How to use the anchoring effect to win more business

By BenAmbridge

04.10.2016

  • The numbers you use on your website can affect your customers’ frame of reference—big numbers mean they think big, whereas small numbers cause the opposite

A recent survey found that the average person working in the UK conversion optimisation industry earned an average of £52,000.1
Hold that thought.

Now, please take a moment to guess the height of Mount Everest.

We’ll come back to your answer, and what it means, in a few moments. First, I’d like to talk briefly about the field that I work in: psychology.

Problems with replicating psychological experiments

It’s fair to say that very few academic psychology articles cross over into the mainstream media. But last year, one particular study made headlines in The Guardian, The New York Times, and The Daily Mail.  It wasn’t good news for psychologists.

In the study, 300 scientists re-ran 100 of the most celebrated psychology experiments to see if they could replicate the original findings. It turned out that, on the whole, they couldn’t. In fact, around two-thirds of replications did not support the findings of the original study.

Now this is pretty bad news for those of us who—like the psychology team at Endless Gain—are in the business of translating findings from academic psychology into strategies for conversion optimisation. If we can’t rely on the published findings—even those in top psychology journals—we’re in trouble, right?

Actually, we’re not. This uncertainty has a flipside.

The good news is anchoring is replicable

If, despite the fact that psychology findings in general seem rather flimsy, one particular finding holds up under this scrutiny time and again, we can be pretty sure that it is real.

Now, back to Mount Everest. Its actual height is 29,000 ft. or 8848 m.

But, if you’re like most people, your guess was probably a bit higher than that. Why? Because when I planted £52,000 in your head—even in a way that is obviously completely irrelevant to the height of Everest—I temporarily shifted your frame of reference; your sense of what a “big” number feels like.

Conversely, if I’d told you that just 2 per cent of people in conversion optimisation work for governments or nonprofits,1 you would most likely have significantly underestimated the height of Mount Everest.

As you’ve probably guessed by now, this “anchoring effect” (so called because the initial number “anchors” your frame of reference) is one of the few psychological findings that has —so far—held up under replication.

When another large-scale replication project examined the anchoring effect, the researchers found that it held up better than any of the other findings they were investigating. In fact, they found that—if anything—the original study significantly under estimated the power of the effect.

Pay attention to all the numbers on your website

The robustness and size of this effect means that you need to pay attention to every single number that is floating around on your website; no matter how irrelevant it may seem.

For example, suppose your street address happens to be “3 London Road”, and you display this somewhere on your site. This seemingly innocent decision risks anchoring customers’ frame of reference to the lower end because the number 3 will anchor them, such that a £10 product feels expensive.

Similarly, you should think very carefully before displaying an empty basket with the text £0.00 (e.g., www.johnlewis.com), which anchors customers’ frame of reference as low as it can go, potentially making any price feel expensive.

Of course, you can also use anchoring effects to your advantage. Displaying an irrelevant number that gets customers thinking in the high hundreds (e.g., “753 sold this week”) could make a £100 product feel like a bargain.

Don’t rely on what others say, do your own tests

But beware. Perhaps the key lesson from psychology’s replication crisis is that you shouldn’t take anyone else’s findings at face value. Instead, run your own tests!

This is something that conversion optimisation companies don’t do enough of (43 per cent run just one or two a month1), but it is absolutely vital. Every website is different, and only by running your own tests, can you find out whether things that should work according to psychological theory are working for you and your site.

Reference

1 A Birkett, “The 2016 State of Conversion Optimization Report”, ConversionXL (2016).

Read on to…Testing your value proposition is one of the best things you can do to increase conversions

BenAmbridge
Hi, I’m Ben. I’m a Reader in Psychology at the University of Liverpool and I lead consumer psychology at Endless Gain. I’m interested in how research findings from academic psychology can be applied in our everyday lives as consumers. And, importantly how psychology plays an influential role in ecommerce. I write a weekly psychology column for The Observer, and my book Psy-Q: You Know Your IQ - Now Test Your Psychological Intelligence has been translated into 15 languages. Check out my TED talk, "Ten Myths about Psychology, Debunked".

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