When you own a business, you’re in sales. And when you’re in sales, you’re in the business of human psychology.
Whether you’re selling candles on Etsy, peddling T-shirts out of the trunk of your car, or inking million-dollar consulting deals, your success or failure will often come down to how well you understand the mind of your buyer. Sure, every customer is different, but there are certain universal levers that can be pulled to increase your chances of getting the business.
Kit Yarrow, a professor of psychology and marketing at Golden Gate Univeristy, calls this crowd cred. Her new book, “Decoding the New Consumer Mind,” reveals that trust levels in the modern consumer are on the decline, making the opinions of similar others more important than ever.
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How can your business put this insight into action? For starters, make sure you are collecting and using testimonials from happy customers. For more impact, make sure your featured testimonials are from not just happy customers, but happy customers who resemble your ideal customer. If you’re marketing to vice presidents of procurement, make sure you’re showing them positive reviews from other VPs of procurement to create the most powerful social proof.
While textbooks refer to this principle as scarcity, you might recognize the phenomena as FOMO, or fear of missing out. However much we desire something, the threat of losing it will usually make us want it even more.
Are you using the powerful pull of scarcity in your business? Typically, entrepreneurs focus their communication, both online and off-line, on benefits. “Work with me and you’ll get XYZ!” But don’t forget the other side of the equation – what will your customer lose by not working with you? Alternatively, if you’re in a product business, let your customers know when something has been flying off the shelves and is almost sold out.
In 2000, the Journal of Personality and Social Psychology published a landmark study by researchers at Columbia and Stanford universities. The findings were basically this: When offering six product choices (in this case, gourmet jams), 30 percent of consumers made a purchase. But when offering 24 product choices, only 3 percent of consumers made a purchase. In short, cognitive overload can put a serious dent in your sales.
And while it might not be practical to decrease your selection of products or services, you can use this piece of consumer psychology to your advantage by providing your customers with cognitive shortcuts. Save them from excessive reading and comparing, and possibly walking away, by clearly marking things as “Most Economical,” “Highest Reviewed” or “Newest.”
What has been the most valuable thing you’ve learned about consumer psychology? Share your insights: Email them to email@example.com.