Elon Musk at a conference
Marketing

According to Elon Musk, Businesses Make Use of These Cognitive Biases to Make Billions Every Year

Customers don’t buy products, they buy emotions. No matter how good, advanced or valuable you have a product or service on offer, if you can’t tap into the human psyche, it just won’t sell. No one knows this better than Elon Musk, billionaire genius behind Tesla, SpaceX, and Neuralink. If you want to make your business sell better, here are 17 biases you can make use of to take your marketing strategy to the next level.

 

Recommended read: Influence: The Psychology of Persuasion

 

1. Framing Bias

Take a look at the following example:

A                B

2$/day        $720/year

Which of the two feels like the more attractive pricing? Example A, right? It is actually the more expensive option.

Think carefully about how you present data to your customers. Otherwise, you are going to have the same bad luck as this one McDonald’s rival.

2. Fresh Start Bias

A fresh beginning eases the mind and encourages people to commit to action.  As an example, think of the popularity of New Year Resolutions. Companies can tap into this bias and market their product likewise. This way, they can also reinvigorate campaigns that have gone stale and prompt further engagement.

3. Entertainment Bias

Nothing sells better than entertainment. Think of the Old Spice Commercial – the viral ad campaign that single-handedly saved the company from going bust. When an ad elicits positive emotions from people, it also has the effect of making a company’s product more attractive in their eyes.

4. Effort Bias

Research shows that people are more likely to value a product more if they can see the effort that went behind it. Posting regular updates about the improvements and upgrades you made to the product can influence the public to see it as more valuable and thus, more desirable.

5. Contrast Bias

People tend to think of an option as more attractive than it is when it is paired with something much less so. Think of why salesmen tend to show you the most expensive item first? Their intent often isn’t to make you buy it but make you see their other lowered-priced items more favorably. Now, if their priciest item does get bought, that’s just a bonus.

6. Country Bias

Swiss Flag

What products come to your mind when you think of Switzerland? 

How we perceive a product is greatly influenced by its country label. Cars with a ‘MADE IN JAPAN’ are deemed highly reliable. ‘SWISS’ chocolates are seen as a premium option. ‘ITALIAN’ fashion apparel often commands a higher price tag. Every country is associated positively with something, use that to your advantage.

7. Reward Gradient Bias

People are much more likely to engage with your business if they assess the immediate reward as both attractive and attainable. Offer a sign-up bonus or first buyer discount.

8. Exclusivity Bias

Sometimes, being generous doesn’t pay. If people see that you are offering big discounts or other attractive offers quite frequently and for long periods, they will start to ignore them after a while. This, in turn, will hurt your sales. Make your offer more exclusive. Set a duration for your discount offers or limit them to only certain customer segments – e.g., the biggest purchasers. This will entice more towards taking immediate action.

9. Risk Bias

People are much more receptive to a purchase if the risk can be mitigated. Businesses don’t offer a return or money-back guarantee out of altruistic reasons. Rather, they do so to lessen the perceived risk on the part of the customer.

If you sell software or a service, consider offering a free trial so that the users know exactly what you have on offer and thus, mitigate their risk of purchase.

10. Consistency Bias

People try to stay consistent with their self-image. If you can make an individual agree to a small request, chances are high they will also agree with a big request later on. This is why signups are so ubiquitous nowadays and why follow-up emails convert so well.

11. Life Event Bias

Happy birthday cake

If you are own an e-commerce store, consider asking your prospect their birthdates. 

According to stats, people are 75% more likely to switch brands during a major life event. These could be positive such as birthdays and New Years or negative such as a new lockdown. Target your ads accordingly and watch your revenue grow. 📈

12. Default Bias

Remember, the human brain likes to make the least amount of effort when it comes to decision-making. Instead of asking customers whether they want any additional services or upgrades, list them as default and ask if they would want to exclude any. By doing this, you are set to greatly enhance your profit margins.

13. Storytelling Bias

bird figurine

Originally purchased for 50 cents. This item here later sold for $52 [Source: Significant Objects]

Storytelling has an incredible impact on how valuable people see your product. Nowhere is it more apparent than in the case of NYT journalist Rob Walker. Rob bought 200 odd objects for a total sum of $129. He then assigned a unique story for each and sold them on eBay. The result? A whopping 6201.5% return on his investment.

14. First Impression Bias

The old adage, “The first impression is often the last impression,” holds true.  People remember the first instance most vividly. Make it count so that you can have a recurring customer and brand advocate.

Since nowadays people first discover a brand through a web search, you need to ensure your website is optimized, user-friendly, and immaculately designed. According to statistics, 88% of website visitors don’t return to a page if they have a terrible experience. By not improving your website design, you are only earning a fraction of what you might otherwise.

15. Vulnerability Bias

From time to time, your organization will make a mistake. Now rather than trying to hide or downplay it, admit it publicly. Why? Businesses that make themselves vulnerable are perceived as more authentic and thus, more likable.

In addition, it is also an effective component of a PR strategy as you can take command of how the story plays out and what you want the media to highlight.

Of course, this strategy isn’t recommended if your brand isn’t well-known or well-perceived. If anything, admitting flaws would then only further tarnish your reputation. So, do your homework beforehand.

16. Intangibility Bias

People are more spendthrift if they are purchasing on credit rather than with cash. According to an MIT study, purchasing on credit makes people spend up to 83% more on items. There is less information for the brain to process with an intangible transaction and thus, less to stress about.

17. Sensory Bias

Roughly 90% of the information our brain receives is immediately discarded by it. When we are exposed to something long enough, our brain’s automatic response is to start ignoring it. This is why it is important to not inundate a potential prospect with too many of your ads lest they become all but invisible. Make your ad marketing strategy less repetitive; if possible provide an ad sequence: presenting the individual a different ad depending on the occasion.

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