How psychological constructs can elevate your customer’s experience

“86% of customers are willing to pay more for a better experience.”

Companies who successfully implement a customer experience strategy achieve higher customer satisfaction rates, reduced customer churn and increased revenues. With CX conquering the hearts of companies, customer journeys, customer loyalty and related topics are becoming a top priority for businesses. Even though these are promising developments,there is one important accelerator missing that has a strong influence on the mix, and that is consumer psychology.

Ever wondered why Mc Donald’s encourages you to order through self-service ordering kiosks? Not to speed up the ordering process, although that’s a nice side effect. It’s mainly to make us order more. Thus, spend more money. Why? Because studies show that verbally ordering at the register makes us more self-aware and holds us back from splurging – we don’t want the cashier to think we’re unhealthy, do we? Apart from the ethical dilemma/issues around this, it is interesting to see that more and more companies nowadays are basing their strategic decisions and strategies on psychological constructs that build the foundation for human and consumer behavior.

Regardless of what you sell, there is a high likelihood that the marketplace is overcrowded. It’s important to remember that you are selling to people, and there are certain biases underlying human behavior. Understanding our cognitive biases will show why our consumers are irrational, and how our decision-making is largely driven by these innate biases. Consequently, knowledge and awareness of psychological constructs can help create your competitive edge in the market and allow you to get a more holistic picture of your customers. 

Put simply: If you understand how and why people think, feel, reason, and act the way they do, you can leverage this knowledge to strengthen your brand identity and elevate customer experiences. In fact, understanding and anticipating consumer behavior will not only enable you to get closer to your customers and improve their experiences with your brand, but it will also help attract, convince, and convert more customers.

In the current market, we see more and more companies focusing on customer experiences by immersing themselves in customer journeys and persona’s, but it is at least as important to explore this ‘psychological sidetrack’, where interesting (marketing) opportunities can be found at the intersection of organizational objectives and human psychology. Let’s zoom in on some important constructs that can supercharge your business’ customer experience.

Eight psychological constructs that can drive your competitive edge

Color Psychology

Colors have an enormous impact on our moods and emotions – possessing the profound ability to influence our perceptions. Did you know colors even have the ability to influence our behavior?
We associate certain colors with whimsy, others with trust, and others with sensuality. Depending on what you’re selling, be aware of your use of color. It is important to send a consistent message on all fronts. Appeal to the subconscious mind first, and logic later.

Default Bias

Making choices costs us energy. Our brains know how to minimize this by sometimes not making a choice; instead, automatically going along with the option that has already been selected for us. This tendency is called the default bias.

The best-known example of this is the number of organ donors in countries where they have an opt-out system. Nowadays, you are an organ donor by default in the Netherlands, unless you indicate that you do not want to be. In countries that use this default option (opt-out), the number of donors is sometimes 5 times higher than in countries where you have to register to become an organ donor (opt-in).

Control choices and behavior by already selecting options for the consumer. For example, if you want more people to pay with iDEAL in your webshop. By already selecting this option, more people will choose this payment method.

Framing

Framing in the social sciences refers to a set of concepts and theoretical perspectives on how people organize, perceive, and communicate about reality.“This frozen yogurt contains 20% fat / is 80% low fat.” Rationally speaking, this is exactly the same, isn’t it? Yet it influences how we judge a product.

Whether a negative or positive frame is better, depends on the goal you want to achieve:
“With a flu shot you stay healthy longer” (positive frame)
“Without a flu shot you get sick faster” (negative frame)
If your goal is to get people to get a flu shot, negative framing is more likely to encourage action. Framing is therefore a relatively simple, but effective way to strategically optimize your content.

Social Proof

People will adopt the beliefs or actions of a group of people they like or trust. This can be seen on many occasions in modern day life. Think of this like an awkward middle school dance – no one wants to be the first one on the dance floor, but once a few people are there, everyone else wants to join in. In other words, doing what other people are doing because other people are doing it. 

Similarly, the use of testimonials on websites is popular. It gives your potential customer proof that your product or service is good; after all, it has already been chosen by several people, then it must be good.

Loss Aversion

Loss aversion means pretty much exactly what it sounds like: Once someone has something, they really don’t like losing it. This stems from the fact that losing something weighs more on a person’s subconscious than when something is won. As a result, individuals will do anything they can to avoid loss.

In everyday life, loss Aversion is seen in FOMO (fear of missing out), or in how we refuse to give up our place in a queue or our declining crypto investment. While you certainly have to be careful how you play to this psychological need, loss aversion is a very interesting concept that can be leveraged in some smart ways. For example, loss aversion can be leveraged by offering freemium products; releasing a feature for the free version of your product for a limited amount of time. After that time period is up, the feature will be removed unless your customer upgrades to becoming a paying customer.

Anchoring

Ever noticed how people tend to unconsciously latch onto the first fact they hear, basing their decision-making on that fact … whether it’s accurate or not?
This phenomenon is called anchoring. It is a cognitive bias whereby an individual’s decisions are influenced by a particular reference point or ‘anchor’. Once the value of the anchor is set, subsequent arguments, estimates, etc. made by an individual may change from what they would have otherwise been without the anchor.

You’ve definitely experienced this while negotiating a price for something, for instance for a souvenir at a market in a foreign country, or when selling your car or furniture second-hand. The first price that the negotiation starts with, functions as the anchor for the remaining conversation.

The Decoy Effect

The decoy effect (also called the asymmetrical dominance effect) is a cognitive bias that occurs when people change their preference between two options when a third, asymmetrically dominated option is presented. In other words: when there is a third option (for instance of €25 – the decoy) that differs from the first two options (€10 and €12), a consumer is more likely to choose one of the first two options. The decoy effect is especially powerful when it comes to pricing; the high-priced option makes the other two more appealing. 

In much of the same way as anchoring, persuasive pricing techniques establish mental shortcuts to streamline decision-making.

And, as a small token of appreciation for reading this article, I’d like to end with one last construct:

Reciprocity

The concept of “reciprocity” is simple, if someone does something for you, you naturally want to do something for them in return. It relies on the give-and-take principle intrinsic in human behavior. If you’ve ever gotten a mint with your bill at a restaurant, you’ve been a victim of reciprocity. Research shows when diners in a restaurant are brought a check without a mint, they will tip according to their perceptions of the service given. With one mint, the tip increases with 3.3%.

There are plenty of ways to take advantage of reciprocity. It doesn’t have to be expensive to give something; it can be anything from a pen to an e-book, sample or free service. Even something as simple as a hand-written note can go a long way in establishing reciprocity. Just make sure you’re giving away the free thing before you ask for something in return.

Don’t underestimate how you can leverage these constructs whilst creating products, experiences, and campaigns that your customers and prospects will love.