But how can we exploit this innate characteristic of ours to create compelling value propositions for our customers?
We have known for centuries that human beings are animals with limited rationality. The irrational impulses and cognitive distortions to which we are subjected are well-known and much, much studied phenomena. Even by marketing: psychology and marketing are, in fact, inseparable and many of the most accredited marketing theories are actually based on notions derived from psychology.
One of these is Prospect Theory , for which Daniel Kahneman was awarded the Nobel Prize in Economics in 2002 "for having integrated the results of psychological research into economic science, especially concerning human judgment and the theory of decisions under uncertainty."
The research focuses precisely on this: uncertainty.
The one that a customer faces, for example, when choosing between two products without being sure which one will satisfy him more; or when he has to choose a certain investment. Even if he is convinced that he is acting rationally, in fact, his brain will set in motion some mechanisms, well known and not very rational, that will guide him in his choice.
Let's see what they are and use them to explain some practical advice that will be very, very valuable every time you have to explain your offer to a potential customer.
First tip: focus on safety
Would you rather risk a lot and have the possibility of big profits, or stay in a safety zone that allows you to minimize the risk of loss?
Risk aversion is obviously individual, but what Kahneman and his colleague Tversky have verified with repeated tests is that a predominant trait in the majority of the population (indeed, in the vast majority) is loss aversion .
In other words, the two researchers highlighted that the risk of losing a certain amount of money (let's say, for example, 200 Euros) is perceived as much more distressing than the possibility of earning the same 200 Euros is perceived as tempting.
Also look at people's reactions when newspapers talk about economic interventions: the idea of losing X from one's income triggers furious reactions from the majority of news readers, but if the talk is about adding the same amount X (for example, through new tax deductions) the reactions could be lukewarm if not scornful because that same value X seems too low to spark enthusiasm.
On the other hand, even in investments, most people try to move conservatively because the fear of loss prevails over the happiness for a possible gain.
But most importantly, the exact same option will trigger completely different reactions depending on whether it is told with a focus on the benefits it promotes rather than the losses it avoids.
So what should a good marketing manager do?
Reassure. Be aware that the fear of losses is extremely strong and act accordingly, focusing on security in your communication.
Be very, very careful about how you present a certain advantage: in the form of a gain (of time, convenience, etc.) or as a way of freeing yourself from a loss (of time, convenience, etc.)?
Second tip: focus on a few elements
Those who work in marketing know that it is better to focus on presenting a few strong points, rather than getting lost in every detail of the product. But why does this happen?
Our brains simply cannot handle a lot of complex information and instinctively tend to focus only on the elements that they deem most important. Sure, complex decisions can be supported by careful investigations and information systems designed to evaluate each aspect separately, perhaps assigning a series of scores based on how much each characteristic matters to us; but how many of us actually do this?
How many, for example, choose a new home by really evaluating every single aspect related to the choice? And how many instead are struck by one or two details (the proximity to a public park, a very bright living room...) evaluated, obviously, in relation to the budget?
This behavior is part of a simplification of decision-making processes. We must remember that we evolved to react quickly to risks and unexpected situations, not to get lost in elaborate mental calculations; even today, we simply generally reason in shortcuts by isolating those two or three elements that we recognize as fundamental for the choice. Kahneman and Tversky call it the isolation effect .
This is why the second piece of advice is to focus on a few carefully chosen strengths for your presentation and communication.
Get to know your ideal customer better, for example through the buyer personas tool. What does your typical customer give most importance to? According to their personal scale of values, how important do they consider it if the product is eco-friendly, or high-tech, or made with a certain style, etc.?
Don't expect the customer to appreciate each of the features of your product separately, but extrapolate those 3-4 that your ideal customer considers most important. And focus on those.
Avoid complexity. Create a feature narrative that the customer can easily absorb and digest.
