Decode Cognitive Biases To Supercharge Your Online Business

Cognitive Biases Complete Guide For Digital Marketers and Online Businesses

What if I told you that you can control the action customers take on your site to supercharge your sales? Well, does this sound too good to be true? Facts say otherwise, and for centuries, successful marketers have leveraged this secret sauce to rake in millions of dollars and built thriving brands and businesses. It’s all about understanding deeply how your customers behave, and leveraging the stimuli to which your customers react.

Well, talking about customer behavior, let’s start with some interesting facts about customers who shop online.

Customers spend less than 15 seconds on an average on a new website.

It takes about 50 milliseconds (0.05 seconds) for customers to form an opinion about your site.

88% of online customers are less likely to return to a site after bad experience.

70% of small business website lack a call to action (CTA) on their homepage.

What’s this got to do with driving your sales, you would say. Well, we know now that customers have a very small span of attention and as digital marketers we need to entice them into trying out our offering and move up the funnel over time to become advocates for our brand. Many digital marketers have used this very effective technique am going to share, to leverage our cognitive biases and skyrocket their brand sales.

As we peel this opportunity further, let’s start with understanding what are cognitive biases. They are one of the most used tool by successful marketers, yet one least understood by many.

“Science has shown that we tend to make all sorts of mental mistakes, called “cognitive biases”, that can affect both our thinking and actions. These biases can lead to us extrapolating information from the wrong sources, seeking to confirm existing beliefs, or failing to remember events the way they actually happened!”

Robert Cialdini, Robert B. Cialdini in his textbook, Influence: The Psychology of Persuasion, has shared some great insights on cognitive biases, which we will further explore to see how some online brands and digital marketers are leveraging to boost their business.

Let’s think about a few examples, so we can warm up before we go deep!

Cognitive Biases — A witty touch

Think about the last time you went for that street shopping, did you notice there was a starting price which you negotiated very passionately and then felt good about the purchase. For all you know, the starting price was just an anchor (anchoring effect bias), and the goal all along was to sell you the piece of merchandise at the final negotiated price. A Win-Win I would say, or Not, I leave you to think about that. 😉

There are more than 185 known cognitive biases in existence (*Source — Wikipedia), but we will cover some of the most influential biases which can hyper boost your business, so read on!

Anchoring Effect

“The anchoring effect is a cognitive bias whereby an individual’s decisions are influenced by a particular reference point or ‘anchor’.”

Think about that visit you would have made to a car showroom. An individual may be more likely to purchase a car if it is placed alongside a more expensive model (the anchor). Prices discussed in negotiations that are lower than the anchor may seem reasonable, perhaps even cheap to the buyer, even if said prices are still relatively higher than the actual market value of the car.

Example — You would see a price slash across most e-commerce sites, which sets the discount from anchor price, and key technique to entice customers.

Anchoring Effect Cognitive Bias

Reciprocity Bias –

“Reciprocity is a social norm of responding to a positive action with another positive action.”

Remember the free samples during a Supermarket visit or free trials when you shop online — these are not merely opportunities to try product, but rather invitations to engage in the rule of reciprocity.

Example — Music streaming apps like Gaana and Spotify, provide access to most content without upfront payment, and then upsell offerings to the customers.

Reciprocity Bias

Consistency Bias –

“Consistency bias refers to Incorrectly remembering one’s past attitudes and behavior as resembling present attitudes and behavior.”

Commit to something and then principle of consistency says that we will then feel an automatic compulsion to stick with the decision we’ve already made.

There is another interesting technique called Foot in the Door Technique, where a small request paves the way for compliance with larger subsequent requests.

Example — Remember the free trials which you get on many sites when you shop online. This is one of the most frequently encountered digital marketing technique which encourages consumers to take small actions initially, and then convert them to paying customers once they have started the journey. Clickfunnels is one of the fastest growing site, leveraging this principle quite well.

Liking bias -

“Liking bias is the idea that we prefer to say “yes” to people that we know and like.”

Robert B. Cialdini in his aforementioned book explores the liking bias with an example from early days of brand Tupperware. Tupperware transformed the buying experience into a fun, energetic in-home Tupperware party, where housewives were incentivized with a small fee to host their sisters, mothers, daughters, and friends to test the storage containers and purchase if inclined. This tactic was effective because it leveraged the liking bias.

Instead of a sales rep showing up at your door for a cold sales pitch, you’re invited to the party of a good friend or family member. You’re far more inclined to say yes to this party than to a stranger at your door. Further, once you’re at the party and you’re introduced to the product, reciprocation tendency, social proof, and the liking bias all work together to get you to buy some Tupperware.

It’s also important to understand the “Halo Effect”, when talking about Liking Bias. Halo effect refers to the tendency where one positive attribute (their good looks) dominates the way we see that person, like when someone is physically attractive, we are more likely to assume they are also talented, kind, honest, and intelligent. We like people who share our interests and Lifestyle, who give us compliments, who are familiar to us, who cooperate with us towards a common goal, and sales people can leverage the halo effect while matching the tone, body language, facial expressions with the customers, to get the customers to like them, and then are able to get buy in for recommended products leveraging this bias.

Example — Many sites like Amazon have a very rewarding affiliate program as one of the key business lever. These affiliates (who enroll with Amazon Associates program) in many cases are influencers or bloggers who have their own community, and promote the products within their groups, which get more footfalls (virtually of course) to Amazon’s site.

Liking Bias

Consensus bias

“Consensus bias is a pervasive cognitive bias that causes people to see their own behavioral choices and judgments as relatively common and appropriate to existing circumstances”.

This bias is especially prevalent in group settings where one thinks the collective opinion of their own group matches that of the larger population. Since the members of a group reach a consensus and rarely encounter those who dispute it, they tend to believe that everybody thinks the same way.

Example — This bias plays out a lot during research stage by digital marketers, and they can easily fall prey to their own notions of what customer’s would like or not from a UX standpoint. A good example of this is when designing various elements of site, a marketer may feel that the slider (like one below), doesn’t work and ask leading questions from customers during research, thus complimenting their own bias. Some good ways to address this bias during research is to not ask leading questions, take feedback from a diverse group, have more data backed judgement, leverage research techniques which remove such biases.

Consensus Bias While Doing Research

Authority Bias

“Authority bias is the tendency to attribute greater accuracy to the opinion of an authority figure (unrelated to its content) and be more influenced by that opinion.”

An individual is more influenced by the opinion of this authority figure, believing their views to be more credible, and hence place greater emphasis on the authority figure’s viewpoint.

You would have seen many brands leverage this in mass marketing like Sensodyne having Doctors in the Ad or Neutrogena having Dermatologist Recommended claim across product and marketing material. Many online brands have also leveraged this bias effectively to entice customers to take a targeted action.

Example — Myntra, a leading online fashion portal continues to leverage celebrities and fashion icons, to drive brand resonance, traffic and conversion with targeted campaigns.

Authority Bias

Bandwagon Effect or Social Proof

“The bandwagon effect is the term used to describe the tendency for people to adopt certain behaviors, styles, or attitudes simply because others are doing so.”

This is one of the most effective strategy used by marketers. I have been in multiple negotiations where I have seen this get result like clockwork, as people tend to make choices influenced by their peers.

Example — Below is the examples of one of the social shopping sites in India called Limeroad. You will notice how this site very effectively uses the social proof in the way they have built their product and user experience, which makes shopping on this site pretty unique.

Bandwagon Effect Bias

Scarcity bias –

“Simply put, humans place a higher value on an object that is scarce, and a lower value on those that are in abundance.”

Has there been a time you were tempted to buy a consumer item because it was almost sold out on shelf, or a car which had months of advance booking. Voila! There was a scarcity bias already at play as you made those decisions.

Example — This bias is leveraged almost ubiquitously on online sites. You will see messages like “Limited Stock”, “Only few pieces left”, “Deal ends in xx hours”. These are all examples of online websites leveraging scarcity bias to boost sales.

Scarcity Bias

Contrast effect

“A contrast effect is the enhancement or diminishment, relative to normal, of perception, cognition or related performance as a result of successive (immediately previous) or simultaneous exposure to a stimulus of lesser or greater value in the same dimension.”

The contrast effect was noted by the 17th century philosopher John Locke, who observed that lukewarm water can feel hot or cold depending on whether the hand touching it was previously in hot or cold water.

Example — Amazon does this pretty well in the example below by highlighting the difference when customers opt for prime delivery.

Contrast Effect

And now, the masterstroke which digital marketers use in design and communication, to win our customers:

Lollapalooza effect

Charlie Munger used the term “Lollapalooza effect” for “multiple biases, tendencies or mental models acting in compound with each other at the same time in the same direction. With the Lollapalooza effect, itself a mental model, the result is often extreme, due to the confluence of the mental models, biases or tendencies acting together, greatly increasing the likelihood of acting irrationally.”

This compounding of multiple biases acting together creates a powerful stimuli in customers mind to take action, and used correctly can supercharge the online website sales.

Example — One of the most familiar example is seen while shopping at Amazon, where multiples biases are being leveraged to drive customer action and boost online brand sales.

Cognitive Biases Amazon Example

Check out this article on my blog to get even more exhaustive information on cognitive biases, which you can leverage as digital marketers or online business owners.

Well, this brings us to the end of this writeup. Congratulations, you have made it till here and hopefully got yourself equipped with one of the most powerful tool to communicate with and influence your customers, and supercharge your business!

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Digital Expert | Leadership Coach | International Business Leader | Million Dollar Startups Creator | Travel Enthusiast www.digicrusader.com

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Anurag Jain

Anurag Jain

Digital Expert | Leadership Coach | International Business Leader | Million Dollar Startups Creator | Travel Enthusiast www.digicrusader.com

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