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3 Social experiments and what your business can learn from them

3 Social experiments and what your business can learn from them

social experiments

Social psychology isn’t always what comes to mind when thinking about how to increase sales but understanding a few fundamentals about how the mind works can really give your business the boost you’ve been looking for. With some great psychologists and behavioural economists out there we’ve found a few interesting social experiments they conducted to whet your appetite…

1. Relativity my dear Watson!

Our minds are striving to make the wisest decisions for us. The brain strains to find rationality and reason behind every choice we make. One way we do this is through comparison…

Dan Ariely wrote in his book, Predictably Irrational (well worth a read!), a process called ‘the asymmetric dominance effect’ or ‘the decoy effect’. His example was this. On the Economist website they offered subscriptions to their magazine:

1 year online subscription $59.00
1 year print subscription $125.00
1 year both print and online subscription $125.00

At a quick glance you’ll notice that both the print and the print and online subscription are the same price. This seems quite pointless as out of the 2 options everyone should opt for the print and online option but Dan did an experiment with his university class to show how having this ‘decoy’ offer converted into sales higher sales for The Economist:

Subscriptions without the decoy offer
1 year online subscription $59.00 – 68
1 year both print and online subscription $125.00 – 32

Subscriptions including the decoy offer
1 year online subscription $59.00 – 16
1 year print subscription $125.00 – 0
1 year both print and online subscription $125.00 – 84

Interesting results right? As you can see The Economist would have had a huge increase of print and online subscriptions by using the decoy offer; but why? According to Dan we try to rationalise our purchases by comparison and we constantly strive for a good deal. By adding in the print only subscription our minds can immediately work out that the print and online version is better value in comparison and as a result most people tend to opt for this choice. Our minds search for elements that are similarly comparable so the online only option simply becomes over looked.

This way of thinking doesn’t only apply for sales but life in general we always look for things to relate to whether were comparing, jobs, holidays, partners etc. This can also be used when pricing featured products. Dan uses another example of a TV salesman placing 3 TVs in his window:

36 inch Panasonic $690
42 inch Toshiba $850
50 inch Philips $1,480

Which option would you choose? The theory goes that because most people would have a hard time comparing these against each other (Is a Toshiba better than Panasonic?) then most will simply go for the middle option which just so happens to be the TV that our salesman wants to sell the most.

2. Less is more

In Sheena Iyengars The Art of Choosing she conducted a test to see if customers were more likely to purchase when presented with more options. A logical way of looking at this would be if there are more options then you are more likely to provide something that is wanted. That was not the result:

On Saturdays she offered the choice of 24 jams and then the following Saturday only 6.

“When 24 jams were available, 60% of the customers stopped for a taste test and 3% of those bought some. When 6 jams were available, 40% of the customers stopped for a taste test, but 30% bought some.”

The result show that even though more customers stopped with the larger amounts of jam barely any actually purchased whereas the day with less options sold about 6 times more jam!

This is what happens when our minds go into ‘choice overload’ and the task of assessing and comparing all of the 24 options turns into such a daunting task that your customers will just walk away whereas comparing 6 jams is a much simpler job that your customers are more likely to make a choice.

This can apply to eCommerce too. Product search pages are limited to display set number of items (unless you click view all), or shops like Amazon along with many others providing between 4-6 recommended, featured or recently viewed items.

3. FREE!

The power of free isn’t something that should be overlooked. Dan Ariely did a test on how powerful this trigger is on choice and the results were dramatic, here’s is a quick overview.

To test his theory he and his colleague set up a stall to sell chocolates, Lindt Truffles (seen as more of a luxury chocolate) priced at 27 cents and Herseys Kisses (a low end everyday chocolate) priced at 2 cent. The majority opted for the truffle.

He then reduced the price down by one pence making the truffle 26 cents and the Kiss 1 cent. 40% went with the truffle and 40% with the Kiss at this pricing; yet still quiet an even split.

But, when the price dropped by 1 cent again making the Lindt Truffle 25 cent and the Kiss FREE the results changed dramatically to 90% opting for the free Kiss even though the relative price difference is still the same.

It may seem obvious but the thought behind it is interesting. Dan goes on to explain that the mind feel more inclined to go for a free option because it reduces personal risk at making the wrong decision. We do not need to invest in this product at all so if it isn’t very good it doesn’t matter as there was no personal loss associated to it.

Now I understand you may not want to go giving your wares away for free, but simple incentives may push a buyer more towards a product you want to sell that maybe they wouldn’t have chosen normally. Think of all those offers we’re seeing at the moment for stuffed toys like Comparethemarket meerkats, the Muller yoghurt bear or the Sofaworks sloth that may push you to purchase from them over their competitors.


Social sciences can be a great read for anyone looking to understand their customers a bit better. So if you fancy getting into the mind of your consumers why not check out these books:

References:
danariely.com
socialtrigger.com

by Jennifer McMillen on 15/11/2014

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