Predictably Irrational Web Marketing Strategies

I'm reading a book called "Predictably Irrational", by Don Ariely. It's about the hidden, irrational forces that shape our decisions, and it's a great read.

There are a few interesting case studies in this book that can be applied to web marketing. I'd like to look at two aspects which might help those of you involved in e-commerce.

Relative Pricing Structures

The first experiment looks at relative pricing structures. How do you structure your prices in order to achieve higher returns? Often, it can be a simple case of making an offer no one in their right mind will accept.

Huh?

Here is an example.

The Economist presented readers with the following subscription offer:

1. Internet only subscription for $59
2. Print only subscription for $125
3. Print and Internet subscription for $125

Notice something odd about option 2 and 3? Why would anyone take up option 2?

They wouldn't. And that's the point.

It turns out humans rarely choose things in absolute terms. We work out how much things are worth based on what other things are worth and compare them. In the above example, the "Print and Internet" offer is better that just the print offer. The "Internet Only" offer might be better than both, however there is no point of relative comparison for that offer. The relative comparison is made between offers 2 and 3, which makes option 2 look poor, and option 3 look like a steal. Ariely ran real tests to measure take-up, and sure enough, most people took option three.

To illustrate how powerful this pricing method is, let's remove option 2.

1. Internet only subscription for $59
2. Print and Internet subscription for $125

In this example, people are faced only with a cheap option and an expensive option. The point of comparison is largely about price. You can guess what option most people chose. They selected the cheapest option, as price becomes the key differentiator.

So, try splitting your offers. Create offers that are valuable compared to other - deliberately substandard - offers.

The Effect Of Expectations

In another chapter entitled "The Effect of Expectations", Ariely asks why the mind gets what it expects, and not necessarily the reality of a situation.

For example, Ariely conducts an experiment whereby researchers offer students a free cup of coffee, along with some rather unusual condiments, such as cloves, nutmeg, orange peel, anise and sweet paprika. Not the sort of thing you'd likely put in your cup of coffee! The students were asked to rate the taste of the coffee, and specify the maximum price they were prepared to pay for a brew.

From time to time, the researchers made one subtle change. They placed the condiments in a range of containers, from rough styrofoam cups, through to beautiful glass-and-metal containers. The condiments were never actually used, however the mere appearance of the serving bowls had a curious effect. When the condiments were placed in luxury containers, the coffee drinkers were more likely to say they liked the coffee, and whats-more, they were prepared to pay a lot more for it.

If people thought the coffee was upmarket, they convinced themselves the coffee was upmarket. The reality was that the coffee never changed. The coffee was of the same quality throughout the experiment.

Self-evident, right? So, can this theory be directly applied to web marketing?

Essentially, we're talking about branding. There is the logical first step of using upmarket web design in order to help convince people your product or service is more desirable. There is a trap, however, and this is the reason I think this case study needs to be adapted for the web environment. When it comes to e-commerce, upmarket, glossy sites do not necessarily result in higher sales. There are various reasons for this, but I think mainly it has to do with the level of trust. A slick website can sometimes feel impersonal, and people crave a personal feel on the web.

Trust, not slick graphical design, is the equivalent of the elaborate serving bowls.

In order to raise expectations, consider raising the level of design, but only if you do so without losing trust. Achieving a fine balance between excellent usability, trust metrics and excellent graphic design is a great target to aim for.

Consider the converse. Have you bought from sites that are unusable? Plastered with over-the-top Adsense? Such sites are less desirable as expectations are set low, primarily because of the low level of branding. The buyer is expecting "cheap". That's probably the only reason people buy from such a site.

Such sites are the web equivalent of broken styrofoam cups, compared to the elegant serving bowls.

Have your say

What do you think? Have you got any "irrational strategies" to share?