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Transcription
Module 5, Lesson 10
Start & Scale

Marketing Psychology

In this lesson, I'm going to teach you about some of the fundamental principles of marketing
psychology and how we can use certain psychological triggers to get consumers to react in a
specific way. The reason marketing psychology is so important is that people are fundamentally
hardwired in the same way. We're hardwired for survival. A quote I read in an article in the
Harvard Business Review recently basically said that you can take the person out of the Stone
Age but you can't take the Stone Age out of the person.

When we receive particular signals, they trigger an emotional response that often leads to
performing a certain action which fulfils a particular purpose. When you're threatened, you feel a
sense of danger which leads to fear which prompts an escape which hopefully leads to safety.
When we gain something valuable we react with joy. If we lose something valuable, we might feel
abandoned and react with sadness and then we might figure how to get it back and move on.
When were included, we feel a part of the group which leads to trust. When we're excluded, we
want to be included again and we'll do more than we were previously willing to do until we get it
back again.

So, inclusivity leads to trust and exclusivity might lead to higher perceived value and the list goes
on. The unexpected will lead to paying attention. Obstacles lead to progress. Newness leads to
excitement. Mystery or teasing leads to anticipation and hopefully satisfaction. So, we can use
these basic human instincts to evoke certain emotions in people that lead to desired actions. So
ultimately, once we have an idea of what these triggers are then we can use them to our
advantage as marketers to within reason persuade people to do what we want.

One of the books that I've read that has shaped my thinking around marketing the most is
Influence the Psychology of Persuasion by Robert Cialdini. If I hadn't read this book, there's no
way that we would have adopted our limited selling model at the 5th for example. Cialdini had
seven psychological principles of persuasion. So, the first was reciprocity. The second was
commitment and consistency. The third was liking. The fourth was authority. The fifth was social
proof. The sixth was scarcity and the seventh was unity.

So, that I can go into some real detail here, I'm just going to pull out the three most powerful in my
experience which are reciprocity, social proof and scarcity. So that we can go deeper on these. I'd
strongly suggest reading up on the others though which you can find the links to in the resources
section of this lesson. So, let's start with reciprocity which is the principle that when somebody
gives us something we feel compelled to give them back something in return. So, if you turn this
on its head, if you want something from somebody, you need to give them something first. So, it's
about incentivization and that's the best way to create a sense of reciprocity.

So, if you want somebody to do something for you, for example sign up your wait list, it's going to
seriously help if you're able to offer something in return. That incentive might be unlocking free
content like an exclusive ebook or challenge, once they enter their email. This doesn't cost you
anything monetarily just the time that it takes to create the resource. We did this at skinnyMe Tea
to convert tens of thousands of our social followers into email subscribers. One of our best
converting pieces of content was our 14-day Free Booty Challenge which drove over 8,000 email
signups in a single day.

And then we set an automated email series to convert the people that signed up for this challenge
into our customers by providing some customer results photos of how in combination with a 14
day teatox they were able to achieve the following results. A great Shopify app that you can use to
do this is called Justuno. So, unlocking free content can be really powerful. Another thing that you
can unlock is a free gift with purchase. And this might be a physical or digital product. An app I
love for this is called Ultimate Special Offers because you can set it up so it automatically applies
the gift with its retail price struck out and replaced with zero dollars at checkout.

We have this set up so that whenever you purchase our 14 or 28 day detox programme this is
automatically applied at checkout which surprises and delights customers at this critical stage of
the buyer journey. And since installing it our overall store conversion rate has risen by over 2%.
This gift can of course be another product on your store. For example, it's SkinnyMe Tea our
strawberry tea strainer or at The Fifth we often did a free watch strap for example. It could even
be customer merch for your brand, like a branded tote bag, stickers or hat for example.

So, unlocking free content or a free gift with purchase are two examples of how to use reciprocity
in your marketing. Moving on to the next psychological trigger, social proof which is basically our
tendency to rely on the opinions or actions of others to inform our own. Social proof is important
as it's one of the fastest ways to scale consumer trust and you need to earn a consumers trust
before they're going to get their credit card out and buy from you.
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Transcription
Module 5, Lesson 10
Start & Scale

According to Nielsen, 83% of consumers trust product recommendations from their friends and
family which is far higher than trust in branded content which I think sits closer at 30% across the
board. So, social proof can be anything that shows the popularity of your site and products. I often
call social proof, people focus content and it can cover a whole range of things from customer
reviews and testimonials, so user-generated content for example, as well as other forms of social
proof like good press, five star reviews, the number of people on your wait list, influencers using
your product and so on.

So, what we're gonna show our potential customers is that people are buying from our store and
liking our brand and having a good experience. So, how exactly can we get this message across?
In a post from the Shopify Hong Kong blog they identify that social proof can be broken down into
four main categories. Popularity, public praise, endorsements from trusted experts and proof of
demand. So, for popularity we wanna focus on quantifiable signs of your brand's popularity. If
you're just starting out, you may not have many of these yet but they're something to work on over
time.

So, some types of social proof that fit under this category include the number of likes, comments,
views and shares on social media posts, viewership numbers on live broadcasts from Facebook
or Instagram or sharing the number of subscribers on your email list to get your audience to opt-in
for example. When it comes to public praise, peer driven public praise will be your most effective
selling tool. In fact, according to a 2017 survey, 85% of customers actually trust local online
reviews as much as personal recommendations and significantly more than marketing materials.
The main types of public praise that we want to focus on will be customer reviews or testimonials,
ratings and user-generated content.

We've already spoken on user-generated content in detail across a couple of lessons but you
wanna make sure that you have permission from your customer to share this content. A great
place to display your user-generated content is a social proof on your product page of your
website and you can use an app like Yotpo to connect like Alya Skin has. In fact, I'd use the Alya
Skin website as an example of how to integrate social proof into your brand as a whole. When it
comes to reviews and ratings, they can be collected and displayed on your site through an app or
in open forums like Facebook, [Link] or Trustpilot.

Both product reviews and general company reviews will benefit you and customers will trust what
their peers have to say. At SkinnyMe Tea we have over 300 customer reviews on both our 14 and
28 day teatoxes which is sitting at around a 4.8 star rating. A lot of brands edit out all of the
reviews below five stars on their website app but I think it's more authentic to leave some of them
in unless they're totally unreasonable. Moving on to endorsements from trusted experts. These
could be industry experts like a dermatologist if you're a skincare brand, a dentist if your teeth
whitening company or a doctor if you're a supplement brand for example.

This is also where influencer endorsements can come into play. And we have a whole module
coming up soon on influencer marketing. These could be from macro influencers who are known
as leaders in their niche or community or from micro influencers for a far more authentic
grassroots approach. And endorsements can also come from publications in your niche your
industry. So, any good PR or mentions that you've received. A lot of sites display these social
proof badges on their homepage, often right after their initial lander image that often features their
EVP.

And finally we have proof of demand which shows that not only a customers interested in what
you're saying, they're actually buying from you. At SkinnyMe Tea we do this by breaking down
certain stats about our brand for potential customers. Like the fact that we've had over 350,000
customers worldwide, that we've sold over 11 million cups of tea which is more than enough tea
to fill an Olympic swimming pool and even if we've helped our customers lose over a combined
1.5 million kilos. You can also with the help of apps and tools automatically make the following
information visible to site followers to establish social proof.

So, things like number of items sold which may be reflected in sales calendars or simply by
showing customers when supplies are low or sold out, harnessing another persuasive tool known
as scarcity which we're covering next. Individual customers who have recently purchased a
specific product. Number of customers currently viewing your site or a specific product page and
the number of customers who are on your wait list or are email subscribers.

We're going to give you a whole lot of different examples of different brands using social proof to
their benefit and some website apps and plugins that you can use to do this too, even if you're just
starting out. So, finally we're moving on to our last psychological trigger, scarcity which states that
people are motivated by the thought they might miss out on an opportunity.
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Transcription
Module 5, Lesson 10
Start & Scale

This response is often referred to as FOMO or fear of missing out which ties in to the fact that
when someone tells you that you can't have something you might just want it more. Basically, it
becomes a challenge which triggers a release of dopamine in the brain which is a
neurotransmitter that helps to control the brain's reward and pleasure centres. And it's activated
when we experience something new, exciting or challenging.

When it comes to introducing scarcity to your brand you want to show that things are only
available for a limited amount of time or that they're nearly out of stock. If they're nearly out of
stock, you might wanna highlight this with messages on your product page or if you have an on
store wishlist, something like only 10 left or simply low in stock. In terms of being available for a
limited amount of time this could be something like a flash sale with a countdown timer on the
discounted prices or displaying that this product is limited-edition and once sold out it won't be
back in stock. At the 5th we're able to do this quite successfully.

Our entire model was structured around the scarcity model, in that we've only sold our watches on
The Fifth of each month for five days. Not only is the time limited that you can shop but of course
the stock is also limited and would often sell out which was creating a real need to sign up during
the month to be notified when we're back in stock and to shop as quickly as possible. This limited
selling model increased demand through scarcity as well as increasing perceived value through
exclusivity. While most designer items are exclusive by way of a large price tag, we were able to
be exclusive by time and limited availability rather than price.

When I exited The Fifth my co-founder actually decided to start selling everyday which definitely
isn't a decision that I would have made for the brand. And that's because in my eyes at least, it
was our model that made us different and not necessarily the products themselves as much. Our
model was our UVP. And this is something that my boyfriend Lucas says in real estate. You sell
sizzle not the sausage. In other words, you sell the benefits not the features.

So, now The Fifth does some limited edition runs of watches that are numbered from one to 500,
for example which does highlight that they're truly limited and marked as such because if you fake
scarcity too often, your customers brains will train themselves not to react like they did previously
because the brain learns that the stimulus has no reward associated with it so it loses its potential.
So, I'd recommend not overdoing it when it comes to scarcity and saving it for real relevant
occasions as much as possible.

Another way to use scarcity ahead of launch is to display the number of people on your wait list
against the number of units that you have in stock. We did this at that board short company that I
was advising called Taylor. When we launched we had a wait list of 16,000 people, except we
only had a thousand units of stock. We decided that would be completely transparent but in doing
so occurred a lot of demand and hype around the product and showed what our wait list was
relative to our stock at all times.

You'd enter and you'd sign up on the wait list and you'd be number 16,802 for example and now
there's only 908 pairs of shorts left. So, there are a lot of interesting ways to go about creating
scarcity. And again, we'll give you some more examples and tools that you can use in the
resources section for this lesson. So that was a big one. We're gonna summarise this as best as
we can in your workbook so that you can have a think of how you can relate each of these
psychological triggers to your brand.

But I'd probably recommend listening to this lesson again if you have the chance and taking some
more detailed notes. So, as an action item for this lesson, I want you to fill out the sections under
each psychological trigger that we went through in your workbook which will help you come up
with some ideas of how you could apply these to your brand. Again, those triggers were
reciprocity, social proof and scarcity. So, go ahead do that now and I'll see you in the next lesson.