🚨Behavioral Economics To Win Customers Over

#HTE 293 -Strategies, examples, and much more!🚀

May 23, 2024 • Estimated Reading Time: 12 minutes

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Today, we're diving into the fascinating realm where psychology meets marketing. Discover five key lessons from behavioral economics that can supercharge your marketing strategies. From understanding consumer quirks to crafting compelling re-engagement emails 📧 and mastering local service ads rankings 📍, we've got you covered.

Join us as we unravel the mysteries behind consumer decision-making, offering actionable insights and strategies to elevate your brand. Get ready to breathe new life into your marketing efforts, forge deeper connections with your audience, and achieve unparalleled success in the digital landscape. 🚀

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5 Behavioral Economics Lessons Marketers Need To Know 📈

Breathe Life Back into Your List: 5 Must-Haves for a Re-Engagement Email Campaign 🌟

Google: Proximity Not A Factor For Local Service Ads Rankings ✨

Top Read 📚 🤩

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5 Behavioral Economics Lessons Marketers Need To Know 📈

Beneath our rational society, emotions and instincts often drive decisions. Marketers can harness this by understanding why people make choices, enabling them to influence these decisions. Drawing from behavioral economics, here are five tips to help guide consumers' seemingly irrational behaviors toward predictable outcomes.

1. Wink, Wink, Nudge, Nudge

Nudges are subtle, often barely noticeable prompts. They aren’t aggressive calls to action like “Do This Or Else!” but gentle suggestions. In marketing, nudges often highlight the exclusivity and scarcity of a product, such as “Only 2 Seats Left!” These messages tap into the fear of missing out, encouraging consumers to act quickly.

Scarcity significantly boosts a customer’s desire to buy. A study in the Journal of Marketing Research found that people were more eager to obtain gift cards described as scarce compared to those freely available. This tactic is widely used on websites like Amazon, which increases the urgency to buy by indicating low stock levels or limited-time offers for free shipping.

To apply this strategy:

Emphasize urgency in purchase opportunities to motivate customers, portraying them as savvy shoppers who are ahead of the game.

2. Mental Jam

Too much choice can be counterproductive. Psychologists Mark Lepper and Sheena Iyengar conducted a study where customers were shown two jam displays: one with 24 varieties and one with 6. Despite the larger display attracting more attention, the smaller display led to better sales.

People enjoy having options, but too many choices can cause decision paralysis. The more options there are, the harder it is to choose.

In practice:

Curate your clients' marketing. Fewer choices can improve engagement and sales.

3. Prove It!

Behavioral economists refer to "herd mentality" as social proof, which explains how people are influenced by the actions of others. Essentially, it's the “everyone else is doing it” mindset.

The hospitality industry has effectively utilized social proof with a simple investment: a 3-by-4-inch laminated paper. In a study published in the Journal of Consumer Research, researchers collaborated with a large American hotel chain to test towel reuse messages. Initially, messages urging guests to reuse towels “because it’s good for the environment” achieved a 35% success rate. However, when the message emphasized behavioral norms, stating “Please reuse your towel because most people do,” the success rate increased to 44%.

This use of social proof helps hotels save more than just water. With fewer towels to wash, labor and energy costs decrease, and the lifespan of the linens extends. While the environmental benefit is significant, the primary motivator for guests was the desire to conform.

To apply this in practice:

Leverage social proof by sharing customer testimonials. Reviews, both positive and negative, are now essential in e-commerce.

4. Duck Decoys

The decoy effect occurs when consumers change their preference between two options after being presented with a third, less attractive option (the decoy).

In a National Geographic experiment at a movie theater, customers were initially offered two popcorn sizes: small for $3 and large for $7. Most chose the small, finding the large too expensive. However, when a medium option priced at $6.50 was introduced, sales of the large popcorn soared because it suddenly appeared to be a better deal.

To leverage this effect in sales, introduce a slightly inferior option at a similar price. This can steer consumers toward the product you want to sell.

5. Ostrich Effect

Two thousand years ago, a Roman myth unfairly labeled ostriches as cowards who bury their heads in the sand when frightened. This misconception led to the term "ostrich effect" in behavioral economics, describing consumers who avoid overwhelming tasks, such as purchases or surveys.

Some may wrongly view these consumers as lazy. However, a study in the Journal of Economic Behavior & Organization found that anticipating a negative experience can be as emotionally taxing as the experience itself. Neuroscientists showed that brain activity in subjects expecting a painful electric shock mirrored that of actually receiving the shock.

To assist these "ostrich" consumers, provide clear steps for purchases, ensure intuitive website navigation, and use progress indicators at checkout to guide them smoothly through the process.

Breathe Life Back into Your List: 5 Must-Haves for a Re-Engagement Email Campaign 🌟

Re-engagement campaigns are essential for rekindling your relationship with subscribers who've gone quiet. Here's how to craft an email that grabs their attention and brings them back into the fold.

  1. Personalized Subject Line 📨 Start with a subject line that speaks directly to the reader. Use their first Name and pose a question or express a sentiment that shows you've noticed their absence.

  2. Example: "We've missed you, [Name]! Is it something we said?"

  3. Special Offer 🎁 Nothing reignites interest like an exclusive offer. Whether it's a discount, freebie, or sneak peek at new content, make it irresistible and time-sensitive to spur action.

  4. Example: "Come back and enjoy 20% off your next purchase! Offer expires in 3 days."

  5. Feedback Request 🗣️ Ask for their input. This gives you valuable insights and makes subscribers feel valued and missed. Frame it as you need to improve to serve them better.

  6. Example: "Help us improve, [Name]. What would you love to see more of? Tell us and get a special treat!"

  7. Update What They've Missed 🔔 Summarize what's new and exciting since they last engaged. Highlight upgrades, new features, content, or products that might pique their interest.

  8. Example: "Look what you've been missing out on! We've launched three new features that you'll love."

  9. Easy Opt-Out Option ❌ Be transparent by making it easy for them to unsubscribe if they're no longer interested. This respects their inbox and can reduce negative feelings, leaving the door open for them to return when ready.

  10. Example: "Not interested anymore? No worries; you can update your preferences or unsubscribe here. We hope to see you again!"

By incorporating these elements, your re-engagement emails will catch the eye of your inactive subscribers and give them compelling reasons to interact with your brand once more. 🌟

Google: Proximity Not A Factor For Local Service Ads Rankings ✨

Google has clarified that a business's proximity to a searcher is no longer a key factor in ranking Local Services Ads 🚀. This update shows Google's evolving approach to prioritizing what's most relevant for users looking for local service providers 🔍.

Chris Barnard, a Local SEO Analyst at Sterling Sky, sparked the conversation by noting an update in a Google Help Center article. He shared a screenshot highlighting that Google had removed the section mentioning proximity as a ranking factor for local search ads. 

Ginny Marvin, Google's Ads Liaison, confirmed this change and provided further clarification 🗣️.

In a statement, Marvin said:

“LSA ranking has evolved over time as we have learned what works best for consumers and advertisers. We’ve seen that proximity of a business’ location is often not a key indicator of relevancy.

For example, the physical location of a home cleaning business matters less to potential customers than whether their home is located within the business’ service area.”

Marvin clarified that this wasn't a sudden change but an update designed to "more accurately reflect these ranking considerations" based on Google's insights and learnings 📈.

The updated article now states that location relevance factors include:

“…the context of a customer’s search… the service or job a customer is searching for, time of the search, location, and other characteristics.”

Proximity Still A Factor For Service Areas

Google upholds policies that mandate service providers to restrict their ad targeting to areas within their serviceable range from their business locations 📍.

As Marvin cites, Google’s Local Services platform policies state:

“Local Services strives to connect consumers with local service providers. Targeting your ads to areas that are far from your business location and/or that you can’t reasonably serve creates a negative and potentially confusing experience for consumers.”

Why We Should Care

By reducing the importance of proximity, Google is granting its ad-serving algorithms the freedom to highlight the most relevant and proficient providers 🎯. This ensures that search results align more closely with user intent, facilitating connections between searchers and companies that can genuinely cater to their location 🌍.

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