Every year for Christmas, we play Secret Santa at work and share our gifts on the day of our Christmas party. Last year, we had our party in early December, so we had the chance to make the most of Black Friday deals.
The issue, for some of our international team members, was sending gifts to Australia. These deliveries got delayed by about a week. Many of them were very stressed about the situation. Some even ended up sending formal complaints to the sites they’d purchased from.
That’s around the time I came across an article published in The NewDaily about Black Friday sales in Australia. If you check the article, you’ll see that the increase in online shopping caused quite a stir for Australia Post.
During this period, they delivered over three million parcels the day following Black Friday—the most in its 210-year history! I shared this with my team members and assured them that the delay must be because of this.
This led to a conversation about how reliant the world is becoming on online shopping. The pandemic forced many of us to do our shopping online. For e-commerce businesses, 2020 proved to be a very interesting year.
In this kind of environment, what more can businesses do to lure in customers? One marketing tactic we’re using today is anchoring.
What is anchoring?
Anchoring refers to the human tendency to put more weight on the first piece of information you engage with when making decisions.
As humans, we tend to focus only on this information and ignore everything else. During decision-making, anchoring influences the way we interpret the information that follows the initial interaction.
Take this hypothetical example.
My favourite retail store sells jeans for $150. As part of an ongoing sale, this is reduced to $75. I find that this is a great deal, making it more likely that I will purchase it. If, however, my friend typically shops for jeans at a capped price of $20, she won’t be nearly as impressed.
In the retail industry, the anchoring effect has great potential. If understood correctly and used strategically, it can improve brand positioning and increase sales.
How can you use anchoring to boost sales and conversions?
- Original price vs discounted price
If you have an ongoing sale, use anchoring to hook people in by letting them know what a good bargain they’re getting.
Put the original price, first, as an anchor that shows them the true value of the item. The discounted price will then gain more consideration. This is because they now know how much they’re saving.
- Monthly plans vs annual plans
This is a classic tactic used by companies that sell services. Getting customers to pay for an annual plan is far more profitable compared to a monthly plan. To anchor customers, displaying the annual price after the monthly price makes them feel like they’re saving money by signing up for a year.
- Manipulate price perception
If you display the price of an expensive item and follow it up by trying to sell something cheaper, people are likely to consider that a good deal.
A pricey food chain in New York used this effect and marketed their $69-dollar hotdog, which drew in crowds to their eatery. Though the hotdog didn’t do well in sales, their $17.95-dollar cheeseburger did quite well.
People who wouldn’t normally pay almost $20 for a burger were swayed to do so because compared to the hotdog, it seemed like a good deal.
- Lead with your core selling point
Anchoring can also be used to convince people that what you are selling is innovative—even if it isn’t.
This is mostly used by businesses that sell electronics. When you market your product, lead with your core selling point. If you convince your audience that the core feature of your product is innovative, every other specification of your product will also appear innovative.
- Gear Acquisition Syndrome (GAS)
GAS is the constant desire people have to add new tools or equipment to their collection. This means that the previous specs of your product will act as an anchor for consumers.
When they see product upgrades and compare that to previous specs, they may be more convinced to buy in.
Make use of anchoring to influence consumer decisions and boost your conversions and sales!
Anchoring is one of the most common and effective tactics used by marketers. The truth is, as consumers, anchoring makes us feel like we make logical, and calculated buying decisions 🙂
Use this tactic in your marketing strategy and sway your customers’ purchase decisions. Make the most of anchoring in your pricing, marketing, and advertising strategies and boost your conversion rate and sales.