7 ways to harness psychology in your small business marketing
Consumer psychology isn't just a tool; it's a strategic advantage. By tapping into the psychological aspects of consumer behaviour, businesses can unlock numerous benefits, from improved customer understanding to increased competitiveness and profitability.
1. Pricing strategies
Pricing isn't just about numbers; it's about human behaviour and perception.
Anchor pricing: The strategy involves presenting customers with a high-priced "anchor" product or option before introducing them to the actual product or service a business wants to sell. This initial anchor price sets a reference point that consumers use to evaluate subsequent offers. Anchor pricing can create a perception of value for consumers. When presented with a lower-priced option after seeing a higher-priced one, consumers often feel like they are getting a bargain or a deal, even if the lower price was the original intended price all along.
Charm pricing: Charm pricing, also called psychological pricing, is a marketing strategy where prices are set just below a whole number or a round figure. Instead of pricing an item at £10, for instance, a business might list it at £9.99. This strategy leverages the way our brains perceive prices and the impact it has on consumer decision-making. One of the primary reasons charm pricing works is due to the left-digit effect. When we read a price, our brains tend to focus on the first digit and give it more weight than the cents portion. So, £9.99 is perceived as significantly cheaper than £10, even though the difference is only one cent.
Bundling: Price bundling is a marketing strategy where businesses offer two or more products or services together as a package deal at a discounted price compared to purchasing each item separately. Bundles create a perception of greater value and therefore buyers feel they are getting more for their money, which can incentivise them to make a purchase. They also simplify the decision-making process as instead of weighing the pros and cons of individual items, customers can choose a convenient package. Bundles are also very effective for cross-selling and upselling - bundles are great to introduce customers to complementary products they might not have considered otherwise.
2. Social proof
Social proof is a psychological phenomenon that occurs when people look to the actions and choices of others to determine their own behaviour. In essence, it's the idea that if others are doing something, it must be the right thing to do. Social proof can manifest in various forms, including:
User Reviews: Positive reviews and ratings from other customers on platforms like Amazon, or TripAdvisor.
Testimonials: Personal endorsements from individuals or organisations that talk about a product or service's quality.
Likes and shares: The number of likes, shares, and comments on social media posts or content.
Celebrity endorsements: Celebrities or influencers promoting a product or cause.
Crowdfunding success: A project's ability to attract a significant number of backers or investors.
Popularity metrics: Metrics such as follower counts, subscribers, and views on social media or video-sharing platforms.
3. Scarcity and urgency
Imagine this: You're browsing an online store, and you stumble upon a product that catches your eye. The description mentions that it's a limited-time offer, and only a few units are left in stock. Suddenly, a sense of urgency takes over, and you're more inclined to make the purchase. This scenario perfectly illustrates the powerful marketing techniques of scarcity and urgency.
Fear of missing out (FOMO): Scarcity and urgency tap into the deeply ingrained fear of missing out on a valuable opportunity. When people believe that something is scarce or time-sensitive, they are more motivated to take action to avoid losing out.
Perceived value: Scarcity and urgency create a perception of higher value. Limited availability or a looming deadline makes a product or offer seem more valuable, prompting consumers to act quickly.
Decision simplification: When faced with limited choices or a time constraint, consumers often skip prolonged evaluation and decide based on urgency.
4. Personalisation and recommendations
Personalisation in marketing is the art of tailoring your interactions with customers to match their preferences, behaviours, and needs. It goes beyond addressing customers by name - it's about providing them with relevant content, products, and experiences at every touchpoint.
In a world filled with choices, customers appreciate brands that understand their preferences and provide relevant solutions. Personalisation and recommendations offer customers a more meaningful and efficient experience while helping businesses increase engagement, conversions, and revenue. By investing in personalisation and recommendation systems, you're not just meeting customer expectations—you're exceeding them.
E-commerce: Online retailers use recommendations to showcase products like what customers are browsing or have purchased. This increases cross-selling and upselling opportunities.
Content marketing: Streaming services like Spotify and Netflix use personalisation to curate playlists and suggest movies or shows based on user preferences.
Email marketing: Personalised email content and product recommendations can significantly boost open and click-through rates.
5. The power of storytelling
Storytelling in marketing is more than just a means of conveying information; it's about crafting a narrative that resonates with your audience on an emotional level. It's about sharing your brand's journey, values, and vision in a way that engages and connects with your customers.
Emotional connection: Stories have the power to evoke emotions, and emotions drive decision-making. When people connect emotionally with a brand story, they are more likely to become loyal customers.
Memorability: Facts and statistics are easily forgotten, but stories are remembered. A well-told brand story sticks in the minds of your audience.
Differentiation: In a crowded marketplace, storytelling sets your brand apart by showcasing what makes it unique.
6. Visual appeal
Visual appeal in marketing encompasses everything from colours, typography, and imagery to layout and design. People form snap judgments, often within seconds, and an attractive visual can make a strong, positive impression. Visuals also convey complex ideas, emotions, and narratives more effectively than words alone and since the human brain is wired to remember visuals better than text, they make your brand more memorable.
Colour psychology: Colours evoke emotions and associations. For instance, red may signify excitement or passion, while blue conveys trust and reliability.
Typography: Fonts have personalities. The choice of typography can convey professionalism, playfulness, or elegance. Be consistent in font usage to establish brand identity.
Imagery: High-quality, relevant images and graphics draw attention and tell a story, and authentic, relatable visuals resonate with audiences.
7. Customer experience
Customer experience encompasses every touchpoint, from the user-friendliness of your website to the helpfulness of your customer support. In a crowded marketplace, products and services can be similar, but customer experience sets brands apart. What’s more, happy customers become loyal customers as they're not only more likely to return but also to advocate for your brand.
Customer experience profoundly impacts brand perception – a single negative interaction can tarnish your reputation, while consistent positive experiences build trust.
Personalisation: Tailoring marketing messages and product recommendations to individual preferences makes customers feel valued.
Consistency: Maintain a consistent brand identity across all touchpoints, from your website and social media to customer service interactions.
Convenience: Make it easy for customers to engage with your brand. Streamline processes, simplify navigation, and ensure a frictionless experience.
Empathy: Understand your customers' pain points, needs, and emotions. Show genuine empathy in your interactions.
Incorporating consumer psychology into your small business strategy doesn't require a large budget. It's about understanding what makes your customers tick and using that knowledge to create a more compelling and customer-centric experience. By applying these practical examples, you can connect with your audience on a deeper level, drive conversions, and build a loyal customer base that will help your small business thrive.