Fascinating Psychology Hacks that Personalization Is Built to Leverage
Marketing Cloud Personalization Use Cases You Should Be Testing Based on Behavioral Science
Utilizing testing, psychology/consumer behavior, and Marketing Cloud Personalization is more critical than ever when trying to keep up with the demands of the frictionless and convenience-focused expectations of customer experience.
Multivariate testing is one of the most valuable, yet underutilized practices in the marketing world today. Many of us marketers are leveraging some A/B testing, but there is generally a lot more room for us to test and learn. Similarly, Marketing Cloud Personalization is one of the most widely capable and valuable products in the marketer’s toolbelt today, but it is also largely underutilized by many marketers.
Well, it just so happens that the topics of testing and Personalization have a fascinating intersection with the world of behavioral science. The Cocktail Party Effect is the phenomenon that describes how a person in a crowded room can separate all the noise of dozens of conversations of varying volumes into auditory streams and filter out which stream (conversation) is most pertinent to focus their attention. This is how, out of a room droning with auditory streams of discussion, if you hear your name in an adjacent conversation, you can instinctively tune into that discussion. Or, if you’re like me and you hear the keyword “dessert”, you’ll shift your focus there instead.
Your consumers (and you) leverage this effect on a regular basis. It’s estimated that the average person sees between 4,000–10,000 promotional messages per day. That’s a lot of streams of noise for a consumer to filter out! That’s why personalized and well-timed messaging is so important; you want your target customer to hear their name mentioned in a relevant conversation and instinctively tune into what you have to say.
But there’s more to it than just using someone’s %%FirstName%% to grab attention. Saying your customer’s name in a personalization string may garner more views, but there is an entire science behind the context, positioning, and processing that goes into the consumer’s mind that plays an enormous part in an actual conversion. Let’s dive into the psychology of why social proof and scarcity are wildly effective approaches every marketing should be testing.
Psychology Hacks
Social Proof
The Concept:
Psychologist Robert Cialdini coined the term Social Proof (aka Informational Social Influence) to express the notion that we all tend to look at other people’s behaviors and choices to validate our own actions. Basically “monkey see, monkey do.” In essence, we are all bound by limited cognitive bandwidth, and we can save time and energy by relying on the signals provided by others (who presumably know as much if not more on a given subject, product, or service) as indicators of what we should be interested in.
For instance, Cialdini references a study in Beijing where a restaurant randomly assigned an asterisk to indicate “this is one of our most popular items” on their menu. When they tested how consumers reacted to this menu edit, the experiment group who was exposed to the supposedly “popular items” saw an increase of 13%–20% in those items.
The Application:
Use Marketing Cloud Personalization to apply badging to your popular products or services. A simple highlight, star, banner, etc. that highlights high-performing sellers can be helpful in breaking down the paradox of choice, where consumers may feel inundated with too many options and feel underprepared to make a decision. Relying on the preferences of others may help push your customer past that analysis paralysis.
This social proof concept applies to plenty of other aspects beyond product or service promotion, as well. For instance, if you have a club or loyalty program to which you’re looking to increase membership, a pop-over or loyalty promotional message could offer the comforting validation of social proof by stating “27% of our customers enjoy savings as a part of our Loyalty Reward program!” Or better yet, test the difference between messages promoting percentages vs. volumes (e.g., “Join 13,082 satisfied customers in our Loyalty Program”).
One thing worth mentioning here is that a successful test may offer more than just higher conversions; it’s also worth monitoring the time-to-conversion metrics on these items as well. You’ll likely find that this small, but powerful nudge is not only valuable to the consumer in what choice they prefer, but how quickly they can effectively navigate the decision-making process.
Scarcity
The Concept:
Scarcity, as you know, is the idea that we value things more when there is a limited supply. We basically want what we can’t have. This is essentially the concept of FOMO (Fear of Missing Out) embodied in consumer behavior. We hate losing out on things (quantity, opportunity, savings, etc.), so this natural tendency of loss aversion drives our behaviors to prevent this loss from occurring as much as possible.
In 1975, psychologists held a now famous experiment where they asked subjects to rate the quality of cookies from different jars. One jar was full of cookies while the other jar only had two cookies left. Unbeknownst to the subjects being tested, they were all the exact same cookies. However, the cookies from the nearly empty jar received substantially higher ratings than cookies from the full jar. Furthermore, as the full jar began to lose inventory, the ratings for those cookies increased.
Similarly, a study showed soup cans that were discounted at different stores. Both stores offered the same discount on Campbell’s Soup, but one store limited the number of items allowed to 12 cans of soup per customer, while the other store had no limit on their promotion. That store sold an average of 3.3 cans per person. The store with the limit of 12 cans sold an average of 7.0 cans per person (a 112% increase). The implication that something is in scarce supply provides an urgency that is a huge motivator for us.
The Application:
A couple of immediate (and low-hanging opportunities) for Personalization use cases can be to apply limits on the quantity allowed at checkout or to show limited inventory remaining for certain items. Look to see how AOV, quantities per checkout, and popularity of these items change when tested against controls.
Additionally, think about if and how you might show out-of-stock items. Are you suppressing those today? That may be an effective way to not sour the customer experience by not letting them see the FOMO in unattainable items. Or perhaps showing these items would increase their urgency to purchase other items knowing supplies are limited. But positioning items as “Out of Stock” may be perceived as frustrating (since shoppers may correlate this to incompetency and inability to manage inventory) whereas marking these items as “Sold Out” may highlight the popularity of the items (and thus provide an opportunity to leverage Personalization for restock triggers for visitors to those PDP pages).
But let’s think beyond the scarcity of resources. Scarcity also applies to opportunity or even time. Test the concept of providing discounts or incentives on certain products or services solely to loyalty members. Then see what happens to those sales as well as loyalty memberships. Furthermore, what would happen if limited-time sales leveraged Personalization to display counter clocks or inventory on real-time opens in emails? Does this create an urgency for customers knowing the volume or time for them to capitalize on a special is limited?
Effective Testing & Psychology
These seemingly small changes can domino into enormous outcomes for marketers. Ultimately, there is no behavioral hack that is a guaranteed silver bullet. Some marketers may find a handful of these approaches extremely effective, while others may see different results. Every marketing strategy and customer base is unique. Finding out what behaviors and motivations are most critical to the consumers’ needs and attention is vital to any marketer. These three concepts are a great place to start testing and sharing the results throughout your organization.
