Five Must-Know Cognitive Biases That Influence Buyers

Five Must-Know Cognitive Biases That Influence Buyers

cognitive biases

One crucial aspect of marketing that many entrepreneurs tend to be unaware of, is customer psychology. There is a wide range of factors that affect customers’ and clients’ behavior. There are various biases which at times, negatively influence buyer outlook, sometimes even tip it in the favour of your competitors. The most common bias that customers usually have, the cognitive bias.

What is Cognitive Bias?

A bias is a set of beliefs that stop a person from taking a neutral, objective and at times, a fair decision. Cognitive biases, as the name suggests, make people make mistakes in cognition, i.e. understand what lies in front of them. People, affected by their own cognitive biases, decide against a businessman due to their memory, past experiences, trust in other people, etc.

Let us take a look at the most common biases people hold and how can they be used to convert leads into sales:

Confirmation Bias

The confirmation bias prevents people from making decisions or believe things which they already do not agree with. For example, if people believe, “Cheaper is Worse”, then they would tend to believe that a lower cost of things would result in bad quality. Moreover, they would readily believe someone who would say the same to them, as this would confirm their beliefs. This kind of bias is very common globally, and no matter how impartial one tends to be, they would ‘prefer’ to support what they already believe in.

When making a pitch, try to understand what confirmation bias your prospective customer has and mould your pitch accordingly. Even when not pitching your business to prospective clients, making people believe that they are doing the right thing when choosing you would work in your favor. No one free from bias; we just need to cater to it so that it does not become a negative thing while being good for business.

Loss Aversion Bias

People hate losing. No one likes a loss and people are at times, terribly scared of making a loss while doing transactions. It has been noted that a buyer would rather not make a purchase if it means they might lose money. A loss of a few Dollars is more frustrating than a gain of the same amount. If your pitch doesn’t make people believe that they are making the right expenditure, your chances of getting a conversion become low.

One excellent way to combat aversion loss is to offer a discount. This reduces the cost in the mind of the buyer and gives them the sense that they saved some money. Another way is to give them a free trial. When the free trial period ends, the customer would tend to believe they would lose out on the very good service they have been getting and are more likely to start paying and continue taking your services.

Anchoring Bias

Again, as the name suggests, people tend to ‘anchor’ their opinion based upon the very first review they get about a business. In other words, the first impression matters a lot. And oftentimes, this impression comes from others. In this age of the internet, people post reviews almost everywhere, including Facebook and Google. If you can get your happy customers to put up a byte in your favour, or write a great review which appears on top, this would make anyone new looking you up impressed.

Even if they have other biases that you can deal with later, getting good reviews where it matters most takes one worry off your hands.

Familiarity Effect

There is an age-old saying, “better the devil you know than the devil you don’t.” This aptly describes people’s fear of the unknown. Now, this doesn’t mean people view a new business as evil but are more likely to purchase goods and services from well-known businessmen and companies. This is one of the key reasons, many businessmen spend a very good amount of money getting publicity for their business.
As branding goes on and you build your business reputation, people will eventually come to you themselves.

Sunk Cost Bias

Most people tend to value time and effort more than objects. E.g. a housewife using a refrigerator for 10 years is less likely to be convinced to purchase a new one when repairs come up. Another example we would take is that of a car; the longer you have one, the more difficult it is to let it go. This is because of the time and effort that has been spent behind keeping it working, functional and looking good.
The same concept can be applied to customers as well, offering your customers a service for a long time will eventually make them less likely to give up on you, if it means starting from scratch with another businessman.

In a Nutshell

Biases prevent people from making decisions they don’t agree with. And this is the key reason why understanding them is important for business health. While spending money on posting on the internet, giving out advertisements etc., this aspect of marketing, at times, tends to get lost.

No one is free from bias and that is not necessarily a bad thing. Our biases keep us from making bad deals with other businessmen and also serve to protect us from what would otherwise be bad for business. From a customer’s perspective, their biases are aimed to protect them from wasting money. By understanding these biases and working around them to make sure customers get the best goods and services, a smart businessman continues his journey towards a successful and fruitful business.

If you are looking for the right solutions for your small or medium business, or even substantial and appropriate advice or mentorship, click here

Also Read: Top lessons businesses must learn from COVID 19 to grow post-pandemic

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