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- [00:00]
Phil Agnew
If you walk down a street with rubbish strewn across the road, you'll be more likely to litter. If someone pushes in front of you in a queue, you'll consider skipping ahead yourself. And if someone checks their phone at the cinema, you'll briefly check your messages too. This is herd mentality, our tendency to follow the actions of others. It's familiar to all of us, yet still can be used by marketers rather effectively to sell more. McDonald's named McFlurry their most popular dessert and boosted sales by 55%. A study cited an influence at work found you are more likely to buy a coffee on a plane if two passengers around you do the same. And Elvis named his 1959 album 50 Million. Elvis fans can't be wrong. Unsurprisingly, this album sold in the millions. Today we are covering marketing psychology tips just like this. We will share reliable science backed evidence on bias psychology and discuss how these principles can be used to improve your sales. All of that coming up. Do you remember when marketing was actually fun? When you had the time to get creative and genuinely connect with your customers, to make content that really resonated and to create campaigns that really performed well? Well, let me be honest, I'm not sure I ever found marketing actually fun, but I certainly enjoyed it much, much more when I wasn't bogged down in data sets, in platforms, in bureaucracy and red. And that is where HubSpot can help. You can turn one piece of content into everything you need. You can know exactly when your prospects are ready to buy and you can see all of your campaign results in one place. They take away the need for platforms, data sets, bureaucracy, and they make things easy to use. It is simple to use with the average HubSpot customer doubling their leads in just 12 months. So if you sign up to HubSpot, you'll get more leads, less hassle and more time to actually enjoy marketing again. Get started for free@HubSpot.com hello and welcome to Nudge. Today I am chatting to Dr. Ava van der Broek. She is a behavioral economist and founder of Behavioral Insights Netherlands specializing in applying behavioral science to public policy. I am also chatting to her co author Tim Den Heyer. Tim is a creative strategist, copywriter and founder of Brain Creatives. He has over 20 years experience in advertising for major global brands. The duo recently published the fantastic book the Housefly Effect.
- [02:35]
Tim Den Heyer
We wrote a book called the Housefly Effect which is about all these little tiny elements in the environment that make people more likely to behave in a certain way so small things with big effects and that's why we chose a name.
- [02:50]
Dr. Ava van der Broek
I once heard someone say that non fiction books should be about two elements, that's candy and meal. So the candy are the fun examples and the meal is the real substance of it. And I think we have a little bit of a candy and meal kind of working relationship where I supply the candy and Ava supplies the meal.
- [03:05]
Phil Agnew
So let's start with a bit of candy by heading back to 16th century England. In the book, Eva and Tim write about how pineapples were extremely rare. And because of this rarity, these pineapples became a status symbol. Their scarcity made them sought after and expensive. Those who weren't in a position to buy their own could hire a pineapple not for consumption but for display at the dinner table. During a dinner party, people literally rented pineapples not to eat, but to prove their status. Today, a pineapple on my kitchen table wouldn't impress anyone. It is the scarcity, not the pineapple, that made the fruit so impressive. When items are scarce, we value them more and smart marketers can use this principle to ethically increase their sales.
- [03:54]
Dr. Ava van der Broek
Yeah, it's very interesting when you just announce in the supermarket, no more than four or no more than six bottles of. Well, or packs of Tropicana per, per customer, people will buy a little bit more. They won't buy four, but if they were planning to buy one, they will buy two. In a lot of cases you see like these housefly effects sort of accumulate. So there is, there's the anchoring point. Oh, apparently people are buying a lot of this stuff. Apparently it's normal to buy several packs rather than one pack. Then there's the loss aversion. Well, why are they limiting this? It might be scarce, it may be running out, so I better get a little bit more. I think reactance may come into it where it's like, oh, I'm not supposed to buy too much of this. Well, I'll be the judge of that and I'll buy as much as I want to buy, thank you very much. In many cases, just making clear that something is an option and that is an option that other people are choosing will lead people in a certain direction.
- [04:51]
Phil Agnew
Jonah Berger writes in his book Contagion how people evaluate cookbooks more favourably when they are in limited supply. And they'll even in a separate study perceive pantyhose as higher end when they are less available. And scarcity doesn't only increase sales. A 2013 study by Gu Botti and Farrow found that chocolates taste better if you can't see other chocolates. A chocolate box with a closed lid drives greater enjoyment as you perceive it as more scarce.
- [05:21]
Tim Den Heyer
Yeah, I think there's one example of a study where they studied the wine shelves and then they were all perfectly mirrored so everything was completely full on the shelves. And then one brand, there were a couple of bottles missing already. And that of course drew attention, but also signaled, oh, other people who know perhaps more about wine than you do or about these wines took this one. And that, I think already increased sales for 3% or so. So definitely that's a part of it.
- [05:49]
Dr. Ava van der Broek
And we also see this in, we saw the pandemic in these weird little stockpiling periods where people were stockpiling toilet paper, for instance, for a while.
- [06:01]
Phil Agnew
We like scarce items and some of us buy useless products simply due to their scarcity. An iPhone app called Iamrich contained no games, no share buttons, no hidden Easter eggs. The only interesting thing about this app was its price. It was priced at $999.99, the maximum you could charge in the app at the time. Did anyone buy it? Oh, yes, they did. The Apple Sport eight times before Apple removed it from the marketplace. People don't rent pineapples anymore, but they do buy worthless yet scarce apps to prove their wealth. In fact, just the fear of scarcity is enough to change behaviour. Take gun sales in the U.S. ava and Tim write that while Obama was president, American firearms enthusiasts were worried that he would take away their weapons. So they bought up pistols, guns and ammo in very large quantities and the industry enjoyed a heyday. But when Trump came to power, a Republican with the support of the National Rifle association, these keen shooters of the nation breathed a sigh of relief and they instantly stopped purchasing so much weaponry. Famous sellers like Remington, Smith and Weston ran into deep financial difficulties as a result, a phenomenon which became known as the Trump slump. The fear of scarcity drove up sales and when the potential for scarcity was removed, sales dropped. However, scarcity is just one of many psychology inspired tips in the housefly effect. Next up, Ava told me about a reciprocity example.
- [07:37]
Tim Den Heyer
I think reciprocity is super interesting, basically because it's such an old structure in our brains. As you were saying, like monkeys also show reciprocal behaviors, then it's usually direct reciprocity. Right. So you give something to me, I give something back to you, you. But the cool thing about humans is that they do this indirect reciprocity, whereas you give something to Tim and I sort of Observe that and then give something to you, for instance, or Tim gives it on to me, paying it forward. There's a couple of beautiful studies about that, both in the lab and in the field, to disentangle these two kinds of motivations or pathways or whatever. And there's this one study. So there's this tradition in China where people give each other money, but they don't exactly know how much is coming from who, so they all seal it in an envelope and then give around the envelopes with money, for instance, for weddings. But also WeChat, some kind of a social media where you can distribute packages with certain amounts of money. Everyone is giving something towards the greater goal, and then it's redistributed among the people who gave something. So it's a very pure form of reciprocity, really.
- [08:47]
Phil Agnew
Researchers at the Massachusetts Institute of Technology analyzed monetary gifts sent on WeChat. These monetary gifts in China are traditional presents known as hongbo. They are usually delivered in a red envelope during Chinese weddings or during the new year celebrations. Tet. In the WeChat version, everybody puts in some money, and then that money is distributed throughout the group as a random amount to each different person. So I might put in $10, but get $20 back, or I might put in $50 and get $5 back. The actual sum that I get back isn't made public, but the person receiving the most amount of money is publicly named as the luckiest draw. It's been an enormous hit. 3.4 million Chinese people sent each other the equivalent of more than 17 million pounds within just one year. Because the luckiest draw was selected randomly, the researchers were able to study whether reciprocity is infectious. Does somebody who receives more also give away more then what?
- [09:48]
Tim Den Heyer
They varied, I think, was they checked how much the winners were actually paying on. So whether, say, I donated 10, $, whatever, I won 50. I was a very lucky person in this game. Am I then inclined to pay back more? Yes, it looked like it. So people who receive something are in a more generous state. And then they actually called out who the luckiest winner was, the luckiest draw, or whatever. So people wouldn't know how much you received, but they would know that you were the big winner. And then even though other people could not observe what you're contributing in the next round, people were even more inclined to give out more.
- [10:31]
Phil Agnew
The luckiest draw, whose name is made public behaves very differently. He or she gives away a little more money than they would typically do, an average of 15% more. So publicity really does impact our generosity. Whether consciously or not, it will encourage us just to give that little bit more. It's proof that we feel we have a strong need to reciprocate, even if we win a random gift and will be more likely to reciprocate if that gift is made public. So if you are ever lucky enough to win the lottery, do not tell your neighbors.
- [11:05]
Dr. Ava van der Broek
And when we're talking about reciprocity, there's one case that I worked on myself that I found was very interesting. We were working for the Dutch equivalent to, I think it's Cancer Research uk, large charity for cancer research. What we did was we had an activation where we had these very talented artists in a warehouse and anyone who knew somebody who had suffered from cancer or maybe still was suffering from cancer could use our artists for free and have to make a really beautiful message that you could send to your loved one to wish them the best. And this was just something we were giving away for free. What we found was when people actually use this, and we sent them a very non salesy email saying, well, we hope this was a good experience for you. If you would like to support our research, this is the way you can do it. That responded exceedingly well. There was reciprocity, which we didn't actually name. We didn't say, well, we did something for you, please do something for us now. But still, you could really see the reciprocity working there.
- [12:10]
Phil Agnew
Another smart way to apply the reciprocity principle is after a company has made a mistake, say you've ordered an Uber which doesn't turn up or is more than five minutes late. Studies show that that makes Uber's customers far less likely to use the app. In fact, they use it between 5 to 10 less after an error like this happens. So to combat this, Uber sended an automatically generated email saying, sorry. However, these apologies, they don't tend to help. In fact, they had no difference on whether somebody would come back and use the app. So Uber called on a famous economist, John List, to find a solution. He ran dozens of different experiments with thousands of customers to see what works best. Turns out, reciprocity is the key. When customers are apologized to and offered a $5 Uber voucher, they don't leave the app. In fact, they use the app more than they would have done otherwise, spending far more than the $5 voucher. Uber's $5 apologies actually grew the company revenue, partly because those Uber customers felt that need to reciprocate the gift.
- [13:16]
Dr. Ava van der Broek
The research shows, if I understand it correctly, that People may actually feel better if they have been able to reciprocate. I think this is why in Japan they have two Valentine's days. Yeah, there's one where guys give their gift to girls and then there's one where the girls can reciprocate so everything's balanced again.
- [13:37]
Phil Agnew
I love that there's one final study on reciprocity that won't help your marketing, but it is interesting nevertheless. Two Swiss economists analyzed the salary data of 487 footballers in Germany's top division. In their analysis, they decided what constituted as a fair salary based on observations by experts. They then compared what they thought was that fair salary with the actual salary that a player received. So, for example, they would find players who are paid more than they should do and players who are underpaid based on this expert opinion. Then they discovered evidence of reciprocity by looking at the amount of effort each player put in. Things like the amount of sprints, distance travelled, amount of tackles, that sort of thing. Overvalued footballers who were paid more than they deserved ran further than those who received lower than expected pay. In fact, every percentage point lower wage resulted in proportionately less hard work on the pitch. If somebody is overpaid, they literally reciprocate by running further. A $5 apology voucher will boost sales due to reciprocity. Limiting the volume a customer can buy will boost sales due to scarcity. And highlighting the most popular dessert boost McFlurry sales due to the herd mentality. But those are just three tactics you can apply. After the break, we'll cover more, including why flights today take 8% longer despite engines being faster. The podcast I'd like to recommend today is Billion Dollar Moves, hosted by Sarah Chen Spellings and it is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. I love this podcast. I had a real great time chatting with Sarah at Inbo 2024 and learning about her wonderful podcast. If you listen, you'll hear Sarah ask the hard questions to business leaders. All of this will help you make your own billion dollar moves in venture, business and life. Listen to Billion Dollar Moves wherever you get your podcasts. Hello and welcome back to Nudge with me, Phil Agnew. Now, if you're selling yogurt that contains 5% fat, how should you market it? Should you say the yogurt contains 5% fat or should you say the yogurt is 95% fat free? I asked him.
- [16:01]
Dr. Ava van der Broek
I'd say generally you will sell more yogurt if you say it's 95% fat free. However, I would also add a different version of that product where you say, look, you've been working hard all week, you really deserve a nice treat. So try our 5% fat yogurt in these instances. It's a little bit more expensive, but you'll enjoy the taste, the rich taste of it. And I also think this is one of those these cases where you cannot say, oh, I don't want to be manipulative, so I'm not going to join in on this. You have to mention one or the other. Even if you mention both, the one you mention first will have an effect.
- [16:35]
Phil Agnew
We are heavily influenced by how an offer is framed. If we want to lose weight, we'll pick a 95% fat free option and we'll avoid the one listed as 5% fat. The impact framing has on our perception was shown vividly in a 1981 experiment by Daniel Kahneman. Kahneman presented a group of students with the following dilemma. He said, an Asian epidemic is expected to cause the deaths of 600 people. Thankfully, there are remedies. Which do you choose? Do you choose program A which will save the lives of 200 people, or program B which gives a 1 in 3 probability that 600 people can be spared, but a 2 in 3 probability that nobody survives. Which would you pick? Program A which saves the lives of 200 people, or program B which gives a 1 in 3 probability that 600 can be spared, or 2 in 3 probability that nobody survives? Well, in experiments, 72% of people opt for option A, they want to save the lives of 200 people. And now Kahneman introduced two more programs. Program C, if you pick this program, it will lead to the deaths of 400 people, and program D which gives a 1 in 3 probability of no fatalities and a 2 in 3 probability of 600 people dying. Now most people pick program d. In fact, 78% did. But here's the thing. Option A, which saves the lives of 200 people, and option C, which will lead to the deaths of 400 people, are the exact equivalent. The only difference is that option A has been framed in positive terms mentioning the total number of people saved. Instead of those dying. Option A said you can save the lives of 200 people, while option C said it will lead to the deaths of 400 people. The death framing caused people to avoid that option. And that is the framing effect. Politicians know this all too well. UK Prime Minister David Cameron brought in a tax on spare bedrooms. British people would be taxed on the number of spare rooms they had. But people hate taxes, so Cameron resolutely stuck to the term spare room subsidy rather than bedroom tax. The term spare room subsidy was inaccurate and unusual. It'd be like calling income tax salary subsidy. But the the Prime Minister knew that once it became known as the bedroom tax, it would become much, much harder to sell. Framing is powerful, but it isn't just for politicians, researchers and yogurt manufacturers. Airline marketers understand it too. Researchers at Washington University analysed 20 years worth of flight data and noticed that between 1997 and 2017, the same flights seemed to be taking longer and longer. That is to say, the duration mentioned by the airline company when you book the flight had increase by more than 8% in 20 years. Here's Tim to explain why.
- [19:31]
Dr. Ava van der Broek
Yeah, if you see that the average flight between two places now seems to take longer than it did 30 years ago, then something's going on there. The airlines have basically learned that how happy people are about their journey has a lot to do with the expectations that the airlines themselves put out there. There's this technique called strategic padding. If they just add like 20 or 30 minutes to the expected flight time, then there can be a lot of instances where the pilot says, well, we're in luck today. We're going to arrive a little earlier. People will be very happy to experience that. And then if, if they have a slight delay, it doesn't feel like a delay because it's still the time that they had had communicated. So what I like about this is everybody gets happier while nothing changes. You're. You're happier with the exact same amount of minutes you spent in a, in the airplane, just because you thought it would be 20 more. This is like a little present. We of ourselves, nobody's any worse for it and it can be so simple. So I think that's a real housefly effect.
- [20:30]
Phil Agnew
Landing late is detrimental to your reputation and results in complaints and dissatisfied customers. But rounding up the expected travel time means the pilot can often report excellent news. We've landed early. It's a classic smart bit of reframing. So far, we've covered marketing tips you can apply. But before leaving, I wanted to highlight one thing to avoid. Here's Tim to explain the problem with Tropicana's infamous 2009 rebrand.
- [20:58]
Dr. Ava van der Broek
Tropicana, very big orange juice brand in the United States, did a rebrand. And well, for me, coming from the creative industry and still being part of that, this is a really painful case because it was a beautiful Redesign, it was really well done. The big problem was that it was a different design than what consumers were used to. And I think the basis of this was a very widespread misunderstanding about the way people buy products like these, which is on routine. In marketing, we love to think that people love our brand and are really committed to it and have really bought into our brand values and our loyal fans. But what you often see is that there is very, very. If you add a little bit of friction to the process, people will leave their. Their beloved brand and pick another brand. And that is what happened here, because they were able to buy Tropicana on autopilot for a long time because they just recognized the packaging right away. So it was a completely, as Carneman would say, system. One decision to grab your Tropicana, then they changed packaging and it was slightly harder to recognize it, just a little bit harder. And this actually cost them $50 million. They had to change it back because it was a disaster, like 20% less sales because people had to do a tiny bit of thinking to find their favorite brand.
- [22:21]
Phil Agnew
Most people buy Tropicana on habit, and although they're changing the design to something that might look better, it can harm sales, as your buyers might simply miss the product. It's something Tim has experienced firsthand.
- [22:34]
Dr. Ava van der Broek
I worked for a large coffee brand and we did a. We did a campaign, and then we looked at the numbers and the sales went up significantly. So I was very excited that my campaign was doing very well. And then we did some market research and we found out that the biggest competitor had just. Just done the same thing as Tropicana had done. They had beautiful redesign of their packaging, and consumers were like, well, I can find that. I'll take another brand. I know that maybe we can be a little bit disappointed in ourselves as consumers or as humans. How little friction can all can make us change our behavior. But this is what happened at Tropicana. You really need to take tiny steps if you want to change packaging, if you don't want to lose consumers.
- [23:13]
Phil Agnew
I couldn't help but think of the recent Jaguar rebrand when hearing this. So I asked him what he thought of the car for firm's new brand. Will it harm their sales in a similar way? Or is car buying more of a system to purchase than orange juice?
- [23:27]
Dr. Ava van der Broek
I think this is complicated. I think one big difference is that Tropicana was doing absolutely fine when they decided to change the packaging, whereas Jaguar is in need of reinventing the brand, because as I understand that they're not doing great. I still think buying a car is more of a system one decision than we like to make out. I think we we really put our system two to use to justify our system one decision that we really want a car like that. But I I do think it's something risky that they're doing, but they are in a business where not doing something risky is also risky. So I wouldn't say it's a bad decision. I'm really interested to see how it works out. But yeah, I agree that the less routine a decision is, the smaller the danger is that you will have backfire effects when you change something about it.
- [24:15]
Phil Agnew
Okay, today we have covered seven marketing psychology tips that you can apply. There was scarcity Highlight limited availability to increase perceived value and drive sales. Remember, cookbooks are preferred when they are seen to be in short supply. Second up was reciprocity. Create goodwill through small gestures to encourage customers to come back. Uber's $5 apology voucher not only increased loyalty, it actually increased their revenue over rule. Thirdly, framing Present your information positively to influence perception and decision making. 95% fat free yogurt will sell better to diet conscious customers than 5% fat yoghurt. Fourth, herd mentality highlight popularity to nudge customer decisions emphasizing the most popular dessert boosted sales of McFlurry. Then there was strategic padding or anchoring. And this is where you manage expectations to enhance customer satisfaction. Airlines extend the expected flight duration to report more early arrivals. Sixth was habits. Avoid disrupting customer habits with sudden changes to designs or branding overhauls. This of course is the 2009 Tropicana redesign. And seventh loss aversion emphasize or avoid what customers might lose to drive action. So framing bedroom tax as a spare room subsidy softened the impact of this tax. And that is all for today folks. There you have it. Proof that a painted fly can save an airport cleaning fees, a $5 voucher can save a company and a well placed nudge can save us all from ourselves. Thank you for listening to Nudge and remember that us humans are delightfully easy to outsmart. A huge thank you to Ava and Tim for joining me today. It was an absolute pleasure chatting with them. Their book the Housefly Effect is a brilliant read full of fascinating studies and examples that I hadn't come across before. It is both informative and incredibly read. If you would like to grab a copy, I have dropped a link in the show notes. Also in the Show Notes you will find a link to the nudge unit. I spoke about this briefly before but this is a new cohort course that I am running in March. It is a three week long course where I will teach behavioural science principles using the east framework. I will then help you apply these principles to your work. Whether that's your marketing emails, whether that's your company packaging, whether that's whatever it might be. I'll help you apply. I will then also help you test those applications on your company and see how much ROI it drives. It is three weeks long. You will not only learn, you will also apply and then test and hopefully you'll see some real ROI at the end of it. I am limiting space to just 20 people. I want to make sure I can give as much attention as necessary to each person on the cohort. So do go and check the link in the show notes if you want to find out more about that. I'm not sure how quickly it will sell out. There's a chance it's already sold out already, but do go and check the link in the show notes. If it has sold up, you can sign up for the waiting list for the next one. That is the Nudge unit. I hope to see some of you there and I hope to apply some of these wonderful marketing psychology tips to your business. Thank you again for listening. I'll be back for another episode of Nudge very soon. Cheers.