Boosting Your Rates With Psychologically Validated Principles

• 17 min read
• Business, Conversion, E-Commerce, Psychology, Usability, Income
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About The Author

John Stevens is the founder and CEO of Hosting Facts, a portal that reviews and compares web hosts. When he is not studying psychology research, he is probably … More about John ↬

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It is often easy to overlook the underlying principles that compel people to take action. Instead, we tend to obsess over minute details — things like button color, pricing and headlines. While these things can compel users to take action, it is worth considering the psychological principles that influence users’ behavior.

Unfortunately, few organizations try to understand what influences user action. Research by Eisenberg Holdings shows that for every $92 the average company spends attracting customers, a meager $1 is spent converting them. Real conversion optimization is rooted deeply in psychology.

In this article, we will analyze seven psychology studies that date as far back as 1961. Each experiment raises principles that will help you boost conversions on your website. Some of the experiments are so controversial that they will make you cringe, but the lessons are fundamental.

The Authority Principle: Leverage The Influence Of Authority Figures To Get People To Act

In perhaps the most famous study about obedience in psychology, Yale University psychologist Stanley Milgram conducted a series of experiments to observe how people react when instructed by an authority figure to do something that conflicts with their conscience. The aim of the experiment was to see how far people would go to obey authority, even if the act of obedience involved harming someone else and acting against their conscience.

For the studies, which began in 1961, Milgram selected participants for his experiment by placing an advert in a newspaper. Once people responded to the advert, Milgram paired the participants and cast lots to determine which of each pair would be the learner and which the teacher. Unbeknownst to the participants, the experiment was rigged — all of them would be teachers, while all of Milgram’s associates would be chosen as learners.

The learner (Milgram’s associate) was taken into a room and connected to an electric chair; the teacher (one of the participants) was then taken to a room next door that contained a row of switches, marked with a scale of 15 to 450 volts — with 15 volts being a “slight shock” and 450 volts producing a “fatal shock.” The teacher was able to see the reactions of the learner through a screen.

Once in the other room, the researcher told the teacher (i.e. the participant) to administer an electric shock every time the learner answered a question incorrectly. The learner was then asked a series of questions and mainly gave wrong answers (on purpose). In return, the authority figure — dressed in a gray lab coat — asked the teacher to administer an electric shock for each wrong answer. The result was stunning: 65% of participants administered the electric shock to the maximum 450 volts, even when the learner long stopped showing signs of breathing. In a variation of the experiment, the authority figure was replaced with an ordinary person, and compliance dropped to a stunning 20%.

Milgram’s experiment shows that we will go to great lengths to obey orders, especially from those seen to be as legitimate authorities (whether legal or moral).

How To Use The Authority Principle To Boost Conversions

The authority principle can be used to boost conversions in your business. For instance, getting authority endorsements will always go a long way to boosting your conversions and profits. You are far better off, of course, avoiding trying to sell products to people who don’t want them, but even scrupulous websites can boost conversions by tapping into the power of authority. Here are some tips:

• Get an authority figure or respected celebrity in your industry to endorse you. A great example of the effectiveness of endorsements from authority figures is Dr. Oz. Dr. Oz is renowned in the health field, and products will sell out at stores as soon as he recommends them. The phrase “Dr. Oz Approved” currently has 1.6 million results in Google (shown below), showing how seriously people take his recommendations.

  

  On a smaller scale, Plum District noticed that customers who were referred to its products by influential online mothers boosted the company’s sales by double that of customers from other channels. Authority endorsement can come in many forms — a post on social media, a testimonial or active involvement with your brand.
• Get an authoritative publication to endorse you. Mainstream publications are also regarded as authorities. In the absence of an endorsement from a person, an endorsement from a reputable publication would go a long way to boosting your credibility. Rent the Runway reported a 200% increase in conversions from visitors referred by fashion magazines and blogs compared to visitors from paid search ads.
• Become an authority yourself. Why get Oprah to endorse you when you can be Oprah yourself? Establish yourself as an authority figure and an industry leader by writing for relevant publications, speaking at relevant events and conferences and establishing relationships with other authority figures. Think of the difference between receiving an email from a stranger and receiving an email from a known thought leader. Making a name for yourself is a great way to warm up your sales leads before you even reach out to them. Seven-figure blogger Neil Patel (pictured below) established himself as an authority by highlighting major brands he has worked with, his recognition from the United Nations and the President of the United States, and major publications that have featured him.

  

The Amos Tversky And Daniel Kahneman Experiment: Use Anchoring To Make People Feel They Are Getting A Bargain

Whether you are working for a company or selling your own products, you have probably seen prospective customers bounce from your website because they feel that your products are too expensive. Well, an experiment (PDF) conducted by psychologists Amos Tversky and Daniel Kahneman in 1974 holds a solution to boost conversions with these customers, too.

During the experiment, the researchers observed how an initial perception influenced the subjects’ behavior. They surveyed people and asked them to estimate the percentage of African nations that are a part of the United Nations. Before people were allowed to answer, though, the researchers had them spin a wheel painted with numbers from 0 to 100. Unbeknownst to the participants, the wheel had been rigged to stop at either 10 or 65. The experimenters found that the people who landed on the higher number on the wheel were more likely to choose a higher percentage than people who had landed on the lower number. Those who were shown 10 on the wheel estimated, on average, that 25% of African nations were a part of the UN, while those who were shown 65 estimated that the percentage was 45%.

The study reveals the effect of anchoring on our actions. If you want to buy a bomber jacket, and all of the jackets you find are around $200, and you later see a similar jacket that costs $150, you would think it’s a bargain, even if the jacket actually costs $50.

Amazon does this effectively, and automatically, for most of its products:

How To Use The Anchoring Principle To Boost Conversions

You can use this psychological effect to boost your sales. First, put your product in high esteem — if possible, make people feel that your product is so amazing that they would never be able to afford it. When they later find out the price you are asking, even if it is expensive, they will see it as a bargain. It is no longer a matter of “$500 is too much,” but rather, “Wow, this could easily sell for $2,500, and I’m getting it for $500!”

Many major brands leverage the anchoring effect by offering deals that appear to be such a great bargain that users might feel that they’re crazy to offer them. Below is shown AT&T deliberately offering both a 32 GB and a 64 GB iPad at the discount price of $529.

The original prices of the 32 GB and 64 GB iPads were $729 and $829, respectively. The latter would be regarded as expensive. At the discounted price of $529, however, it’s a bargain. The user feels, “Wow! I’m getting double the storage for the same price!” They no longer focus on the high cost of the 64 GB model, but rather on the fact that it costs the same as the model with half the storage.

The Little Albert Experiment: Use The Conditioning Principle To Turbocharge Your Conversions

The “Little Albert” experiment is pretty extreme compared to the other experiments discussed here, and it probably wouldn’t be allowed today, not only because of the nature of the experiment itself, but also because the subject was just a child at the time. (It was widely reported that the child, known as Little Albert, never recovered from the effects of the experiment.) The experiment, however, does teach some fundamental lessons about how the human brain is wired.

Psychologist John B. Watson conducted the experiment to observe the phenomenon of classical conditioning. In simple terms, classical conditioning is “a learning process by which a subject comes to respond in a specific way to a previously neutral stimulus after the subject repeatedly encounters the neutral stimulus together with another stimulus that already elicits the response.”

The study observed a child who Watson referred to as Albert B. and who is popularly known today as “Little Albert.” Little Albert was nine months old at the time, and he loved animals prior to the experiment — particularly, a white rat. However, Watson began to pair the presence of the rat as well as other animals with the loud bang of a hammer hitting metal. Eventually, Little Albert developed a fear of animals, including the white rat he initially loved, due to the associated discomfort that came with the loud bang. Although the two stimuli were completely unrelated, their association was strong enough to elicit a response in Little Albert.

How To Use The Little Albert Principle To Boost Your Conversions

• Associate a positive emotion with your brand and products. In Little Albert’s case, the emotion associated with the presence of animals was fear and anxiety. As a result, he came to dislike animals. For Nike, this emotion is a feeling of being able to achieve your goals by using its products. Nike has carefully positioned itself as the brand to help you achieve your goals. From its trademarked “Just do it” slogan to its strategic use of the underdog character who becomes a hero in some of its ads, Nike has associated the positive emotion of achievement with its brand.
• Make this positive association obvious. Constantly repeat the association until an image is created in the mind of your users, and you’ll notice a significant increase in responses to your messages.

In Nike’s “Find Your Greatness” ad, we see an overweight boy running desperately and not giving up. The implied message is that anyone can do it, which is in line with Nike’s advertising over the decades.

The Jam Study: Giving People Too Many Choices Can Cripple Sales

In his book The Paradox of Choice, psychologist Barry Schwartz famously argues that having too many choices isn’t necessarily good for people and might have unintended effects. This holds true for conversion optimization. The effect was well demonstrated through the famous “jam study.”

Psychologists Sheena Iyengar and Mark Lepper published the jam study in 2000. The study observed the behavior of 754 shoppers in an upscale grocery store and how they responded to the choices they were presented with. The shoppers were observed on two consecutive Saturdays. A tasting booth was set up in the grocery store with jam selections on display. The first group of people were exposed to a table displaying 24 varieties of gourmet jam, while the second group were exposed to a table displaying 6 varieties of jam.

The study found that, while the table with more varieties of jam attracted more consumer attention (60% of shoppers stopped at the booth) than the table with fewer varieties of jam (40% of shoppers stopped at the booth), the latter outperformed the former in sales by a factor of 10 to 1.

That’s basically a 900% increase in conversion rate. How would you like the same?

This has a fairly logical explanation. Research shows that human attention span is rapidly declining, shrinking from 12 seconds back in 2000 to 8 seconds now. Rather than increasing your conversions, giving people more options will actually harm it by crippling their decision-making ability.

How To Use The Choice Principle To Boost Your Conversions

Offering more options sounds like a good thing, until it isn’t. Giving people more options will draw their attention; if you ask them, they will tell you that’s what they want. However, research shows that most people actually respond better to fewer options. Limit the choices you present to users, and you will more likely get them to take the action you desire right away.

Dropbox’s minimalist home page is a great example of this. It’s plainly obvious that Dropbox simply wants you to sign up, and its home page focuses on helping you do just that.

In “The Minimal Homepage,” Mattan Griffel observes that the fastest-growing companies in the world — especially in their early days, when they needed fast adoption — all had something in common: a minimalist home page. Dropbox, Quora, LinkedIn, Twitter and Pinterest are some notable examples.

The Decoy Principle: Drive Users Toward One Option

Another famous conversion optimization experiment is known as the economist pricing experiment. Psychologist Dan Ariely popularized this experiment in his book Predictably Irrational. Ariely surveyed 100 of his students at the Massachusetts Institute of Technology and asked them to choose between the following three options:

• web-only subscription ($59),
• print-only subscription ($125),
• print and web subscription ($125).

The results of the experiment were amazing: 16 of the 100 people surveyed chose the web-only subscription, while 84 people chose the print and web subscription. Nobody chose the print-only subscription.

Ariely then removed the print-only subscription, which nobody chose, and gave another group of 100 students the following options:

• web-only subscription ($59),
• print and web subscription ($125).

The findings were surprising: 68% chose the web-only option, while 32% chose the print and web option.

Why is the contrast so sharp? This is the decoy effect in action; the print-only option was introduced to make the print and web option more attractive and to make the web-only option less attractive. Seeing that the print and web option cost the same amount as the print-only option, people felt that there must have been an error and that they were getting a bargain. But this was psychology in action.

The AT&T offer referred to earlier in the section on anchoring is also a form of decoy pricing. The fact that both the 32 and 64 GB iPads were sold at the same price made the 64 GB model an instant bargain. The 32 GB model could be said to be a decoy to boost sales of the 64 GB.

How To Use The Decoy Principle To Boost Your Conversions

You can use the decoy principle to boost sales by introducing an appealing offer that costs less and has more features. This way, people will feel that they are getting a bargain and will be compelled to act immediately. When people see that package A has twice the features of package B, yet both cost the same, they will instantly develop a preference for package A.

Here is another example of decoy pricing used by Apple to sell the iPod Touch:

By putting the 8 and 32 GB iPod Touch models side by side and pricing them so closely, some users will feel compelled to select the 32 GB model without considering that competing products might be superior and cost less. Instead, they will focus on the fact that they are getting the 32 GB at a much better price. With those three models marked at those price points, and all with apparently similar features, the 32 GB model looks like the bargain!

As you can see, adding one or more purchasing options can boost conversions. However, something more fundamental is going on here. Why will many people easily hand over their money for a product from one brand, yet be reluctant to pay a fraction of that amount for a similar competing product? Let’s find out.

The Richard Thaler Experiment: Use Context To Boost The Perceived Value Of Your Product

Context influences value, which explains why people are more likely to bargain in a flea market than in a boutique. Richard Thaler conducted an experiment to demonstrate this principle. Subjects were asked how much they were willing to pay for beer. The first group was told that the beer would be purchased from a local grocery store, while the second group was told that the beer would be purchased from a fancy hotel. The study revealed that people offered to pay more for the very same beer when it came from the fancy hotel.

To boost conversions, master the art of conveying exclusivity through context. The grander people consider your brand to be, the more likely they will pay for your product, even if it is worth much less.

For example, you are more likely to pay a premium for a baseball glove like the ones shown below if you see it on a curated e-commerce website than in an online superstore. Canopy’s home page lists one glove for $250, whereas Amazon’s search results display infielder baseball gloves ranging from $9 to $45.

How To Use The Principle Of Context To Boost Your Conversions

Create a premium feel to attract premium customers. Some believe that offering discounts or competing on price is not a smart long-term approach to business. Instead, create a premium impression and you will command premium rates.

That being said, it’s not always about what you’re offering. Simple brand positioning and marketing can go a long way to improving your conversions. This brings us to our next point.

The Familiarity Principle: Use Repetition To Get People To Notice Your Offer

The power of repetition in boosting conversions is deeply rooted in psychology, and it is one of the principles advocated by Robert Cialdini in his book Influence: The Psychology of Persuasion.

A 2013 study by Jaroslaw Jankowski found that content repetition can boost conversions on websites. The more exposed people are to your offer, the more familiar they become with it, and the higher the probability that they will act on it. This is known in marketing as the rule of seven; that is, prospective customers need to come across your offer at least seven times before they take action.

How To Use The Familiarity Principle To Boost Your Conversions

Don’t limit yourself to one marketing channel. Spread your message across multiple channels, maximizing touch points, and you will likely notice a boost in conversions. Jay Baer offers a great case study. He says that his Jay Today show, a daily three-minute video, is one of his strongest content-marketing performers. After each video is published, he repurposes it into eight different pieces of useful content, which he then distributes on eight different platforms, including YouTube, LinkedIn and Medium. This helps grow his business by attracting more attention and increasing his likability, using the power of repetition.

Below is the YouTube version of one of his recent shows promoted as a linked post on Facebook, followed by the same content in iTunes podcast form.

His effective distribution of content based on the familiarity principle has been a key driver of growth for Baer’s company.

The familiarity principle also works well in advertising. Research shows that companies will consistently repeat ads to the same people because it creates in them a subconscious desire for the products.

Conclusion

Effective conversion optimization goes beyond simply changing a button’s color or making a few tweaks here and there. The trick is knowing the fundamental principles that make people act the way they do. Hopefully, the psychology studies reviewed in this article have provided you with some practical insight to boost your conversion rates.

Whether by leveraging the power of classical conditioning (the Little Albert experiment), keying into the effectiveness of decoy pricing (the economist pricing experiment) or using plain-old social proof (Milgram’s experiments), you can do much to boost your website’s conversion rates. The key is in the implementation. Take lessons from the studies referred to above, implement them on your website, and watch your conversions increase.

Other Resources

• Influence: The Psychology of Persuasion, Robert Cialdini
• Predictably Irrational, Dan Ariely
• “More Isn’t Always Better,” Barry Schwartz, Harvard Business Review

Further Reading

• Finding Your Tone Of Voice
• Redesigning With Personality
• Why User Experience Cannot Be Designed
• Creating A Living Style Guide: A Case Study

(ah, yk, al, il, mrn)