MarketingSherpa Blog

I like to think of myself as a savvy consumer. I research purchases. I ask friends for suggestions. I look for deals. This has undoubtedly spared me headaches and wasted money — but it has not freed me from clever marketing.

This fact is made clear in a recent Wired article by Dan Ariely, Professor of Behavioral Economics, Duke University. In the piece, Ariely explains the psychological factors that help build Amazon, Facebook, Groupon and other successful companies.

We interviewed Ariely last year about his book, Predictably Irrational: The Hidden Forces That Shape Our Decisions, and published his advice. Here are three marketing insights from his recent article in Wired:

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Insight #1. Eliminate small frictions

Online retailer Amazon.com does a great job of reducing friction around the cost of shipping, “which has always been one of the biggest psychological hurdles to buying online,” Ariely notes. By offering free shipping for orders over $25, Amazon turns this pain point into an incentive to purchase multiple items.

Amazon also offers free two-day shipping on all items for customers who pay an annual $79 fee. Ariely suspects this option removes the psychological barrier of paying for shipping, which increases customers’ propensity to buy, and makes customers more likely to purchase from Amazon over a competitor.

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Marketing Application: Recognize and reduce the friction points in your conversion process, whether they are related to shipping costs or the number of steps in your landing pages. Learn more ways to reduce friction in this post from the MarketingExperiments blog.

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Insight #2. Group approval can overpower stigma

We have also interviewed Robert Cialdini, Professor of Psychology and Marketing, Arizona State University, and found that he shares some of Ariely’s principles. Among them is that a group can greatly influence the behavior of an individual.

For example, Ariely notes that Groupon has become a smashing success despite focusing on coupons, which research has show to stigmatize shoppers. Groupon’s success is driven, in part, because its deals are only valid if purchased by a certain number of people (or a “group”).

This adds social acceptability to the transaction, Ariely says, and makes people more comfortable when purchasing a coupon.

“Social acceptability is baked into the premise–into the name, even,” he says in the piece.

Furthermore, Groupon’s deals are available for a set time period (often 24 hours), which adds to the scarcity and urgency of the offer.

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Marketing Application: Testimonials from people in your audience can show customers that people similar to them have positive experiences with your company.

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Insight #3.  Personal investment increases value

I am no longer baffled by the success of FarmVille, the Facebook game in which tens-of-millions of players build and nurture digital farms. Ariely explains that people place an irrationally high value on something they create. Because players invest in building a farm, they are reluctant to neglect them and will spend more time playing the game.

FarmVille also leverages the power or reciprocation, a behavioral trait described by Ciadini in which people feel indebted to those who give them something. In FarmVille, players can give each other useful items, such as cows and shovels.

“When someone does good to us, we want to return the favor, and in FarmVille, that translates into spending more and more time playing the game,” Ariely says in the piece.

Marketing Application: Encouraging customers to customize a product before purchasing can make them more inclined to purchase it. Also, giving away free content or products can help encourage purchases.

Editor’s Note: You can learn more from Dr. Dan Areily at MarketingSherpa Email Summit 2014, February 17 through 20 in Las Vegas. As a keynote speaker, Ariely will discuss the roles that impulsivity and the environment play in how likely people are to respond to emails.

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Related resources

Hidden Friction: The 7 Silent Killers of Conversion

Pricing Psychology Test: Shopping Guide Lifts Order Value 35%

Behavioral Economics in Marketing: 7 Insights to Lift Results

Six Scientifically Proven Ways to Succeed in Office Politics

Online Marketing Conversion: “Free” is a Pretty Strong Incentive

NPR: Dissecting People’s ‘Predictably Irrational’ Behavior

Dan Ariely’s website

About Adam T. Sutton

Adam T. Sutton, Senior Reporter, MarketingSherpa
Adam generates content for MarketingSherpa's Email and Inbound Marketing newsletters. His years of experience in interviewing marketers and conveying their insights has spanned topics such as search marketing, social media marketing, ecommerce, email and more. Adam previously powered the content behind MarketingSherpa's Search and Consumer-marketing newsletters and carries that experience into his new role. Today, in addition to writing articles, he contributes content to the MarketingExperiments and MarketingSherpa blogs, as well as MECLABS webinars, workshops and summits.

Prior to joining MarketingSherpa, Adam was the Managing Editor at the Mequoda group. There he created content and promotions for the company's daily email newsletter and managed its schedule.

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Categories: Online Marketing Tags: Amazon, behavior, Dan Ariely, Facebook, FarmVille, Groupon, Marketing, Online Marketing, psychology, Robert Cialdini, trigger