PSY-Q: Using Psychological Intelligence to Understand and Optimize Customer Behavior
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You’ve heard of your IQ – your intelligence – but what about your Psy-Q? How much do you know about Psychology and its crucial role in understanding and optimizing customer behavior? In this webinar, Professor Ben Ambridge will take you through the Top 10 Psychological Principles of CO, illustrating each with actionable insights that can be applied to any website. These include: Delay discounting: One marshmallow now or two later? How to delay discounting affects customer behavior (as well as your life expectancy). Commitment: Foot in the door or Door in the face? How to get customers to commit to a purchase. Less is more: How gimmicky giveaways can hurt your conversions. Risk aversion vs Risk seeking: Flipping customer behavior with simple reframing. Why is Endless Gain delivering the webinar? Simply because their way is different from everybody else’s. Endless Gain uses Biometrics to understand human emotions and behavior, and Psychology to optimize human emotions and behavior. Their mental models help clients convert more customers, keep them for longer, and have them spend more. Ben Ambridge is a Professor of Psychology at the University of Liverpool and the author of two books: Psy-Q: Test Your Psychological Intelligence and Are You Smarter Than A Chimpanzee. He has spoken at numerous CO events including Conversion Hotel, Digital Elite, and Real UX.
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PSY-Q: Using Psychological Intelligence to Understand and Optimize Customer Behavior
- 41. The Ultimate Pocket Guide to Consumer Psychology: Selling Fast and Slow Download The Ultimate Pocket Guide to Functionality Testing Download The World’s First Dictionary of Conversion Optimisation Download 10 Step Plan for a Better Customer Buying Experience Download Thought leaders (books written) Large Digital Agency of the Year 2020 Northern Digital Awards Best Use of CRO 2019 UK Digital Growth Awards CRO Agency of the Year 2019 UK Digital Growth Awards CRO Agency of the Year 2018, 2019, 2020 Northern Digital Awards CRO Agency of the Year 2016, 2017, 2018, 2019 Northern Ecommerce Awards Industry recognised Founded in 2016 30 colleagues based over two locations (Manchester and Bangalore) About us
Hinweis der Redaktion
- Thanks for coming along, working at home…
- Around the time I hooked up with Endless Gain I did a TED talk – It was only at a school just down the road, but I was lucky enough to be featured on the main TED site, and it really took off from there. And not just in good ways – as well as the predicable emails asking me to sort out all kinds of problems in people’s personal lives, I got very stern letters from the British and International Rorcharch Societies because I dared to show an inkblot test that I downloaded from Wikipedia. Anyway, the title of that talk was the Top 10 Myths of Psychology – and, as you’d expect – this involved debunking things that people think are real psychology findings, but actually aren’t. But myths are no good to you right, you need actual actionable findings – findings that will give us ideas for tests we can run on your site. So I thought what I’d do for today is switch this around and give you the Top 10 NON Myths – genuine findings that you can actually use. Oh one more thing – I’m sure you all need a bit of waking up after being stuck at home,so I’m not just going to TELL you about these studies, I’m going to RUN these studies on you!
- Right I know you’ve just had lunch, so maybe you’re not hungry, but who’d like a marshmallow. You can have one now, or two at the end. You’ve probably heard of the famous marshmallow test – kids who were able to resit went on to do better in school, less likely to get into crime, drinking drugs etc. But only around 1/3 could wait. Kids eh? But actually we’re all a bit like this – look…
- It’s pretty close isn’t it. I think most of us would choose the £900 now in the final case – I think I would.
- So this is a problem we encounter a lot, for example with selling websites – For one of our clients, the people selling on their site had to pay around $100 up front, to get a few thousand later - BUTthey’re spending it now and getting the money later. So one of the solutions we’re exploring is taking credit card details now but say “You pay only when your item sells” (obviously with a small print that it debits automatically after a certain time if it doesn’t say it’s sold). Or if your site is more standard ecommerce, selling, site – it’s worth experimenting with buy now pay later.
- Nice under-designed site here. What this shows is that you can buy my latest book for £3. I’m afraid this is not a mockup. Which is why I have a stack of them in my garage…
- The Theory says you won’t sell for less than about £6. Already having it makes it worth roughly DOUBLE the value to you. Original study with coffee mugs – people offered £3 or a mug took the money. But people given the mug wouldn’t sell it back for less than £6. Why? Basel study – People either given lottery tickets they can sell, or given chance to buy them. First group look for reasons to KEEP them; second look for reasons NOT to buy them.
- So how could this work for your site? Well of course it depends exactly what your site is selling, but you need a way to get the customers to feel that they already HAVE the product and don’t want to lose it. Can you bundle something they’d later have to pay a fee to keep? Can you give them a free trial and make them feel like they don’t want to lose it? We did this very succesfully for virus software with a well known IT security company. Once they have it, they don’t’ want to lose it.!
- Endowment is closely related to another well-known psychological phenomenon. [Read first part of slide then]. Then you experience, yes, that sinking feeling as you realise.
- Yes….[text flies in]…they’re both for the same weekend. Which do you choose? Let’s vote.
- This type of study has been done time and time again, and it turns out that – on average –over 50% of people choose to go to Italy. Maybe we didn’t quite get that result here – you’re all too rational – but at least SOME of you chose the option you’d prefer less, which makes absolutely no sense at all. This is a classic “sunk cost” effect. You don’t want to waste the £300. But look at it rationally. The entire £450 is gone forever. Forget about it. You have a choice of two options and you deliberately pick the worse one.
- How could this work for you? You’ll have to play this very carefully, and of course run tests, to make sure you’re not alienating people – but if you have various add ons/upgrades, you could try not offering them until people have already paid out some money, and they don’t want to “waste” that by not spending a few more $ to get the best possible product, get it as quickly as possible and so on. But not all sunk costs are financial – Effort can also be a sunk cost. Most sites will require a sign in at some point, but when. There are obviously advantages to doing it early, so you can get their email address etc., and email them if they abandon their cart. On the other hand, if your site requires quite a lot of work, it might be a good idea to get them to “sink in” lots of effort before making them sign in.
- If we stepped out the door now, we’d see a chugger – but what would they say? One of the earliest, and the most famous, study was conducted at Stanford University is California. Researchers phoned up houses in the local town – Palo Alto – and said “Would it be OK for a team of 5-6 men to come to your house for two hours and rifle through all your cupboards to catalogue the products that you buy, for market research?”. Not surprisingly, 80% told them to get lost (the surprising this is that 20% actually agreed!). But in the foot in the door version, they first asked them to complete a simple 8-question market research survey over the phone, and only at the end did they say “Well that was very useful, but what would be even better would be if you’d agree for a team of 5-6 men to come through your house and rifle through your cupboards…”. In this foot in the door version, over half agreed to this pretty big request. So, and this is similar to the last one, but could it be a good idea to get a small commitment first before asking for a big one
- This is obviously the idea with offers like this – I mean they could gives you 3 months for free (that dollar doesn’t mean much to Microsoft, right) – but they’re thinking once you’ve paid out a bit –and in particular, once you’ve made that regular commitment to pay a certain amount each month, you’ll pay out a lot more. Or on the other hand….
- Foot in the door works well for most people, but there’s actually a particular type of person – people who thrive on change and unpredictability – where the opposite works better: a technique called “door in the face”. So you start off with a totally UNreasonable request (“Buy this jacket now for £2000?”), then following it up with a much smaller one (“How about this one for £100?”). Original Caldini study first asking for volunteers to take juvenile delinquents on a day trip the zoo, then followed up with working as a counsellor for two hours.
- So – and this is also a bit like a framing effect or an anchoring effect, both of which we’ll meet later. Could it, counterintuitively, be good to hit people with like “this is going to be £100” and then immediately offer “discounts”? Could be risky? But is it worth a try? It actually depends on the type of customers your site is likely to attract- a study showed that risk-seekers are more won over by the door-in-the-face. Obviously we’re a bit of a way offf of customizing sites to individual personality types BUT say your site sells extreme sports experiences – door in the face would probably work better than foot in the door…
- People in the UK only send me your answers
- Now people in the rest of the world– how many in the whole meal (the word’s saddest happy meal)? When this was done under test conditions people guessed the ”meal deal” had around 100 FEWER calories than the burger on its own. This is known as the ”less is more” fallacy – here, that less food is more calories.
- But it works with money too. A famous study (Christopher Hsee, a Professor at the University of Chicago Business School) found that people were prepared to pay more for a box of 12 pristine mugs (dunno why they always use mugs!) that a box of 20 with 5 broken, but 15 pristine ones. Even though they were getting more pristine mugs in the second version, people would pay less for it. The lesson for your site is that adding on “free” extras that don’t seem of particularly high value to the customer (even if, in fact, they are) can make the offering seem worse, rather than better.
- So here’s an example from a real site (I won’t say which!) – Do customers really perceive “Show up to 8 photos in search results” as adding much value. If not, it could make the standard package seem worse value than the basic.
- Now from less is more to more is more – some big numbers - [Read first part]. It’s just over 53,000
- .
- [read slide, then…]. The correct answer is roughly 29,000 feet but if you’re like most audiences I’ve tried this with, you will have seriously overestimated its height? Why? Because when I planted 53,000 in your head—even in a way that is obviously completely irrelevant to the height of Mount Everest—I temporarily shifted your frame of reference; your sense of what a “big” number feels like. Now we’ve used anchoring quite a bit in our tests with different customers, and it’s often been successful -it’s one of the strongest and most reliable of all psychological findings, and a recent replication project (which showed many findings are myths) actually found that we’ve been UNDERestimating its power.
- So where can you use it? It could be a price (e.g., of a decoy item), it could be a big cash figure (e.g., your total sales last year), it could just be a big number in general (e.g. your street address; if it’s a high number), it could be fun facts related to your product (e.g., if you sell shirts, you could say the average shirt has 10,000 separate strands of cotton) – The point is just that if you get a big number in front of the customer, it can make your prices seem small by comparison
- The point is for your site – the same deal, financially, can be perceived very differently if it’s a loss versus a gain. For example, it may well be better to have the basic price $5 higher, but offer free delivery than to have it $5 cheaper and then charge $5 for shipping. Or I mentioned before some work we did for a classified selling site – it can work better to “frighten” customers with the amount they stand to lose in terms of the sale price if they don’t sell on this site, and instead go with an (on the face of it) cheaper alternative.
- The point is for your site – the same deal, financially, can be perceived very differently if it’s a loss versus a gain. For example, it may well be better to have the basic price $5 higher, but offer free delivery than to have it $5 cheaper and then charge $5 for shipping. Or I mentioned before some work we did for a classified selling site – it can work better to “frighten” customers with the amount they stand to lose in terms of the sale price if they don’t sell on this site, and instead go with an (on the face of it) cheaper alternative.
- What’s the odd one out here? – Teddy from the build a bear workshop. Pick your own strawberries. Better Crocker Mix. Armchair from Oak Furniture Land. Labour-Love/IKEA effect – You value something more when you have to work for it. So
- Lots of sites these days are going the other way –doing everything for the customer. This is good if the stuff it’s doing is the boring grunt work –entering you card details etc, as this decreases boredom/frustration and increases “flow”. BUT can you get your customers to do some “fun” “work” – some kind of design work – like the websites now that let you design your own trainers. Can you let your customers customize their package, or make some minor design choices by having slight variants of the product? If so, they may value it more.
- Decoy effects are very well known and very old – in fact they were first documented by Joel Huber and his colleagues at Duke University as far back as 1982. This is a great example of one here – you’re not supposed to choose the Print-only or Digital-only – they’re just there to make the others look good. So there are basically two ways it can work – you can have a very cheap decoy designed to make the others look higher quality (e.g., the underdesigned economy baked beans) OR you can have a very expensive decoy designed to make the top “real” choice look better value. Another thing about the Economist example, rather than ordering your options in terms of price, is it worth thinking about moving them around rather than having then in order of price – having the MIDDLE one the best value makes people think they’re being clever and spotting a trick!
- Now list everything you remember. Go! I bet you didn’t get all the numbers. But I bet you remembered QX, right? You’ve just completed one of the experiments that Von Restoff did in 1933. What she found was the same thing you almost certainly found for yourself – you remember the item that sticks out
- And we put this effect to use in some work we did with Miss Guided (actually it was animated rather than just a different colour, but you get the idea).