Brainfluence: 100 Ways to Persuade and Convince Consumers with Neuromarketing

Chapter 1

Sell to 95 Percent of Your Customer’s Brain

Ninety-five percent of our thoughts, emotions, and learning occur without our conscious awareness, according to Harvard marketing professor and author Gerald Zaltman.¹ And he’s not the only expert who thinks this way; the 95 percent rule is used by many neuroscientists to estimate subconscious brain activity. (NeuroFocus founder and chief executive officer [CEO], A. K. Pradeep, estimates it at 99.999 percent in his book, The Buying Brain.²) It’s doubtful we’ll ever be able to arrive at a precise number, but all neuroscientists agree there’s a lot going on under the surface in our brains. (There’s debate, too, over the terminology; many scientists prefer nonconscious or preconscious for greater precision. I’ll mostly use subconscious, simply because it’s the most familiar term.)

One indication of the power of our subconscious comes from a study that showed that subjects given a puzzle to solve actually solved it as much as eight seconds before they were consciously aware of having solved it. (The researchers determined this by monitoring brain activity with an electroencephalograph (EEG) and identifying the pattern that correlated with reaching a solution.³) Other research shows a lag in decision making—our brains seem to reach a decision before we are consciously aware of it.

The realization that the vast majority of our behaviors are determined subconsciously is a basic premise of most of the strategies in this book, and indeed, of the entire field of neuromarketing. Customers generally can’t understand or accurately explain why they make choices in the marketplace, and efforts to tease out that information by asking them questions are mostly doomed to failure. Furthermore, marketing efforts based mostly on customer statements and self-reports of their experiences, preferences, and intentions are equally doomed.

Brainfluence Takeaway: Stop Selling to 5 Percent of Your Customer’s Brain

The rest of the takeaways in this book are a lot more specific and actionable, but this one is the most important. Despite knowing that rational, conscious cognitive processes are a small influence in human decision making, we often focus most of our message on that narrow slice of our customer’s thinking. We provide statistics, feature lists, cost/benefit analyses, and so on, while ignoring the vast emotional and nonverbal subconscious share of brain activity.

Although there are conscious and rational parts in most decisions, marketers need to focus first on appealing to the buyer’s emotions and unconscious needs. It’s not always bad to include factual details, as they will help the customer’s logical brain justify the decision—just don’t expect them to make the sale!

Notes

1. Gerald Zaltman, How Customers Think (Boston: Harvard Business School Press, 2003).

2. A. K. Pradeep, The Buying Brain: Secrets for Selling to the Subconscious Mind (Hoboken, NJ: John Wiley & Sons, 2010), 4.

3. Incognito: Evidence Mounts That Brains Decide Before Their Owners Know About It, Economist 390, no. 8627 (April 18, 2009): 86–87, http://www.economist.com/node/13489722?story_id=13489722.

SECTION ONE

Price and Product Brainfluence

Every marketer wrestles with decisions about how to structure a product line and how to set prices. A small difference in pricing can make a big difference in profits, but the wrong price can kill sales, too. Fortunately, neuromarketing has plenty to tell us about these closely related areas!

Chapter 2

The Ouch! of Paying

One of the key insights neuroeconomics and neuromarketing research have provided us is that buying something can cause the pain center in our brain to light up. Researchers at Carnegie Mellon and Stanford universities presented subjects with cash, put them in a functional magnetic resonance imaging (fMRI) machine to record their brain activity, and then offered them items, each with a price. Some of the products were overpriced, and others were a good value. The subjects were able to choose to buy items with their money or keep the cash. The researchers compared self-reporting of purchase intentions by the subjects, brain scan data, and actual purchases.¹

I spoke with Carnegie Mellon University professor George Loewenstein after that work was published, and he noted that one significant aspect of the findings is that the brain scans predicted buying behavior almost as well as the self-reported intentions of the subjects. In other words, absent any knowledge of what the subject intended to do, viewing the brain scan was just about as accurate as asking the subject what he or she would do.

Loewenstein pointed out that, in this experiment, the questions about the intentions of the subject were quite straightforward and one would expect the answers to be good predictors of actual behavior.

The negative activation produced by cost is relative, according to Loewenstein. That is, it isn’t just the dollar amount; it’s the context of the transaction. Thus, people can spend hundreds of dollars on accessories when buying a car with little pain, but a vending machine that takes 75 cents and produces nothing is very aggravating.

Bundling Minimizes Pain

Auto luxury bundles minimize negative activation because their price tag covers multiple items. The consumer can’t relate a specific price to each component in the bundle (leather seats, sunroof, etc.) and hence can’t easily evaluate the fairness of the deal or whether the utility of the accessory is worth the price.

Fairness Counts

Cost isn’t the only variable that causes pain. It’s really the perceived fairness or unfairness of the deal that creates the reaction. Other parts of an offer that caused it to appear unfair would presumably cause a similar reaction as a price that was too high.

There’s not always a single fair price for an item. For most people, a fair price for a cup of coffee at Starbucks would likely be higher than a cup from a street corner coffee cart. A famous study by economist Richard Thaler showed that thirsty beachgoers would pay nearly twice as much for a beer from a resort hotel than for the same brew from a small, rundown grocery store.²

Credit as Painkiller

Overall, Loewenstein wasn’t enthused about using his work for neuromarketing purposes. He pointed out that, for many years, credit card companies have prospered while encouraging consumers to spend too much by exploiting the principles he’s now uncovering in his research.

The problem is that, for many consumers, the credit card takes the pain (quite literally, from the standpoint of the customer’s brain) out of purchasing. Pulling cash out of one’s wallet causes one to evaluate the purchase more carefully.

We think this makes a lot of sense and is entirely consistent with real-world behavior. A credit card reduces the pain level by transferring the cost to a future period where it can be paid in small increments. Hence, not only does a credit card enable a consumer to buy something without actually having the cash, but it also tips the scale as one’s brain weighs the pain versus the benefit of the purchase. This can be a bad combination for individuals lacking financial discipline.

Brainfluence Takeaway: Minimum Pain, Maximum Sales

Pricing and the product itself need to be optimized to minimize the pain of paying. First, the price must be seen as fair. If your product is more expensive than others, take the time to explain why it is a premium product.

If you find yourself in a situation where, for cost or other reasons, the price of a product is likely to produce an ouch! reaction from your customers, see if some kind of a bundle with complementary items will dull the pain.

Payment terms and credit options can also reduce the pain of paying. Don’t push your customers into buying products they can’t afford, but even affluent customers will feel less pain if they don’t have to make immediate payment in cash.

Notes

1. Brian Knutson et al., Neural Predictors of Purchases, Neuron 53, no.1 (January 4, 2007): 147–156, http://www.neuron.org/content/article/abstract?uid=PIIS0896627306009044.

2. Richard Thaler, Transaction Utility Theory, Advances in Consumer Research 10 (1983): 229–232.

Chapter 3

Don’t Sell Like a Sushi Chef

I love sushi. But I hate the way most sushi restaurants sell it, with a separate price for each tiny piece. Every bite I take seems to have a price tag on it. Mmm . . . not bad. But was that mouthful worth five bucks? Do I really want another one?

It turns out my brain is normal, at least in relation to my aversion to the typical sushi pricing scheme. In the last chapter, we met Carnegie Mellon University economics and psychology professor George Loewenstein. Another insight from his work is that selling products in a way that the consumer sees the price increase with every bit of consumption causes the most pain. This isn’t physical pain, of course, but rather activation of the same brain areas associated with physical pain. In an interview with SmartMoney, Loewenstein noted³:

[Consumers are] not weighing the current gratification vs. future gratifications. They experience an immediate pang of pain [when they think of how much they have to pay for something] . . .

It also explains why AOL switched from pay-per-hour Internet service to pay-per-month. When they did that, they got a flood of subscribers . . . Why do people love to prepay for things or pay a flat rate for things? Again, it mutes the pang of pain. The worst-case alternative is when you pay for sushi and you’re paying per piece. Or watching the taxi meter; you know how much every inch of the way is costing you.

Marketers have realized this for years, and they have responded with offers designed to minimize the pain associated with buying their products. All-inclusive meal options are popular at many eateries. Netflix crushed its video rental competitors in part by its all-you-can-watch price strategy. Cruises have surged in popularity in part because they deliver a vacation experience for a fixed price. In each case, the marketer offers a single, relatively attractive price that removes additional pain from the buying experience.

Paying for Pain Avoidance

In many situations, the single price is actually higher than the amount the consumer would have spent on individual food items, movie rentals, and so on. Nevertheless, the all-inclusive number is likely to appeal to many consumers, particularly those that Loewenstein would identify as being most sensitive to the pain of buying.

Brainfluence Takeaway: Avoid Multiple Pain Points

To minimize customer pain, marketers should always try to avoid multiple individual pain points in the purchasing process. Obviously, some situations make individual purchases unavoidable; for example, a grocery store can’t offer fee-based shopping instead of item-by-item pricing.

Many business situations, though, will permit some experimentation with a single-price approach for items usually purchased separately, such as a monthly or annual fee instead of individual transactions. That simpler pricing approach may boost not only sales, but because some people will pay a premium for pain avoidance, profit margins as well.

Notes

3. Lisa Scherzer, Professor: Pain, Not Logic, Dictates Spending, SmartMoney, March 22, 2007, http://www.smartmoney.com/invest/markets/professor-pain-not-logic-dictates-spending-20987/.

Chapter 4

Picturing Money

The concept of priming is simple, although it’s also a bit unsettling: if you present an individual with subtle cues, you can affect that person’s subsequent behavior, even though he or she is entirely unaware of either the priming or behavioral changes. Money-related images are some of the more potent forms of priming.

Psychologist Kathleen Vohs has studied priming extensively and found that supplying subjects with cues related to money increases selfish behavior. For example, she and her colleagues had student subjects either read an essay that mentioned money or sit facing a poster that pictured different types of currency.

The subjects who were primed with money cues took 70 percent longer to ask for help in solving a difficult problem and spent only half as much time helping another person (who, unknown to the subject, was actually part of the experiment) needing assistance.

The money-primed subjects also preferred to work alone and chose solitary leisure activities compared with unprimed subjects. They even sat farther apart when setting up chairs to chat with another subject.

Vohs concludes that even subtle money cues change the frame of mind people are in: they don’t want to depend on others, nor do they want others to depend on them.

This work has interesting implications for advertisers who frequently use money themes in their ads. Big savings, higher investment returns, visions of prosperous retirement, money containers ranging from piggy banks to gleaming bank vaults . . . ads are full of these images. Most of these ads appeal to the selfish interest of the viewer, so any priming that takes place matches the intent of the advertisement. A mutual fund company touting superior returns and prosperous-looking retirees clearly wants to appeal to the self-interest of the customer; the company hopes the viewer will be sufficiently enticed by these images to transfer funds to it.

Money-related advertising images are pervasive in other types of ads, though, and not all appeal to selfish interests. Many print, television, and even in-store ads seem to emphasize savings. Are save money on gifts for Mom advertisers shooting themselves in the foot by subtly priming the would-be gift givers with selfish feelings?

The advertisers who should be particularly cautious about money cues are those who want to appeal to the viewer’s feelings about others. Filling viewers with feelings of warmth and a desire to please someone else, and then reminding them about money, could be self-defeating.

Really, of course, it’s a trade-off. Good salespeople often make the sale using feelings and emotion, and then close the deal with a financial incentive that has an expiration looming. If you’ve ever sat through a time-share sales pitch, you’ll recognize that technique. Much of the pitch is intended to evoke warm feelings about recreation, quality time with family and friends, and so on, but there’s always a financial incentive as the close approaches. Special financing is available only today, there’s a price reduction for 48 hours, and so on. This approach is clearly effective. An advertiser must make a judgment call on whether and how to bring money into the picture if the appeal is primarily an emotional one.

No Money in Sight

Think about the long-running A Diamond Is Forever campaign. This is a good example of advertising that scrupulously avoids introducing money cues. Their ads target the luxury gift market. Spending large sums of money to give someone else a polished piece of carbon whose value is determined by cartel-enforced scarcity is hardly a concept that appeals to one’s self-interest.

This effective ad campaign is a purely emotional pitch that would be spoiled by a tagline that offered, for example, special savings in December! The ads even avoid talking about the investment value of diamonds.

Restaurant Lessons

Even a simple currency symbol in front of a price can make a difference. One Cornell study looked at several common restaurant price display techniques:

Numerical with dollar sign: $12.00

Numerical without dollar sign or decimals: 12

Spelled out: twelve dollars

The researchers expected that the written/scripted prices would perform best, but they found that the guests with the simple numeral prices (those without dollar signs or decimals) spent significantly more than the other two groups did. When you visit a restaurant and find the menu has small prices presented this way, you’ll know they are up on their neuromarketing best practices!⁴

Brainfluence Takeaway: Use Money Cues Wisely

Use currency symbols in ads for products consistent with selfish feelings—products that offer financial independence, for example, or even a self-indulgent purchase like a sports car.

For campaigns focused on giving and thinking about others, such as gifts, nonprofit appeals, and so forth, advertisers may want to be a bit cautious and should likely avoid introducing financial imagery.

Notes

4. Sybil S. Yang, Sheryl E. Kimes, and Mauro M. Sessarego, $ or Dollars: Effects of Menu-price Formats on Restaurant Checks, Cornell Hospitality Reports 9, no. 8, The Center for Hospitality Research, Cornell University School of Hotel Administration, http://www.hotelschool.cornell.edu/research/chr/pubs/reports/abstract-15048.html.

Chapter 5

Anchors Aweigh!

Here’s a scenario: You decide to venture into a cell phone store (despite your reluctance to deal with a bewildering number of phones, options, plans, and confusing pricing). As usual, you find you’ll have to wait a bit for a salesperson. The greeter hands you a card with a big 97 printed on it and says, It should only be a few minutes. We’ll call your number, 97, when a salesperson can help you. You notice that a large digital display on the wall is showing 94. You see it click to 95, then 96, and finally 97. The receptionist says, Number 97, please, and a salesperson arrives to assist you. You thought nothing of the numeric ordering of customers, but it’s possible that the store had an ulterior motive: they could have been attempting to manipulate the price you would pay. Sound bizarre? Read on . . .

When a consumer views an offer, a key element in the decision to accept or reject it is whether it appears to be a fair deal or not. We know that buying pain—the activation of our brain’s pain center when paying for a purchase—increases when the price seems too high. But how does that value equation work? The answer is anchoring; typically, we store an anchor price for different products (say, $2 for a cup of coffee for the local coffee shop) that we then use to judge relative value. That sounds simple enough, but it’s actually not. Some anchor prices are stickier than others, and at times, totally unrelated factors can affect these anchor points. The better marketers can understand how anchoring works, the more creative and effective pricing strategies they will be able to develop.

Gasoline: Drifting Anchor

First, let’s look at a nonsticky anchor price scenario that most of us cope with daily: fluctuating gasoline prices. In the United States, we’ve seen prices surge past the $4 level, not high by world standards but a new threshold for Americans. The first time I saw that 4 digit at the front of the price, I’m sure my brain registered pain. I had barely become used to paying $3 per gallon of gas. But, after a short time, my anchor was reset. The $4 prices were no longer exceptional, and if I had been seeing mostly $4.29 prices, a $4.09 price would register as a good deal. If I saw a station offering gas for $3.99—a price that only a few months earlier would have seemed outrageously high—I’d be hard pressed not to pull into the station to take advantage of the bargain. Of course, gasoline is a unique product; we expect its price to vary, and we have constant feedback on current pricing as we pass gas station signs. For this product, we are constantly reanchoring.

Real Estate Prices

Other items have stickier anchor points. In Predictably Irrational, Dan Ariely describes research by Uri Simonsohn at Penn and George Loewenstein at Carnegie Mellon University, showing it takes about a year after relocation for home buyers to adapt to the pricing in a new market with higher or lower real estate prices. People who moved and bought a new home immediately tended to spend the same amount on housing as they had before, even if it meant buying a home that was much larger or smaller than the one they left.⁵

Less Familiar Products

But what about items for which we have fuzzier anchors? We get daily feedback on gas prices, and if we own a home, we probably keep an eye on sales of comparable properties to gauge our own level of equity. Items that are unfamiliar or rarely purchased may form an anchor point when we start thinking about the purchase. If we decide to buy a big-screen television, we may spot one we like in a Best Buy circular for $1,000. We may not buy that item, but according to Ariely that now becomes an anchor price against which other deals are measured.

Irrational Anchors

Here’s where anchor prices get weird—and weird isn’t a word I use lightly when I’m talking about the foibles of human brains. Up to this point, there was a perfectly logical framework underpinning the brain’s anchoring process. But research conducted by Ariely showed that getting subjects to think of a random number—in this case, the last two digits of their Social Security number—impacted the price they were willing to pay for various items. A higher random number led to higher