Simple psychology principles to improve your marketing and boost your sales (with Phil Agnew)

Phil Agnew is the host of the UK's largest marketing podcast called “Nudge”. He specialises in consumer behaviour and how to apply scientific principles at each stage of the marketing funnel. In today's episode, we talk about the science of marketing psychology and behaviour and how to use it in your business.

– How identifying behavioural and marketing psychological principles will help you to understand the science behind decision making for buyers.
– The 4-step marketing funnel and the scientific principles you can use at each stage to maximise your marketing and your message.
– The influence of illusions, social norms and other biases on the decision making process.
– Why being distinct within your niche/industry is more important than being different.

You can connect with Phil at https://www.nudgepodcast.com/ or search for Nudge wherever you get your podcasts.

 

 
I'm interviewing Phil Agnew, who is the host of the UK's largest marketing podcast, Nudge. He, like me, also geeks out on all things marketing. And today we are talking about behavioral psychology, marketing psychology, the science behind the decisions we make when it comes to buying from certain brands.
He explains this in a way that is so practical for businesses like yours and mine, where we can really apply these scientific concepts, in such simple ways to all different areas of our marketing.

So without further ado, let's jump into the chat with Phil.

Before we dive in, I'd love to know how you managed to, or how you fell into studying the psychology of marketing in your career. What's your background?

So I, like a lot of marketers, decided to study marketing at university which, when you're 17, 18, seems like a great idea. When you're 21 in your first marketing job it often doesn't seem like such a great idea because I spent all this time and all this money on marketing, learning about marketing, and I found myself in my first marketing job doing marketing for a fairly small startup and I was just so ineffective.
I had to write emails and those emails weren't converting. I had to write inbound blogs and those blogs weren't getting any clicks. I had to design landing pages and those landing pages wouldn't get any sales. And all of the strategy I'd learned about marketing, stuff about the 4Ps, about premium pricing strategy, all of this stuff, it just wasn't effective for me in my role.
It wasn't helping me be effective. I spent many years like this in marketing, just really struggling to actually get results with some of the things I was trying. I felt a bit frustrated. I sort of looked at my peers who were in a teaching profession or lawyers or doctors, and they had all of these laws and strategies they could follow.
And I didn't think we had that in marketing, but then I sort of stumbled upon the world of psychology, consumer psychology and behavioural science, read books like the one you mentioned and learned so much about the field. And since then have discovered that there are hundreds of heuristics and biases that all of us follow when we make a decision and if we as marketers can understand those heuristics and biases, we can actually change our landing page, tweak our email subject line, change our blog to make it far more effective and really get some consistent results in our marketing. So that's how I stumbled into it.

For about five years ago almost, I made my podcast, Nudge, which interviews people far, far smarter than me about behavioural science and have been learning a lot about the subject since then.

I love that. And when you talk about heuristics and biases for the people who are listening to the show, who might never have ever heard of that before, what on earth are they? 

Yeah, what on earth are they? So they are basically heuristics and nudges that all of us follow when we make decisions. So when we make a decision, there are hundreds of things going through our head. We might be thinking about what we want to have for dinner. We might be thinking about why that person is dressed that way.
We might be thinking about what people are thinking about us. And we're very busy people. There are hundreds or tens of thousands of decisions that we make each day. And the way we cope with that as humans is by using these biases, these nudges where we make a decision far quicker.
So great examples, if you go on holiday and you see a big queue outside a restaurant, and then you see another restaurant without many people outside, you'd be more likely to go in the restaurant with the queue. That's social proof. So that's the idea that you follow the actions of others. And by following the actions of others, this is something that we've learned over millennia is really, really good for us because let's say, for example, as cavemen and women, if we see a bunch of cavemen and women running out of a cave We know not to go in that cave because there's probably something dangerous in there. There's probably something that might kill us in there and we've kept that today. So we've kept that today when we're walking past a restaurant, we're more likely to go into the popular one or when we're on a website And we learn that a product is best selling we're more likely to buy that and there's wonderful ways you can apply this. I've tested it a lot myself to promote my own podcast.
So for example, I ran a test with my newsletter, my podcast, when we reached a hundred thousand downloads. And it was a very, very simple test. One just said the name of the episode, which I'd launched that week. And the second, so it was a classic A B test, said the name of the episode which I'd launched that week, and then in brackets it just said plus we've reached 100, 000 downloads, so just a bit of social proof, just saying that people are following the show.
And that one with the 100, 000 downloads, the social proof version, 22% better open rate, two times higher click rate just by applying one of the most basic nudges, just a simple bit of social proof. So that's one of the easiest ones to follow really.

Here where I live in Brisbane, we say thank you to bus drivers. I did live in London where you are for a little while. And when I said thank you to a bus driver, people looked at me like I was nuts. But I've noticed when I get off a bus and I say thank you to a bus driver, the person behind me most often will say thank you as well.
And if I don't, if I'm getting off first and I don't, the person behind me usually won't either. Is that social proof in action as well? 

That's a really good one because it's a sort of a subsection of social proof known as social norms. So what you're doing is you're setting the norm for that behaviour. You're saying as a bus passenger we should be courteous and we should say thank you and that sets a norm which other people will follow.
In the same way when you first came to London and you saw me or some other miserable Londoner get off the bus before you and not say thank you, we set the norm and you wouldn't. There's a wonderful example of this with um, we call them trolleys in supermarkets, you know in supermarkets you push around a trolley. They were invented about I think it was 70 80 years ago by a super supermarket owner who wanted his customers to spend more money in the store. So he invented these trolleys that people could push around and put their groceries in. But he had real difficulty getting people to use these trolleys because imagine if you've been shopping all your life and you go into a store and rather than baskets, what you're used to, or just your own bags, which is what people are used to putting their stuff into, you see these weird metal things with wheels and you've got no idea what they're used for.
You are not going to pick one up. You're not going to be the first person just to pick one up and try it out. You're not going to do it. So what the supermarket owner did, this is in Rory Sutherland's brilliant book, Alchemy, the owner paid actors for the first week to walk around the store just pushing trolleys, putting things in and out of their trolleys.
So they would just walk around the store pushing the trolleys and that set a social norm. By seeing people push around the trolleys, they knew that, oh, this is a normal behaviour, I can do the same thing as well. So when normal people came into the store, they followed the actions of others. And Rory Sutherland makes a good point in his book that if you went into a homeware store today and people were pulling around dustbins on wheels and carts, you would do the same because you would follow that norm.
The trolley is just one example of many that we could follow. And social norms is one of those biases that we like to follow. We like to follow those actions of others.

That's so interesting. That makes so much sense. Like if you're at an event and the host is asking people to participate or put their hand up, and then nobody puts their hand up. And then after the first person's put their hand up and spoken, everyone starts to put their hands up. Makes sense why that happens now.
So before we dive into some of these individual principles one by one, uh, because I think that's probably how we'll be able to help the listeners most to understand how they can apply some of these, but I'm curious to know where exactly in your marketing, can you begin to apply this? You mentioned landing pages, emails, where else can you start to use some of these principles to, I guess, have a more of an impact on the person who's consuming that?

Yeah, it's a great question. Some people feel like nudges is something you apply right at the end. You just use these behavioural biases once you've done your whole marketing plan. But there's a lot of behavioural scientists will say, actually, no, you can use a different approach, which is behavioural science is a lens through which you can view all of your marketing so you can find ways to improve it across the funnel.
So in my course, which I've created called the science of marketing, I've looked at how you can apply these nudges in every stage of the funnel. So in awareness, in consideration, in acquisition, and in retention. I think there's all different areas you can apply it because really these biases become handy whenever somebody is making a decision.
That could be a decision to click on your tweet. That could be a decision to Pick one product over another that could be a decision to not cancel your Amazon Prime subscription, for example, so it can be all the way through to retention. And even winning customers back as well. I think there are wonderful examples of that too. So there's really lots of areas you could use it right the way through from awareness to retention.
I think the one place I would say for the listeners, that'd be really helpful is it's really worth testing this stuff. So if you can use these principles in an area where you can test email subject lines is a great example, landing pages is a great example. Maybe just some of the posts you're putting on social media or perhaps some of the messages you're sharing on your website.
That's a really good way to use this because then you can run an A B test and you can get some actual results for yourself. You can say, yes, social proof does work for me in this example. And so anywhere you can test is a really good place to start.

 

 

Okay, I love that. And I love that we've got four stages. I'm a big fan of any kind of framework because it helps my brain to wrap around. Otherwise it's like, Oh, there's all of these different things. How do we add them in? Where do we use them? So when we go through, I'm going to ask you to share a couple of the different individual principles with the easiest way to share them be. 

So the ones you could maybe use is awareness through to retention. Let's do it that way. So we've talked about social proof. What's another principle that might be really useful for somebody who is marketing their business by themselves?
Yeah, so this sort of we're thinking about this awareness stage. We're wanting people to get attracted to our business and get them to be aware of our business. One that's really useful to think about is the principle of distinctiveness. And this is something as marketers will all understand, you know being distinct in our spaces is really important. We know it's important, but it's not a new thing. It was discovered way back in 1933 by a researcher called Hedwig von Westeroff who's got a very distinct name and I don't think that's accidental ━ and what she did is she gave people these lists of letters to remember and in the list were different combinations of letters so x, w, y or um, e, r, t or w, x, and different combinations.
Not an easy thing to remember, really, all these different combinations of letters. But then within the list of, say, 15 combinations, there would be one combination of numbers. 4, 2, 3, for example. And then she would ask, after about 10 minutes of them looking at this sheet, the sheet would be taken away and they would say, can you try and write down how many different combinations you remember?
And what she was really looking to see is, is that distinct asset, the numbers in this case, more memorable? It turns out they are. They are 30 times more memorable. The participants were 30 times more likely to remember the numbers than the letters. Then she repeats the experiment, this time the numbers are commonplace, there's 14 combinations of numbers, and then one combination of letters.
Suddenly the letters become more memorable. So what this is basically telling us from a psychological point of view is that being distinct within your category is what makes you memorable. And so Richard Shotton, a behavioural scientist who is current, he wasn't doing this stuff 100 years ago, he was doing this in 2018.
He ran a study with brands and he showed people 10 brands from one category. So these were brands from the automotive category, so Chevrolet, Ford, all of these different brands. And then one brand from the fast food category. So Burger King, and he said, look at these brands very briefly, ask them 10 minutes later, which do you remember?
Burger King was four times more memorable because it is unique within the set. He then flips it, lots of fast food brands, one automotive brand, the automotive brand is four times more memorable. So what does this tell us as marketers? What is it important to us? Well, there's this phrase in marketing which is you have to be different.
Differentiation, that's what we've always heard. But this says it's a little more nuanced. This says it's not just that you have to be different, it's more that you have to be distinct within your category. So actually, being quite similar to other products is fine, as long as they're not within your category set, as long as that's not what people are comparing you against.
So let's find some really easy ways to apply this. Social media, for example. You can really stand out on social media if you are distinct compared to the category of people you're within. So Steph, you and I are marketers on social media. We probably post a lot of marketing stuff on LinkedIn. What we should be doing is not copying other marketers because that will just make us samey.
We should look at experts in other fields, maybe people who are sharing stuff about entertainment, about sport, about Politics and apply some of the things they're applying. Maybe they're using different forms of video or different forms of conversation style or different forms of audio, because doing so will make us distinct within our category or in a completely different way.
Let's just think about how you're branding your business. What colour are you going for? There's a classic example in the UK, and I know this example is Australia because the same, a very similar brand copied it. In the UK we have a low-cost airline called EasyJet and you folks have a low-cost airline called Jetstar and they both did something very interesting.
They both decided to pick a colour which was totally distinct from their rivals, this sort of fluorescent orange. So Jetstar is a bit more hidden because it's grey and then the star is orange but EasyJet is fully orange. And they picked that because nobody, no other airline had it so they would stand out.
Now this colour is not new, in fact it's a very common colour to use when you're promoting cheap things. So you'll see cheap supermarkets  using this colour. You'll see big deals in yellow, orange, orangey writing or big offer signs in the same writing. So it's quite a common colour to use when you're promoting cheap things, but they applied it to a new category set, which was airlines.
And it was so popular that Jetstar decided to use the same thing, which maybe takes away from the principle because you shouldn't do it within your same category. But I think EasyJet and Jetstar are far enough apart that I don't think they're competing.

Distinctiveness is really important to remember. Look at the competitors that your audience are comparing you against and say, Am I distinct compared to them? You don't have to be different compared to everyone. You just have to be distinct compared to them. ───
think that's such an important point because I certainly, I notice with a lot of the clients and the students who I work with, a lot of people who listen to the show. They, the first thing they look at when they are creating content for social media, for example, they look at what the successful competitors are doing in their industry.
They're like, Oh, that post that this competitor shared got all of these likes. Therefore, I need to reverse engineer that and create something similar for my brand. So what you're saying is actually, no, don't reverse engineer that. Go and look at what somebody else completely different in another industry has done and reverse engineer that instead for your industry.
So that you're not being compared to, or you're not looking similar to the others in your space.
Exactly right. Exactly right. Yeah. ────
Do we have any other principles at that awareness stage
Yeah, yeah,
we could leverage quite easily?
absolutely. There's one I love and there's one I would encourage you to use, Steph. I would encourage almost every small business to use because it's such a powerful one and it's this bias known as the Labour Illusion. Sometimes it's an illusion, sometimes it's not, but it's known as the Labour Illusion and this is a very simple idea.
In studies run by Harvard Business Review, they asked people at restaurants, how much are you enjoying the food? You know, how much would you pay? What do you think of the quality? And they had a random controlled, uh, experiment where there were basically two restaurants where they would ask people or one restaurant that was altered on alternative nights.
On some nights, the window to the kitchen would be open. So you could see, everybody could very easily see the chefs cooking their meal. On other nights, that window was closed. Otherwise, the restaurant was identical. Same food, same quality of food, everything like that. And consistently, people said the food tastes better and that they would pay more for the food when you can see the chefs.
So the idea here is that if you see the work going into the products being created, you'll enjoy it more. There's been other studies with product tours. So for example, if you go to pretty much any brewery, you can do a tour of the brewery and then taste some beer at the end or, you know, any sort of company where you can get a tour.
And they've asked people how much do you enjoy the beer before the brewery tour starts or just in a completely different setting? And then how much do you enjoy after and how much would you pay? And consistently people would pay and enjoy that product far more once they've toured around the company.
So seeing the behind the scenes, for example, really boosts enjoyment. And so basically seeing the work that goes into something makes you more likely to, to, to value it. But that's real work. So that's you seeing the actual work. There are ways you can do this, which is ━ just by saying you've done more work.
And by the way, not endorsing lying, never, never lie. But there's a, there was an interesting study which, um, showed people, um, these were house buyers. So these were people who were looking to buy a house, I think in America. ─ And in the study they were shown lists of houses sent to them by a real estate agent, and they asked the estate a, the estate agent to just change the copy on the email.
When they sent over that list, on half of the emails they were, they told the estate agent to say, oh, I spent just half an hour creating this with the help of my computer or the help of a bit of a search algorithm I had on my computer. And for the other half of the emails, they said, oh, I actually spent eight hours.
Well, I just spent eight hours researching. Your needs and I've selected these houses for you now. The true was the truth was the second one They had actually spent that amount of time doing it But half the time they said we've just spent much less for the purpose of this test And it turns out people were far more likely to not only value the houses That were that took a lot more time to find the 8 hour version They were far more likely to go on and buy those houses to make a much bigger purchase decision and so Just showing the work you do and the effort you put into something makes people far more likely to consider your product and potentially even buy.
And this is one thing that I've tested. I thought a lot of the times with these principles, I think, well, let me test this out. I've got my own podcast. I want to find ways to apply this. So I created a Reddit ad, really easy to run A, B tests on Reddit. And one of the ads said, learn six memorable marketing strategies from the experts I've spoken to this year.
So it was an ad I did at the end of last year, so it was a yearly round up. And the other ad was identical in every way, but the copy just said, I've spent 480 minutes listening to marketing experts this year. So saying the effort I've put in, and then said, Here are their marketing strategies. That second ad, which showed the labour I'd put in, had a 45 percent higher click through rate than the first one.
With just that tiny copy tweak, the actual image on the ad was the same. ─ And so that's a really you can use. ───
Wow. That's so interesting. And I wonder if this is related. It might not be, but I notice, so sometimes I mix it up, um, with the call to action that I give at the end of each episode. Sometimes I'll say, leave a review. Sometimes I'll expand on that and I'll say, look. My team and I put a lot of effort into creating this show.
And I've noticed on the, on the weeks when I do put a little bit more time into that call to action, and maybe it's just because the call to action is longer, but I've noticed on those weeks, we tend to get more reviews. I wonder if that's related or if it's completely unrelated.
I think you're using it, Steph. I think that's it. And it's some people stumble upon it. So Steve Jobs famously stumbled upon it in some of his earlier keynotes. He just started saying at the start, Oh, we've been working weeks and months on this product. Oh, we've been, you, you, there's a classic line. He said, way, if you came here on weekends, you'd see cars in the parking lot.
You know, we've been working a lot. And he obviously figured out that it worked in these keynote presentations because in every keynote Presentation following those early ones when he first came back to apple He consistently uses the labor illusion whenever he started a keynote presentation saying, you know this iphone This is we've spent hundreds of hours working on this or the ipad.
This is a You know the first innovation we've made in the last 10 years that's been of this level sort of thing So you're just like steve jobs steph. You've just discovered in the same way. He has
I'm even wearing a black top. There we go. ━━━─────━━━━─ All right. So if we move then down the next step from awareness, what was that next step in the four stages?
Yeah, so we've got awareness, maybe we've covered a bit of consideration, so that's sort of in the mix there. And then you've sort of got the actual, okay, when are they going to make a decision in terms of purchasing, so consideration, purchasing, that sort of area. ━━
consideration stage, what principles can we start to implement there?
yeah, this is where it gets, I think, really interesting.
There's a couple that I think are really important. One is a sort of classic one that many of you will know, which is scarcity. So scarce resources are seen as just more valuable than abundant resources. So this makes sense from an evolutionary trait, you know, we want to ─ hold on to the resources that are scarce in the wild, whether that's an interesting bit of food or fruit, and abundant resources like Bland food or fruit or just grass as another example not being not using very good examples today But as another example, we don't need those abundant resources as much and we hold that true today So in the uk people spend hours on their computers trying to get glastonbury tickets refreshing the page We'll pay any amount of money for it just because it's a scarce resource.
There's a really famous example When the Concorde stopped flying, they announced they would stop flying in six months, the sales of the remaining Concorde tickets sold out within almost 24 hours. Nothing had changed about the service, nothing had changed about the cost, they just became a scarce resource overnight and suddenly a scarce resource is far more valuable.
And there's Really interesting ways we can apply this in marketing. So there's a wonderful example again from the psychologist I mentioned, Richard Chotton, who's written a brilliant book called The Choice Factory. And in that book, he shares an example of how he applied the scarcity principle in marketing.
And so he showed people two movie posters. ─── And these are different populations, so nobody saw the same poster and nobody saw the same test. One of the posters just looked normal, so poster for Willy Wonka, which is out at the moment, normal poster. Maybe says when it's, um, when it started airing, that's it, but otherwise standard.
The second poster was exactly the same, but with one extra line of copy that Richard had added himself. And the extra line of copy simply said, movie ending this week. Which was true, which was true in the scenario. So it just showed people the true thing which was that in your local cinema the movie will stop airing this week.
Just by adding that one extra line people were 36 percent more likely to actually go and attend the movie when they saw that line. And that's scarcity in action. Just knowing that the movie would stop airing in your cinema made people 36 percent more likely to attend. And I love that one because it's still not used by any movie poster that I've seen out there.
Unused, even though it's proven to work. So there's a big opportunity if anyone's in movie advertising or even event advertising or anything where there's a limit on when people can go and see or watch or buy something. Really, really valuable one you can use and scarcity is one that I would highly recommend to anyone listening.
So interesting. I, so a friend and I recently ran a one day event a couple of weeks ago, and we noticed, we started promoting the event maybe about a month out. Nobody was buying, nobody was buying, nobody was buying until the deadline approached and then everyone bought. ─━ It's interesting how just having that deadline.
Can make somebody take that action, but I know it gets a bit of a bad rap in, especially in the online business space. I'm, you know, I work with a lot of course creators and we've all seen the funnels where it's, you click on it and there's 30 seconds to buy and everyone talks about how unethical that is.
Where for you is that fine line between ethically using scarcity and unethically using it?
So it's really simple. Scarcity is more effective when you use it in an ethical way. So let's use the example of an online course where you're getting live training with a course teacher. ── You could put a scarcity limit on your sales. You could say You know, this is limited to just 200 people. In fact, I would encourage most people to do that because it's a really powerful way of encouraging people to buy saying it's limited or any letting limiting the amount of people on the course. ──
Now, if you were doing a live course where you're taking live questions and you're giving live answers to those questions, doing that limitation increases the value. Because fewer people are on the course, fewer people are taking up the time of the instructor, fewer people are asking questions, there's more chance that you'll be able to answer your question.
So you're giving a justifiable reason why there's a limitation, why it's scarce, why prices might go up after 200 people have signed up, why the offer ends after 10 days, because you want fewer people on the course. That makes the course more valuable. So find ways to use scarcity that actually works.
Benefits the end customer. So in courses, limit the amount of people can come on and say I'm limiting it because it will make it a better experience for those who join. You can do the same for webinars. You can do maybe the same for some sort of um, sales. So you could say, I really want to support my early supporters, my The people who just always help me out and I want to give them a better deal So the first 50 people will get 50 percent off That's not because I you know, that's not because I think that's the best way to sell it That's because I really want to support my early supporters who who often support me So find ways find angles where you can use scarcity which actually benefits the end user I think limiting the amount of people on your course is a really good example.
Doing things like just saying you have 30 seconds to buy, but if you refresh the page, you'll have another 30 seconds will just annoy people will just annoy people. And it's so frustrating because it's just a poor way of applying that bias. If you think a bit more about how you can apply it, you can find a much smarter way, which your customers will engage with. ─────
I love that. Yeah. Because I think that one gets conflated a little bit with high pressure sales tactics when it really isn't. It's just a smart principle that does help somebody to make that decision. So I love, I love that you talked about that. Uh, what other principles are there at that consideration stage?
Yeah, there's one that which I think is very important and it is anchoring. So anchoring, again, one many of your listeners may have heard of. It's the idea that the initial piece of information we hear or see will anchor our following judgments and what we think. So, for example, there was a study, I think in the UK, which showed people a newspaper headline, and the headline said something like climate bill to cost 100 million pounds.
So a very neutral headline, just said climate bill to cost a certain amount of money. ─── And then what the researchers did is they added a logo of a newspaper. On top of that on the top of that headline sometimes they added the logo of the financial times And the other time they added the logo of a tabloid So the sun so you can imagine the equivalence in your own country of a sort of tabloid low quality newspaper or a high quality editorial newspaper And they ask people what they thought of the article without reading it what they just thought of the title Is this a positive or negative thing and people are so anchored by that initial bit of information, which is the newspaper Publisher that they presumed the contents to be drastically different for the financial times They said oh this must be a really positive thing 100 pounds 100 million pounds sounds like a really good deal When it was the tabloid they thought the opposite.
Oh, this is negative 100 million pounds for climate change That sounds like too much. I don't want my taxpayers money going there. So it's this Really interesting finding of we're really anchored by these decisions and there were all sorts of ways this can come into marketing So there's a brilliant book called messengers By steve martin and joe marx and they worked in a real estate lots of real estate examples But real estate stores store where people are buying houses And they worked with the receptionist who was picking up the phone answering the phone when people initially called and then transferring the customer on to an actual estate agent who was going to Buy or sell their home. ──
And what the receptionist was doing at that point was simply answering the phone and saying, no problem, let me hand you over to Peter or whoever the estate agent might be. ─ And the two psychologists, Joe Marks and Steve Martin, they sort of realised this is where the decision is being anchored. People are listening to the receptionist and they're being anchored by that decision and it might change their subsequent acts and actions.
So on alternative calls, they ask the receptionist to say ─ I'll hand you over and then on other calls they said can you say I'll hand you over to Peter? He has x amount of years experience. So for example 20 years of an experience and will be perfect for you So subtle subtle difference one way. They just hand you over one way.
They say here's how much experience Peter has And why I think he'll be perfect for you. And when they say that, when they anchor by simply sharing the amount of experience he has, which is a bit of a labor illusion there, which we spoke about as well, but when they do that anchoring sales, actual sales that the estate agent made were 20 percent higher. ───
Wow.
anchor to say, and I'll give you one more stuff because I think this is the anchoring ever, ever used in marketing, which is De Beers, who sell diamond wedding Now De Beers, way back in the 1940s, 50s, actually had a surplus supply of diamond rings, diamonds. There was, they had too many and they couldn't shift them. ─
And they needed to find a way to make the sort of abundant ring seem really scarce and worth paying for. So they created an ad campaign, which is now famous. And so many of your listeners will have heard it. And the ad campaign simply said, how can you make two months salary last forever? And that very simple way of setting an anchor for a purchase which was never that high before.
No one was spending anywhere near two months, but by saying, suggesting that the social norm, that everybody is spending around two months salary on their engagement ring, made people far more likely to buy. And I know that ad has been successful because they've been running variations of it for the last 70 years.
So it's clearly working for them and it's a classic example of anchoring in practice. ─
And that's, I mean, that's an example as well of effective advertising that's become this social norm that, you know, most people wouldn't have known that the concept of spending two months salary on a wedding ring came from that ad. That's amazing. And I think we also see it, um, correct me if I'm wrong, we see it also when we go and sign up for any kind of SaaS product, any kind of software where we see the three prices next to each other.
That's anchoring as well, isn't it?
that's a classic example of anchoring. So you have your higher priced option, your premium option, and that is there partly because you have a good option which is worth that money and it will have more features, but mainly because all of these SaaS firms will have run tests where you put that premium priced option in and suddenly the amount of people who pick the middle Priced option goes up dramatically so previously people would be probably 50 50 between the lowest price and the middle priced or the highest price at that point you then put a premium one in and it moves people to that middle one that's also known as the Goldilocks effect so when you have three things people Almost certainly will pick the middle option.
So by adding a more expensive version makes people more likely to pick it And there are this example is everywhere in the world. It's why you have signature mcdonald's burgers. It's why you have first class seats It's why you have front row seats at the theater and back row seats All of these examples are just ways to anchor the buyer to make them spend more ─────
I'm going to be second guessing every single decision I ever make from now on, basically. ━━──━━━━───── So then if we move down to the next step in the journey from consideration, is the next step then purchase, I'm guessing? ───
Yeah, so then we were in the real important part where you're trying to make people buy. ───
Okay. What, what principles can we leverage at this stage? ──
Well, there's there's one here which Is maybe, you know, a bit, maybe a bit very important for people who are doing one on one selling. Maybe important for people who are trying to build loyalty with their audience and build a lot of trust over time. So if you're selling a course, for example, you need to build a lot of trust over time to before people even consider making a decision.
But by doing this, you might actually tip them over the edge to make them think, okay, now I really want to go and buy. ─ And this is, this is one of Robert Cialdini, who is a very, very famous behavioral scientist, social psychologist. He wrote there were six weapons of influence that you can use to influence people.
And one of his six was reciprocity. Now reciprocity is not new to any of your listeners. It is the simple idea that we, we want to return favors. If you do me a favor, Steph, I will feel a real urge to return that favor. I will feel uncomfortable if I don't. If a mate helps you move house, you will want to return that favor.
If, uh, if a in law buys you a drink, you'll want to buy them one. It's this real ─ In her desire we have to return these favours and there's a researcher called Philip Kunz who discovered this very famously, I think back in the 70s, where he just decided to spend, to send 600 Christmas cards to total strangers, total strangers, people who had never heard of him before, never met him before and he just wanted to test reciprocity.
He wondered how many people will send me a card back. How many people will? You know, these are complete strangers. Sent 600 cards, got 200 responses. 200 random people sent a Christmas card to a total stranger simply because of this reciprocity bias. And there's, that's a sort of anecdotal example. Like, oh, okay, you sent a bunch of Christmas cards.
There's studies in the lab which proved the same thing. So this is a Dennis Reagan study and for the study, he brought these participants into an art gallery. And had this whole ruse that they were meant to be viewing the art and rating the art. And with the participants in the art gallery, there would be a fellow participant who would actually be a paid actor.
So if you were in the study, you would think this is a fellow participant just like you, but he's actually a paid actor. And the real experiment is what this paid actor does with the participant, because in half of the experiments, the paid actor fellow participant is doing nothing, just, just looking at the art with him.
And then in the other half, he goes out, buys himself a can of Coke. ─ And buys an extra can of coke for the fellow participant comes back and said, Oh, hey, I just had a bit of spare money. Here's a spare. Here's a can of coke for you. Do you want to do you want it? They would always say yes. So just doing a fellow a nice thing.
But then the reciprocity principle kicks in. And then later in the experiment in both examples, that paid actor, he asks the fellow participant, Oh, I'm selling raffle tickets for a local charity. Would you be willing to buy some? ─ And when he had given a can of coke earlier, he found that people bought two times as many raffle tickets as they did before.
So simple experiment, simple setup. But very interesting finding he can two times his sales simply by giving a bit of reciprocity So what does this mean for us digital marketers running small businesses? Well, it means giving things away for free is actually really really valuable giving your audience free bits of cash for free templates free things to follow ── This is a really good way of building reciprocity, giving them your time, giving, taking the time to answer emails, taking the time to build a relationship with people is a really good way of triggering reciprocity, because what you'll find is the more reciprocity you gain, the far more likely it is that you will actually be able to make a sale and that can really make people more likely to buy at that point of purchase. ────
Is that why content marketing is so powerful? You know, you and I are both podcasters. We share so much great free content. Is that the science behind why content marketing works or why people will buy after having consumed your content for so long?
It's one of the things, but it's definitely one of the most important. Like I guarantee you, Steph, of the people who are, who end up buying some of your online products, ─ let's face it, probably all of them have consumed something from you for free before. It'd be really, really rare if somebody went to any company.
And just bought something without knowing anything about that company, without seeing anything in that company, without receiving anything from them, but especially for, for small businesses, for small, you know, online marketers like ourselves, people want to return the favor. So if I have spent the last two days binging all of your episodes, learning all of the wonderful things that you share on your podcast about digital marketing, applying them to my business and getting results and actually getting monetary value from those results.
Of course, I'm going to be so much more likely to buy the product that you launch or the course that you launch to, to just return the favor. And also because I know that there's value from it and lots of other reasons as well, but reciprocity will pay into that as well. ──────
Oh, I love that. Oh, that's, that's such a great one. Uh, and it's funny because it's one of those ones that, yeah, I've been doing all along and never even thought about. Why it works. Uh, and then onto the final stage. So you mentioned retention is that final stage. What can we implement in that retention stage to, I guess, retain our existing customers and clients?
Yeah, so there's obviously lots of things you can apply, and you could apply a bit of anchoring here, you could apply a bit of label elusion here, you can apply these nudges at different stages, but one that seems to be very effective at the retention, phase is loss aversion. So loss aversion. is just as you would describe it, we have this aversion to loss.
We don't like to experience losses. And this was discovered by a Nobel prize winner, Daniel Kahneman, and he found that people experienced losses and found them to be twice as painful as the equivalent gain would be positive. So as an example, if I find. 10 on the floor, I'll feel pretty happy, feel pretty good, right?
Found 10 on the floor. But if I lose 10, I will feel twice as bad as the equivalent feeling of how I felt good. So that feeling, that emotion will be twice as strong than when I actually gained, even though the same monetary value has been found and lost. And so there are all sorts of interesting ways this can apply in marketing.
The essential idea is that when we know we are experiencing a loss, when we feel like we're going to miss out on something, lose something, we are far more likely to act to avoid that loss. We are loss avoiding people. This is why The insurance industry exists simply because we will pay more than we probably need to to avoid any losses, to avoid the feeling of losses.
If anybody's ever rented a car before, you will feel this exact principle. You go to check out, you think, okay, that's fine. I don't need all this extra add ons. And they say, you might have to pay 50 grand. To cover, uh, damages on this car if you end up totalling it. That feeling of loss triggers and you want to act to avoid it so you pay for the insurance.
And there's one classic example of this which is from a major company but I think small companies can apply it as well and it's from Amazon. ── It's from Amazon Prime. So what they, Amazon Prime need to do is retain people. Almost everybody has signed up to an Amazon Prime account at some point during our lives.
Their goal now is we need to retain people. So it's really important that they keep people subscribed. And so they use a very, very tailored specific message to keep you subscribed. They don't tell you about all the benefits you gain. They don't say, Oh, TV, music, free delivery. They say exactly what you'll probably lose.
So they calculate, they say, I tried this recently, I tried to leave Prime and it said, Phil, you have saved 313. 83 in delivery fees since you joined Prime. And that number will be unique for everyone. That is the exact amount you've saved. If you leave Prime, continue to use Amazon, you will lose that amount of money.
And so they trigger this feeling of loss of version we feel oh my god, I don't want to lose 313 quid ─ and Richard Chataway in his book behavioral business. He's analyzed all these major major businesses how they've applied these pay for your science nudges He found that that one extra line of copy Reduced churn for Amazon to reduce people leaving by 42% So simply sharing what you'll lose if you leave is it can be that powerful.
So if any of your listeners offer a membership business, if any of your listeners offer subscription business, any of you offer access to maybe courses that you pay ongoing to get access to ── sharing what they'll lose, if they unsubscribe will be far more beneficial than sharing what they've. Gained by continuing, continuing to subscribe, so highlight losses when people are thinking about leaving. ──────
That's yeah, that's huge. And I noticed Uber does that with, I think it's Uber one or whatever the subscription is, I randomly got a push notification on my phone the other day saying, you've saved this much. With Uber One. And I was, that was a subscription where I was like, am I really saving 10 a month?
Oh yeah, no, I'm saving more than 10 a month. And that's such an interesting principle. I also noticed Audible does this. Uh, when you go to cancel, it tells you how many credits you're going to lose, or you're going to lose out on all of the Audible exclusive podcasts you can only listen to with your Audible subscription. ──
I love that. That's
Cracking examples, cracking examples, and there's all sorts of ways you can apply it, you know, that's a very specific way, but there are, there are other ways too. In fact, you can use it at the awareness stage. So, you know, if you're ─── Offering access to a course ── telling people what they might miss out on if they don't get access can be really powerful So saying, you know, you might miss out on learning this one trick, which I use to grow my business And it's the only place you're going to hear it bit of scarcity as well.
It can be powerful there, too ───────
Is this the principle that also applies then, for example, if I'm launching my course and I have bonuses and the bonus expires on a certain date, obviously there's a bit of scarcity there as well, but if the bonus expires on a certain date, are they then trying to avoid losing out on that bonus?
Yeah, quite possibly it maybe depends how you frame it because if you frame it by saying here's what you gain if you sign up now before you lose then that's that's classic scarcity in action but if you use that bonus to say Oh, this own, this offer will only last for five more days, and after that, there'll be no chance to get this offer again.
If you really highlight what you'll miss out on, that's a really powerful way of using it. But the, the thing with this principle is it is far more powerful if the act, if the individuals actually have the thing in the first place. So a more powerful way to apply this, Steph, would be to send your listeners. ──
Unique codes via email or your newsletter subscribers say, I've actually created this unique code coupon code, which when you put in is unique to you and it gives you 50 percent off, but so then they have possession. They actually have the code and it's theirs and it's personalized to them. But then if you say this will actually run out in seven days because I don't want this course getting too big and I want to keep it small.
So I'm only offering this for seven days. You'll lose that value in seven days. That will be far more effective than if you have a general code and just give it to everybody and, and, and don't, and maybe just offer it automatically when they go and check out. So giving them a code, making it feel personalized, making them feel like they own it, and then they'll lose that value afterwards is more effective. ───
I'm really noticing all of the, all of the purchasing decisions I've made now because of these. So I, I got a, I think it was a 15 or 20 code for, as a reward for buying, uh, I think it was a Dyson Airwrap. So I got a 20 code that I could use at this online beauty store and it was expiring. I think the expiration date was January.
So I thought, Oh, well, I'd better use it now in December before it expires. Uh, so that makes so much sense. Now it was a little personalized coupon code that I thought this is my own gift voucher, I need to spend this. I don't want to lose out on this. ─ Genius. Absolutely. Genius. Now we've covered quite a few different principles today, and I'm sure there are hundreds of them that people could continue learning about, but when it comes to actually applying these various principles in their marketing, what are some of the big mistakes that you notice people making in general?
Yeah, I think probably one of the biggest ones is hearing about these nudges, hearing about these biases and just assuring they will. Obviously work for your business. They should they really should you know, these are things that have been proven in the proven in labs Proven by big companies proven by other marketers.
This is better advice to follow than simply following Maybe the one other marketer that you've got on your social media feed what they're doing or your gut instinct This is really good advice to follow but assuming it will just work for you Is not right because what you'll see with the all of these principles is they work to a certain degree They work in certain scenarios, but they don't work 100 percent of the time So it's always always worth testing these principles out as an example charm pricing This is the idea where you end your price with a nine proven to be very successful in many industries So if you buy ─━─ It's really, really powerful to put a 9 ending price because 200 seems a lot more expensive than 199 because we read from left to right.
So we see the 1 first and the 1 is less than the 2. Classic example. And this is powerful for lots of brands. Apple, all of Apple's products have a 9 ending because they've tested it and it works for them. But if you were to go into a really high end Michelin style restaurant and all of the products were priced at 99 pence or 99 cents, so 10.
99 or a 99 cents ending, that would reduce the perceived value of it. It wouldn't work for them as well. Because they are seen as, they're seen as wanting to be expensive. You actually go to an establishment like that to spend money because you want to enjoy yourself. You want to enjoy if you're going to a Michelin star restaurant.
So my point here is ─ it's really important for all of us and all of our businesses to test these things out. So if you have a website, try adding this, try adding one of these approaches onto your website for a week, take it off the next week, compare the conversion rates. If you're running a newsletter, try an A B test on your newsletter if that's possible.
If you run a podcast like us, Steph, try different things. You've shared how at the end of some of your episodes you do it a bit of a labour illusion, at the end of others you don't. You can then compare the effectiveness. If you're able to test it out and see if it works, that can be really, really powerful.
So that would be my, my one mistake I see people make. They maybe apply something like the Goldilocks effects and they put three different prices on their products, but they haven't tested it. They didn't know what the baseline was before. I think running these tests is really powerful. That can be how you really learn. ──
And I think one, another one that comes to mind for me as well is I, so I think back to my very first business where I did not have product market fit. I didn't know what I was selling. I didn't know why anyone would want to buy it. And I thought that by changing the call to action button on my landing page from red to green, it would increase conversions.
Uh, so I guess the, I, another mistake that would be glaringly obvious for me. As somebody listening to this is thinking that implementing all of these different principles will make up for lack of product market fit or not being able to articulate what problem you solve or not knowing who your ideal client is.
Any of those other kind of foundational things that are really, really important when it comes to selling anything online. ━━ Before we hit record, you mentioned there was one particular Principle that's really relevant to the theme of this show, which is imperfect action. And I believe you said it was called the pratfall effect.
Could you tell us a little bit about this one? ━━━─
So Steph, I love your show because it's, it basically tells people, you know, things don't have to be perfect, get it out in the world, try it. That's what it, that's, you know, if you can test it, that's best. And there's an effect which I think really plays into this. So it's this, this effect called the Pratfall effect.
And the idea behind it is that if you showcase a weakness, if you showcase a flaw, you'll actually become more likable. So this was a experiment done back in the 60s by a researcher called Elliot Aronson, and he filmed an actor. ─ Correctly answering lots of quiz questions correctly. So he would know the capital of certain countries, you know, the population of russia He would know all of these quest questions get them really right and then in At the end of the quiz the actor spilt coffee down himself.
So it's really clumsy just spilt coffee down So I said, oh my god, so sorry. I've just spilt coffee down myself ─ and then in he then showed This video, the actor answering all these questions correctly, two participants, but half the participants saw the full clip where he would answer the correct questions correctly and spill the coffee down himself, and the other half would saw an edited clip where it's cut early, so there's no spilling of the coffee.
He then asked them how likable ─━─── So how much do you like them? So not how intelligent they are, how much do you like them? And he found that when the actor spilled the coffee down himself, he was seen as far more likeable. Far, far more likeable than when he didn't. And what's behind that is, we like weaknesses.
We like it when people are honest and transparent and show their full selves. Because they appear more likeable. And this has been proven, not just in this example, but Joe Sylvester from, I think, Cardiff University in Wales, ran a study with job interviewees. So she got her research assistants to apply for hundreds of different jobs and go for hundreds of different interviews.
And in these jobs, they would always share the same skill set. They would say, I've got this exact experience. These are my strengths. Here's everything about my career. ─ But half the time they were told to only share their strengths. And then in the other half of the time they were told share your strengths but also feel comfortable to share your weaknesses, don't hide them.
And she found that when people were comfortable and did share their weaknesses they were far more likely to go for his next round, far more likely to get the job. This is irrational, of course. We would assume that job, uh, hirers would value people who didn't have weaknesses over people who did, or sorry, value people who had fully, full strengths rather than people who had weaknesses.
But the opposite is true. When we showcase our flaws, when we flaunt our weaknesses, we are more likely to be considered likable. We're more likely to To get engagement and I think this is what's really wonderful about your podcast because you push people to get it out there because It doesn't matter if you make a mistake.
It doesn't matter if there's typo It doesn't matter if the link doesn't work. Sometimes it doesn't matter if you fail the first time because actually Just being true being honest showcasing your weaknesses Will actually make you more likable make you more likely to get a job and probably make people more likely to go on and buy your products ──
I love that. And that segues beautifully into the question I ask all of my guests, which is when was the time that you took imperfect action and what happened as a result? ━
So I use it all the time because I use this floor so one of my examples is i've Often set up little courses that I've run or little freebies that I'll give my, give my, give my users. ━ I've actually tested this as well, but I'll just give another example of once I did a big course, I did a big launch, put the email on the website, ─ wrong link.
Link just went to a blank page. Didn't go to the right area, so I'd gone too quickly, I hadn't tested things. Went out to my whole email database. Wrong link. I then sent an apology email saying, sorry folks, I can see all of you who've tried to click it, this is the wrong link. Let me send it again with the correct link.
And what's really funny is I do these emails fairly regularly where I push people to buy my course, push people to sign up. That apology email, and I'm sure your listeners will have found the same thing, that actually got more engagement and more people to click than a typical promotion email would. And it's a it's another cracking example of how you can be imperfect you can try something and fail But actually you're probably only going to boost your likeability if people already support you if they're already on your email list They're only going to like you even more So that was a sort of cracking example of of that, but I make mistakes all the time And now I just tell myself it's a good thing.
It's a good thing. ━─━━━━━─━━
I love that Phil. This has been, I could honestly, I could keep talking to you for hours about this kind of stuff, but unfortunately we do have limited time. So for our listeners who want to keep learning more from you, where can they find you? ───
Yeah, just search for nudge N U D G E wherever you get your podcasts and you'll find me there. ──────
Amazing. Thank you so much, Phil. This has been such a great chat.
Cheers Steph. Thanks so much for having me