Part 1
How to use cognitive biases to improve your conversions (Part 1)
Did you know that the human brain makes around 35 000 decisions every single day? Most of them are unconscious and automatic, and we don’t even know about them. The only way the human brain can process this crazy overload is by using many shortcuts, simplifications, and rules of thumb. However, it often leads to various cognitive biases.
Understanding these biases can help you both design a better experience and improve your conversion rates. In this two-part article, I’m going to walk you through the ten most common biases and will demonstrate how you can utilize them.
Remember, there is a thin line between the ethical use of cognitive biases and their misuse to manipulate or scam. Always use them ethically and avoid dark patterns which might boost your sales short term but harm your business in the long run. [1]
Anchoring Effect
Let me start with a question: do you think that the Czech Republic population is lower or higher than 40 million? Alright, and now what exactly do you think it is? Do you have your guess? Here is the answer. Were you close? Unless you knew the actual number because you rock in geography, your response was much closer to the number I stated in the first question.
The number I gave you is called the anchor, and it turned out that people are too heavily dependent on an initial piece of information like this when making a decision. Another explanation is that people want to make a guess which is consistent with the information they have. An anchor serves as a reference point that people tend to adjust to reach a plausible value. This behavior was spotted originally by Tversky and Kahneman in 1974 and later validated in many research papers [2], [3].
How to Use It?
If you want your user to perceive such a number as low (e.g., your product price), present them with a much higher number first. It will invoke the impression that the accurate price should be much higher, and the actual cost will look like a good deal.
You can add an extra ULTIMATE PRO option in your pricing list, which is much pricier than the actual product and offers additional tweaks, support, or customization. Or you can add a crossed price tag with an original non-discounted price.
Vice versa, if you want some number to stand out in a big way (e.g., a number of books which your e-shop offers), present your user with a smaller number first.
Bandwagon Effect
We, human beings, are social creatures. This aspect of our lives has a substantial impact on our perception, behavior, and also decision-making.
In the early ’50s, Solomon Asch conducted an experiment where a group of people was given a simple task. All participants in this experiment were actors except one. When it came to answers, all actors were uniformly answering intentionally wrong. 75 % of actual participants were influenced by the actors’ responses and answered wrong as well. [3]
It was one of the first pieces of evidence of conformity and the so-called bandwagon effect, which says that people tend to do what others do. People like to be part of the movement and the winning team. Belong to a social group rather than being under social pressure for having a different opinion.
How to Use It?
Ensure your customers belong to a greater community of users who bought such a product — thus, they’re not making a mistake. Highlight your numbers, especially if they’re huge. E.g., already 500 customers purchased this course, we sold 10,000 copies of this book in your country.
Testimonials and verified reviews of a product or a company also represent a strong reassurance for all hesitating customers. There is only one rule: do not make up these reviews, reviewer’s names, or pictures. It’s easily detectable, and it feels lame.
IKEA Effect
When I was a kid, I was super eager to become a magician. I was about to buy myself a wizard kit full of magic tricks with all the necessary tools and explanations, but unfortunately, I didn’t have enough money. I talked to my father, and he helped me design and build a magical matchbox with disappearing matches in it.
I was so happy about this spell that I showed it to everybody who I knew several times. Even after I got the dream wizard kit, magical matchbox was still my favorite spell by far. Why? Because I co-created it.
People value products that they partially created approximately twice as much as the other products [9]. This phenomenon bears the name of the famous furniture retailer, which sells most of its furniture specifically designed to be assembled at home. The customer has a good feeling because the price is reduced for the assembly costs and has a good feeling because they built the furniture. [4]
How to Use It?
Add an aspect of customer-owned creation to your product. Let your customers customize their product by choosing a color, accessories design, or some of the product features. Personalization option early in your onboarding leads to higher retention later.
After the onboarding, push your customers to create something. E.g., compose the first tweet, customize your library categories, make a list of favorite musicians.
Involve your customers in the process of product development. By using any of the popular research methods such as interviews, user-testing, or questionnaires, you’ll be able not only to acquire a great insight into the actual usage of your product but will also increase your customers’ emotional investment in your product and their perceived value of it.
Barnum Effect
Have you ever read a horoscope in the newspaper and thought it’s pretty accurate? You’re not alone! Around about 70% of people read a horoscope at least once a week. And according to research from 2014, almost 30% of people believe it [5]. The reason for this bias is the same as why people believe in fortune-telling, aura reading, and some types of personality tests.
This psychological phenomenon is named after the great circus performer and manipulator P. T. Barnum. It causes people to feel that generic descriptions that match their personality were tailored specifically to them. Usually, the narrative is intentionally vague and inexplicit enough to fit most people.
How to Use It?
Make your customers feel like you’re interacting with them as 1-to-1. Use the information you know about them (e.g., name, location, gender) during your interaction. Combine them with other general and positive statements. Customers who identify with your product’s description are more likely to use it or buy it.
When describing some of the user’s characteristics, use more positive statements. People find it easier to believe a description that flatters them because it makes them feel good and boosts their ego. A negative narrative raises the need to defend oneself, and it feels less credible.
Post-Purchase Rationalization & Buyer’s Remorse
Any major purchase comes with many emotions. It’s a turbulent phase when we reevaluate our decision, reconsidering the value received and the price paid.
Usually, people experience so-called post-purchase rationalization — they overlook any faults or defects of the purchased product. In contrast, they’re amplifying or subscribing to new negative drawbacks to the other products they didn’t choose. Sometimes it’s called a “Buyer’s Stockholm Syndrome.”
The main reason for this effect is our need for consistency. We need our inner beliefs, values, and mental model to be consistent with our outer actions. As a result, we’re trying to rationalize the purchase, justify the issues and faults with the new product to protect our self-image.
If the product’s utility is much worse than we initially expected and there are other cheaper alternatives, “Buyer’s remorse” usually comes into play. It is often overlooked as a source of disappointment, frustration, and guilt when buying a luxurious or expensive item such as a vehicle or real estate. During this time, customers tend to return or reverse their purchases.
How To Use It?
A relationship with your customers doesn’t end with a successful purchase. The period after a purchase happens is as crucial as what precedes it. Make sure your after-purchase experience is exclusive. It helps your customers with positive rationalization so they avoid remorse.
Engage with your new customers after the purchase. Praise their choice. Summarize all the benefits and emphasize how much better it is than other options. It can be done by an email delivered after the purchase or by popping a note within the app.
Make sure your customer support is fast and helpful. Nothing’s worse than non-responsive customer support when encountering a critical bug or finding yourself stuck while learning to use your new shiny product. In this case, remorse comes instantly.
Consider developing some post-purchase reinforcement mechanisms. E.g., encourage your customers to give you a rating or review right after the purchase. First, it’s another small action which your customer will want to be consistent with later. Second, it creates a feeling of closure of the purchase process and accelerates the rationalization phase.
Other resources
- https://www.amazon.com/Thinking-Fast-Slow-Daniel-Kahneman/dp/0374533555
- https://www.amazon.com/Predictably-Irrational-Hidden-Forces-Decisions-ebook/dp/B002RI9QJE
- https://www.sog.unc.edu/sites/www.sog.unc.edu/files/course_materials/Cognitive%20Biases%20Codex.pdf
- https://www.verywellmind.com/what-is-a-cognitive-bias-2794963
For more content like this, follow me on Twitter: @michallangmajer
