Category: Conversion

💎 On reframing price comparisons (Starbucks Short, Tall, Grande, and Venti)

When Howard Shultz created Starbucks, he was as intuitive  businessman as Salvador Assael. He worked diligently to separate Starbucks from other coffee shops, not through price but through ambiance. Accordingly, he designed Starbucks from the very beginning to feel like a continental coffeehouse.

The early shops were fragrant with the small of roasted beans (and better-quality roasted beans than those at Dunkin’ Donuts). They sold fancy French coffee presses. The showcases presented alluring snacks — almond croissants, biscotti, raspberry custard pastries, and others. Whereas Dunkin’ Donuts had small, medium, and large coffees. Starbucks offered Short, Tall, Grande, and Venti, as well as drinks with high-pedigree names like Caffe Americano, Caffe Misto, Macchiato, and Frappuccino. Starbucks did everything in its power, in other words, to make the experience feel different — so different that we would not use the prices at Dunkin’ Donuts as an anchor, but instead would be open to the new anchor that Starbucks was preparing for us. And that, to a great extent, is how Starbucks succeeded.

Excerpt from: Predictably Irrational: The Hidden Forces That Shape Our Decisions by Dan Ariely

💎 On decision-making quality decreasing as the stakes rise (small versus large purchases)

After my first lecture, Binmore offered a version of the “low stakes” critique. He said that if he were running a supermarket, he would want to consult my research because, for inexpensive purchases, the things I studied might possibly matter. But if he were running an automobile dealership, my research would be of little relevance. At high stakes people would get stuff right.

The next day I presented what I now call the “Binmore continuum” in his honor. I wrote a list of products on the blackboard that varied from left to right based on frequency of purchase. On the left I started with cafeteria lunch (daily), then milk and bread (twice a week), and so forth up to sweaters, cars, and homes, career choices, and spouses (no more than two or three per lifetime for most of us). Notice the trend. We do small stuff often enough to learn to get it right, but when it comes to choosing a home, a mortgage , or a job, we don’t get much practise or opportunities to learn. And when it comes to saving for retirement, barring reincarnations we do that exactly once. So Binmore had it backward. Because learning takes practice, we are more likely to get things right at small stakes than at large stakes. This means critics have to decide which argument they want to apply. If learning is crucial, then as the stakes go up, decision-making quality is likely to go down.

Excerpt from: Misbehaving: The Making of Behavioural Economics by Richard H Thaler

💎 On letting let people figure things out for themselves, rather than spelling it out (try before you buy ideas)

Sticky ideas have to carry their own credentials. We need ways to help people test our ideas for themselves — a “try before you buy” philosophy for the world of ideas. When we’re trying to build a case for something, most of us instinctively grasp for hard numbers. But in many cases this is exactly the wrong approach. In the sole U.S presidential debate in 1980 between Ronald Reagan and Jimmy Carter, Reagan could have cited innumerable statistics demonstrating the sluggishness of the economy. Instead, he asked a simple question that allowed voters to test for themselves: “Before you vote, ask yourself if you are better off today than you were four years ago.”

Excerpt from: Made to Stick: Why some ideas take hold and others come unstuck by Chip Heath and Dan Heath

💎 On how contextualising statistics in more everyday terms can make them more tangible (compelling)

Contrast the following two statements:

  1. Scientists recently computed an important physical constraint to an extraordinary accuracy. To put the accuracy in perspective, imagine throwing the rock from the sun to the earth and hitting the target within one third of a mile if dead center.
  2. Scientists recently computed an important physical constraint to an extraordinary accuracy. To put the accuracy in perspective, imagine throwing a rock from New York to Los Angeles and hitting the target within two thirds of an inch of dead center.

Which statement seems more accurate?

As you may have guessed, the accuracy levels in both questions are exactly the same, but when different groups evaluated the two statements, 58 percent of respondents ranked the statistic about the sun to the earth as “very impressive.” That jumped to 83 percent for the statistic about New York to Los Angeles. We have no human experience, no intuition, about the distance between the sun and the earth, The distance from New York to Los Angeles is much more tangible. (Though, frankly, it’s still far from tangible. The problem is that if you make the distance more tangible — like a football field — then the accuracy becomes intangible. “Throwing, a rock the distance of a football field to an accuracy of 3.4 microns” doesn’t help.)

Excerpt from: Made to Stick: Why some ideas take hold and others come unstuck by Chip Heath and Dan Heath

💎 On how too much data can make us overconfident in our predictions (rather than boost their accuracy)

The problem of more data was investigated by Paul Slovic, Professor of Psychology at the University of Oregon. He ran an experiment with professional horseracing handicap setters in which they were given a list of 88 variables that were useful in predicting a horse’s performance. The participants then had to predict the outcome of the race and their confidence in their prediction. They repeated these tasks with access to different levels of data: either 5, 10, 20, 30 or 40 of the variables.

The results were illuminating. Accuracy was the same regardless of the number of variables used. However, overconfidence grew as more data was harnessed. Experts overestimated the importance of factors that had a limited value. It was only when five data points were used that accuracy and confidence were well calibrated.

Marketers face a similar set of problems. They have access to more data than ever before and many believe that because the information exists they should use it. The Slovic experiment suggests otherwise. We shouldn’t harness data just because we can. Instead, as much time should be spent choosing which data sets to ignore as which to use.

Excerpt from: The Choice Factory: 25 behavioural biases that influence what we buy by Richard Shotton

💎 On giving people too much choice (paralysing their decision making)

Another study, conducted by Shafir and a colleague, Donald Redelmeier, demonstrates that paralysis can also be caused by choice. Imagine, for example, that you are in college and you face the following choice one evening. What would you do?

  1. Attend a lecture by an author you admire who is visiting just for the evening, or
  2. Go to the library and study.

Studying doesn’t look so attractive compared with a once in a life-time lecture. When this choice was given to actual college students only 21 percent decided to study.

Suppose, instead, you had been given three choices:

  1. Attend the lecture.
  2. Go to the library and study.
  3. Watch a foreign film that you’ve been wanting to see.

Does you answer differ? Remarkably, when a different group of students were given the three choices, 30 percent decided to study – double the number who did before. Giving students two good alternatives to studying rather than one paradoxically makes them less likely to choose either.

Excerpt from: Made to Stick: Why some ideas take hold and others come unstuck by Chip Heath and Dan Heath

💎 On the power of headline writing (in the newspaper age)

By early evening, the decision is finalised as to what the front page (“the splash”) will look like. At the Sun, this was one of the most important jobs of the editor. Before, say, 2010, the newspaper could shift an extra 100,000 copies on the strength of having a good story on its front; that is a rarity now indeed. The craftsmanship of headlines, though, is one of the great joys of tabloid journalism. Sun meeting rooms are named after famous headlines of its past: How Do You Solve a Problem Like Korea (on the threat of Kim Jong-Il); Super Caley Go Ballistic Celtic Are Atrrocious (on a Scottish football match); and so on. Headline-writing is a competitive sport: people sit at their desk, brows furrowed trying to come up with the funniest line. At the Sun there is a headline of the month competition too.

Excerpt from: How Britain Really Works: Understanding the Ideas and Institutions of a Nation by Stig Abell

💎 On Social Proof’s deep roots (the deepest human desires is to belong)

Humans are herd animals. We want to fit in, to bond with others, and to earn the respect and approval of our peers. Such inclinations are essential to our survival. For most of our evolutionary history, our ancestors lived in tribes. Becoming separated from the tribe — or worse, being cast out — was death sentence. “The lone wold dies, but the pack survives.”

Meanwhile, those who collaborated and bonded with other enjoyed increased safety, mating opportunities, and access to resources. As Charles Darwin noted, “In the long history of humankind, those who learned to collaborate and improvise most effectively have prevailed.” As a result, one of the deepest human desires is to belong. And this ancient preference exerts a powerful influence on our modern behaviours.

Excerpt from: Atomic Habits: An Easy and Proven Way to Build Good Habits and Break Bad Ones by James Clear

💎 On how big numbers fail to move us (for charity fundraising)

In a 1992 survey by W. H. Desvousges and colleagues, people were told that birds were dying because they became mired in uncovered pools of oil at refineries. This (fictitious) problem could be solved by putting nets over the pools. The experiment asked participants to indicate how much they would be willing to pay for nets to save the birds The researchers tried telling different groups that 2,000 birds were being killed a year — or 20,000 birds, or 200,000 birds. The answers didn’t depend on the number of birds! In all cases, the average dollar amount was $80. Evidently, all that registered was A lot of birds are being killed. We should do something about it.

Excerpt from: Priceless: The Myth of Fair Value (and How to Take Advantage of It) by William Poundstone

💎 We seek out information that fits with what we want to hear (health problems)

Here’s a more scientific example of how this tendency works. Two psychologists, Peter Ditto (of the University of California, Irvine) and David Lopez (founder and CEO of iAnalytics Statistical Consulting), told participants that they would take a test to determine whether they had a dangerous enzyme deficiency. For the test, participants had to put a drop of saliva on a strip and then wait for the results. Some learned that the strip would turn green if they had the deficiency; others learned that green meant they did not have the deficiency. The strip wasn’t a real test — it was simply a piece of paper that ever changed its color. The result? Participants who hoped to see the test strip turn green as evidence that they didn’t have the deficiency waited much longer than those who hoped not to see it turn green. That is, people waited more patiently for data when they believed the data would reassure them than when the believed it would scare them.

Excerpt from: Rebel Talent: Why It Pays to Break the Rules at Work and in Life by Francesca Gino

💎 The power of name (brand) recognition

I give a final striking example, this time to do with publishers. In 1969, Jerzy Kosinsky’s novel Steps won the American National Book Award for fiction. Eight years later some joker had it retyped and sent the manuscript with no title under a false name to fourteen major publishers and thirteen literary agents in the US including Random House, the firm who originally published it. Of the 27 people to whom it was submitted no one recognised it had been published and all 27 rejected it.

Except from: Irrationality by Stuart Sutherland

💎 We tend to underestimate how much we’re influenced by others (partly explains the popularity of the iPod)

They asked 40 owners of iPods how influenced they were by the trendiness of the product relative to their peers. The scale went from one (much less than average) to nine (much more than average), with five as average. So the neutral answer was clearly five. However, the average response from participants was 3.3.

Excerpt from: The Little Book of Behavioral Investing: How not to be your own worst enemy by James Montier

💎 If a brand can change its comparison set it can change a shopper’s willingness to pay by orders of magnitude (a lesson in selling coffee)

Consider Nespresso. They sell in distinctive pods, which provide the right amount of coffee for a cup. Because they’re sold in that unit we compare their price to other places selling by the cup, such as Costa or Caffe Nero. When compared to the £2.50 Costa charge, Nespresso pods, costing 30p-37p, feel like a bargain.

But stop for a second and remember back to when they launched. If Nespresso had sold their coffee in standard packaging the natural comparison set would have other brands of roast and ground coffee, like Taylor’s or illy. Their price would have been judged against the norm for other coffees — roughly £4.00 for 227g. Even with tens of millions of pounds of advertising they could never have persuaded consumers to pay £34 for a 454g bag. But that £34 figure equates to 7p per gram, exactly what they’re charging now.

Excerpt from: The Choice Factory: 25 behavioural biases that influence what we buy by Richard Shotton

💎 On the paradox of choice (Monstromart: where shopping is a baffling ordeal)

“Monstromart: where shopping is a baffling ordeal” reads the slogan of a fictional supermarket in The Simpsons.

Inside the supermarket, there were whole aisles for one type of product. There were different brands of tomato ketchup as far as the eye could see, bags sugar could be bought in hundreds of varieties, the express checkout had a sign reading: “1,000 items or less”.

In the end, the Simpsons returned to Apu’s Kwik-E-Mart. In doing so, the Simpsons were making a choice to reduce their choice. It wasn’t quite a rational choice, but it made sense. Their unconstrained freedom left them paralysed to make decisions.

There is no denying choice improves the quality of our lives. When people have no choice, life is almost unbearable. Choice is essentially freedom, which is fundamental to our well-being. However, like The Simpsons, the choice paradox suggests that offering consumers too much choice can leave them paralysed to make a decision.

Excerpt from: Product Gems 1: 101 Science Experiments That Demonstrate How to Build Products People Love by David Greenwood

💎 On the influence of options presented in a relatively large group (our probability judgments are often inaccurate)

I recently watched a competitive swimming heat on television. The race sticks in my mind because 50% of the athletes, four in total, were from the United States. Knowing very little about each participant, nor who the favourite was for the race, at first glance, it looked like the United States had to place in the top three. The result: none of them finished in the top three.

In this case, the size of each category, the country each athlete represented, incorrectly led me to believe they had a better chance of making it into the top three. I incorrectly believed “they had the numbers on their side”.

The category size bias demonstrates how our probability judgments are often inaccurate. Category size can impact the perceived likelihood of a specific outcome, such that an outcome classified into a large (vs small) category is perceived as more likely to occur.

Excerpt from: Product Gems 1: 101 Science Experiments That Demonstrate How to Build Products People Love by David Greenwood

💎 On using the rejection-retreat principle to boost sales (start high)

I was walking down the street when I was approached by an eleven- or twelve-year-old boy. He introduced himself and said that he was selling tickets to the annual Boy Scouts circus to be held on the upcoming Saturday night. He asked if I wished to buy any at five dollars apiece. Since one of the last places I wanted to send Saturday evening was with the Boy Scouts, I declined. “Well,” he said, “if you don’t want to buy any tickets, how about buying some of our big chocolate bars? They’re only a dollar each.” I bought a couple and, right away, realised that something noteworthy had happened. I know that to be the case because: (a) I do not like chocolate bars; (b) I do like dollars; (c) I was standing there with two of his chocolate bars; and (d) he was walking away with two of my dollars.

Excerpt from: Influence: The Psychology of Persuasion by Robert Cialdini

💎 On wanting what we can’t have (the power of scarcity)

During a famine in 1774, Frederik ordered a national cultivation programme. In a response typical of many towns, the people of Kolberg declared: “The things have neither small nor taste, not even the dogs will eat them, so what use are they to us?”

Frederick’s initial response was more a violent “shove” than a nudge – he threatened to cut the noses and ears off any peasant who did not plant potatoes. However, he soon changed tack. In modern parlance we’d say that he used a bit of “psychology”.

Legend has it that instead of issuing further threats, Frederik ordered his soldiers to establish a heavy and visible guard around the local royal potato fields, yet also instructed them to be deliberately lax in protecting them. At the same time, the local peasants noticed their king’s conspicuous admiration of potato flowers as well as the tubers themselves, and sneaked in to steal and plant the “royal crop”. Within a short time, many potatoes were stolen and soon being widely grown and eaten.

Excerpt from: Inside the Nudge Unit: How small changes can make a big difference by David Halpern

💎 On the importance of providing a backstory to price cuts (plausibility of the deal)

But when Meghan Busse, Duncan Simester and Florian Zettelmayer, academics from MIT and the Kellogg School of Management, investigated they discovered a curious anomaly. In the previous weeks the car companies had been cutting prices so much that the employee discount was generally no better and occasionally more expensive, than existing deals.

The academics hypothesised that it was the price cue, not the price, which mattered. Consumers reacted to the plausibility of the deal rather than the actual discount. When consumers don’t trust brands they treat deals sceptically, but when they’re accompanied by a back story they have more heft.

When you are contemplating promotions don’t rely on an eye-watering discount. Numbers leave customers cold. We’re not natural statisticians – stories move us to action far better.

Excerpt from: The Choice Factory: 25 behavioural biases that influence what we buy by Richard Shotton

💎 On the magnetic middle (to reduce energy consumption)

We found that over the next several weeks, those who had been consuming more energy than their neighbours reduced their energy consumption, by 5.7 per cent. Not much of a surprise there. More interesting, however, was the finding that those who had been consuming less energy than their neighbours actually increased their energy consumption by 88.6 per cent. These results show that what most others are doing acts as something of a “magnetic middle”, meaning that people who deviate from the average tend to be drawn towards it – they change their actions to be more in line with the norm regardless of whether they were previously behaving in a socially desirable or undesirable way.

Excerpt from: Yes! 50 Secrets from the Science of Persuasion by Noah Goldstein, Steve Martin and Robert Cialdini

💎 On why the mind is a lot like the human egg (confirmation bias)

The experiments prove that it’s hard to overturn negative opinions. Rejecters of your brand are difficult to convince because they interpret your message through a lens of negativity.

As the legendary stock market investor, Charlie Munger, said:

“The human mind is a lot like the human egg, in that the human egg has a shut-off device. One sperm gets in, and it shuts down so that the next one can’t get in. The human mind has a big tendency of the same sort.”

Excerpt from: The Choice Factory: 25 behavioural biases that influence what we buy by Richard Shotton

💎 On reaching people early before their habits harden (if you want to change behaviour)

In the policy world, a good example comes from a programme known as the Nurse Family Partnership (NFP), originally developed and tested by David Olds in the USA. The programme involves a nursing practitioner befriending and supporting a young at-risk mother from the pre-natal stage through the child’s second birthday. It is a well-validated programme that has been shown to reduce violence and abuse of the child, improve educational attainment and even reduce the child’s rate of offending at the age of 15 compared with children from a similar background who did not participate in the programme (at least in the USA).

A less well known but fascinating detail of the NFP is that Olds noted when we introduced it into the UK was that the programme worked much better with mothers having their first child. This isn’t a marginal detail. It is an expensive programme, and so it is incredibly important to make sure that is focuses on the right people, and at the right time, to whom it will make a difference – young, first time mothers.

In general, we might take as an opening mantra something like “learn it first, learn it right”

Excerpt from: Inside the Nudge Unit: How small changes can make a big difference by David Halpern

💎 On the power of aligning incentives (jumping out of a plane)

Here’s another example: in World War 2, US paratroopers had a problem with the fact that, allegedly, one in twenty chutes failed in some way. The soliton was to require the packers and inspectors to regularly jump out of airplanes using parachutes chosen at random from the store. The quality of packing then rose to 100 per cent and stayed there. “The packers are all jumpers,” explained on NCO to Stars and Stripes magazine: ” We try to have each man jump once a month. That’s a pretty food way to keep them honest on the tables.”

Excerpt from: One Step Ahead: Notes from the Problem Solving Unit

💎 On breaking sales records using the anchoring bias (selling Girl Scout cookies)

Years ago, when The Tonight Show rules late-night TV and when the all the guests weren’t celebrities promoting their latest book, movie, or TV show, host Johnny Carson interviewed the Girl Scout who sold the most cookies that year. This young lady, Markita Andrews, set a cookie sales record that was never broken. What was her technique? In addition to hard work, she used a framing strategy to make her customers view the purchase as a trivial expense.

Markita’s strategy was simple When she knocked on a door, she would firs ask for a $30,000 donation to the Girl Scouts. Naturally, she had no takers on that request. But then she’d ask if they would at least buy a box of Girl Scout cookies. and just about everyone would.

Excerpt from: Brainfluence: 100 Ways to Persuade and Convince Consumers with Neuromarketing by Roger Dooley

💎 On the power of doing good to boost sales (organic cotton and Patagonia)

In the mid-1990s, there was a shortage of organic cotton—cotton that Patagonia relied on to make its products. While other companies might source non-organic alternatives in the interim, Chouinard’s’ response was “if we have to be in business using an evil product like traditionally grown cotton, we don’t deserve to be in business”.

The big ‘a-ha’ for Chouinard was that you could do something good for the environment that was also good for your business. Patagonia became California’s first B Corporation in January 2012. At the time, the company was turning over $600m in annual revenues and employed around 2000 people.

Patagonia continues to donate 10% of its profits to small-scale environmental campaigns where $10,000-$15,000 can make a real difference. Their Worn Wear initiative encourages the repair, recycling and resale of garments. The company once took a full-page advert in the New York Times with the tagline: “don’t buy this jacket, unless you really need it”.

Excerpt from: Product Gems 1: 101 Science Experiments That Demonstrate How to Build Products People Love by David Greenwood

💎 On the power of getting a commitment (watch my things)

Take, as proof, what happened when psychologist Thomas Moriarty staged thefts on a New York City beach to see if onlookers would risk personal harm to halt the crime. In the study, a research accomplice would put a beach blanket down five feet from the blanket of a randomly chosen individual – the experimental subject. After a couple of minutes on the blanked spent relaxing and listening to music from a portable radio, the accomplice would stand up and leave the blanket to stroll down the beach, A few minutes later, a second researcher, pretending to be a thief, would approach, grab the radio, and try to hurry away with it. As you might guess, under normal conditions, subjects were very reluctant to put themselves in harms way by challenging the thief – only four people did so in the twenty times that the theft was staged. But when the same procedure was tried another twenty times, with a slight twist, the results were drastically different. In these incidents before taking his stroll, the accomplice would simple ask the subject to please “watch my things,” which each of them agreed to do. Now, propelled by the rule for consistency, nineteen of the twenty subjects became virtual vigilantes, running after and stopping the thief.

Excerpt from: Influence: The Psychology of Persuasion by Robert Cialdini

💎 On why clothing stores instruct their sales personnel to sell the costly item first (the contrast principle)

Those who employ it can cash in on its influence without any appearance of having structured the situation in their favor. Retail clothiers are a good example. Suppose a man enters a fashionable men’s store and says that he wants to buy a three-piece suit and a sweater. If you were the salesperson, which would you show him first to make him likely to spend the most money?

Clothing stores instruct their sales personnel to sell the costly item first. Common sense might suggest the reverse: If a man has just spent a lot of money to purchase a suit, he may be reluctant to spend very much more on the purchase of a sweater. But clothiers know better. They behave in accordance with what the contrast principle would suggest: Sell the suit first, because when it comes time to look at sweaters, even expensive ones, their prices will not seem as high in comparison. A man might bulk at the idea of spending $95 for a sweater, but if he has just bought a $495 suit, a $95 sweater does not seem excessive. The same principle applies to a man who wishes to buy the accessories (shirts, shoes, belt) to go along with his new suit.

Contrary to the commonsense view, the evidence supports the contrast-principle prediction. As sales motivation analysts Whitney, Hubin, and Murphy state, “The interesting thing is that even when a man enters a clothing stores with the express purpose of purchasing a suit, he will almost always pay more for whatever accessories he buys if he buys them after the suit purchase than before.”

Excerpt from: Influence: The Psychology of Persuasion by Robert Cialdini

💎 On our tendency to underestimate how much social proof affects our behaviour (increasing busking donations)

At a busy New York City subway station we hired researchers to count the number of commuters who donated to a street musician as they walked past.

After a short time a small change was made to the situation that had an immediate and impressive impact. Just before an approaching (and unsuspecting) commuter reached the musician, another person (who was in on the act) would drip a few coins into the musician’s hat in view of the approaching commuter. The result? An eight-fold increase in the number of commuters who chose to make a donations.

In a series of post-study interviews with commuters who did donate, every one of them failed to attribute their action to the fact that they had just seen someone else give money first. Instead they provided alliterative justifications: “I liked the song he was playing”; “I’m a generous person”; and “I felt sorry for the guy.”

Excerpt from: The Small BIG: Small Changes that Spark Big Influence by Robert Cialdini, Noah Goldstein, and Steve Martin

 

💎 The power of making it personal (think about how someone else might feel)

Emotions get people to change their behavior. In his show Crowd Control, Dan Pink tried to get people to stop illegally using handicapped parking spots. When Dan’s team changed the handicapped signs so they has a picture of a person in a wheelchair on them, illegal parking in the spots didn’t go down — it topped altogether. Seeing a person’s face, thinking about how someone else might feel, made all the difference.

Excerpt from: Barking Up the Wrong Tree by Eric Barker