We are intelligent beings and make logical decisions about our life and future. But we are also ruled by our emotions and feelings, and this emotional part of us comes to light when we are considering a new purchase.
People may have a rational and logical need for a product or service but when they make the final choice, their emotions pick the winner. One of the aspects of human behaviour that plays a huge role during this emotional journey towards a purchase is cognitive bias.
What Are the Cognitive Biases?
The cognitive biases are for human behaviour like pockmarks on the smooth surface of a stone. It is a glitch, a small aberration that upsets the otherwise logical nature of human thinking. Call them misconceptions if you wish.
Thus, cognitive biases are ideas people believe in without any logical explanations and reactions they have to certain events and situations without being able to say why they acted in that way.
So, how is a behavioural trait important for marketing and why should you know about it? The answer is that by cleverly exploiting cognitive biases, you can get more sales.
Here are some of the most important cognitive biases you can use to your own advantages in your marketing campaign:
1. Loss Aversion
We don’t like losing. More importantly, we don’t want to look like losers in other people’s eyes. This is the cognitive bias that makes people so competitive in everything, from sports to work.
But how do you exploit this trait in your ads? With the good old scarcity tactics, combined with social proof. “X people already enjoy the benefits of our premium membership now discounted at Y% until Z day.” This kind of ad is the perfect trigger for loss aversion. No one wants to be left behind. No one wants to miss a good discount. If they do, they will feel that they lost something of value. So, they will act.
2. The Bandwagon Effect
This cognitive bias is heavily used in politics, not only in marketing. It is based on the idea that we want to belong to a group. So, if our friends or peers use a product/service, we have to use it, as well.
For instance, in marketing, the bandwagon effect is visible in social media campaigns that show the names of some of the user’s friends who liked the business page or purchased the products sold by a certain company.
3. The Decoy Effect
The decoy effect can be seen at work for products with different tier prices. You have the cheapest version (with the most basic benefits) and the most expensive one (with all the benefits included). Left like that, most people would opt for the cheapest version.
But there is always a mid-tier price. This mid-tier option has some supplementary benefits compared to the cheapest option but is priced closer to the most expensive option. By comparison, the most expensive option appears to offer the best cost/benefits rapport. Thus, customers will purchase it.
4. The Zero-Risk Bias
Even adventurous people tend to be careful about their hard-earned money. They do not want to incur the risk of spending money on a product or service they may not be happy with. They will think twice about trying something new, without any safety net to protect them from loss.
This safety net is the well-known money-back guarantee that has become a staple on e-commerce websites and in online ads. In real life, only a few customers actually demand their money back (we are talking about earnest and reliable businesses, like yours). But the promise that the can have a risk-free experience is what convinces them to try a product for the first time.
5. Hyperbolic Discounting
This cognitive bias is closely connected with instant gratification. Faced with an immediate benefit and a superior benefit that comes at a later time, most people will choose the first one.
This type of cognitive bias is used in ads effectively by promising instant access, fast checkout without the need to create an account and other similar benefits associated with instant gratification.