Anchoring and the Pick-Your-Own-Price Strategy

A while back I bought the website How To Flip Websites. After experimenting with lots of different pricing strategies, I decided to try one where I let people pay whatever they wanted. I set up a special page and drove people to it with Google Ads. The page included a BUY NOW button that works like Paypal donation. When you click it, you enter your own price and then are given access to the videos. But before they paid, I used the anchoring strategy by suggesting a price. What I found is that, although people paid less than the suggested price, more people overall chose to pay. I suggested $39, and the average prices was around $17, but my conversion rate went from 2% to about 35%.

Consumers Lie. Why Neuromarketing Works Better Than Focus Groups

An article in Advertising Age examines neuromarketing to see if it’s really what proponents claim it is. The core of the story focuses on A.K. Pradeep, who promotes neuromarketing over focus groups because in focus groups, consumers don’t always tell the truth.

Amid the many vagaries of marketing research, one thing is clear: Consumers lie. About what they want. About what they need. Sometimes they do it purposely. Most often they simply don’t seem to realize what they’re doing at all. Mr. Pradeep and his peers in the field of neuromarketing say they have the solution.

I frequently see internet marketers asking people in public forums what they want in a new product. That may not be the best way to find new product ideas. I’m guessing that most of you don’t have neuroscience equipment to measure brain activity, so the best alternative is to focus less on what consumers say, and more on the data of what actually sells.

Using Cognitive Dissonance To Increase Purchases

There is nothing your brain hates more than cognitive dissonance. In fact, your brain hates it so much that it has build in mechanisms to avoid cognitive dissonance either by ignoring certain pieces of information or by changing your perception. Wikipedia defines cognitive dissonance well:

Cognitive dissonance is a psychological term describing the uncomfortable tension that may result from having two conflicting thoughts at the same time, or from engaging in behavior that conflicts with one’s beliefs, or from experiencing apparently conflicting phenomena.

In simple terms, it can be the filtering of information that conflicts with what you already believe, in an effort to ignore that information and reinforce your beliefs.

Our brains want nothing more to appear consistent, so in order to sell to someone, it helps if you can convince them to take simple easy steps in the direction of a sale. Commitment to your product in one way or another, affirming value on some level, will help them feel more comfortable with a purchase down the road.

This is why newsletters work so well as selling tools. Signing up is a way to show that the newsletter offers some value. Otherwise, why fill your inbox with it? Well, if the newsletter offers value, then doesn’t an ebook, video series, tutorial, or something similar that is even more in depth offer more value than the newsletter? It should, if ptople want to remain consistent in their beliefs and thoughts. And according to the theory of cognitive dissonance, they do.

Marketing to Wants vs. Shoulds

Roger Dooley has an excellent post about marketing “wants” vs. “shoulds”.

Everyone is familiar with the want vs. should conflict. Do you order the loaded cheese fries as your side dish, or the steamed broccoli? You want the greasy fries, but you know you should order the broccoli. Do you cut the grass (should) or watch football (want)?

Roger references a research paper that explores the different ways of selling wants vs. shoulds. With respect to online marketing, it had the following advice:

The authors comment that online sellers and catalog merchants should be sure to take delivery time into account when promoting their merchandise - consumers are likely to order more want items if they are available for immediate delivery. On the other hand, they caution that customers will spend less overall the further in advance of delivery the order is placed.

Understand whether your product is a want or a should, and set it up for the proper buying behavior to maximize your sales.

Use Your Customer’s Imagination to Close More Sales

How do you start your online sales pitch? You have spent good money bringing someone to your website. They have a problem they need solved. Do you ask them to imagine a life with your solution? If so, it could translate to your bottom line.

A professor named John Carroll was the first person to examine the use of imagination to persuade. Before the Carter/Ford election he divided his students into two groups. One group was asked to imagine that Carter won the election, and was asked to think about detailed items such as Carter’s victory speech and Ford’s concession speech. The other group was given the exact same task but asked to imaging Ford winning the election. After it was all said and done, each group was asked to calculate the odds of each candidate winning the election. You know what happened. Compared to control groups, the groups that imagined a candidate winning gave higher probability estimates of the likelihood that the imagined candidate would win.

Similar studies have continued to verify this effect. Imagination does have an impact on perception. If you encourage your site visitors to imagine using your solution, they will think of it in more favorable terms, and will think it is more likely to solve their problem. Imagination helps counter the inherent skepticism many people bring to a web purchase. But one word of warning - don’t over-do it. Don’t ask them to imagine your product curing cancer when all it does is relieve common cold symptoms. Brains adapt to tricks, so if you use them you are only hurting your own chances for a future sale.

Vivid Testimonials Matter

In 1977, Eugene Borgida and Richard Nisbett published one of the most interesting studies about the power of testimonials. They took a group of potential University of Michigan students, and they provided them a course catalog with recommended classes. The students were divided into three groups.

Group 1 received no special information about the recommended classes.

Group 2 received base rate information about classes based on aggregated reviews from students that had completed the courses. This was the most thorough information presented to any group.

Group 3 heard a panel of several students talk about why they liked the recommended courses so much.

Even though the statistical information reviewed by Group #2 was the best, most high quality information, the testimonials by far made the most difference in class choice. Students in the face to face condition signed up for an average of 1.4 more recommended courses than students in the control condition.

The lesson - vivid testimonials matter. But beware - basic text testimonials may not have nearly the effect of powerful video testimonials.

Marketing and Random Reinforcement

An article in the Boston Globe examines the neuroscience of gambling.

“The trick of a one-armed bandit,” Montague says, “is that it provides us with the illusion of a pattern. We get enough rewards so that we keep on playing. Our cells think they’ll figure out the pattern soon. But of course they won’t.”

What does that mean for your marketing? Well, here’s a hint… don’t discount the effect of surprise rewards.