Using the Science of Persuasion—and Advanced Segmentation—to Boost Online Sales

Last Tuesday was a snow day for most of us in the Northeast, and I used that time to finally get around to reading a marketing book that was recommended highly to me.

The book is “Influence:  The Psychology of Persuasion” by Robert Cialdini, published in 1984. This social psychology classic uncovers the secrets of getting people to take action and contains principles that can be used by retailers today to boost online sales. 

Dr. Cialdini, a professor of psychology and marketing at Arizona State University, lays out six proven methods based on the science of persuasion that can get people to say yes to almost anything:

  • Reciprocity
  • Commitment & Consistency
  • Liking
  • Authority
  • Social Proof
  • Scarcity

Warren Buffett’s second in command, Charles Munger, actually sent Dr. Cialdini a thank you letter and a share of Berkshire Hathaway stock (worth $75,000 at the time) after he read the book due to the impact it had on him and his business. In his own book, “Poor Charlie's Almanac,” he wrote that the gift to Cialdini was in thanks “for what he had done for me and the public.” Charles also sent copies of the book to all of his children.

Read on and see how you can put these six principles to use for your e-commerce business.

1. Reciprocity - Giving to Get

The principle of reciprocity means that when someone gives us something beneficial, we feel compelled to give something back in return. I recently experienced this concept firsthand. Two weeks ago, I was dining at a new restaurant with my wife, and our waitress dropped our BYO bottle of wine and shattered it all over the floor. To make up for it, the owner gave us dinner on the house. Since then, my wife and I have been back twice. This is reciprocity in action.

Of course, e-commerce retailers can’t interact with each customer like a small restaurant owner can. So how can you make reciprocity work for you?

Free Gift With Purchase

You might not be able to offer a free dinner, but you can definitely offer something free with purchase. This tactic is a favorite of cosmetic and beauty brands. Here’s an example from Nordstrom.

Even if you don’t advertise the gift in advance, slipping samples of other products into your shipped product can create the feeling of having received a gift that might earn you a second purchase.

Taking this to the next level, sophisticated marketers use customer value tier segmentation to determine who gets which free offer. Higher value customers—those likely to make many repeat purchases—might be offered the free gift, while customers less likely to return could be given a coupon off of their next purchase.

We’ll discuss how to create customer segments that take into account both past purchase history and predicted future purchase behavior in a future blog post.

2. Commitment & Consistency - Getting Customers to Commit to Small Things Leads to Big Results

The principle of commitment and consistency says that people strive to appear consistent in their words and actions. Once someone makes a commitment, they are much more likely to take actions in line with that commitment.

As a retailer, if you can get customers to make a small commitment to your brand (like signing up for your email newsletter), they are more likely to eventually purchase from you. And if you can actually get products in their hands, even if there is no official commitment to buy them, your chances increase even more.

This is the principle behind Stitch Fix:

Stitch Fix knows that if you sign up to receive 5 pieces of clothing, you are probably going to buy one or two.  So they make it as frictionless as possible—fill out the survey, get your clothes, send back what you don’t want. They say that there is no obligation to buy, but they know the customer feels the commitment the minute they open the box.

3. Liking/Social Proof

The principle of liking says that we are more likely to engage if we feel a connection to the person trying to get our attention.

This principle explains why brands hire celebrities to endorse their products, or feature the founders and the story behind the brand.

Using your founder’s story to get consumers to like your brand

Many brands have an iconic founder with an amazing story, and many retailers use this story to create affinity for their brand. One great example is Lily Pulitzer.

Loyal customers love Lily and aspire to be like her. It is no surprise that her story plays a prominent role in the Pulitzer business.

Get Celebrity Endorsements That Connect with Your Ideal Customer Persona

Calvin Klein has identified their most important personas and are using that insight to guide their celebrity endorsement strategy. Retailers that take the time to really understand their best customers—both through quantitative as well as qualitative analysis—find that their marketing and merchandising decisions get easier and and their businesses flourish.

4. Authority

People appear hard-wired to respond to authority (or the appearance of authority). How can you use this to sell? Bring experts into your website experience and have them make suggestions and recommendations. Dermstore does this really well in their “expert advice” section of their website.

Expert Suggestions

5. Social Proof: Safety in Numbers

Cialdini defined social proof as people doing what they observe other people doing.

Cialdini conducted a study in several Phoenix hotels comparing the effects of those ubiquitous hotel-bathroom placards that ask guests to reuse towels, testing four slightly different messages. The first sign had the traditional message, asking guests to “do it for the environment.” The second asked guests to “cooperate with the hotel” and “be our partner in this cause” (12 percent less effective than the first). The third stated that the majority of guests in the hotel reused towels at least once during their stay (18 percent more effective). The last message was even more specific: it said that the majority of guests “in this room” had reused their towels. It produced a 33 percent increase in response behavior over the traditional message.”

Incorporating Social Into the Shopping Journey

Social media is playing a big role in the shopping journey - which would be no surprise to Dr. Cialdini even back in 1984! Retailers are leveraging a consumer’s social network to take advantage of the Liking principle. New social selling startups are taking advantage of the herd mentality such as Soldsie (selling through comments) and Like2Buy (user generated content galleries).

Apparel retailer TopShelf Style is a great example of social selling in action. TopShelf utilizes Soldsie, a solution that allows the retailer to implement comment selling on Instagram. Whenever TopShelf puts something up for sale on Instagram, customers who want to buy it simply need to comment “sold” together with their email address. Soldsie then generates an invoice and sends it to the shopper, so she can complete the transaction.

6. Scarcity

Cialdini’s final concept is the principle of scarcity, which states that people are highly motivated by the thought that they might lose out on something.  Scarcity-creating events like limited quantities and deadlines give shoppers the impression that the product that they want will be gone soon - a great motivator for action.

Airlines were early online pioneers of this concept. However, overuse has made this tactic less less effective—how can every flight only have 2 seats left?

Almost sold out!

Fast fashion retailer Eloquii takes a much more sophisticated approach. They have curated a section of their website with items that are about to sell out. This section has become one of the most popular (and profitable) sections of their site.

Nordstom’s HauteLook brand has built an entire business based on this principle.  Limited duration flash sales on branded fashion items take the “fear of missing out” to the next level.

You can get even better results when you use incorporate predicted product affinity segmentation into your flash sales. Identifying audiences most likely to want a particular item, and using that insight to personalize your daily emails or your online product assortment can provide a huge boost in flash sale performance.

Seasonal or Limited Products

Admit it, you love your Gingerbread latte from Starbucks, and you know you can only get it for a few months in the winter. Products only available in specific seasons, or limited special editions, drive demand based on their limited availability. Identifying the customer segments that love these seasonal items adds a huge boost to holiday marketing campaigns.

Taken together, these principles of influence help consumers decrease the risk of 'yes' (liking, social proof, authority) or increase the risk of 'no' (scarcity, consistency, reciprocity).  And both - when used thoughtfully - can drive traffic and conversions for your website.  

If you are already adopting Cialdini’s principles in your business, take them to the next level with advanced segmentation techniques. Use predicted lifetime value segmentation to determine who gets which free trial offer. Leverage predicted product affinity segments in your daily emails promoting your limited duration sales - putting the products in front of the audience most likely to want them. Use customer analytics to identify your ideal personas in order to find the right celebrity endorsement and fine tune your product offerings.

Incorporating segmentation into your day to day business can take these principles of persuasion to the next level.

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