Psychology Marketing - Why It Shouldn’t Be Overlooked

Broadly used enough, loyalty programs have been involved in every aspect of our daily lives. Online stores give us coupons or promotion codes immediately after we register or make a purchase. We see “two for five” or "buy 9 get 10" deals everywhere when stepping in any supermarket, and every once in a while we suffer from the harassment of car insurance companies while checking our mailbox.


A big part of the business we do here at Anthem is focusing our analytic specialty and energy on evaluating the effectiveness of our client’s loyalty programs. Pulling millions of data points from customer databases, we then provide independent and thoughtful recommendations by using the most advanced analytical tools. However and interestingly enough, as this data-driven marketing perspective is becoming more and more widely accepted, we find some practices are neglecting the importance of the psychology aspect of marketing.


Participants enrolled in a real cafe reward program (buy ten cups of coffee get one free) were found purchasing coffee more frequently as they approached their reward. The average difference between the first and the last observed inter-purchase times was 0.7 days (t = 2.6, p < 0.05), meaning that there is an estimated acceleration of 20% from the first to the last purchase. In the same study, an atmosphere of "illusion of progress toward the goal" was found to also induce purchase acceleration. Consumers who received a 12-stamp coffee card with two pre-existing "bonus" stamps completed the 10 required purchases relatively faster than consumers who received a regular 10-stamp card.


I found it to be interesting that businesses are more focused on evaluating rather than analyzing consumer behavior. Marketers cannot wait to discover whether their program works and afterwards eagerly move forward or drop their initial idea.


We might have tasted a bit of psychology marketing from the research above. I think a more sensible approach would be to first dig deeper into consumer psychology, initiate a series of creative tests on potential target segments, and then analyze as well as better redesign the program by utilizing data-driven quantitative tools.


Posted by Shaokang Wang on 07/06