Neuromarketing is revolutionising how we can approach digital marketing. With new understanding in human psychology and cognitive biases, understanding the thought process of potential customers has become an important frontier in maximising conversion rates in E-commerce.
What is digital Neuromarketing?
Neuromarketing, also known as consumer neuroscience, is a field of psychology that studies the brain to predict consumer behavior and decision-making. Neuromarking involves measuring physiological signals to gain insight into customers’ motivations, preferences and decisions (Harrell, 2019). This is to say that understanding how to influence these mechanisms has apparent and immense value for marketers.
When shopping online the human brain relies on mental shortcuts, small changes in how a product or service is presented can make huge differences in the thought processes of a customer. Therefore, if we as digital marketers can better understand these cognitive biases, we can effectively optimize the user experience to greatly increase conversion rates for our clients. To begin, let’s discuss the two systems of thought and how they differ.
How are system 1 and system 2 thinking different?
In his book “Thinking, Fast and Slow”, psychologist Daniel Kahneman popularized the idea of the human brain having two unique modes of thought called System 1 and System 2. The theory describes System 1 as our automatic, intuitive mode while System 2 exists as our more rational thinking mode that requires more cognitive effort (Kannengiesser, U., & Gero, J. S, 2019).
System 1 | System 2 |
| Fast, intuitive and effortless | Slower, requires greater effort |
| Used for daily behavior | Used for analytical thinking |
| Driven by emotion and bias | Driven by reasoning |
| Does not require memory | Requires memory |
| Automatic | Controlled |
How can we use System 1 to our advantage in digital marketing?
As marketers, our primary focus is on System 1 thinking, as it is the mode that is more easily influenced and is the mode for quick impulses such as that to buy a product online. Kahneman describes how System 1 is usually the first mode used in decision making before it has a chance to be challenged by System 2. That is to say, if a company is able to replace long or complex conversion paths with simpler ones, a customer is more likely to resort to System 1 thinking.
Arguably the most famous example of this philosophy in e-commerce is Amazon’s “1-click” ordering process. Jeff Bezos focused on ensuring that the ordering process on Amazon take “the least amount of effort”, focusing on the speed and simplicity of checking out (Brandt, 2011). His genius not being in creating an online bookstore, but in designing an online bookstore that is enjoyable to use and simple to spend money on.
This demonstrates to firms how one of the internet’s biggest strengths is its ability to streamline the conversion process to be as easy and quick as possible. Therefore, this principle should be the primary focus for a firm as it tries to improve its digital marketing performance, as the fewer roadblocks there are for new customers, the fewer opportunities there will be for the engagement of System 2 thinking which is more resistant to the effects of marketing, digital or otherwise.
What is processing fluency and how can it affect consumer behavior?
processing fluency describes the cognitive bias in which we favor information based on how easily our brain can process it. The more fluently we can process information, the more we believe in it (Reber, R., Schwarz, N., & Winkielman, P., 2004).
We can use the fundamentals of processing theories to guide how we design our online presence with digital marketing. Research in this affect on consumer behaviour was carried out by Adam L. Alter and Daniel M. Oppenheimer in their study into how processing fluency affects people’s willingness to buy stocks. In this study, It was demonstrated that people regularly favored stocks based on the ease of pronunciation of their names which in turn boosted the stock performance (2006).
This result shows a correlation between processing fluency and how people behave financially, suggesting that people often make decisions about companies non-consciously. In digital marketing, this can be used to our advantage, as by making information about our product or service easier to understand, customers are more likely to view it as credible.
What are cognitive biases and how can they be used for conversion?
Cognitive biases arise from our tendency for mental shortcuts, they describe patterns of deviations from rationality leading to sometimes flawed perception and reasoning (Haselton et al., 2015). In digital marketing, they can be advantageous in influencing consumer behavior to improve conversion rates.
Examples of Consumer Cognitives Biases:
- Loss Aversion: Loss aversion is a term in consumer psychology which describes how we experience the pain of a loss much more intensely compared to the pleasure of a gain (Heshmat, 2018). Roughly speaking, a loss hurts twice as much as the pleasure of a gain of equal value.
- The Anchoring Effect: The anchoring effect describes the bias people have in overvaluing the first piece of information they receive (Tversky & Kahneman, 1974).
- Implicit Egotism: People unconsciously gravitate towards people or things that resemble themselves, a bias that stems from people’s positive self-associations (Pelham 2005).
How to optimize a landing page around consumer cognitive biases
Cognitive biases such as these are already used in marketing, so it is important to recognize the psychological reason they are so effective. Take price discounts for example; the anchoring effect explains how being shown an initial price anchors our perception of the value of a product, positioning the new cheaper price as an impressive deal regardless of the real value of the product. This can then be used in tandem with the principle of loss aversion; by making the sale last for a limited time, the fear of missing the sale overrides the mental calculation of the gain from the product, pressuring them to commit. In addition, loss aversion can be used even more directly through digital marketing by giving customers in the engagement stage a personalized limited-time offer to yield an even higher conversion rate.
Furthermore, Implicit Egotism can be used in digital marketing by taking advantage of the abundance of data that marketing tools such as Google Ads have on potential customers. By understanding what each customer is like, tailored ads such as testimonials from similar customers can be used to leverage implicit egotism.
Ultimately, while we like to see ourselves as rational beings, psychology and neuromarketing reveals that we are greatly influenced by biases and non-conscious decision making. As digital marketers looking to attain the highest conversion rates possible, understanding how these principles influence consumers will make it easier to convert them from potential customers into happy customers.
Sources
Brandt, R. L. (2011). One click: Jeff Bezos and the rise of Amazon.com. Portfolio/Penguin.
Harrell, E. (2019, January 23). Neuromarketing: What you need to know. Harvard Business Review. https://hbr.org/2019/01/neuromarketing-what-you-need-to-know
Haselton, M. G., Nettle, D., & Andrews, P. W. (2015). The evolution of cognitive bias. In D. M. Buss (Ed.), The handbook of evolutionary psychology (2nd ed., pp. 724–746). John Wiley & Sons. https://doi.org/10.1002/9780470939376.ch25
Heshmat, S. (2018, March 8). What is loss aversion? Psychology Today. https://www.psychologytoday.com/blog/science-of-choice/201803/what-is-loss-aversion
Kannengiesser, U., & Gero, J. S. (2019). Design thinking, fast and slow: A framework for Kahneman’s dual-system theory in design. Design Science, 5, Article e10. https://doi.org/10.1017/dsj.2019.9
Pelham, B. W., Carvallo, M., & Jones, J. T. (2005). Implicit egotism. Current Directions in Psychological Science, 14(2), 106–110. https://doi.org/10.1111/j.0963-7214.2005.00344.x
Reber, R., Schwarz, N., & Winkielman, P. (2004). Processing fluency and aesthetic pleasure: Is beauty in the perceiver’s processing experience? Personality and Social Psychology Review, 8(4), 364–382. https://doi.org/10.1207/s15327957pspr0804_3
Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and biases. Science, 185(4157), 1124–1131. https://doi.org/10.1126/science.185.4157.1124
Unkelbach, C. (2006). The learned interpretation of cognitive fluency. Psychological Science, 17(4), 339–345. https://doi.org/10.1111/j.1467-9280.2006.01708.x