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Cognitive biases to grow your business

You can use psychology to increase the sales of your online shop or service. In this article, I want to focus on the concept of the Cognitive biases.

A Cognitive bias is a pattern of deviation in judgment, to be clear, our brain can make mistakes when it has to take a decision or evaluate a situation. This happens because our brain has information-processing shortcuts (Heuristic), that can easily make mistakes of evaluation.

Cognitive biases can be a problem because they can lead us to make irrational decisions, but we can use them also to increase sales and to create effective marketing messages and tactics.

Let’s start to take a look at 5 cognitive biases and how to use it in business.

1. Loss Aversion

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Losing something is terrible for everybody. We are so averse to the concept of losing that when we’re faced with the threat to lose something we never wanted, we put all our energies to have it anyway or to not lose it. This is the Loss aversion bias, basically, this bias is able to force us to change our priorities and thinking in order to not lose a thing (that we didn’t consider before).

Use Loss aversion in business

If you want to use this kind of bias for your business, you can create an offer that makes feel to your audience like they are losing something important, if they do not consider your offer. In marketing, this trick is known also as FOMO (fear of missing the opportunity) here a clear example.

Instead of sending a newsletter that says “Buy xxx and save $200 a month” turn it in ” Don’t lose $200 every month on..”

Hope that this Cognitive bias is clear, now let’s move forward.

2. Status Quo Bias

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Everyone loves to change, we crave for changing our lives and condition constantly, however our brain starts to fight for the status quo and refuse changes, automatically. This because people prefer to stick to what they already know because change requires energy. For this reason in politics you can notice that even if there’s a party that doesn’t work so well for the people, the people won’t vote to change the government. So when people have to evaluate the pros and cons of an already known situation and a new one, they will prefer to stay with the solution that they already know well. This concept can be applied as well also to unhappy marriages.

Use Status Quo Bias in business

When you communicate with your audience, make every statement, every offer, very simple, don’t launch too many information, every choice has to be natural and simple. Underline how simple is your solution, a refund, a return of the product or how fast could be to register to your service.

If you overwhelm your audience with information they won’t take action, in any way.

3. Anchoring Bias

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As human beings, we compare every new piece of information with elements and notions that we already have in our mind. If you had a very smart friend at the high-school, you will automatically compare every new smart person that you will meet, with him/her.

We can make another example if you’re used to buying a smartphone for $700, the first time that you will see an offer for the same kind of item for $599 you will immediately see it as a great offer, and vice-versa. As the anchors in our mind changes, also the perception of the people, the things and experiences change around us.

Anchoring bias in business

We can’t stop to make comparisons, so when you propose a product to your audience you can communicate in a way to direct  their comparison in the direction that is more useful for your business.

To make a very simple example, you can report into your page that on other sites the same product can cost more, or that other sellers, ship the products in a much longer period of time.

I think you get it, using the anchoring bias in business is basically compare your offer with another one that can be immediately considered worst.

4. Framing Bias

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Context is king, I say this because the context can change our perception of things. The Framing Bias is all about how the context and the references can change the way we think about a certain thing and situation.

To make it very clear, if you give to 2 people 2 different group of words. One group with positive words: positive, winner, success. The other group with negative words: failure, disaster, hopeless.

Then you tell to these 2 people the story of John, a man who quits his job to go to Africa for adventure; it’s clear that the person that read the positive group of words, will think about John as a courageous and successful person, while the other person (negative words) will think about John as a reckless guy.

You can tell the same story, but if you expose your audience to different contexts or frames of information, you will influence their perception.

Framing Bias in business

Before you present an offer to your audience/customers, craft the farm in which you want them to relate. If you’re selling a new helmet for a bicycle you may have to create a story that put your audience in the correct context of embracing the advantage of a bicycle helmet.

You can work on the framing bias also on your website design. If you go for soft colors, you create a safe, friendly and feminine environment, by this way it will be easier to sell products and services for women and families.

5. Ingroup Bias

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As human beings we love to stay in the group, it’s our tribal nature. When we are in the group we produce oxytocin (love hormone) that helps us to form strong bonds with other members of the group. But at the same time, we become suspicious and negative towards other groups.

It’s easy to think about other groups as wrong, boring, dangerous etc… think about politics and how the politicians work to identify other groups as dangerous and wrong.

Ingroup bias in business

Define your marketing material and messages in order to resonate very well with your target audience. If your target is a 20-40 years old married woman, then speak to her like a 20-40 years old married woman. Show that you understand her. Us testimonial and images similar to your target group.

Hope that you’ve found useful information in this article, if you need to build a new marketing strategy for your product of service, just enter into our program to receive more information. 

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