Episode 35 - Behavioural Science II

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📰 Top Story: Behavioural Science

My brand new CRM Marketing course is getting rave reviews, particularly the behavioural science section. In it, I highlight 32 different behavioural science techniques you can use to maximise the impact of your retention activities at moments of truth (plus much more!).

In this episode, we dive into three behavioural science techniques covered in the course. 

The Endowment Effect 

The endowment effect is very familiar to brands like Apple and IKEA. 

Essentially, it is based on the concept that people value things they own more highly and demand more to give up an object than they would pay for it. 

Apple knows this, so its open-plan stores encourage customers to touch and feel the product. When you do, you imagine what it feels like to own the product, which psychologically brings you closer to purchasing it. 

IKEA knows this, too, because if you have to build the item you purchased, you feel a greater sense of pride in ownership of the item. It's more yours. 

In the context of retention, brands should use language that makes them feel like they are giving up something they own if they wish to cancel. Words like ‘end my membership’ instead of ‘cancel’ can stop and make customers think before deciding to cancel a subscription.  

You can also use it to drive upsells. Rather than directly prompting the upsell with an offer, you can tell customers you have left a credit in their account to be used against a purchase. This makes the customer feel like they ‘own’ the discount and that not using it would be a waste. 

The Choice Paradox 

We tend to think that more choices are better, but too many choices can lead to effortful decision-making and less satisfaction with our decisions. 

Netflix acknowledges this, and too much doom scrolling is a significant driver of churn. That's why they focus so much on personalisation.  

But too little choice results in us not feeling in control. 

For example, in a signup flow, going from one subscription option to three moves the customer from ‘Do I like it or not?’ to ‘Which one do I like best?’. 

More than 3-4 options, plus variable contract terms, require effortful decision-making and will increase the proportion of customers who drop out.  

The Exclusivity Principle 

Making people part of an exclusive group makes them more likely to act. Tools like

• VIP codes / special discounts positioned exclusively for them 

• Access to exclusive phone numbers, communities, features 

• Exclusive channels, e.g. email-only or landing page-only offers that disappear  

• Language like reserved for you, secret, sneak peek, the untold story, what they don't want you to know, handcrafted, for the 1%, pre-approved, not available to the public, be among the first etc. 

• It is also why loyalty tiers often go with desirable and valuable names like platinum or gold  

The point is that subtle changes in language, user experience, product design, and offer construction can have a huge impact on retention success and, ultimately, the success of your business. 

Access my CRM Marketing course to explore 32 different behavioural science principles and much, much more. It is currently available with a Valentine's Day promotion, but be quick, the offer expires on February 15th.  

Until next week, 

Tom 

Do you need help with Customer Retention?

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