Behavioural Marketing: How to Succeed When Customers are Reluctant to Spend
Three tips on marketing products during a cost of living crisis
Inflation, with its rising food, energy, and product prices, is changing consumer purchase behaviour across many categories. As the cost of living increases, people may delay certain purchases, look for less expensive options or forgo some items and services altogether.
Fortunately for marketers, there are some behavioural science tactics that can help keep customers coming back, even during times like these.
Behavioural scientists have studied why people do what they do—how they make decisions. And these scientists have found that very often, people rely on decision-making shortcuts, which are automatic, instinctive, reflexive behaviours. People will default to these hardwired behaviours with little to no thought. It’s a way for humans to conserve mental energy because weighing every decision that needs to be made during the course of the day would take so much time it would literally be impossible to make them all. So rather than analyzing every situation, people simply rely on decision-making shortcuts for some choices.
Marketers can use this tendency to their advantage. In fact, there are at least three behavioural science principles that you can tap to prompt customers to choose you. While there is no silver bullet that will get every person to do what you want, harnessing these will increase the likelihood you get the response you desire.
Magnitude Encoding Effect: Minimize the impact of your prices
Behavioural scientists have found that how prices are presented can influence people’s perceptions of them. Specifically, how much physical space a price takes up can influence whether people perceive it as smaller or larger.
For example, here are three ways to express the same price:
The first takes up the most physical space, so use it when displaying savings or value. However, when showing prices, marketers may want to choose the option without the comma, decimal point and accompanying zeroes, because that makes the price take up less space, and as a result, seem smaller.
Researchers have also found that showing a dollar sign that is approximately half the size of the numeral can make the price appear to be less. So, too, can spelling the amount out, using no numerals at all. If you’ve ever been to a very high-end restaurant and seen the menu prices written in script instead of shown numerically, you now know why!
Finally, where a price appears on the page or screen can influence people’s perceptions of it. Research shows the same number in the upper left-hand corner of a page will be perceived as a “higher” number than if it were displayed in the lower left-hand corner of the page.
Social Proof: Show that people continue to buy your products
During times of uncertainty, people often look to others and follow their lead. This is particularly true if the others they’re looking at are somehow similar to them. When they’re unsure of what decision to make, humans gain a sense of security knowing that other people have already made the choice that they are about to make.
Behavioural scientists refer to this as the Principle of Social Proof. One interesting aspect of it is that people assume the ones they are watching know something they do not!
To leverage social proof, marketers can highlight the large number of people who are their customers, the most purchased product and service choices and the growing popularity of certain categories or tiers. Displaying ratings and customer testimonials are two more ways to take advantage of social proof.
During times of rising prices, marketers can benefit from choosing customer testimonials that begin by expressing some doubt about whether the product is worth the cost and then conclude that it is. For example, compare the two testimonials below:
“Acme makes the best widgets. I love their product.”
“I thought all widgets were essentially the same. But when I tried the bargain brand, I quickly returned to Acme. They make the best widgets. I love their product.”
In the second example, the testimonial giver begins by saying something that a customer or prospect may well be thinking, especially now. When the reader sees that, it resonates. They have a, “yes, that’s exactly what I was thinking” moment. Then they read on to see that staying with your product is still best the idea. They feel they have gained some knowledge based on another person’s experience. And they didn’t have to take a risk in order to do so.
Availability Bias: Remind people what it’s like to go without your product
Behavioural scientists have found that people will predict the likelihood of an event happening based on how readily they can recall a relevant example. If it’s easy to call to mind an example, people believe the event is more likely to happen. For instance, if there’s a shark attack on a beach, people will immediately become more cautious than they normally are. Even if they had been swimming for months without any concern, and even if shark attacks there are rare, people will suddenly think another one is more likely to happen because the recent one is fresh in their memories. This response is called Availability Bias.
Marketers can use this principle to encourage people to continue buying. To do so, you need to prompt customers to recall a time when they ran out of your product or they had no access to it. Once you get them to recall the resulting disappointment or difficulty they experienced, that feeling will be fresh. As a result, their instinct will be to not want to put themselves in that situation again. They’ll feel that if they don’t have your product, they’ll likely experience that same disappointment or difficulty and they won’t want to. Instead, they may choose to go without something else, so as not to have to scrimp on your product.
Marketing during an economic downturn or a period of inflation may not be business as usual. You could encounter differences in consumer attitudes and behaviours. However, you can still successfully attract and retain customers by adding some behavioural science to your marketing strategies and your creative executions. It’s possible to influence how people perceive prices when they make purchases and what items they refuse to give up. Employing Magnitude Encoding Effect, Social Proof and Availability Bias are three tactics to take advantage of that could prove especially effective right now. And, it should be noted, they represent only three of many decision defaults your customers and prospects typically rely on.
Watch this video for more tips and techniques on how to reassure and retain customers during economic uncertainty.