Mapping Cognitive Heuristics to Sales Funnels Theory
By: Andreas Brücker
Tags: Marketing, Bias, Sales Funnels, Advertising, Cognitive Heuristics

The following article provides a framework for marketers and advertisers on how to use cognitive heuristics in multi-staged sales funnels.

Most of us have probably heard about cognitive heuristics. Heuristic decisions are systematic errors in thinking and automatically made to facilitate decision making when 1) information, 2) time, or 3) meaning is limited. They are a simple process to give a fast response, but our judgments also deviate from what would be considered desirable in terms of formal logic. The initial concept (also called Nudge Theory) was coined by the economist Richard Thaler, who is also considered to be the godfather of Behavioural Economics.

Advertisers and marketers have a strong interest in nudging consumers towards certain decisions, by using cognitive heuristics for their own purposes. These rather commercial applications and techniques are not really new to the advertising industry and have been already discussed by many others such as: here, here, and here.

While those articles primarily investigate how heuristics can be used in a general context, the following article will provide a structured integration of cognitive heuristics in sales funnels. Sales funnels are basically models that take the whole acquisition journey of prospects into consideration; from first contact until purchase (or even further, considering after-sales activities and retention rates). Applying this framework allows advertisers and marketers to adjust their message and tone to the corresponding phase. Merging cognitive heuristics and sales funnels is particularly interesting when it comes to multi-stage funnels and online lead generation.

Most of the following model can be used for either B2C or B2B lead generation, as long as the advertising journey is trackable, and a recurring communication is guaranteed. As a framework, we will use a three-layered sales funnel in terms of communications goals.

While communication in the early stages can be rather fun, easy, and entertaining, the longer a prospect is in a funnel, the stronger the advertising components should get, and the communication should switch from a soft-selling to a hard-selling approach.

Three-staged Sales Funnel Model

Initial Awareness — Attract & Promote

At the beginning of the funnel, advertisers should focus on attracting new customers and promoting the brand in a generic and de-commercialized tone. As consumers are continuously bombarded by information, it becomes more difficult than ever to cut through the clutter in an overcrowded information and entertainment environment. Simply posting a product image in the hope that consumers will find and appreciate the ad is unlikely to provide the desired results.

So how can advertisers effectively attract consumers and interrupt their subconscious browsing mode to create a moment of awareness, without being too intrusive? The following list of cognitive heuristics has been found to be very useful in breaking through the clutter and obtaining initial attention.

Top Funnel Mapping: Attract & Promote

Aesthetic Usability Effect

The Aesthetic Usability Effect describes a paradox in which people perceive more aesthetic designs as more intuitive than those considered to be less aesthetically pleasing. When promoting a product or service, advertisers should try to design the ad to be as pretty as possible — according to the Aesthetic Usability Effect, prospects are more likely to stop scrolling and get further engaged when seeing aesthetically pleasing content. Our brain perceives it as being easier to understand (more “snackable”) and there is a higher willingness to engage. Advertisers should not overload top-funnel ads with information and fancy effects but instead focus on lean messaging.

Dell promotes the aesthetics of a product in a clean and simple way.

Bizarreness Effect

The Bizarreness Effect is described as the tendency of bizarre material to be remembered better than common material. The scientific evidence for its existence is still contested, but some experiments have shown that ads which address a bizarre topic perform better than their less controversial peers. Finding the right level of bizarreness can be difficult and marketers should keep in mind that what is considered to be bizarre for a certain group, does not necessarily mean that everyone perceives it from the same perspective. Perception, interpretation, and implication can vary significantly between cultural backgrounds.

#EatLikeAndy Burger King Campaign 2019

STM Forum ad with a controversial message and disturbing visual

Humor Effect

The Humor Effect is a psychological phenomenon that causes people to remember information better when they perceive that information is humorous. Just like in real life — starting a relationship with a funny connotation can be a good strategy. This positive, first impression of a brand brings a smile to consumers’ faces and makes the ad not only stand out but also easier to remember.

Spotify Billboard Campaign points out humorous irregularities of user behavior

Availability Heuristic

The Availability Heuristic, also known as availability bias, is a mental shortcut that relies on immediate examples that come to a person’s mind when evaluating a specific topic, concept, method, or decision. Information from the recent past is accessed by our brains more quickly and we overestimate its scope and meaning. Advertisers should think of recent events and try to lever their impact on buying decisions by linking messages to those.

Stuart perceives airplane crashes to be more likely to happen because of a recent incident

Mockup ad leveraging availability heuristics

Law of Prägnanz

People will perceive and interpret ambiguous or complex images as the simplest form possible because it is the interpretation that requires the least cognitive effort from us. Advertisers should not try to make things too complex in the early stages of the funnel. Consumers will try to reduce the complexity of your message to a minimum. Ads should provide a snackable message instead of being overloaded with (irrelevant) information at this stage.

SurveyMonkey focusses on communicating one simple message

Tip: Even if you want to communicate the intention of a serious and sophisticated company, don’t take yourself too seriously at the beginning of a relationship with new clients. If you apply the sales funnel technique correctly, you will have plenty of better opportunities to make your point. For the early stages and first impressions, try to entertain rather than educate or convince. If you are pushing your product or service with too many “Buy or Die” ads from the beginning, you are more likely to turn off prospects.

Attention Retention — Interest & Educate

Once we have the attention of our prospects, it is time to interest and educate on a more detailed level. We can work with a set of heuristics at this stage to make special features stand out, or to distinguish us from competitors.

The goal in this stage is to establish expertise, help consumers to make an informed decision, and offering help, like answering specific questions. Applied correctly, brands can not only achieve a sophisticated level of trust but also use their knowledge as a basis for other inbound marketing concepts (like improved search engine rankings).

Middle Funnel Mapping: Interest & Educate

Framing

Framing is the principle that our choices are influenced by the way something is framed by different wordings, settings, and situations. Advertisers can place the same product in different scenarios to address target segments more granularly by simply changing the “frame”.

Hyundai Santa Fe Display Ads frame the same product in different ways by creating three different scenarios

Anchoring

Anchoring is a cognitive bias where an individual depends too heavily on a particular piece of information. Once the anchor is set, we are biased towards interpreting information around that anchor, even if we eventually discover the anchor to be incorrect or less relevant. If we are unable to re-anchor, the initial anchor will prevent us from making fully rational decisions based on unbiased analysis.

Controversial Campaign by Saatchi & Saatchi anchors price relations

Von Restorff Effect

The tendency that an item which sticks out is more likely to be remembered than other items is called the Von Restorff Effect. Creating meaningful, helpful contrast between products through, for instance, the use of a complimentary product in a list of similar products can be of great advantage. Use color, shape, position, and texture to accentuate the contrast.

A mortgage advertiser uses the image of a house upside down in their ad

Halo Effect

The Halo Effect describes the tendency for positive impressions of a brand or product in one area to positively influence one’s opinion or feelings in other areas. On the one hand, campaigns placed on high-quality sites show a higher engagement rate, are perceived as more pleasant, and stay longer in the memory of consumers. On the other hand, the Halo Effect also works for negative first impressions (so-called Horn Effect).

Dior ad allocates Johnny Depp’s “first, wild impression” to the parfum

Zeigarnik Effect

In psychology, the Zeigarnik Effect occurs when an activity which has been interrupted, may be more readily recalled. It postulates that with continuous tension, people remember unfinished or interrupted tasks better than completed tasks. Marketers can create cliff hanger ads or a continuous narrative to keep prospects hooked.

SodaStream has something to announce but doesn’t tell right away what it is

Serial Position Effect

The Serial Position Effect is the tendency of a person to recall the first and last items in a series best, and the middle items worst (also called the Primacy and Recency Effect). Placing the least important items in the middle of lists can be helpful because these items tend to be stored less frequently in long-term and working memory. Positioning key actions on the far left and right within elements such as a navigation bar can increase memorization.

While the first ad on Google AdWords in the most expensive, the last one is much cheaper but also catchy

Illusionary truth

Illusionary Truth fallacy is the tendency to believe (false) information to be correct after repeated exposure. Some companies practice repeating their slogan over and over again, so consumers are more likely to perceive the statement to be true.

Bett1 stresses the statement of “Best Tested Mattress Ever”

Closing the Sale — Convince & Convert

By now prospects should know our brand, are likely to be emotionally attached and know all the applications, features, and benefits of the product. But that does not necessarily mean that they will actually buy from us and not from another company. In most cases we are not the only provider on the market and consumers have the chance to buy a similar product somewhere else. To avoid that, we have to convince and convert! Here is a list of cognitive heuristics that are particularly good to nudge people to take action and ultimately drive your sales.

Bottom Funnel Mapping: Convince & Convert

Sunk Cost Fallacy

We speak of of a Sunk Cost Fallacy, when facing increasingly negative outcomes from a decision, action, or investment, but nevertheless, continue the behavior instead of altering course. There are examples where companies interact intensively with their prospects by using a framework that provides bits of valuable information coming with (artificially created) efforts for consumers. A very common tool is surveys, where users will provide a lot of information but to receive eg. a full report, they must subscribe or pay for it. Given that users already spent some time with the survey, they are more likely to sign up or purchase as they feel the need to “recover” the time spent in order to gain any benefit. A great example is this, a “how-much-should-my-app-cost” website.

BuildFire asks to leave your email to see the results after a 14-steps questionnaire

Weber-Fechner law

Also known as the sensory-perception law, it states that sensory response to external stimuli is not proportional to the intensity of the stimulus. Where the intensity of the stimulus is very high, our senses self-adjust so as to only detect enormous differences, whereas when the intensity of the stimulus is very low, they adjust so as to amplify the smallest possible differences. In marketing, this implies that when initial prices are small it is easier to perceive small changes in them and to tell those two things apart. When numbers get higher, it is harder to perceive the same small change, while the absolute values stay the same.

Selecting lower price items, the shop proposes a store pickup by default instead of relatively high postage (49%) …

… while the delivery option is in default and postage of 4,86€ for a 140,90€ iPhone case seems rather marginal

Belief bias

The tendency to judge the strength of arguments based on the plausibility of their conclusion rather than how strongly they support that conclusion is called belief bias. In other words, we are likely to accept a conclusion as true because it is believable to us, rather than examining whether the conclusion is logically valid. How is this used in advertising and marketing? As long as the conclusion is what someone wants to hear, prospects will usually write off the details of how someone got there. That conclusion matches with what they want. A seller can avoid using logic in a sales pitch and instead focus solely on the outcome he or she can provide. So can politicians.

Political ad from Trump’s campaign team attacking Joe Biden

FOMO

Probably one of the best known and most used heuristics: Fear-of-missing-out is a form of (social) anxiety — a compulsive concern that one might miss an opportunity or satisfying event.

A prominent timer on a ticket sales website to increase the urgency of the purchase before the next price increase

Endowment Effect

People are more likely to retain an object they own than acquire that same object when they do not own it. From a marketing perspective, this can manifest in a number of ways. For example, people are often willing to pay more to keep something they already own while new customers will be less inclined to pay the same asking price. Likewise, it is difficult for people to let go of things they already own because the sense of value becomes inflated. In marketing, it is common to offer something gratis for a certain time and threaten to take it away again. That way prospects can try the service and, according to the endowment effect, they will value it higher than beforehand.

Netflix giving a 30-days free trial

Email and marketing platform sendinblue encourages its prospects to take a free trial

Scarcity Effect

The tendency that humans place a higher value on an object that is scarce (rare), and a lower value on those that are in abundance. By displaying a low stock number next to the product, marketers can create an (artificial) scarcity effect, which reinforces the urgency of the purchase and eventually boosts their sales.

Online fashion retailer YOOX highlights the scarcity of items

Decoy Effect

The Decoy Effect or the Asymmetric Dominance Effect is a cognitive bias in which consumers will be inclined to have a specific change in preferences between two options when also presented with a third option that is asymmetrically dominated. This is a type of cognitive bias in which an unattractive or more expensive option is added to make an alternative option look more attractive.

Apple favors decoy pricing on its website

Transaction Utility

Describes the happiness a consumer gets from the perceived value of the deal. Transaction utility is modeled as depending on the difference between the selling price and a reference price. A large discount will increase our willingness to buy a certain product simply because we perceive it as “such a good deal”. Whether we really need the product plays a secondary role.

Sportsdirect.com promotes clothing on high discount

In-Group Bias

In-Group Bias describes the effect, that people prioritize products and ideas that are popular with a group they’ve aligned themselves with. Across many different contexts, people act more pro-socially towards members of their own group relative to those outside their group. Marketers can take advantage of this bias by creating such groups and addressing the prospect as if they were part of it.

Hubspot wants us to join 48.000 fellow sales professionals

NYT refers in its ads to “Readers in Europe” as a group of readers

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