Why Don’t Retailers Use More Psychology to Succeed?

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Psychology is a science like any other. Although we talk about retail’s amazing ability to avoid science and sound decision making, we’ve never talked about the use of psychology, even though retailers might be accused of borrowing from the annals of psychology whether they realize it or not.

Let’s start with advertising. Most retailers have no objective idea if their promotions worked. That’s because leadership doesn’t want to have conversations about machine learning and how it might make them more successful. For the full explanation you can read more here. That said, retailers should think about the kinds of content the precedes theirs. In other words, emotional states have a huge impact on the effects of marketing.

Robert Cialdini and his former graduate students demonstrated that advertisements using simple and classic persuasion principles – such as popularity and scarcity –  can fail miserably, or succeed wonderfully, depending on the information that immediately precedes the advertisement. In that research, people in one condition read a product review about a restaurant described as “the most popular restaurant” at which “many people gathered.” They were told that “if you want to know why everyone gathers here for a great dining experience, come join them at the Bergamot Café.” In another condition, the Bergamot Café was instead described as a destination for a chosen few: “a unique place off the beaten path” that was a “one-of-a-kind place… yet to be discovered by others.” Those subjects read that: “if you’re looking for a great dining experience different from any other, look no further than the Bergamot Café.” When asked whether they’d actually enjoy going to the Bergamot Café, people’s responses depended on what had been going on just before they read the restaurant review. Some of them had just watched scenes from a scary movie (The Shining); others had just watched a romantic movie (Before Sunrise).

Compared to people who were experiencing no emotion, people who had just seen the scary movie were positively influenced by the appeal to popularity, but they were actually turned off by the appeal to uniqueness. People who were feeling romantic, on the other hand, had just the opposite reaction – they were turned off by popularity, and attracted to the out-of-the way place far from the bustling crowds.

So a note to your marketing team: when they think about advertising they should pay attention not only to how much viewership a program has, but to what its content is. 

Here’s a psychological tip for positioning. A study from Beijing, China demonstrates that people want to follow the lead of similar others, “What have other people like me done in this situation?” So what the owners of a string of restaurants in Beijing did was put a star next to certain items on their menu that signified, “This is one of our most popular dishes.” And each one immediately became 13% to 20% more popular just by pointing to something that was true. Now that you see this it probably makes sense that Amazon shows you other popular items, no?

There’s also something to ponder on the deep psychological response to numbers. For instance, if you have a number in the name of your restaurant, a name like “Studio 97” instead of “Studio 17” would lead people to tip higher.

Are you finding yourself wanting feedback on your service? You might want to consider changing the way you ask. A group of survey takers were asked to evaluate the idea of a fast casual restaurant. Some were asked for feedback others for advice. Those asked for advice reported a higher likelihood of wanting to eat at the restaurant. People are more likely to patron an establishment if they feel they were a part of it.

Ever heard of the idea of reciprocity? It’s apparently a societal norm, which makes researchers wonder if it’s been an engrained human characteristic going back ages. I’ll attest I’ve watched countless retail executives totally ignore this tenet and treat others poorly after getting what they wanted. But for those still paying attention, a study showed restaurants giving a gift of free food saw spend increase 24%. It seems counterintuitive that providing people free food would make them full and thus likely to spend less, but that’s not what the research showed. Showing a little love can go a long way.

Something to keep in mind as you navigate down the path of running a business in brick and mortar.

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