The Psychology Behind D2C Sales: 3 Proven Tactics to Use in Your Marketing Campaigns
Marketers today are more likely to use psychology than ever before. The fields of neuromarketing and behavioural economics are expanding rapidly and gaining in importance. Some major brands, like Netflix and Amazon, have even created their own departments focused on consumer research that drives their marketing efforts.💡
Psychology is especially important in direct response marketing. You need to convince your potential consumers and elicit interest and a desire to buy within a few seconds, whether it’s your ad, your landing page or a shopping cart.
You all probably consider yourself independent thinkers, making your own well-thought-through decisions, right? (a behavioural economist would laugh at you) Well, science proves us otherwise. “But wait,” you would say, “if I can be influenced, can I control the world too?”
Let’s not take it that far (yet). ✋
(If you’re interested in diving deeper into consumer psychology, start by reading Nudge Theory by Cass Sunstein and Richard Thaler and Predictably Irrational by Dan Ariely).
Here are three useful marketing techniques that rely on fundamental psychological principles. I’m not saying after reading this article you will suddenly be able to understand consumers’ minds and become the next Richard Thaler or David Ogilvy. Still, it might save you from a couple of nervous breakdowns trying to figure out why your ads or landing pages are not performing, despite your lovely copy and creative.
1. Anchoring ⚓️
Anchoring is one of the most basic yet highly effective tactics in marketing. I learned it when I was a kid delivering less-than-positive news to my parents. I would usually start with a tragic story of an absolute disaster that could potentially happen to a 7-year-old and then add: ”Would’ve been horrible, right? But I only got a ‘C’ on my test.”
After a silent heart attack, sometimes they would even congratulate me on getting a “C.”
Anchoring bias states that people are heavily dependent on the first piece of information presented while making decisions (Kahneman and Tversky, 1974). Black Friday 🛍 is a perfect example. We see a crossed-out old price and a discounted price that suddenly appears very alluring. Another example of anchoring would be displaying really pricey products next to cheaper ones to frame consumers’ point of reference. You might see a $500 T-shirt next to a $100 one, making the $100 shirt seem like a good deal.
2. The Zero Price Effect 🏷
I once had a client try to sell a gym membership subscription through direct response ads with a full year commitment: “Purchase a yearly membership now. Only $1,299.” No wonder they were not impressed with their CAC! The common root would’ve been offering a free trial week or a class that significantly increased the chances of converting clients.
What is the special power the word “free” has on us? Research shows that once we try a product or service for free, we perceive its benefit value as higher and are more likely to stick with it. That’s especially true for products or services that are viewed as bringing pleasure. For example, imagine you’re on a diet and pass a pastry store that sells doughnuts for $1. If you’re committed to your goal, you’ll probably continue on by. But imagine the store offers you doughnuts for free. For some reason, that choice suddenly becomes a no-brainer.
How can you use the zero price effect in your marketing efforts? Some examples are:
- Offer free trials 🆓
- Raise the price of your product but make shipping free 📦
- State that X% of the product is free 🤑, as many detergent brands do, for example
Remember the perceived value of reducing the price from $2 to $1 is much lower than reducing it from $1 to $0, even though the difference is the same (Shampanier, K., Mazar, N., & Ariely D., 2007, Zero as a special price: The true value of free products.).
3. The paradox of choice 🤔
Most of you probably know this bias, but we still notice many emerging brands failing at it. The market is saturated with products and services and an endless list of options customized to fulfill your every dream. The automatic reaction that some brands have is “I have to offer every option to ensure customers find what they like and purchase my products, not the competitors’.” In most cases, that turns out to be false. As Barry Schwartz argued in his book The Paradox of Choice: Why More Is Less, limiting the number of options reduces consumer anxiety levels. For D2C brands, this can be the difference between a healthy ROAS and total failure.
In direct response, we want consumers to make decisions fast. If there is an endless number of options, they might just get frustrated and leave the purchase until another time.
Of course, this principle doesn’t fit all business models — some brands’ competitive advantage lies in offering total customization. If you’re not sure, you can try a split test with two different landing pages, providing either a wide variety of customizable options or only a few for consumers to pick from. If your strategy is to have a product for every customer, you might try using surveys or questionnaires to help consumers choose the right product or define a custom option.
These are just a few tactics that psychology can teach us. We as consumers are easily influenced, and some brands have really mastered that art. 🎨 Understanding human reasoning is not easy, but there’s no need to pursue a trial-and-error approach when there are proven strategies and tactics to influence consumer behaviour.