12 Cognitive Biases to Boost Sales & Customer Retention

If you want to boost sales and improve customer retention, try these research backed cognitive biases which are powerful marketing tools.

In this article, I’ll explore 12 specific and persuasive cognitive biases that can be used in your marketing. Plus I will share research studies and examples of ethical use.

I’m writing this article because I’m a multi-bestselling entrepreneur, with about 2 million books and courses sold globally.

I’ve spent the last 2 decades studying and practicing various marketing strategies. And I love sharing the most effective marketing tools for today’s competitive marketplace.

I also produced a bestselling online program to help entrepreneurs make passive income online: “Make Profitable Courses Without The Overwhelm.”

Let’s get started learning about the persuasive marketing benefits of cognitive biases.

What are Cognitive Biases?

Cognitive biases are mental shortcuts our brains take when making decisions. They can be both helpful and harmful, depending on the situation. By tapping into these biases, you can influence your customers’ decision-making processes.

12 Cognitive Biases to Boost Sales and Customer Retention

Let’s take a closer look at 12 cognitive biases that can be used to boost sales and improve customer retention.

1. The Anchoring Bias

• Definition: People rely too much on the first piece of information they hear when making a decision. This can affect the way they think about things, like how much they should pay for something. For example, if someone hears a high price for something first, they might think it’s worth more than it actually is.
• Research: A study by the Journal of Marketing found that participants were more likely to purchase a product when a higher-priced version was presented first. Another study found that people are less influenced by the Anchoring Bias when they’re given more options to choose from.
• Ethical Use:  Focus on presenting the value and benefits of your product before revealing the price. This can help people understand why the product is priced the way it is and make a more informed decision. If you’re charging more than other similar products, make sure you’re providing unique features and benefits that justify the higher price.

2. The Decoy Effect

• Definition: People change their preference between two options when a third, less attractive option is presented.
• Research: The Journal of Consumer Psychology found that the decoy effect increased the likelihood of customers purchasing a mid-priced option.
• Ethical Use: Offer three options, with the middle option being the one you want customers to choose.

3. The Availability Bias

• Definition: People make decisions based on the most recent or easily available information.
• Research: Providing positive reviews or testimonials can influence customers, according to a study by the Journal of Consumer Research.
• Ethical Use: Ensure that your reviews and testimonials are honest and genuine.

4. The Scarcity Effect

• Definition: People place more value on something that is rare or in limited supply.
• Research: The Journal of Marketing found that the scarcity effect increased the perceived value of a product, making customers more likely to purchase.
• Ethical Use: Limit the supply of your product truthfully and don’t use false scarcity to pressure customers.

5. The Reciprocity Bias

• Definition: People feel obligated to return a favor or gift.
• Research: The Journal of Marketing Research found that the reciprocity bias increased the likelihood of customers making a purchase in return for a free gift.
• Ethical Use: Consider offering something of value to your customers without the expectation of a purchase in return.

6. The Bandwagon Effect

• Definition: People conform to the actions or opinions of others.
• Research: Using phrases like “most popular” or “best-selling” can influence customers, as noted in a study by the Journal of Personality and Social Psychology.
• Ethical Use: Ensure that your claims are truthful and accurate.

7. The Confirmation Bias

• Definition: People seek out information that confirms their existing beliefs.
• Research: The Journal of Marketing found that providing information that aligns with your customer’s values or beliefs can influence their purchase decisions.
• Ethical Use: Provide accurate and honest information that reflects the values and beliefs of your customer base.

8. The Endowment Effect

• Definition: People value something more when they own it.
• Research: Offering a free trial or sample, as noted in a study by the Journal of Consumer Psychology, can increase the likelihood of a purchase.
• Ethical Use: Ensure that your free trial or sample offers genuine value to the customer.