The Austrian-American psychologist and marketing expert Ernest Dichter pioneered the application of Freudian psychoanalytic concepts to the study of consumer behaviour. Ever since, marketers have been trying to tap into the human subconscious to influence consumers.
Now, armed with the technology to measure brain impulses, Neuromarketing claims to be able to learn which emotions consumers are experiencing and what memories are being stored.
Such a claim has attracted understandable interest.
In 2011, NeuroFocus, a pioneer of neuromarketing and one of the biggest players in this booming industry, was acquired by the global measurement and analytics firm Nielsen. Equally, some of the world's biggest companies are turning to Neuromarketing as a new way of convincing consumers to buy their products. Google, Facebook, McDonald's, Unilever, Procter & Gamble and GSK are all adopting this brain scanning technology to help them understand what motivates consumers and turns them into buyers.
What is Neuromarketing?
The term Neuromarketing was coined in 2002 by Professor Ale Smidts, and the first Neuromarketing conference was held in 2004. According to one of the leading thinkers in this area, Roger Dooley - the author of Neuromarketing and Brainfluence - Neuromarketing is based on the premise that 95% of all our thoughts, emotions and learning occur before we are ever aware of it; meaning that marketers are actually only talking to 5% of their customers’ brains.
Neuromarketers claim to be able to find out what kinds of marketing hit the other 95% of the brain for maximum impact by leveraging the latest scientific technologies, such as fMRI, MRI, EEG, and biometrics.
Despite the attention that Neuromarketing has received, many have argued that studying brain activation does not provide an explanation for consumer behaviour; it only provides a new level of description for what we already know is happening.
This is very true. Neuromarketing alone is unable to explain consumer behaviour as, although it can explain what is happening (how consumers feel when interacting with stimuli), it fails to adequately explain the why factor.
Most agree that there is no such thing as a magic ‘buy’ button in our brain, nor can consumers be manipulated into buying things that offer no value to them at that time. Consumers are independent individuals who will make decisions about what they want to buy based on many permutations of different motivators. This kind of rich information is only gleaned from qualitative methods.
So, what can we learn from Neuromarketing?
Despite the reservations about Neuromarketing, there are some broad findings that are useful to keep in mind when thinking about how to improve customer experience and increase engagement.
The Paradox of Choice was coined by Barry Schwartz, who’s research showed that overloading customers with too many options may actually paralyse people’s decision-making processes, resulting in choice fatigue. This was corroborated by Professor Sheena Iyengar’s research in California’s gourmet food market, where her team set up a booth of samples of Wilkin & Sons jams. Every few hours, they switched from offering a selection of 24 jams to a group of 6 jams. On average, customers tasted two jams, regardless of the size of the assortment, and each one received a coupon good for $1 off one Wilkin & Sons jam. 60% of customers were drawn to the large assortment, while only 40% stopped by the small one. However, 30% of the people who had sampled from the small assortment decided to buy jam, while only 3% of those confronted with the two dozen jams purchased a jar. Iyengar concluded that having fewer options makes it easier for consumers to make decisions and complete tasks. Building on this study, a team of researchers at Stanford University found that an excess of choice often leads consumers to be less, not more, satisfied once they actually decide and are often left with a nagging feeling they could have done better.
Lesson? Less is more.
2. The Power of Free
Professor Dan Ariely, author of Predictably Irrational, found that “free” is far more effective than “almost free.” He argues that this is true even when the price differential of two products were near identical (e.g. one cent vs. free). Professor Robert Cialdini, agrees with Ariely. In his book Influence: The Psychology of Persuasion, Cialdini explains the pervasiveness of giving out free samples in marketing through the concept of reciprocity. Reciprocity is a strong factor in human behaviour. As such a small favour can produce a sense of obligation to return a much larger favour.
Lesson? Giving free samples creates a reciprocal relationship with the consumer
3. The Fear of Loss
Making a product appear scarce can be a powerful marketing tool to instil a sense of urgency to the buying process. Research suggest that this is because our fear of loss rather than gain is the greater emotion. For example, in an experiment people were given $50. They were then asked whether they would prefer to keep $30 or lose $20. Even though the dollar amounts were the same, the majority chose the ‘keep $30’ option.
Lesson? Fear of losing out on a bargain or offer is a greater motivator than the persuasion of gain.
4. The Use of Storytelling
The writer Maya Angelou once remarked: "I've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel." Business leaders like Jack Welch of General Electric fame have always understood the importance of storytelling to engage. When rational thinking conflicts with emotion, emotion wins. As such the use of storytelling allows you to connect at an emotional level with your customers. Research has found that linking ideas to commonly known stories leverages previously established neurological paths in the consumer’s memory. Studies show that when absorbed in a story, people detect fewer inaccuracies and inconsistencies. However, when reading dry and factual content, people seemed more critical than when reading a story.
Lesson? Use storytelling to engage your customers
5. Social proof
In 1969 Stanley Milgram, a social psychologist, conducted a social contagion study on 42nd Street, New York City. He wanted to test whether people will do things if they see other people doing it. So, he and his colleagues stood on the street and stared up at a sixth floor window. There was nothing to see, but they wanted to see how social contagion worked. Their results found that 45 percent of passers-by stopped if one person was looking up but a massive 85 percent of the passers-by stopped if 15 people were looking up.
This study is still pertinent today because, thanks largely to new digital channels such as social media, we are now more influenced than ever before by viral marketing and word of mouth. In general, we are more persuaded by people that we like. This is why Facebook and other trusted social networks have become the preferred point of engagement for many of us. The more people see others doing something, the more they want to check it out too. The Edelman Trust Barometer consistently shows that there is a steady decline in people’s trust in companies. On the other hand, trust in peers is increasing. So, businesses need to harness the power of personal recommendations and referrals.
Lesson? Make sure your social proof is focused, plentiful, credible and trusted.
Global Engagement Director
Theresa joined EY-Seren in early 2017 as our Global Engagement Director, moving from New Zealand to be with us. She has extensive experience working across marketing, digital strategy and customer engagement functions in both the public and private sectors.