Article by: Lyfe Marketing

Learning why people make the decisions they do is essential knowledge for every marketer.

And that’s whether you’ve made it your career and you geek out on it, or you’re just doing what you need to do to get the word out about your business.

So today, we’re talking about one of our favorite topics – marketing psychology.

What Is Marketing Psychology?

Marketing psychology is the science of understanding why consumers make the buying decisions that they do.

Why Should Small Businesses Even Bother?

There is a TON of competition out there. You probably know this as a marketer or small business owner.

Understanding the reasoning behind your customers’ decision (or indecision) will help you:

• make better ads,
• design better experiences, services, or products, and
• help you reach your business goals.

So in this post, we’ll be covering some of the most popular marketing psychology terms and what they mean.

We’ll also share examples of how they’ve been used by other businesses, so you can start thinking about making it work for yours too.

Understanding The Fundamentals Of Marketing Psychology

1. The Marketing Psychology of Social Proof

The concept of social proof is that we take cues from what others are doing to judge whether or not we should also do something.

We look for people who have authority, like celebrities, our friends and family, and even other strangers, and think, “if they think it’s good, then it’s good.”

We see this concept of social proof used all the time:

• Influencer or celebrity endorsements of products
• Experts talking about the effectiveness of a tool or product
• Customer reviews on search and social

When we talk about social proof, we can separate them into 6 categories:

1. Expert – Someone who is at the top of their field, industry, or topic recommends your business
2. Celebrity – Someone who is famous recommends your business
3. User – Existing customers recommend your business
4. Wisdom of the Crowd – Large groups of people endorsing your business (think follower count)
5. Wisdom of Friends – Social connections engaging with your business
6. Certification – An authority has given you a certificate (like a Google Certified Partner), badge, or awards your business has won for design, product, etc.

For these six categories, we want you to write out ideas for using each to market your business.

Here are some ideas to get you started:

• Invite an expert to review your product or do a Q&A with your audience
• Host an event and invite experts to attend (a discussion panel can be fun)
• Open up affiliate marketing options to influencers and users
• Introduce brand ambassadors
• Work with influencers (We would start with micro-influencers for affordability and effectiveness. Plus, their audiences trust them.)
• Encourage and share user-generated content
• Shoutout good reviews and thank them for their business (publicly)
• Share testimonial graphics to your feeds
• Ask for reviews
• Get verified on social networks (Did you hear? it’s super easy now on Twitter!)

That should be enough to get you started, but don’t stop with this list.

There are so many ways to utilize social proof in your marketing, and it works.

2. The Marketing Psychology of Scarcity

We all basically understand this concept; the less of something there is, the more people want it.

It’s an economic concept that applies to marketing beautifully.

We all know that we like to show off when we have the thing that everyone wants but no one can find.

We see this concept in:

• Social media posts from influencers showing luxury cars or limited-edition handbags, etc.
• Limited-time discounts or sales
• Displaying inventory counts on websites (“Only 4 left!”)

Large companies use this principle all the time.

One of our favorite examples comes from Nintendo, who, when they launched the Wii Console back in 2006…

…purposely kept supply low by producing fewer consoles than they had demand for.

They outsold the Xbox 360 and PlayStation 3 by keeping supply low, so as soon as folks saw a Wii available, they didn’t think about it, they just bought it.

When we talk about scarcity, we can separate it into 2 categories:

• Limited Time – This can be flash sales, purchase countdowns, seasonal specials or releases, timed trials, and more.
• Limited Number

How can you use scarcity in your marketing?

Here are some ideas to get you started, but the sky is the limit here. So take some time to brainstorm and note examples you see from other brands.

• Out of stock labels

Keep products up on your website even when they go out of stock. But do this only if you plan to bring the product back.

Collect email addresses to notify customers when it’s back in stock.

If they notice your items are going out of stock a lot, they’ll learn to buy as soon as they see something they like.

• Only __ left

This creates a sense of urgency and pushes consumers to make an immediate purchase.

All sorts of websites use this tactic. In-store, this can look like not filling containers or bins all the way.

This is so you can make shoppers feel like that item must be super popular since there isn’t much left.

• Flash sales

Buyers only have a couple of days to get the deal.

Display countdown timers on your website and across social media.

Plus, you can also post reminders and send an email marketing campaign on the final day and in the final hours of the sale.

• Seasonal releases

We’re looking directly at the Pumpkin Spice Latte. Love it or hate, think it’s basic or not, there’s no denying the power of Starbucks’ seasonal drinks.

Speaking of Starbucks, remember that limited-time Unicorn Frappe that caused such a frenzy a few years ago? Now that’s good marketing.

3. The Marketing Psychology of Reciprocity

This is the idea that people like to reciprocate when others do something for them. You scratch my back, I scratch yours.

A lot of digital content marketing uses the psychology of reciprocity, since the consumer is getting a value of some sort for free.

As they have a positive experience with your content or brand, they’ll be more likely to reciprocate.

They can do this either by making a purchase or referring you to someone who will make a purchase.

We see this concept in:

• Free trials from streaming services, apps, or digital tools
• In-depth blogs, articles, or videos from a business for their customers
• Try at home options (like we see for glasses)
• Samples that are given out for free

When we talk about reciprocity, often the answer is giving something away for free, but it doesn’t have to be your product or service.

Here are some ideas to get you started:

a. Offer a freebie (a valuable freebie, not a garbage freebie)

This can be a PDF, a video, a recording, a bundle of tools, or a free version of your product, service, or experience.

b. Free premium trial

If you have an app or software, this is especially helpful.

c. Reach out on customers’ birthdays or send a thank you note

Making your customer feel special can do wonders for your business. How can you personalize their experience?

d. Share user-generated content

They’ll want to brag and will appreciate the shoutout so they will be more willing to share your posts with their followers in the future.

Recently, one of our team members actually signed up for a meal kit delivery service and had been enjoying it.

She said she was pleasantly surprised to find free desserts in a couple of her boxes…

…with a note from the company apologizing for shipping delays due to the 2020 situation.

She was a new customer, so these issues didn’t affect her at all, but they still included that note and the delicious treats, and she’s still happily subscribed.

According to her, if she hadn’t gotten this, she likely would have stayed a member…

…but now she’s a big fan and has recommended the service to her friends and family.

4. The Marketing Psychology of the Foot-In-The-Door Technique

The idea behind this sales and marketing principle is…

…if you can get someone to say yes to something small, it’s much easier to get them to say yes to your bigger ask later on.

Jonathan Freedman and Scott Fraser demonstrated this technique beautifully.

They did it by asking homeowners in California to put large signs on their lawn urging cautious driving.

Initially, only 17% agreed. But when they asked homeowners first to put up a small window sign, most agreed.

When they showed up 2 weeks later to ask again about putting up a yard sign, 76% said yes.

We see this concept in:

• Asking for users to engage on your website even before they buy

• Recommending products to add to your cart
• Showing past purchases
• Offering discounts or free products

Here are some ideas to get you started:

a. Add similar product recommendations on the product pages and in the shopping cart

You can use phrasing like “If you like X, you’ll also like Y”, or “Customers who bought X also bought Y.”

b. Suggest products to get their cart started

Use this recommendation based on past purchase history. If the user bought it before, they may buy it again.

c. Offer some way to unlock a special code or discount

Extra points if it’s gamified like a “scratch ticket” or prize wheel users can spin. Put a time limit on it, such as first-order only or expires in 24 hours.

d. Give free shipping

Again, limiting this to the first order/s over a certain dollar amount will help urge a purchase.

e. Ask your users to answer questions or share preferences on your site

A great example of this is websites that ask for your preferences when you create a new account, like Netflix or Pinterest does.

5. The Marketing Psychology of Anchoring Bias

Anchoring bias refers to our tendency to latch onto the first piece of information we see or hear when it comes to making a decision.

You will refer back to your “anchor” to compare and contrast new information.

We see this concept in marketing a lot. Here’s an example:

You see a window display for french fries that are only $2.00 for a large. You think, “Awesome, I love french fries and that’s a great price.”

But when you drive up to order there’s another display, this time for a meal that includes a drink and a hamburger for only $6.00.

You compare the price of the fries on their own to the price of the meal, and the meal looks like a better deal to you… so you buy it.

There are a few different methods used in marketing to help increase conversions. Here are some ideas:

a. Initial price setting

This strategy is displaying an “original price” to establish a primary value.

Customers will keep this in their mind and be receptive to a lower price. Amazon does this particularly well.

b. Multiple unit pricing

This makes an individual item seem like a poor choice in comparison. Buy in bulk and save!

We see this modeled well at wholesale places like Costco.

Folks feel like they’re making a smarter choice when they can bundle and save versus buying the individual item.

c. Price perception

This strategy uses a comparison of the prices of similar items.

The anchor (the cheaper item they see first) looks like a bargain compared to the expensive version.

d. Gear Acquisition Syndrome

This strategy is often used in fashion and tech. Many people want the biggest, best, shiniest version of a thing they already have.

Reminding people this is the latest version works.

This is what happens every time there’s a new iPhone, even if the difference between models isn’t that much.

That’s because their anchor (their current phone) isn’t as good as the new one.

There are many other examples of anchoring bias, but these are the most commonly used and can be implemented by any size business.

6. The Marketing Psychology of Loss Aversion & the Endowment Effect

The idea behind this one is relatively simple. Humans don’t like losing things.

In fact, we hate losing things more than we love getting things.

It’s true. We hate it twice as much!

Have you ever missed out on the sale of an item you’ve been wanting to buy? Or waited too long to get tickets to an event and they sold out?

It’s the worst.

Similar to how we hate losing things, we tend to overvalue what we have. That’s the Endowment Effect.

A specific study highlighting the endowment effect showed that people who are given a mug as a gift assigned it a higher dollar value…

…than a group asked how much they would pay for that same mug.

We can use both of these principles together to increase conversions.

Here are some ideas to get you started:

a. Give a free trial with all the bells and whistles (maybe keep a couple of bells and whistles to yourself)

This applies both the Endowment Effect (we overvalue what we have) and Loss Aversion (if we don’t upgrade, we lose out).

b. Create a sense of urgency

This combines the principle of scarcity. If we know there’s a limited time or number, we’ll act more quickly for fear of missing out.

There’s an entire acronym for it: FOMO.

The phrase may have had its pop-culture field day and been laid to rest, but the principle applies to marketing every single day.

c. Show shipping countdown timers

A good example of this is to order before 2 PM and get your item the next day or similar.

The impulse buys combined with loss aversion make an easy yes for most shoppers.

d. Put it in your copy

Maybe your product or service prevents loss for people. Say that! Use phrases like:

• “protect your ____”,
• “keep your ___ safe”, or
• “prevent ____”.

e. Use it to get more lead gen form conversions

Display a progress bar showing how far your form filler has gotten (showing what they’ll lose if they leave without completing the form).

7. The Marketing Psychology of the Decoy Effect

The decoy effect refers to buyers changing their minds after deciding between 2 options…

…when a third option is added that is meant to nudge them to the more expensive of the two options.

If you’re comparing two similar items and the less expensive item is actually a better choice, you can add a third option that’s more expensive than option 2.

A third option that makes option 2 look like a better choice than option 1.

In this example from The Economist, we can see which option they want us to choose.

We think we’re making a choice, but there’s a decoy to push us toward the best option for the business.

Notice the other language using loss aversion and scarcity. It all works hand-in-hand.

Here’s how you’d do this for your business:

a. Choose your key product

This is the product you want to sell more of. Make sure it’s a good product and people like it.

b. Structure your key product

This should have lots of benefits but should be more expensive than your other options.

c. Create a decoy

Structure this to make your key product look good and desirable.

d. Give between 1 and 3 other options (for 3 to 5 total)

Too many options can lead to indecision, so don’t make it complicated.

e. Price the decoy close to your key product (the high-priced option)

The price can be the same or slightly lower.

8. The Marketing Psychology of Priming

Priming is kind of like setting the mood before a romantic dinner. You want to have a nice dinner with someone you love, so what do you do?

You try to make the environment nice to prime your partner and yourself for a romantic evening.

It has a subconscious effect on us – most of us don’t even realize it when it’s happening.

Here are some examples for priming that you can use:

a. Music sets the tone. If you own a bakery and you want to sell more Macarons…

…maybe you play French music to get people subconsciously thinking about France.

b. Ask a direct question to get folks thinking about your brand.

c. Show images of what could be (aspirational images). Before and afters, inspirational vacation pics, etc.

d. Highlight product features in your copy to get people thinking about those features.

e. Make a fun video showing the product, and set the tone with the set and music.

f. Use color psychology to put shoppers in the right mindset.

g. Logos and graphics can do this as well. Just think about the smile in the Amazon logo – priming you for a positive experience from the start.

Color Psychology

We mentioned color psychology earlier when we were talking about priming. And it’s a fascinating topic that we recommend you looking into.

This is especially true if you’re trying to decide on branding or package design, or you create any imagery for your business.

And also, here’s a graphic from Huffington Post that you can check out if you’d like to learn more about it right now.

Conclusion

The world of marketing psychology is fascinating, and we’ve barely scratched the surface in this post.

But we hope you learned something new and have a better idea of how to use these principles in your marketing efforts.

Marketing psychology comes after you’ve got a great product.

So if you’re just starting out, focus on your value proposition and the quality of your product or service.

When that’s settled, well, in our opinion, that’s when the fun begins.