Small Businesses: Using Psychology in Your Marketing - Southport Marketing Consulting

Small Businesses: Using Psychology in Your Marketing

The word “Psychology” evokes negative connotations for me, especially when applied to business. I’ve worked for a couple of bosses who have clearly taken a training course on psychology in business, and then have used these tools to transparently try and manipulate me and others into doing things their way. Maybe the word psychology gets a bad rap, but usually we picture someone using dark methods of the mind against others for their own gain!

Well, yes, that’s what I’m going to teach you today! But I can say with a clear conscience that these aren’t dark methods, they’re useful tools you can employ regularly to communicate more effectively with your customers and potential customers.

I’m also going to admit from the outset that this article is based on something I read recently on SumoMe, where they produced a very long article on how to use psychology in your email marketing.

As I read through it I realised that it was stuff I did myself anyway (and learnt several new tricks), but maybe didn’t label it as they did. I’ve also applied this beyond email marketing to your whole marketing message because as a small business you may not even do email marketing, and what we can learn from this can be applied across all forms of communication with your customers.

Why Use Psychology in Your Marketing?
There’s several reasons you would want to use psychology in your marketing, because you can:
• improve the number of people responding to your marketing messages
• get your core message over to them easier
• reduce the sales process
• sell more!

And, it’s been proven to work over and over again. As you read through the following suggestions on how to use it, you’ll certainly realise that you fall for it yourself every day, as its employed knowingly or unknowingly by children, adults, companies and you, yes even you!

Psychology Methods

1. Fear of Missing Out

The fear of missing out is a genuine fear that most of us have, admit it or not. So, if you tell a customer that there’s a limited time offer with a real date or time deadline, they will invariably be concerned that they don’t want to miss out on what must be a great deal because it has an expiry date.

APPLICATION: As you decide on a marketing campaign, try and put a limit on the offer.

“Purchase before 30th January and receive a 10% discount”

“Only 100 available, so order while stocks last”

You don’t actually have to combine this with a discount because when people think something is scarce they are willing to pay more it. So, it can work particularly well with the launch of a new product. Have you seen on the news how many people queue up outside phone shops when a new phone is launched because there are limited initial stocks?

2. Give and You Will Receive

So here’s how this works, you give someone something of perceived high value for nothing. They then feel obliged to give something back, ideally their custom.

I experienced this recently when I went into a Neptune store (an exclusive high priced furniture store) because my wife wanted to look around it for ideas despite the fact we couldn’t afford to buy anything there (I hate doing that!). As we entered the store the sales assistant eyed us up and down, obviously thought we qualified as potential customers, and promptly handed us a fancy tote bag containing a hardback book and several samples. I felt bad that day leaving the store with nothing but the freebies, so I ended up buying their over-priced paint for our kitchen, which made me feel better.

Interestingly enough, something that looks expensive that you’ve given away might not actually cost you much, particularly if you produce it yourself en-masse, but the potential customer will think it’s more expensive than it was. Picture a bakery owner stood outside her bakery handing out whole muffins to people. They might have cost her 10p to make but she retails them for £1.00. I’m guessing most people handed a free muffin are going to feel obliged to visit that bakery at some point soon and invest some of their money in another muffin or something else.

APPLICATION: Find ways to give away something of perceived value for free. It could even be on the back of them buying something else:

“Buy product A and receive product B for free”

“Please claim your free Product B when you visit our store”

3. Feeling Special

This is achieved by exclusivity, yes you know what I mean, those designer brands that have highly inflated prices but people buy them anyway. Most of the time people buy them because when others see them with one they know they’ve got lots of money, because they can afford one. If someone’s driving a Bentley you think “rich”.

APPLICATION: As a small business it can be difficult to charge a premium price because you’re not a well-known brand. However, marketing yourself as ‘boutique’ or ‘hand-crafted’ or ‘made locally’ can allow you to charge a premium price.

You can also use other exclusive language to make your customers feel like they’re in an exclusive group by calling yourself a ‘club’, ‘community’, ‘family’, ‘tribe’ etc. Local business advertising company Southport Club have built this into their name to show that it’s exclusive to people in Southport, and to build a sense of community into membership.

4. Reassurance

This is providing evidence that you are reliable, your product or service is sound, and you will be there for them if anything goes wrong. This is particularly true if you are new to the market.

APPLICATION: This should be applied quite deep into your business plan, for example having a business premises a customer can visit is highly reassuring. Your branding should look fit for purpose, or even make you look like you’ve been around for years – look at the shops and the new bars in Churchtown village.

A couple of things you can implement to reassure customers without spending too much money:
• A Money Back Guarantee is a method of giving something of value to a customer which reassures them, without it costing you any money upfront.
• Collect and display Customer Feedback, as there’s nothing more reassuring than other customers saying how great you are.

5. Free

Free is a word maybe used too much in marketing, but hey it works! But here’s the point, if you give away something for free tell people that you’re giving it away for free. Sometimes we package a service or product with all the things we think a customer wants. And yes they do want it all. But sometimes you can forget that some of the extras you’ve included aren’t included by you competitors, so make sure you highlight that. Tell people what they’re getting for free.

APPLICATION: Don’t do it all the time for everything, but for certain marketing campaigns add a free service or product to the bundle and focus your marketing message on that:
“Book your Car Service and receive a free Valet”
“Free Revlon nail polish of your choice with every manicure”
Yes when you give away something for free with your main product or service, people notice, they love getting things for free.

6. Because

This was a new one to me and I wasn’t too sure on it until I started using it. If you use the word ‘because’ or equivalent, people don’t ask too many questions, because you’ve already provided the answers whether they made sense or not (see what I did there).

APPLICATION: I could have a marketing message which says:
“Buy our beef jerky”
Only people who buy beef jerky will buy it. However if I change it too:
“50% of regular gym members eat beef jerky because its high in protein and low in fat”
Suddenly people know why they should buy it, and they want to try it themselves.
However, this works too:
“Buy our beef jerky because it tastes great”
Crazy I know! But the word ‘because’ fills a psychological void when it comes to buying.

You’ll just have to try it to see how it works, because if you don’t you’ll never know!

7. Repeat What Your Customer Says

Now this might seem obvious or it might seem stupid, but it’s something that is a proven sales technique. Just by repeating back to a customer what they said reassures them that you are listening to them, you know what they’re talking about, and you’re going to provide something which meets their needs.

Simple example is the waiter repeating back your order to you. We’ve all had waiters who stand there nodding, don’t write anything down, go away and then the wrong food comes. Idiots! But the waiter who writes down your order than reads it back to you, then delivers what you ordered, is the one that deserves the tip.

APPLICATION: There’s several ways you can do this:
• Build into your sales process ways to repeat back to the customer what they want
• Listen to what your customers say about your product or service and then use their terms and phrases in your marketing
• If your product is handmade to order, or you are providing a service which is expensive or can’t be reversed like a tattoo, then go through several rounds of checks to make sure you know exactly what the customer wants
There’s nothing worse for your brand than a sales person who does all the talking and then presumptuously tells the customer what they need. Potential customers walk away shaking their heads and go elsewhere, but unfortunately it happens time and again in most shops in all towns in Britain.

8. Price Reductions

Price reductions are an age-old marketing tool, and when done right can increase your sales dramatically without damaging your brand.

There are whole industries that flourish off doing it the ‘wrong way’, think the sofa retailers. They set a high price, then 3 months later slash the prices (to what they should have been anyway). I don’t like this type of marketing to be honest, inflating prices so you can slash them later, I think it damages your brand and stops people buy when your full price is displayed.

However, the ‘right’ way to do it in my eyes is to reduce end of batch products, products you’re trying to clear, or old models by displaying the original price and then a new reduced price. You can also reduce peaks and troughs in your sales year by doing this as well.

APPLICATION: Very simple really, display the original price with a line through it and then the new reduced price next to it.

£999 now £699

A further application of this is when a customer is buying something they don’t know the value of. Think about a person ringing around several roofing companies to get quotes on a new roof for their house. The first quote they get tends to give them a price point they set as a benchmark. So Bob the Roofer quotes them £5000. Then along comes Sally Slaters and quotes £6000. Suddenly Bob looks cheap. However, if they’d rang Brian Bricky second and he’d quoted £3000, Bob Roofer was expensive.

Yes I’m telling you something you know, sometimes people get quotes from several companies before they decide on which to choose. But here’s the clever bit, if you can tell a customer, “well we usually charge £6000, but if you book this today I can give it to you for £5000”, you’ve set the benchmark at £6000 and you’ve offered them a price reduction (notice I also used the fear of missing out here too). Suddenly there’s no need for them to shop around.

You can also provide an average industry price alongside your own, if your price is lower than the industry average, or that of your competitors. But if you’re just showing a reduction on your own price, it doesn’t matter if you are cheaper than your competitors or not.

9. Use Yourself

Use yourself in your marketing. This is something which a lot of big companies can’t do. But as a small business you can and should do where possible. We all love to see people succeed particularly if they’re a local person, that’s why we feel good about a footballer or athlete from our town doing well. Add to that the fact that people buy from people they like, know and trust. And also that a lot of people are passionate about supporting local businesses rather than the rising tide of national superstores.

APPLICATION: On your website or in your marketing materials tell people about you and your journey, where you come from and that you’re supporting local people with a service or product just for them.

Think about using your name and or your picture in your branding and marketing. People want to know who owns and runs the local shop, they want to address you by name, feel like they know you. They want to know their electrician by name so they can put his name in their phone directory. They want to tell people to meet them at Sarah’s café because they must be a regular there.

Use yourself to your advantage. A lot of big companies try and use a central person or character in their marketing so that people feel a connection to them, think of KFC, Disney, Direct Line, Kellogg’s Frosties. And it’s also why big food companies use famous chefs and celebrities as brands to produce product-lines. You don’t need to invent a character or pay a celebrity, you get you for free!

10. Less is more

Less is more is related to options that you give customers. If you sell your main product in 25 flavours you’ll spend a lot more money on product development, packaging, marketing materials and production. But you’ll sell more product if you give them just 3 flavours. See this study by Harvard Business School if you want to know why that is:

Basically, people don’t want too many options because it confuses them, makes them uneasy about their decision, and takes up valuable time. Yes, some people like to shop around before they buy, but not for everything. And they only shop around because they want to reassure themselves that what they think they want is the best.

APPLICATION: Keep your product selection, payment plans, clutter in your shop, calls to action in your marketing, optional extras, and everything else to a minimum. And in fact, 3 is the magic number ( Give people more than 3 choices and they start to forget what the options are, makes them anxious, feel like they’re no longer in control of the process, quickly exit to gain control.

I think it’s better where possible to keep the options down to 1 or 2 for things like payment plans, marketing calls to action. Because they’re all part of a larger decision. Once the customer or potential customer has made an important decision to visit your website, buy a product etc why then give them too many options to distract them from doing what you want them to do.

11. Follow the Crowd

We all do it, even if we fight hard not to. We tend to buy a coat because we’ve seen other people wearing a similar one and look good in it. We buy a brand because it’s celebrity endorsed. We stop to see what the crowd are looking at in the town square.

You can utilise this base human nature in your marketing quite easily. Ever notice how a restaurant try to get you to sit in the window on a quiet lunch service? Because if you’re doing it other people will too.

APPLICATION: Find ways to use your current customers to advocate for you. That might be by:
• having them queue outside your shop on a busy morning,
• have them display a board outside their house while you do work there,
• display customer testimonials on your wall or on your website,
• publicly interact with your customers on social media, thanking them for their business,
• sign up for a ratings platform like Feefo or TripAdvisor and ask your customers to rate you.

Use Psychology Everyday

So hopefully now you feel assured that the use of psychology in marketing isn’t some dark art, it’s common sense. You probably do a lot of it already anyway without realising it. But try and pick out a few of the 11 psychological methods above and implement them into your business plan, your marketing strategy, each marketing campaign, and every customer interaction. You will see the benefits, because you will.
I’d love to hear how you’ve employed some of these marketing tactics, or how you’re thinking of using them, please leave a comment below.

About the Author
Stephen Haigh is a Marketing Consultant who has worked with small and medium-sized businesses over the past 17 years, managing their marketing strategy and implementation.  He is based in Southport and while also running an international Executive Search company, advises small businesses on how to market themselves better locally, and online to reach a wider audience.

He has worked with the business services industry, consumer goods, financial services, manufacturing and home decor.  Working in-house as a Marketing Manager and as a Marketing Consultant representing The University of Liverpool.  Holding a BA (Hons) Business Studies with a major in Marketing from Lancashire Business School.

He enjoys reading and blogging about cycling, travel, and business.



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