10 Irrational Human Behaviors and How to Leverage Them to Improve Web Marketing
Jim Krukal recently tweeted a link to Chris Yea’s outline of the Predictably Irrational book by Dan Ariely. I don’t know if it was because I was trying to read it on the train on the way to work, but although I found it interesting, I had a hard time absorbing any of the information. Thankfully, Rand Fishkin from SEOMoz has done a superb writeup with examples so I no longer feel like such a dullard.
Some of my favourite insights are as follows:
I: The Truth About Relativity
When Williams-Sonoma introduced bread machines, sales were slow. When they added a “deluxe” version that was 50% more expensive, they started flying off the shelves; the first bread machine now appeared to be a bargain
When contemplating the purchase of a $25 pen, the majority of subjects would drive to another store 15 minutes away to save $7. When contemplating the purchase of a $455 suit, the majority of subjects would not drive to another store 15 minutes away to save $7. The amount saved and time involved are the same, but people make very different choices. Watch out for relative thinking; it comes naturally to all of us.
Lessons to Apply to Web Marketing:
VII: The High Price of Ownership
The “endowment effect” means that when we own something, we begin to value it more than other people do.
Ariely and Carmon conducted an experiment on Duke students, who sleep out for weeks to get basketball tickets; even those who sleep out are still subjected to a lottery at the end. Some students get tickets, some don’t. The students who didn’t get tickets told Ariely that they’d be willing to pay up to $170 for tickets. The students who did get the tickets told Ariely that they wouldn’t accept less than $2,400 for their tickets.
There are three fundamental quirks of human nature. We fall in love with what we already have. We focus on what we might lose, rather than what we might gain. We assume that other people will see the transaction from the same perspective as we do.
Lessons to Apply to Web Marketing:
- In contrast to the recommendations for offering something for free, be aware that users who get your product/service for “free” will place less value on it than those whoe worked for it or bought it themselves.
- It’s easier to get more money from your existing customers than it is to attract new ones (this marketing wisdom has been around forever, but applies particularly well given this psychology)
Good work Rand! You can read the rest of the article here.
