I want to show you a bit more about how to persuade people to buy and why some of the common methods we see out there are not working.
This is cutting edge science…
There are some very misleading myths in modern psychology and the self-help industry is inadvertently perpetuating these myths. It seems that much of what we believe about popular psychology is not based on actual scientific research — that is, studies using proper rigorous scientific methods that include control groups, placebos and so on that can show whether a particular effect is real.
Many of these myths apply to business, whether it is your own personal effectiveness which dictates your level of success, or the way consumers behave — either way psychology has a big influence. To be ‘in the know’ about the cutting edge of scientific research into modern psychology can put you way ahead of your competitors in terms of attracting customers and making sales!
Professor Richard Wiseman conducted a review of the scientific literature on persuasion and how people actually react to rewards and incentives. The results may surprise you!
Rewards and incentives
The popular belief is that offering rewards and incentives is the best way to persuade customers to purchase from you. It seems that the bigger the reward, the better. We are told that we should offer bonuses and freebies worth tens or hundreds of dollars, as well as huge discounts on products with the aim of persuading people that they are getting good value for money and making enormous savings. This is the popular belief — the scientific evidence says otherwise…
Why rewards fail
Professor Wiseman reviewed the scientific literature on persuasion, trawling through hundreds of research studies and realised that rewards are actually pretty ineffective and can actually work against you when you’re trying to make a sale. It turns out that dangling the biggest carrot you can in front of the noses of your customers is not the best incentive to buy, after all. This is completely counterintuitive, but the evidence is there.
In one classic study by Stanford psychologist Mark Lepper and his colleagues found that groups of children offered rewards for their drawing participated significantly less and were less enthusiastic than children who were not offered rewards. It seems that children who were offered a reward associated it with being persuaded to do something they didn’t like — if they had to be rewarded to do something then they reasoned that they must not like it. This effect has been replicated many times in many different studies and the conclusion is clear — if you reward people for doing something they enjoy, the reward reduces the enjoyment and de-motivates them. By offering a reward, you can effectively transform play and enjoyment into work.
Does this only apply to activities that people enjoy? It seems not.
You would imagine that offering rewards would encourage people to perform tasks they dislike, yet studies have shown that excessive rewards can actually have a detrimental effect on the attitude of the people doing the tasks. This effect has been replicated time and time again.
Carrots don’t always work
One study by Richard Wiseman asked two separate groups of people to take part in an experiment in which they spent an afternoon picking up litter in a London park. They were deceived as to the actual aim of the study, so as not to bias the results. One group was paid handsomely for their time and effort, while the other group were only given a small amount of cash. After an hour or so of backbreaking and tedious work, everyone was asked how much they enjoyed their afternoon’s litter picking.
While you might imagine that the people who were paid well would feel more positive than the group who were paid a paltry amount, the amazing results were exactly the opposite. The group who were paid well rated their enjoyment as 2 out of 10, while the group who are poorly paid rated their enjoyment as 8.5 out of 10, a very significant result. It seems that people that had been paid well thought that since they had to be paid a large amount, they must dislike tidying the park and subsequently did not enjoy the work. In contrast, the people who received a small amount of money thought that they must enjoy helping to tidy the park because they did it for very little reward.
According to these studies and many others that have replicated the same results, it seems that regardless of the nature of the rewards or the tasks involved, those who were offered a large carrot tended not to perform as well as those who didn’t expect a reward.
Some studies showed a short-term boost when the reward is offered, but over the long term, rewards tend to destroy the very behaviour they are designed to encourage.
Implications for business
You might be wondering what on earth picking up litter in the
park has to do with the behaviour of consumers.
Well, when we have to offer our customers huge rewards to get them to buy our products, we are sending the message that our products are not good enough and people won’t buy them unless they are rewarded for doing so. We are effectively downgrading our own products. Consumers know that low-end products are often discounted — it’s the philosophy of pile ‘em high, sell ‘em cheap — yet products that are genuinely high-quality and worth the asking price are rarely seen in giveaway sales. People subconsciously make this association and when your products are permanently being offered at a knockdown price with high value freebies thrown in for good measure, you are inadvertently de-motivating people to buy from you.
So what does work?
If the promise of a reward does not work to motivate people to take action and buy from you, what form of incentive will persuade your customers to buy?
From Professor Wiseman’s scientific review, it seems that to encourage people to do more of something they enjoy you should try presenting them with an occasional small surprise reward after they have bought from you. If you want to encourage people to do something they do not enjoy, then you should offer a realistic but not excessive reward at the start, followed up by feel-good comments that encourage them to pursue the activity.
As far as getting people to convert from visitors to customers, this translates as offering small, realistic rewards and incentives, rather than the excessive bonuses, discounted prices and freebies we’ve been led to believe will work.
Give rewards as a surprise after they have bought from you — perhaps money off vouchers or a free report as a thank you for their purchase. This can help to cultivate long-term repeat customers, which is the basis of a successful business and where the money really is. Think of your favourite supermarket, these are some of their favourite strategies. You could change anytime you like, but you like your supermarket, it’s familiar, friendly, they seem to look after your interests and the quality almost always lives up to your expectations, if not, you can trust them to sort it out, right? Now think about how many times you buy from them. How much do you spend a year with them? If you spent just $300 a month that’s $3,600 a year…just 277 repeat customers means sales of $1 million. Try this exercise next time you are at the supermarket waiting to pay. Count how many people are standing at all the tills, see how long it takes to pack and pay for your groceries. Multiply how much you spent by the amount of people you counted at the tills. This is how much they are selling during the time you spent at the till. Does it make sense to you now?
I reckon my not so big local supermarket is taking more than 1 Million a week from repeat customers.
Now, don’t forget about those feel-good comments that can motivate and encourage people to remain loyal to you. Avoid being too cheesy but make sure you thank your customers and let them know how much you appreciate their business.
Here is a summary of those persuasion techniques:
• Too many large rewards and incentives de-motivate people and devalue your products
• Offer small, realistic rewards and incentives, such as 5 percent off or 3 for 2 offers
• Give surprise rewards after people have bought from you to cultivate long-term customer loyalty
• Don’t forget to thank your customers and let them know you appreciate their business
Wiseman R (2010) 59 Seconds: think a little, change a lot. Pan books, London