Heuristics: Reducing Consumer Decision Friction
Often, the under-appreciated advantage that successful brands and marketers have is an understanding of behavioral psychology. A critical facet of behavioral psychology is the study of heuristics. Think of a heuristic as a shortcut our brains use to make decision-making processes easier. Heuristic principles are cognitive biases that reduce decision friction— turning more extended decision-making processes into more nominal ones.
Heuristics can influence purchasing decisions ranging from buying a pack of chewing gum to purchasing a luxury yacht. Influencing buyer decisions for any of the three decision-making processes can be extremely difficult. But the more you understand about the decision-making process of consumers, the more of an impact you can have on reducing the friction between discovering your product, purchasing your product, and having brand loyalty. Consumer heuristics are so important, leveraging them can turn even the most extended decision-making purchases into a limited decision-making purchase. Likewise, using consumer heuristics can turn a limited decision-making purchase into a nominal one.
Let’s take Apple computers as an example.
This is where it gets interesting. If a customer were in the market to buy a brand new computer, and you had to categorize that decision-making process into one of the three examples a: nominal; b: limited; and c: extended; which would you choose?
From the last article on whether or not keto certification was worth it, you may have answered: “extended.” This may be due to the cost of the product and the perception that this is a high-involvement purchase. But here is where you, and perhaps even your marketing professor were wrong. The real answer is: it depends on the customer, and it depends on the *brand*.
You see, Apple brand loyalty is so high, that most Apple users wouldn’t even consider an alternative brand, regardless of cost or new features offered by a competitor. In fact, the decision process can be so limited that the Apple loyalists only decision-making thoughts may be “Laptop or Desktop?” Or “13 inch or 15?” And, “Do I really need that new iPhone, or am I happy with the iPhone that I already have?”
According to marketing firm Fluent, Apple has one of the highest loyalty rates in the world— a whopping 91% loyalty score. But the customer satisfaction rate was only 85% . Nevertheless, imagine what it would take to get an Apple-brand loyalist even to consider a Dell computer, let alone walk into a store to make that brand switch. It’s nearly impossible, even if the consumer satisfaction wasn’t quite as high.
This is why achieving brand loyalty should be the ultimate goal for every brand, because the decision making process for products both low-cost and high-cost can be limited or in some cases nominal. In other words, the ultimate goal for each marketing effort should always be to help customers make their decision-making process more limited, or as nominal as possible, to favor their brand.
The real question, is “How?” How do you get people to adopt a new product or idea? How do you get consumers to choose your product first? Well, that is where heuristics come in handy. Apple has leveraged heuristics to significantly reduce the amount of time that it takes for a consumer to choose their products over the competition, no matter what kind of product they are selling.
As a brand, you can leverage human behavioral psychology just like Apple. Let’s go over some Heuristic Techniques.
“Human judgments are limited by available information, time constraints, and cognitive limitations” Herbert A. Simon, Cognitive scientist.
A heuristic is an approach to problem solving or self-discovery that employs a practical method that is not necessarily perfect, but sufficient for reaching an immediate goal. Think of heuristics as mental ‘short-cuts’ to reduce more complex processes into simpler judgmental operations to reduce decision friction. They offer efficient and most-often accurate solutions to recurring problems. Decision Heuristics are a brand’s best friend and can turn even an expensive and extended decision-making process into a nominal one, such as in the case of Apple computers.
To compete for a limited number of consumer dollars, companies use a variety of marketing and advertising tactics. Although there may initially appear to be a plethora of different tactics, according to leading social psychologists, effective tactics are rooted in a small number of persuasion principles . The six scientifically-validated psychological principles that appear to be deployed routinely in long-prospering, successful businesses include reciprocation, liking, authority, scarcity, consistency, and consensus (social proof.)
Social Proof Heuristics
Social proof is a term coined by Robert Cialdini in his 1984 book, Influence, which describes a psychological and social phenomena where people are influenced by a third-party entity to take a specific action. Social proof occurs most often when a person is in a situation where they are uncertain of what to do or what to buy and looks for clues from third-party influence to sway their decision-making processes.
For example, if you’re browsing a website and see a testimonial from an industry expert you respect, that’s a form of social proof. When you’re looking at the pricing page of service that you are unfamiliar with, and you see that an industry giant you are familiar with already using the tool, that’s also a form of social proof. If you sign up for a product demo because you see the tool solved the exact problem that you have for a similar company, you were influenced by social proof. If you see a third-party certification label like the keto certified logo and buy a product, you were influenced by social proof.
Essentially, social proof functions by borrowing third-party influence to sway potential customers, and increase trust in a product or service. In marketing, the use of third-party social proof influence is a well-known approach to increase the effectiveness of product packaging, ads, and sales pitches. Social proof is widely used in marketing strategies and consistently appears on a short list of proven persuasion tactics.
Social proof marketing is effective because it helps ease the mind of worried consumer quickly and effectively, helping decision making processes move from extended to limited, limited to nominal, and nominal to ultra-fast. The persuasion that occurs from offering social proof generally work on principles of heuristic cues. While the heuristic tendency to look for third-party certifications on a product package may periodically lead to a product that did not have the taste or consistency qualities that could turn a consumer into a brand loyalist, following this type of heuristic will usually lead to much better choices than choosing at random, leading consumers to rely on them for decision-making processes. Relying on third-party certification heuristics helps individuals make faster decisions, and improves trust signaling for the brand. Thus, third-party certifications like keto certification are an effective type of social proof marketing.
Food Tribe Heuristics
A tribe is any group of people, large or small, who are connected to one another, a leader, or an idea. For eons, human beings have been seeking out tribes. These tribes may be religious, ethnic, economic, political, or even musical. It’s simply a function of human nature. Now the Internet has eliminated barriers of geography, while influencers, blogs, and social networking sites are helping existing tribes get bigger. But more importantly, these tribes aren’t just mere crowds— they are connected.
Food tribes are interconnected communities that share preferences regarding the types of foods they eat, and the ideas and brands they support. With the growth of social media, these tribes have become more cohesive, to the extent that many have formed personal identities around their food tribe.
The Paleo and Vegan, and now Keto Food Tribes have been an excellent example. It should be no surprise that consumer and industry analysts have found that members of food tribes are beginning to prefer alternative on-pack claims and third-party certifications that validate the “inclusiveness” of a product within their personal eating philosophy/food tribe . Appealing to these food tribes is a function of another heuristic principle known as “psychological kinship.”
Psychological Kinship Heuristic
Evidence suggests that the concept of “similarity” between people may be defined by genetics, social identity, attitudes, and values, and also has the potential to influence an individuals purchase behaviors . As such, psychological kinship is another heuristic that inspires increased trust, increased sharing, and increased purchasing behavior between individuals and brands who display ideological similarities— such as being a part of the same food tribe. Such cues, along with repeated positive interactions, can lead to enhanced trust, “psychological kinship,” and brand loyalty.
Brands that signal tribal connection with Paleo or Keto Certification logos are forms of social proof, but also enhance trust signaling with “food tribe” kinship heuristics. This type of heuristic influences the decision-making process and can turn a limited-decision purchasing into a nominal one. Customers choose brands that they trust over brands that they don’t.
Conflict of Interest Heuristics
Credence quality is a quality that is difficult for customers to evaluate when examining a product or service. For example, it would be difficult to know if an unfamiliar coffee brand was fair-trade, organic, or gluten-free without deeper investigation unless it was indicated directly on the packaging.
To help consumers with their purchases, and to indicate these quality attributes, some brands simply add their own claims on the product packaging to persuade buyers of the legitimacy of their products. While some claims help, such as “no-added-sugar” or “made in the USA” can be persuasive labels, consumers often believe that the claims made by the brands themselves to be illegitimate, due to financial conflicts of interest.
According to the Nielsen’s Global Health & Wellness Survey, nearly half of the people in the United States and Canada — 48%— distrust manufacturer’s claims on their food labels and packaging, and the same report suggests that consumer trust in food products declines steadily every year. It also reports that 43 percent of Americans believe that brands are purposefully misleading consumers as a way to sell products. And that 44 percent of Americans are skeptical of the first-party health claims purported on food labels made by the brand . However, to solve the conflict of interest concern while increasing transparency, positively improving consumer trust in a brand, and promoting faster decision making processes in low-investment environments such as a grocery store, the best strategy to get a customer to choose your product first is to leverage heuristics.
The social proof, conflict of interest, and food tribe heuristics may all be leveraged with a third-party certification like paleo, or keto certification. Certifications can quickly and effectively ease the mind of the worried consumer, reducing decision friction, and improving product differentiation to ensure that the consumer chooses your brand over your competitor. It’s no wonder that at the point of sale, third-party certifications like Keto Certification are worth it, because they have such an impact on sales.
Third-Party Paleo or Keto Certification Impact on Price and Sales
Brands differentiate their high-quality products from competitors using various trust signaling strategies. These signaling strategies include brand reputation, third-party certification, warranty, and information disclosure. Of these signaling strategies, studies suggest that third-party independent certifications send the strongest trust signals, bar none.
Studies found that on average, third-party certified products were sold for more than 50% otherwise equivalent products, and could have up to a 55% price differentiation impact between certified and non-certified products. This same study found that reputation only impacted price differentiation less than 3% and that warranties had no effect on the price of goods, whatsoever .
In other words, brands leveraging the social proof, food tribe, and conflict of interest heuristic with third-party verifications like the paleo and keto certification during the purchase decision process were able to influence consumer buying behavior quickly.
And in the long run, it pays off tremendously.