Applying Behavioral Science for Improved Conversions  ## Metadata - Author: [[Social Media Marketing Podcast]] - Full Title: Applying Behavioral Science for Improved Conversions - Category: #podcasts - URL: https://share.snipd.com/episode/4e48d680-79a7-4497-8920-b9f617706341 ## Document Notes ## Highlights - **People Use Fast Heuristics To Decide** - People make most decisions quickly using mental shortcuts rather than deep deliberation. - Marketers should design for these heuristics because people are 'cognitive misers'. Transcript: Richard Shotton Yeah. So I think there's a massive upside for marketers because frankly, if you work in marketing, if you work in advertising, you really are in the business of behavior change. The absolutely fundamental questions that you're grappling with are things like, how do we get people to pay more for our products? How do we get them to switch from a competitor brand? How do we get them to buy more of our products? Now, every one of those questions involves the audience changing its behavior. So the question really is, why wouldn't you draw on a field like behavioral science? All behavioral sciences is the experimentally based robust study of what effectively influences people's behavior. Not what they claim influences their behavior, but what actually influences their behavior. So I think this is as relevant a topic as you can get for any aspect of marketing. ([Time 0:02:58](https://share.snipd.com/snip/e847eef2-a740-4ce6-86f4-e073460a4dc1)) - **Break Prices Into Concrete Units** - Break prices into the smallest, most concrete units to increase appeal. - Present costs as daily or monthly amounts rather than a large annual total. Transcript: Richard Shotton Consider. But yeah, you mentioned other pricing experiments. One of my favorites is this idea of the pennies a day effect. It's a whole raft of studies which are useful for marketers because it says, once you've set your price, how do you make that price as appealing as possible? One tactic is to break the price into the smallest possible unit. The original guy that studied this was John Goreville at Harvard. And back in 1998, works with him in charities and basically gets a group of people, randomizes him into different subgroups. And some people are asked, will you donate $365 a year? And you get a very low uptake. Other people are asked, will you donate $1 a day for the rest of the year? And you get a much higher uptake. Now, most people listening probably don't work for charities. It's very easy to think, that's an old experiment 27 years ago, non-commercial category. It's not going to apply on my car or my pack of beer. But most of these studies, they can be translated across category. So I reran the Goreville study back in 2015, but I did it with cars. It's a kind of car rental. And some people were shown a picture of a car, a description of a car, and then the annual price. So I think it was $16.68 or perhaps maybe pounds. And then other people were shown the same car, the same description, and then the daily price, £4.57. Now, when I asked people how good value they thought the car was, I saw this wildly different pattern. People who saw the annual price, 11% thought it was good value. People that saw the daily price, 51% thought it was good value. ([Time 0:13:40](https://share.snipd.com/snip/17ecb481-5a4a-4265-800a-3645855659ed)) - **Use Stepped Pricing To Exploit Present Bias** - Use stepped pricing and low introductory rates to exploit present bias. - Schedule price jumps later so immediate cost feels smaller and boosts sign-ups. Transcript: Richard Shotton As much. That is something that businesses can apply. So if you want to get people to buy things, you want to be doing stepped pricing. The introductory rate should be nice and low, and then you make your profit by the jump in price that comes from three or six months. The argument for behavioral science is people will give disproportionate emphasis to what is going to be coming out of their account this very second. ([Time 0:20:19](https://share.snipd.com/snip/00237e08-f982-421c-a25e-605e1199cc0e)) - **Add A High-Priced Option To Shift Choices** - People's choices are shaped by surrounding options, not just absolute value. - Adding a very expensive option pushes most buyers toward the middle choice. Transcript: Richard Shotton Well, you had mentioned earlier extreme subversion, and that could definitely be applied. So extreme subversion is this idea that if you give people three prices, they tend to opt for the middle one. So the initial study was Amos Tversky back in 1993, shows people two cameras, basic camera, $169, fancy camera with more features, $239. And when people come to pick which one they're going to buy, you get this exact 50-50 split. So the key thing to remember for us, because there's going to be a lot of numbers, is there is a one-to ratio between these cameras. He then gets rid of those people, gets a completely fresh group of people, shows them the same two original cameras, same price, same benefits, but he introduces a super premium $469 Camera. Now, a few people do pick that super premium camera, but not many, it's 21%. But we can almost, let's ignore them for now. What interests us is those remaining two numbers, because we were seeing those original two cameras at a one-to premium, one-to ratio. But when he introduces this super premium camera, it now goes in a ratio of one to three. So the very basic camera, they're getting 22% of sales. The premium camera, the now middle camera, 57% of sales. So it's gone from a one-to ratio to a one-to ratio. What Tversky is showing here is that people don't just pick based on the price, quality, and inherent attributes of a product. They are also deeply influenced by what that product is surrounded by. And rule of thumb in this situation is, I don't want to go for the cheapest because it might be low quality and I look a bit mean, but I don't want to go for the most expensive because it's Probably over-engineered, overpriced, and I look like a show off. People have a simple rule of thumb, which is to gravitate to the middle. The other way of thinking about it is the middle price, that $269, is approached very differently depending on whether there are two options or three options. If it's just compared with the $169 camera, it looks $100 more expensive. And the consumer thinks themselves, well, I'm being a bit wasteful splashing out all this money. But if you've also added this super premium $469 camera, people can now reframe that $269 cost as a $200 saving. It's exactly the same thing, but people approach it as a saving now rather than additional cost. So going back to your example, if you are monthly offering and then annual offering, and you want people to pick the annual one, what I would do is add like a two-year purchase option or A four-year purchase option. Hardly anyone will pick it. Its role isn't to be picked. Its role is to reframe what the annual option looks like. Now, it doesn't look like much of an inconvenience, too long a time period, because it's a year or two years less than the really, really long one. ([Time 0:24:02](https://share.snipd.com/snip/91c454ca-3384-41c5-b43c-b0ca577464e5)) - **Show Effort To Raise Quality Perception** - Make the effort behind a product visible to increase perceived quality. - Highlight prototypes, iterations, or behind-the-scenes work in your messaging. Transcript: Richard Shotton So when it comes to creating a perception of quality, one of my favorite sets of studies is the labor illusion. So this is the idea that when people are judging a product, they are influenced by how much effort they think went into the creation of that product. So what I did for Hacking the Human Mind, so this is the latest book I wrote with Michael Aaron and Flickr. We recruited 282 people and we showed them this beautifully designed bottle of vodka. It was a fake brand that we put together. We called it Black Sheep Vodka. Some people just saw the beautiful bowl and they were asked how gorgeous they thought it was. 17% thought it was amazing. Then we got another group of people, showed them exactly the same imagery, we said the designer had gone through 143 iterations before getting to this design. Now, the proportion of people who thought it was beautiful goes up to 23%. So you've got this 35% improvement in ratings. Exactly the same product, exactly the same image is judged differently depending on whether people think lots of effort has gone into it. Now, the academic who first looked into this kind of idea, Andrea Morales at University of Southern California, her explanation for this is judging quality is a complex question. And just as we talked about right at the beginning, people are lazy. They're cognitive mindsets. They're looking for shortcuts. So what people do is when they're faced with a complex question, they replace that complex question with a simpler one that gives them an almost as good answer. So if actually judging beauty or quality is the complex question, the simpler one is how much effort do I think this designer went to? So we use effort as a proxy for quality. ([Time 0:27:38](https://share.snipd.com/snip/9bb7f179-3eae-40a8-acf8-f41b973e3c4b)) - **Vodka Design Rated Higher After Iterations** - In a study, a vodka bottle rated more beautiful when told the designer made 143 iterations. - Stating the effort raised positive ratings by about 35%. Transcript: Richard Shotton It was a fake brand that we put together. We called it Black Sheep Vodka. Some people just saw the beautiful bowl and they were asked how gorgeous they thought it was. 17% thought it was amazing. Then we got another group of people, showed them exactly the same imagery, we said the designer had gone through 143 iterations before getting to this design. Now, the proportion of people who thought it was beautiful goes up to 23%. ([Time 0:28:09](https://share.snipd.com/snip/ed801176-7954-485c-9899-e11875fd6a18)) - **Make Work Visible In Product Design** - Use transparency in product design or imagery to spotlight effort. - Let customers see inner workings or chef activity to boost perceived value. Transcript: Richard Shotton And then Dyson do this brilliantly as well. They apply the Labour Illusion by being physically transparent. You buy Dyson and you can see into its inner workings, you can see the dust being sucked up. Most vacuums before it had a beige opaque casing. You couldn't see what was going on. And that's the application of the labor illusion. Knowing the work going on makes us appreciate it more. That might sound a bit of a leap from my black sheep vodka study, but there's some lovely work by Buwell and Kim. So Buwell was at Harvard. And what they did was ask diners to rate the quality of their meals. And sometimes the diners could see into the kitchen, the open blank kitchen, see the chefs at work. Other times they were sitting around the corner and couldn't see the chefs at work. And there was a significant difference. People who could see the kitchens rated their dishes higher, even though it was the same food from the same batch, because the effort was made salient, it was rated higher. ([Time 0:31:51](https://share.snipd.com/snip/f4f22688-dd7b-4f1f-9dd2-7849f573ec27)) - **Admitting Flaws Can Enhance Credibility** - Admitting a flaw can increase perceived strength if the flaw emphasizes that strength. - Brands can turn weaknesses into believable signals of potency or authenticity. Transcript: Richard Shotton Now, some of the original academic work by people like Elliot Aronson was very much about appeal. You as a human became more warm and likable if you exhibited a flaw. But I think what the breast brands have done is very carefully identify what their core strength is and then admit a weakness that emphasizes that core strength. So if that all sounds a bit weird and abstract, there is an absolutely amazing campaign in Canada. I think it started in 1986. This was Buckley's Cough Syrup. So 1986, family-owned brand, not the biggest cough syrup in the market, tiny, inconsequential. What they then do is start a new creative campaign. And the line is, it tastes awful and it works. And for the last 39 years, they have gone to increasingly crude, creative, funny ways of stressing how foul this cough syrup tastes. So for example, there's one ad which says the largest bottle we sell is 200 milliliters. Anything larger would be cruel. Now, what's so good about this is they're not just admitting that there is a flaw in their product, foul taste. What they're doing is thinking, well, what we really want to convey is efficacy, potency. And then once they've made that their badge of quality, then they think, well, what is the weakness? There's almost like a mirror to the strength that we have. And frankly, if you tell people you are foul tasting, there is an assumption that, well, the trade-off is probably that it's really, really potent. ([Time 0:36:24](https://share.snipd.com/snip/df8747a7-53ae-4e3a-b791-66db2a4054d9)) - **Turn Intention Into Action With Triggers** - Motivation alone rarely converts intentions into actions. - Pair desire with a clear 'when/where' implementation intention to trigger behavior. Transcript: Richard Shotton Yeah. There's a lovely set of ideas into this problem called the intention to action gap, which is essentially the argument that you can boost someone's motivation to act in a particular Way or buy a particular product, but it doesn't always convert very well to actual behavior change, you know, sales or behaving differently. So the classic study is a 2002 one. It comes from Sarah Milne at the University of Bath. And she was interested in how do you get people to exercise? So she goes out, recruits 248 people, splits them into three groups. First group, they come to her lab, she gives them a diary, and then she says, look, next two weeks, fill in the diary, write down every time you exercise. Now, when those people come back two weeks later, 35% of them have exercised at least once a week. So that's the control. Milne then wants to see, how do you boost this number? So her next group of people come into the lab, give them the diary, and then they play this motivational film about why exercise is amazing, what's going to change their life, make them Feel energetic, increase their longevity. People watch the film and then they say they are enthused and motivated to exercise. But when they come back two weeks later, the numbers have barely changed. You've got 38% of people exercising. So we've gone from 35% exercising to 38, even though they said they were going to exercise, even though they said they were really keen. So that's the intention to action gap. Motivation, according to Milne, is a necessary but not sufficient condition for behavior change. You need to add something else. That's where it gets interesting for marketers. Final group of people. She invites them to the lab. She gives them the diary. She plays the motivational film. And then she gets those people to make what a psychologist would call an implementation intention. She asks the people to say, when, where, and with whom are they going to exercise. So I might say, I'm going to exercise Tuesdays mornings when I've dropped my daughter off at school. That would be an implementation intention. Essentially, you are creating a trigger to remind you to exercise. Now, when that group comes back, 91% of people exercise at least once a week. ([Time 0:38:47](https://share.snipd.com/snip/ec4ef54f-d3db-4ffc-89fc-2805fea45100)) - **Provide Clear Temporal Triggers** - Give customers explicit trigger cues like time or context to prompt action. - Use phrases such as 'take after breakfast' or 'do it on Friday morning' to boost follow-through. Transcript: Richard Shotton Final group of people. She invites them to the lab. She gives them the diary. She plays the motivational film. And then she gets those people to make what a psychologist would call an implementation intention. She asks the people to say, when, where, and with whom are they going to exercise. So I might say, I'm going to exercise Tuesdays mornings when I've dropped my daughter off at school. That would be an implementation intention. Essentially, you are creating a trigger to remind you to exercise. Now, when that group comes back, 91% of people exercise at least once a week. And that is a massive, massive difference. Now, Milne's argument, in my case, when Tuesday morning comes around, essentially, I've associated this particular behavior to that moment. So that moment of Tuesday morning, after dropping my daughter off at school, that acts as a catalyst to convert intention to action. Milne's argument is many people interested in behaviour change. They do the hard work of generating motivation, but they fall down because they don't do the simpler task of attaching a behaviour to a very clear time or place or mood. Now, you could apply that principle commercially. If you think about Snickers, you're not you when you're hungry. They are associating consumption with that feeling of hangriness. The ads don't talk about the product and how tasty it is. They associate very clearly with a particular moment. Taco Tuesdays, champagneagne and Celebration. In Britain, we have Kit Kat and the line, have a break, have a Kit Kat. Now, all of these are associating a product with a very clear time or place. So rather than asking people to take your vitamins twice a day, you should say to them, whether it's pharmacologically needed or not, say, take them after breakfast, take them before Dinner. ([Time 0:40:30](https://share.snipd.com/snip/5402639d-15b6-4543-8193-4d5abc762242))