Experience
Humor Effect
We’re more motivated by and remember things that make us laugh
72 people were split into 3 groups: Humor, Neutral or Contentment and shown a respective video: Mr Bean (a British comedy show), an educational video or a beach scene. They were then all asked to solve a secretly-impossible puzzle.
Those humored spent 50% more time and made 2x more attempts trying to solve the problem than others.
Make it funny. Consumers have more positive attitudes towards humorous ads and their brands, increasing intentions to buy (Eisend, 2008). However, levels are dictated by product category and how related the humor is to the product.
Funny stories are more memorable than other positive emotions like admiration or respect. Puns are particularly memorable because they force us to simplify our humor delivery to a single line, reducing mental effort (Summerfelt et al., 2010).
Bring humor into the workplace. It helps boost employee satisfaction (Decker 1987), leads to higher productivity (Avolio et al. 1999) and boosts creativity (Brotherton 1996). Ben & Jerry’s, Southwest Airlines and Sun Microsystems are well-known for their use of humor within organizational culture (Barbour, 1998).
Pricing
Decoy Effect
We’re more likely to buy B over A by adding C to make B look more attractive
153 people were asked to choose between a 5-star restaurant 25 mins away and a 3-star restaurant 5 mins away. A third decoy restaurant option was then added of 4-stars at 35 mins away.
This decoy shifted preferences from the closer, cheaper restaurant towards the 5-star option.
Determine your target.
What is the product you want to sell more of, next to a lower-margin competing product? Build your decoy product around this with a price or attributes that inadvertently highlight the target's attractiveness.
Don't overwhelm.
Offering too much choice or highlighting too many competing attributes where neither option is clearly more attractive will trigger Analysis Paralysis, making consumers' decision processes more difficult.
How is your target clearly more attractive?
Test different decoy values to optimize the effect.
Huber et al., (2014) suggest that decoys work best when it’s really easy and quick to see the dominant product, when pre-decoy desire is roughly split between target and competitor and when people don’t strongly like / dislike the decoy.
Experience
Peak-End Rule
We remember an experience by its peaks and how it ended
682 colonoscopy patients were split into two groups, with one undergoing a longer procedure but with a period of less discomfort added on at the end.
After, patients were asked to recall the total pain felt. The peak-end group reported 10% less pain and a 10% increase in attending a follow-up procedure.
How do you want to be remembered in customers’ eyes?
How do you want to leave them feeling? What little touches can you add to your product or service to leave customers feeling amazing and want to share with their network?
Create a Customer Journey Map
Identify positive experiential opportunities to exploit and painful weaknesses to remedy.
Some pains may be small or cheap to fix, yet play a big part in a person’s memory.
Negative experiences are a hidden opportunity...
...to re-establish a positive peak and / or end. Things will go wrong, whoever’s at fault, so allow flexibility and an authentic humanity to surface, not just to save the relationship but to allow the brand to shine.
Handle a problem well enough and that’s what customers will remember, not the problem itself.
Pricing
Anchoring
What we see first affects our judgement of everything thereafter
During decision making, anchoring occurs when individuals use an initial piece of information to make subsequent judgments.
Once an anchor is set, other judgements are made by adjusting away from that anchor, and there is a bias toward interpreting other information around the anchor.
For example, the initial price offered for a used car sets the standard for the rest of the negotiations, so that prices lower than the initial price seem more reasonable, even if they're still higher than what the car is really worth.
Studies have shown that anchoring is very difficult to avoid.
For example, in one study students were given anchors that were obviously wrong. They were asked whether Mahatma Gandhi died before or after age 9, or before or after age 140.
Clearly neither of these anchors are correct, but the two groups still guessed significantly differently (choosing an average age of 50 vs. an average age of 67).
During decision making, anchoring occurs when individuals use an initial piece of information to make subsequent judgments.
Once an anchor is set, other judgements are made by adjusting away from that anchor, and there is a bias toward interpreting other information around the anchor.
For example, the initial price offered for a used car sets the standard for the rest of the negotiations, so that prices lower than the initial price seem more reasonable, even if they're still higher than what the car is really worth.
Studies have shown that anchoring is very difficult to avoid.
For example, in one study students were given anchors that were obviously wrong. They were asked whether Mahatma Gandhi died before or after age 9, or before or after age 140.
Clearly neither of these anchors are correct, but the two groups still guessed significantly differently (choosing an average age of 50 vs. an average age of 67).
Participants were asked to quickly estimate - within 5 seconds - the answer to one of two same calculations, anchored either low or high.
Those with the low anchor guessed 512 on average, whereas the high guessed a much higher 2,250. The correct answer was 40,320.
Put the highest price first
This will make subsequent prices appear cheaper in comparison and increase sales.
For instance, on the wine list shown, instead of putting the expensive items at the foot of the list, rearrange them in descending price.
Alternatively, if higher, show your competitors' prices first before revealing your comparative value.
Don’t set your anchor price too high
If you do, the natural inclination to anchor other options against this price will diminish.
Be realistic. Keep it within an appropriate region of your other prices in order for your anchors to be effective.
Audience matters.
Anchoring effects weaken for those with higher cognitive ability (Bergman et al., 2010) and those with prior product-buying experience (Alevy et al., 2011).
Experience
Present Bias
What we want now is often the opposite of what we aspire to in the future
195 students were asked to fill out a lunch order survey in return for a free lunch. They were split into two groups and asked either a few hours prior to or just before lunchtime.
Those asked with the delay made food choices 11% lower in calories than those just before lunch.
Adapt with time-to-delivery.
Online grocers could change what’s shown to the user based on how many days out their delivery slot is, showing more aspirational goods in the week prior and impulsive goods the day before.
Build around customers’ goals.
Have them make a preference on your site for their future self i.e. that they want to lose weight or save more money this year. Then, have this preference dictate what products are shown to them online, along with a subtle reminder that you’re helping with their bigger goals.
Encourage “future lock-ins.”
Banks could improve consumer savings by allowing pre-registration for a future savings account. Consider locking in other types of ‘should’ decisions that will benefit the consumer’s future well-being, as well as reducing your costs through better demand forecasting.
Product Development
IKEA Effect
We’ll pay disproportionately more for something we’ve helped create
52 people were split into two groups and given IKEA boxes: either fully-assembled or unassembled that they were asked to put together.
Those tasked with assembling their box were willing to pay a 63% premium for it during the subsequent bidding process over those given the pre-assembled boxes.
Provide personalization options early in your order flow to engender a sense of ownership and significantly improve conversion. Apple do this with their customizations for a new computer, as do new car showrooms. How can you add a low-risk, satisfying sense of creation into your existing products or services, especially around your USPs?
Don’t create choice overload and stress with too many pre-purchase customizations. Similarly, keep any post-purchase building effort simple, fun and low risk. What core parts of your product manufacture should always remain out of customer hands?
Frame involvement as a value-add experience and not a labour-cost-saving exercise. How much this is felt may depend on your brand, your product and what you allow to be crafted by customers.
Branding
Self-Expression
We constantly seek out ways to communicate our identity to others
274 people were shown 10 t-shirts, split into 4 groups and then asked to rate the shirts on either likeability, casualness, colorfulness or how much it matched with a cap. They were then asked how fun the task was.
Those given the ability to express their like or dislike rated the task as much more fun than the other groups. Simply, we value ways to express how we feel.
Personalization pays.
Bold, scaleable self-expressive features increase loyalty and sales.
Coca-Cola’s #ShareaCoke campaign - switching out the product name for a person’s name - led to a 10% rise in 2014 sales and a 7% spike in Facebook growth.
An Australian store sold 400,000 customized jars of Nutella for $10 each, becoming their top seller.
Tie it back to emotions.
Though there are successes like Kraft Heinz personalized soup “Get Well Soon ___”, with consumers happy to spend five times more, know that personalization has upper bounds on price and has less impact as it becomes more common.
Like Heinz, the smartest brands will tie personalization to underlying product emotions - care and sympathy in this case.
What emotions do you want end consumers to feel? Use personalization to help express these publicly.