While marketing science, or consumer psychology as it’s sometimes known, is a mammoth subject in and of itself, this article aims to cover some key principles relevant to customer marketing.
With the customer marketer seeking to understand and be the voice of the customer across an organization, it’s important to cover some ground here. We’ll go over:
- An outline of what consumer psychology is,
- The importance of responding to your customers,
- How consumer psychology is related to customer marketing, and
- What the information gap theory is.
An outline of consumer psychology
Consumer behavior is concerned with the mental, emotional, and behavioral activity that comes before or after the purchase of goods or services. In essence, when the consumer comes to the realization that they have a need, they embark on the decision-making process, during which they attempt to fulfill the need identified.
This need could be triggered internally or externally. Imagine you realize you need a new phone; in today’s world, phones are pretty much an essential, but chances are if you’re in a privileged position, this is likely an emotional need than an actual need.
I’d start searching for reviews, asking questions like ‘best camera phone 2021’, and weigh up the alternative options. If I was convinced and swayed enough, I might make the leap to purchase.
As customers add a product to their basket or consider that subscription, there’s still a chance they might abandon it, as elements of doubt seep in. If my excitement and research wins out however, I’ll commit to the purchase decision.
Post-purchase behavior can include product adoption, retention, and even advocacy. This behavior can be positive with a progression through the customer journey (which is what we want!), or negative with reactions such as ‘buyer’s remorse’ - the state of anxiety or disappointment after a pricey purchase. All come under this umbrella term.
Buying decisions that require a lot of input from the customer in terms of money, time, or cognitive load are most likely to cause buyer’s remorse, especially if they don’t yield the desired results.
The reality is, though, that what may look like a linear set of steps is much more complicated, and in an ever-adapting world, it’s sometimes tricky to predict how customers might behave.
Let’s fast forward a bit to focus on the existing customer, and explore how psychology may be able to help us with retention.
Think about that after-dinner mint, or piece of candy that you might get when you ask for the check.
Studies have shown that the placement of one mint increases the tip given by 3%, which jumps further to around 20% at the offer of a second mint. This is a classic example of reciprocity in action.
It speaks to what seems to be the innate drive within us to offer something back when we’re shown generosity. Did the neighbor take in an important package for you? Chances are, if an opportunity to give something back presents itself, you’ll do it. But what does this look like in practice from a customer marketing point of view?
Reciprocity strategies can be used to enhance engagement, advocacy, and ultimately revenue. Even better if these strategies are tailored and personalized to a customer. According to a study from Epsilon, 75% of customers think that personalized offers are positive.
Take this a step further into free, personalized content, or even swag. An increasing number of companies are looking at super-specific items that resonate with their advocate community - a great example of this can be seen at Quorum, who have given out dog bandanas, much to the delight of their customers.
Gifts or swag don’t have to be super expensive, they just have to resonate. A word of caution with swag/gifts - try not to make it feel transactional or tacky.
This ‘giving’ to the customer doesn’t have to be something physical, however. Here are three ways to incorporate reciprocity into your customer journey:
- Celebrate your customer’s wins. Have they completed a course or spoken at an event? Whatever it is, shout about their successes - make posts on socials or within your advocate community, or even post something handwritten. Just ensure the personal touch.
- If you’re going to gift, give choices rather than sending something generic, give customers the choice. Would they prefer to donate to charity? A gift card? A dog bowl? Brainstorm some swag or digital content for each persona/segment to ensure that there’s something to appeal to everyone.
- Get there first and keep going. Don’t wait too long to act. Has a customer done something that should be rewarded? Get in there. Obviously, this needs to be weighed up against things like cost, but always be the instigator. Gain feedback from them, implement this later. Reciprocate their thank you with recognition.
Most people don’t like losing. Loss aversion can be detected to entice people throughout email campaigns or in content - with messaging like ‘don’t miss out!’ or ‘just two days to go’ commonplace.
Generally speaking, people would rather avoid a loss than proactively gain something. As the stakes grow larger and a bigger purchase is on the cards, loss aversion grows stronger. To put it simply, we’d rather not lose 20 dollars, even as opposed to gaining 20 dollars.
On an individual level, the fear of incurring a loss can actually backfire and prevent us from taking calculated risks. For example, an investment with likely returns may seem like a terrible idea in our distorted brain. On a much larger scale, loss aversion can have far-reaching implications in political and environmental decision-making, and even international relations.
Loss aversion is also closely connected to FOMO - fear of missing out. According to Trustpulse, 40% of millennials say they spend money on something to post it on social media, and on top of that, 3 in 4 prefer to spend money on experiences over ‘stuff’ - the latter having wider implications for marketing as a whole, as brands try to put forward an experience or lifestyle rather than a product.
Basically, it seems that humans are practically hardwired to avoid loss and appear to fit in. And, sometimes the very idea of experiencing a loss is enough for a customer to take stock.
So how is consumer psychology relevant to customer marketing?
The first thing that might spring to mind is urgency - if a company can instill a sense of urgency, our brain’s more likely to kick in and sign up to something or click the checkout button - think of the ‘2 left in stock’ message you might see.
Other commonplace strategies include countdown timers on web pages to signify the end of an offer, or ‘limited’ messaging. These’re often overused - a deluge of popups, emails and the like must be used carefully to have any impact.
Secondly, it’s important to factor in the status quo. As mentioned previously, the sheer number of psychological factors at play for a consumer can lead to paralysis. In practical terms, this means that many consumers are more than happy to stick with what they know rather than run the risk of disappointment.
If we think about bigger decisions like changing jobs, the status quo factor really starts to kick in. In general, people need a really good reason to change course, but if pricing, customer experience or product issues creep in, that motivation to do so appears. All of this can affect your retention rate.
Here are a few things to consider in the light of loss aversion and FOMO:
- Find ways to remind customers of the value you provide and what their life would be like without it - remind them that they don’t want to lose a good thing.
- Instill a sense of ownership in customers. This is another good reason to establish an advocate community - if this perceived sense of ownership increases, loyalty does too. Ownership can also be instilled via customizable features, such as colors, profile settings, and so on.
A study by Ghost showed that customizable features in a user blog converted over 10%, more than ten times the rate of those who didn’t use the feature. Beta programs and CABs are also a good way to instill a sense of ownership and influence.
- Customer reviews or user-generated content on socials can trigger feelings of FOMO - if others are enjoying your product, seeing the benefits in action can flip a switch.
- Loyalty programs can also be leveraged - think about what would appeal most to your audience. Be it virtual or real-life rewards, the prospect of losing these can often make things more problematic for customers to switch.
It’s worth mentioning here that loyalty programs, from a psychological perspective, need to be unpredictable to pay off - often, the customer feels like they’ve ‘earned’ the rewards or points and the feeling of actually gaining something is reduced.
Some more interesting examples that can encourage reciprocity and loyalty include:
- A free sweet treat on your birthday or free coffee at a particular coffee shop
- Early access to particular products/services
- VIP treatment
- Exclusive access to knowledge-based programs such as webinars
We can see some of those ideas at play here in this example from the Body Shop’s love your body club, and in Anthropologie’s Anthroperks - with messaging like ‘sign up in a snap’, ‘be the first’ and ‘don’t miss out’.
Another standout is Hostelworld, the leading global online travel agent. After having little success following traditional loyalty-based models, they went back to the drawing board to discover what would resonate with their young customer base.
What they found was that they needed to up the emotional ante and convey this across the customer journey - all above pricing and availability. They also became hyper-connected to their customers, maximizing engagement across socials and upping support. Authenticity was at the core - and it paid off.
Removing the ‘transactional’ element is vital to create an atmosphere of customer-centricity.
Information gap theory
Another consideration from consumer psychology is information gap theory. Also known as the curiosity gap theory, it argues that if someone perceives they lack knowledge in an area they’re passionate about, they’ll seek it out.
Sometimes, this can be negatively interpreted as clickbait - an overly emotional or exaggerated ‘hook’ to make you click. An example of this would be:
But when used constructively, it can have an impact in customer education and content - two domains that customer marketing might well have a hand in.
Consumers are more skeptical of content than ever before, often feeling manipulated and overwhelmed by ‘salesy’ tones of voice.
With this in mind, let’s take a look at a few ways customer marketers can serve curious consumers.
Consider how you’re making people feel
A study from Buzzsumo suggests that the most emotive posts are either awe-inspiring or funny. While these might not be appropriate all of the time, consider some inspirational stories from customers, or inject some humor into a newsletter or article.
If your persona work’s up to date, you can also tailor the content even further to particular segments. If your audience isn’t feeling something, well, they should be - as well as having their curiosity fuelled!
Evaluate your content
Invest in high quality articles and content - you want to be plugging the curiosity gap, not leaving people wondering why they clicked the link in the first place. Talk to your customers or check feedback to find out what kind of content they’d like to see.
This is also highly relevant to product education - whether in the onboarding or adoption phases, or later on in the customer journey, perhaps providing additional resources for your advocate community.
Take a look at your comms calendar if you have one, and consider if your output is bridging that curiosity gap. As far as emotions and content go, a great idea is to run some surveys to see how this content is coming across.
To wrap things up - here are the key points:
- Theories from psychology and marketing science can help us encourage particular behaviors in our audience, if used effectively.
- Reciprocity strategies can help at various stages throughout the customer journey.
- People don’t like to lose - encourage ownership - as humans we don’t want to lose what we ‘own’.
- Bridge the curiosity gap - reevaluate your content, keep your customers curious and coming back for more.
Consumer psychology or marketing science doesn’t have to be an esoteric topic; there are many concepts that are highly practical and relevant to customer marketing, whether in a B2B or B2C setting.
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