going to take a little time for marketers to learn to work easily with Copilot. “There’s always time for adoption,” Jania agreed. “What is directly connected with this is, this is my ninth Connections and this one has the most hands-on training that I’ve seen since 2014 — and a lot of that is getting people using Data Cloud, using these tools rather than just being given a demo.”

What’s new about Einstein Personalization

Salesforce Einstein has been around since 2016 and many of the use cases seem to have involved personalization in various forms. What’s new?

“Einstein Personalization is a real-time decision engine and it’s going to choose next-best-action, next-best-offer. What is new is that it’s a service now that runs natively on top of Data Cloud.” A lot of real-time decision engines need their own set of data that might actually be a subset of data. “Einstein Personalization is going to look holistically at a customer and recommend a next-best-action that could be natively surfaced in Service Cloud, Sales Cloud or Marketing Cloud.”

Finally, trust

One feature of the presentations at Connections was the reassurance that, although public LLMs like ChatGPT could be selected for application to customer data, none of that data would be retained by the LLMs. Is this just a matter of written agreements? No, not just that, said Jania.

“In the Einstein Trust Layer, all of the data, when it connects to an LLM, runs through our gateway. If there was a prompt that had personally identifiable information — a credit card number, an email address — at a mimum, all that is stripped out. The LLMs do not store the output; we store the output for auditing back in Salesforce. Any output that comes back through our gateway is logged in our system; it runs through a toxicity model; and only at the end do we put PII data back into the answer. There are real pieces beyond a handshake that this data is safe.”

Source link

Keep an eye on what we are doing
Be the first to get latest updates and exclusive content straight to your email inbox.
We promise not to spam you. You can unsubscribe at any time.
Invalid email address
Continue Reading

MARKETING

Why The Sales Team Hates Your Leads (And How To Fix It)

Published

on

Why The Sales Team Hates Your Leads (And How To Fix It)

Why The Sales Team Hates Your Leads And How To

You ask the head of marketing how the team is doing and get a giant thumbs up. 👍

“Our MQLs are up!”

“Website conversion rates are at an all-time high!”

“Email click rates have never been this good!”

But when you ask the head of sales the same question, you get the response that echoes across sales desks worldwide — the leads from marketing suck. 

If you’re in this boat, you’re not alone. The issue of “leads from marketing suck” is a common situation in most organizations. In a HubSpot survey, only 9.1% of salespeople said leads they received from marketing were of very high quality.

Why do sales teams hate marketing-generated leads? And how can marketers help their sales peers fall in love with their leads? 

Let’s dive into the answers to these questions. Then, I’ll give you my secret lead gen kung-fu to ensure your sales team loves their marketing leads. 

Marketers Must Take Ownership

“I’ve hit the lead goal. If sales can’t close them, it’s their problem.”

How many times have you heard one of your marketers say something like this? When your teams are heavily siloed, it’s not hard to see how they get to this mindset — after all, if your marketing metrics look strong, they’ve done their part, right?

Not necessarily. 

The job of a marketer is not to drive traffic or even leads. The job of the marketer is to create messaging and offers that lead to revenue. Marketing is not a 100-meter sprint — it’s a relay race. The marketing team runs the first leg and hands the baton to sales to sprint to the finish.

​​

via GIPHY

To make leads valuable beyond the vanity metric of watching your MQLs tick up, you need to segment and nurture them. Screen the leads to see if they meet the parameters of your ideal customer profile. If yes, nurture them to find out how close their intent is to a sale. Only then should you pass the leads to sales. 

Lead Quality Control is a Bitter Pill that Works

Tighter quality control might reduce your overall MQLs. Still, it will ensure only the relevant leads go to sales, which is a win for your team and your organization.

This shift will require a mindset shift for your marketing team: instead of living and dying by the sheer number of MQLs, you need to create a collaborative culture between sales and marketing. Reinforce that “strong” marketing metrics that result in poor leads going to sales aren’t really strong at all.  

When you foster this culture of collaboration and accountability, it will be easier for the marketing team to receive feedback from sales about lead quality without getting defensive. 

Remember, the sales team is only holding marketing accountable so the entire organization can achieve the right results. It’s not sales vs marketing — it’s sales and marketing working together to get a great result. Nothing more, nothing less. 

We’ve identified the problem and where we need to go. So, how you do you get there?

Fix #1: Focus On High ROI Marketing Activities First

What is more valuable to you:

  • One more blog post for a few more views? 
  • One great review that prospective buyers strongly relate to?

Hopefully, you’ll choose the latter. After all, talking to customers and getting a solid testimonial can help your sales team close leads today.  Current customers talking about their previous issues, the other solutions they tried, why they chose you, and the results you helped them achieve is marketing gold.

On the other hand, even the best blog content will take months to gain enough traction to impact your revenue.

Still, many marketers who say they want to prioritize customer reviews focus all their efforts on blog content and other “top of the funnel” (Awareness, Acquisition, and Activation) efforts. 

The bottom half of the growth marketing funnel (Retention, Reputation, and Revenue) often gets ignored, even though it’s where you’ll find some of the highest ROI activities.

1716755163 123 Why The Sales Team Hates Your Leads And How To1716755163 123 Why The Sales Team Hates Your Leads And How To

Most marketers know retaining a customer is easier than acquiring a new one. But knowing this and working with sales on retention and account expansion are two different things. 

When you start focusing on retention, upselling, and expansion, your entire organization will feel it, from sales to customer success. These happier customers will increase your average account value and drive awareness through strong word of mouth, giving you one heck of a win/win.

Winning the Retention, Reputation, and Referral game also helps feed your Awareness, Acquisition, and Activation activities:

  • Increasing customer retention means more dollars stay within your organization to help achieve revenue goals and fund lead gen initiatives.
  • A fully functioning referral system lowers your customer acquisition cost (CAC) because these leads are already warm coming in the door.
  • Case studies and reviews are powerful marketing assets for lead gen and nurture activities as they demonstrate how you’ve solved identical issues for other companies.

Remember that the bottom half of your marketing and sales funnel is just as important as the top half. After all, there’s no point pouring leads into a leaky funnel. Instead, you want to build a frictionless, powerful growth engine that brings in the right leads, nurtures them into customers, and then delights those customers to the point that they can’t help but rave about you.

So, build a strong foundation and start from the bottom up. You’ll find a better return on your investment. 

Fix #2: Join Sales Calls to Better Understand Your Target Audience

You can’t market well what you don’t know how to sell.

Your sales team speaks directly to customers, understands their pain points, and knows the language they use to talk about those pains. Your marketing team needs this information to craft the perfect marketing messaging your target audience will identify with.

When marketers join sales calls or speak to existing customers, they get firsthand introductions to these pain points. Often, marketers realize that customers’ pain points and reservations are very different from those they address in their messaging. 

Once you understand your ideal customers’ objections, anxieties, and pressing questions, you can create content and messaging to remove some of these reservations before the sales call. This effort removes a barrier for your sales team, resulting in more SQLs.

Fix #3: Create Collateral That Closes Deals

One-pagers, landing pages, PDFs, decks — sales collateral could be anything that helps increase the chance of closing a deal. Let me share an example from Lean Labs. 

Our webinar page has a CTA form that allows visitors to talk to our team. Instead of a simple “get in touch” form, we created a drop-down segmentation based on the user’s challenge and need. This step helps the reader feel seen, gives them hope that they’ll receive real value from the interaction, and provides unique content to users based on their selection.

1716755163 298 Why The Sales Team Hates Your Leads And How To1716755163 298 Why The Sales Team Hates Your Leads And How To

So, if they select I need help with crushing it on HubSpot, they’ll get a landing page with HubSpot-specific content (including a video) and a meeting scheduler. 

Speaking directly to your audience’s needs and pain points through these steps dramatically increases the chances of them booking a call. Why? Because instead of trusting that a generic “expert” will be able to help them with their highly specific problem, they can see through our content and our form design that Lean Labs can solve their most pressing pain point. 

Fix #4: Focus On Reviews and Create an Impact Loop

A lot of people think good marketing is expensive. You know what’s even more expensive? Bad marketing

To get the best ROI on your marketing efforts, you need to create a marketing machine that pays for itself. When you create this machine, you need to think about two loops: the growth loop and the impact loop.

1716755163 789 Why The Sales Team Hates Your Leads And How To1716755163 789 Why The Sales Team Hates Your Leads And How To
  • Growth loop — Awareness ➡ Acquisition ➡ Activation ➡ Revenue ➡ Awareness: This is where most marketers start. 
  • Impact loop — Results ➡ Reviews ➡ Retention ➡ Referrals ➡ Results: This is where great marketers start. 

Most marketers start with their growth loop and then hope that traction feeds into their impact loop. However, the reality is that starting with your impact loop is going to be far more likely to set your marketing engine up for success

Let me share a client story to show you what this looks like in real life.

Client Story: 4X Website Leads In A Single Quarter

We partnered with a health tech startup looking to grow their website leads. One way to grow website leads is to boost organic traffic, of course, but any organic play is going to take time. If you’re playing the SEO game alone, quadrupling conversions can take up to a year or longer.

But we did it in a single quarter. Here’s how.

We realized that the startup’s demos were converting lower than industry standards. A little more digging showed us why: our client was new enough to the market that the average person didn’t trust them enough yet to want to invest in checking out a demo. So, what did we do?

We prioritized the last part of the funnel: reputation.

We ran a 5-star reputation campaign to collect reviews. Once we had the reviews we needed, we showcased them at critical parts of the website and then made sure those same reviews were posted and shown on other third-party review platforms. 

Remember that reputation plays are vital, and they’re one of the plays startups often neglect at best and ignore at worst. What others say about your business is ten times more important than what you say about yourself

By providing customer validation at critical points in the buyer journey, we were able to 4X the website leads in a single quarter!

1716755164 910 Why The Sales Team Hates Your Leads And How To1716755164 910 Why The Sales Team Hates Your Leads And How To

So, when you talk to customers, always look for opportunities to drive review/referral conversations and use them in marketing collateral throughout the buyer journey. 

Fix #5: Launch Phantom Offers for Higher Quality Leads 

You may be reading this post thinking, okay, my lead magnets and offers might be way off the mark, but how will I get the budget to create a new one that might not even work?

It’s an age-old issue: marketing teams invest way too much time and resources into creating lead magnets that fail to generate quality leads

One way to improve your chances of success, remain nimble, and stay aligned with your audience without breaking the bank is to create phantom offers, i.e., gauge the audience interest in your lead magnet before you create them.

For example, if you want to create a “World Security Report” for Chief Security Officers, don’t do all the research and complete the report as Step One. Instead, tease the offer to your audience before you spend time making it. Put an offer on your site asking visitors to join the waitlist for this report. Then wait and see how that phantom offer converts. 

This is precisely what we did for a report by Allied Universal that ended up generating 80 conversions before its release.

1716755164 348 Why The Sales Team Hates Your Leads And How To1716755164 348 Why The Sales Team Hates Your Leads And How To

The best thing about a phantom offer is that it’s a win/win scenario: 

  • Best case: You get conversions even before you create your lead magnet.
  • Worst case: You save resources by not creating a lead magnet no one wants.  

Remember, You’re On The Same Team 

We’ve talked a lot about the reasons your marketing leads might suck. However, remember that it’s not all on marketers, either. At the end of the day, marketing and sales professionals are on the same team. They are not in competition with each other. They are allies working together toward a common goal. 

Smaller companies — or anyone under $10M in net new revenue — shouldn’t even separate sales and marketing into different departments. These teams need to be so in sync with one another that your best bet is to align them into a single growth team, one cohesive front with a single goal: profitable customer acquisition.

Interested in learning more about the growth marketing mindset? Check out the Lean Labs Growth Playbook that’s helped 25+ B2B SaaS marketing teams plan, budget, and accelerate growth.


Disruptive Design Raising the Bar of Content Marketing with Graphic

Source link

Keep an eye on what we are doing
Be the first to get latest updates and exclusive content straight to your email inbox.
We promise not to spam you. You can unsubscribe at any time.
Invalid email address
Continue Reading

Trending