Customer Psychology – The Banks Use It, And So Should You
There appears to be a whole new science revolving around ‘Irrationality and Decision Making’ (also known as the herd instinct). It was the subject of a recent Business Day seminar, in which head of behavioural science at Standard Bank Wealth, Adam Gottlich, described how financial services companies may appear to offer free or low-cost services, but only to set the new customer up for ‘cross-selling’ opportunities. These are undertaken by using ‘trigger words’ which are known to have more psychological power than any others, when used in marketing promotions.
He listed these as:
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Here are some other customer psychology tips:
Social proof of ‘herd instinct’
One of the clichés of childhood is being taunted by a parent “If your friends jumped off a bridge, would you do it too?” (usually, just after the child makes the excuse, “But he did it first!”). Ironically, the reality is that grown-ups do this too — and this is widely exploited in the world of marketing and sales.
Dr Robert Cialdini cited this as one of his six principles of persuasion: we become more willing to do something when we see that other people are doing it. We want to fit in and believe that following the crowd will help us achieve that goal. It’s why websites show how many times a post has been shared or liked on social media. When you can prove that other people like your product or service, it increases your credibility and people become much more willing to buy.
Authority: The ultimate influencer
Influencers are so important, because people want to get their information from someone more knowledgeable or experienced than themselves. They also want to associate with well-known or powerful figures. Authorities offer a brand that their followers want to associate with, and predictably, sales follow. Content marketing and positioning oneself as a ‘though leader’ within one’s market are powerful ways of showcasing your knowledge. By sharing your expertise and incorporating it into your branding, your voice becomes significantly more persuasive and influential.
Loss aversion: Fear of missing out (FOMO)
One of the most important sales tactics is to tell potential customers what they stand to lose if they don’t make a purchase – this is ultimately more persuasive than telling them what they could gain. Free samples or ‘free-trial’ periods are a way to counteract the loss-averse mindset. Prospective leads have nothing to lose by trying out a product for free, which makes them much more likely to gain first-hand experience with a product and eventually turn into paying customers.
Urgency, scarcity and the mad rush
Black Friday madness typifies this phenomenon. Every marketer knows that creating urgency and scarcity — be it through ‘limited-time offers’ or other promotions — is a great way to drive up sales.
In conclusion, the above tips Customer psychology – the banks use it, and so should you