We like to think of ourselves as logical people making logical decisions.
We study the data in our analytics dashboards, looking for trends among our customers. We carefully weigh the pros and cons in our personal buying decisions, easily arriving at a logical choice.
Right? No, that’s wrong.
The truth is that the human brain is incredibly complex, influenced by context and emotions. For example, there are many cognitive biases that affect every decision you and your clients make. So, what is cognitive bias?
What is Cognitive Bias?
Cognitive bias is a type of thinking error that occurs when individuals allow their decisions to be influenced by personal preferences, emotions, and beliefs. Everyone is susceptible to cognitive bias, leading to inaccurate judgments and decisions. Why do cognitive biases even matter?
Why Do Cognitive Biases Matter?
We all suffer from various cognitive biases, often at the same time. In fact, the belief that you are less affected by cognitive biases than others is a form of cognitive bias itself. It’s called “blind spot bias,” a small bias that makes it easier for you to detect biases in others (rather than in yourself).
The more you understand about how the human brain works, the better you can market your products and convincingly persuade potential customers.
The History of Cognitive Bias in Psychology
Cognitive bias is a phenomenon that has been extensively studied by psychologists and other researchers over the years. It refers to the tendency of individuals to base their judgments and decisions on inaccurate or incomplete information.
One of the earliest studies on cognitive bias was conducted by psychologists Daniel Kahneman and Amos Tversky in the 1970s. They found that people tend to make decisions not based on logic or objective evidence, but rather on their personal beliefs and biases.
Since then, many other studies have been conducted on cognitive bias, showing that it plays a role in a wide range of decisions and judgments, from everyday choices like what to wear or what to eat, to more significant decisions like whether to invest in a particular stock or vote for a certain candidate.
Common Examples of Cognitive Biases
There are many different types of cognitive biases, but some of the most common include:
Confirmation Bias
This is the tendency to seek out, interpret, or remember information in a way that confirms personal assumptions or hypotheses. For example, if you believe that apples are unhealthy, you may only pay attention to news and studies that support this view and ignore any evidence to the contrary. This type of bias can lead to poor decision-making because not all available evidence is considered.
Availability Bias
This is the tendency to estimate the likelihood of events that are easy to imagine. This bias can lead people to be afraid of flying, even though statistically it is safer than driving. Availability bias can lead to irrational decisions based on emotions rather than facts.
Anchoring Bias
This is the tendency to heavily rely on the first piece of information encountered when making decisions. For example, if you’re trying to decide how much to spend on a new car, you may base your decision on the sticker price, without considering other factors like monthly payments or fuel efficiency. This bias can lead to poor decisions by not taking all relevant information into account.
Overconfidence Bias
This is the tendency to place excessive trust in one’s own abilities or judgments. This bias can lead to unnecessary risks or poor decisions based on an inflated estimate of a person’s capabilities.
BiasBackfire Effect
When people claim they knew something beforehand, after it has been validated. For example, after attending a basketball game, a person claims they knew who would win in advance.
Examples of Cognitive Biases in Business
New cognitive biases are added to the list every day. Like the “Cheerleader Effect,” which was popularized by the character Barney on the television show How I Met Your Mother. It is the bias that makes us believe individuals are more attractive when they are part of a group.
But here are some basic examples along with some “unusual” examples to help you quickly access the information:
Availability Bias
Definition: The tendency to estimate the likelihood of certain events based on how “available” they are in memory, which can be influenced by how recent the memories are or how unusual or emotionally charged they are.
Availability bias relies on recent memory. If you can quickly recall something, it must be important or at least more important than things that are not easily recalled.
For example, after hearing about a string of thefts in the news, you may be more cautious when locking your doors at night.
How this applies to e-commerce: Use what is happening in the world and in the news to boost sales. For example, after Hillary Clinton’s loss in November 2016, the Women’s March was organized in January and International Women’s Day in March, the creators of the game “Cards Against Humanity” released a “her” version of the game:
The entire homepage highlighted the bias against women, starting from the fact that it is the same game in pink packaging, but it costs an additional $5.
Backfire Effect
Definition: A person’s reaction to evidence contrary to their previous beliefs is to strengthen their previous beliefs.
This is also known as confirmation bias. Essentially, when strong evidence is presented against people’s previous beliefs, they often reject the evidence and believe even more strongly in their original position.
Additionally, we have a tendency to seek out, interpret, prefer, and remember information in a way that confirms our preexisting beliefs.
Anyone who has engaged in a heated debate about politics or religion, for example, can recognize this cognitive bias.
People believe what they believe, and it’s very hard to change those beliefs.
How this applies to e-commerce: Conduct research to understand what these beliefs are that your audience holds and focus on emotional appeals to change them. For instance, there is an increasing number of climate change deniers now. If they were to visit the WWF store, they would encounter an emotional appeal to save the animals affected by climate change:
Barnum Effect
Definition: The observation that individuals will give accurate ratings to descriptions of their personality that are supposedly tailored specifically for them, but are actually vague and general enough to apply to a wide range of people.
This explains how horoscopes, predictions, and personality tests can seem very accurate.
This cognitive bias gets its name from the American circus performer P.T. Barnum, whom some people believe said, “There’s a sucker born every minute.”
How this applies to e-commerce: You can make visitors feel like you are speaking directly to them, even if you are addressing thousands. All it takes is some research on customer opinions and using that.
Benjamin Franklin Effect
Definition: A person who has done a favor for someone is more likely to do another favor for that person compared to someone who has done a harm for them.
Wait, what? The suggested reason for this psychological phenomenon is that you did the favor because you like the person.
This is actually the cognitive bias that explains longstanding feuds and rivalries, as the opposite is also true: you come to dislike people you do harm to.
Transfer
the phenomenon of choosing immediate rewards over delayed ones as “temporal discounting.” This concept suggests that people often prioritize short-term benefits rather than long-term gains.
How it applies to e-commerce: Consider offering instant gratification options or shorter delivery times to appeal to consumers’ preference for immediate rewards. For example, highlighting the option for same-day delivery or instant access to digital products can be effective in persuading customers to complete their purchases.
This is the present bias. Simply put, excessive bias toward immediate gratification leads to a preference for small immediate rewards over larger delayed rewards.
How this applies to e-commerce: Always provide fast shipping options, even if it costs more. Also, use limited-time offers to activate this present bias. For example, Bob & Lush offers free next-day delivery if you order before 4 PM:
Post-Purchase Justification Effect
Definition: The tendency to convince oneself through logical arguments that the purchase was a good value.
This is also known as choice-supportive bias. We want to ensure that we made the right decision, so we tend to assign positive attributes to the option we chose.
For example, if you chose option A over option B, you’re likely to downplay the downsides of option A and highlight the downsides of option B. You’re also likely to emphasize option A’s advantages while downplaying option B’s advantages.
How this applies to e-commerce: Most people feel buyer’s remorse “often” or “sometimes.” The post-purchase justification effect comes in to help eliminate this remorse. Use positive language on confirmation pages and email messages. For example, Tait Ischia sends this email when someone buys her book on copywriting:
Congratulations on making the right choice, followed by FAQs to ease the customer’s mind.
The Rhyme-as-Reason Effect
Definition: Rhyming statements are considered more truthful.
We are all familiar with the famous phrase from the O.J. Simpson trial, right? “If it doesn’t fit, you must acquit.”
In experiments, people consistently rate rhyming versions of expressions as more truthful. For example, “What agility conceals, alcohol reveals” was rated as more truthful than “What agility hides, alcohol exposes.”
This is likely because rhymes are easier to process.
How this applies to e-commerce: Use rhyme wherever you can, whether in product descriptions, product titles, or site banners, etc. For example, BarkBox uses rhyme to instill confidence in the quality of items within each monthly shipment:
The Halo Effect
Definition: The tendency to transfer positive or negative traits of a person from one personal area to another in others’ perceptions of them.
This cognitive bias explains why a bias toward certain products develops due to positive experiences with other products from the same company.
For instance, you might buy an Apple Watch, even though you’re not particularly interested in watches, due to positive experiences with your smartphone and laptop.
You might also be familiar with this concept when it comes to physical appearance. It’s the same reason we perceive people we find physically attractive as smart, charming, caring, etc.
Devil effect is the complete opposite of the halo effect. It’s when individuals allow an undesirable trait or negative experience to influence their evaluation and decision.
How this applies to e-commerce: Review your store’s attributes and highlight your best features. Perhaps you have a fantastic personality, or maybe you’ve produced a similar product in the past that people love, etc.
Highlight any positive trait you may have to create a halo around your current product. For example, Chubbies has a big and relatable personality that creates a halo around their shorts:
The Ingroup Favoritism Effect
Definition: The tendency to give preferential treatment to people who are perceived to be members of the same group.
These groups can be formed based on trivial surface traits (like having tattoos) and important moral attributes (like political opinions).
This cognitive bias dates back to 1906 when William Sumner, a sociologist, proposed that humans are a type of united in groups by nature. He also noted that humans have a natural tendency to favor their own group at the expense of others.
How
This applies to e-commerce: your store should fit the group you are targeting to market to. You should speak, act, and behave like your target demographic. For example, this is how Death Wish Coffee speaks to their audience:
The Impact of Humor
Definition: Humorous elements are remembered more easily than others, possibly due to the uniqueness of the humor, the time required to comprehend the humor, or the emotional persuasion that results from humor.
If you can make someone laugh, you can make them remember you. “Something funny happened to me yesterday,” “There’s a funny car commercial on TV,” “You won’t believe what my two-year-old said at the grocery store.”
Not only are we willing to remember funny memories, but we are also willing to share them. Why? It could be for several reasons: surprise, humor distracts the brain from the fact that it’s being marketed to, laughter makes us very happy.
Perhaps this is why 20% of all advertisements and 50% of TV commercials rely on humor.
How this applies to e-commerce: If it feels authentic (no one wants to force humor where it doesn’t belong), add some humor to your store. For example, Poo-Pourri adds humor both to the website and in its famous YouTube videos:
The Peak-End Rule
Definition: It seems that people do not perceive the totality of an experience, but they perceive the average of how it was at its peak (i.e., either very pleasant or unpleasant) and how it ended.
This is a cognitive bias that ignores the overall sum or average of the experience. Instead, it forces us to evaluate the experience based on how we felt at its peak (i.e., the most intense moment) and how it ended.
The rest of the information isn’t missing, it just isn’t utilized.
Daniel Kahneman and Ben Z.W. Carmon conducted a study to explore the peak-end rule. They found that participants who were very dissatisfied during most of the experience but were satisfied in the final seconds described the experience as positive.
In an earlier study, Kahneman and a few other psychologists found that participants were willing to suffer longer for the sake of the peak-end rule. Participants had two options: immerse their hand in water at 14 degrees for 60 seconds or immerse their hand in water at 14 degrees for 60 seconds plus an additional 30 seconds with the temperature raised to 15 degrees.
Most people chose the second option. They would suffer longer, but the ending was happier, leading to a more positive memory.
How this applies to e-commerce: Delivering your product on time and having it work as promised is the grand ending, so make sure you’ve invested in a quality product and checked your shipping options.
The peak point is likely your checkout process, so ensure it is as smooth as possible. Don’t ask for more information than you need, don’t require sign-ups, allow for digital wallets, etc.
For example, Tattly does this right:
What Causes Cognitive Bias
Social pressure is one of the main causes of cognitive bias. It can be difficult to think objectively when we feel the need to conform to the beliefs of those around us. This pressure can come from family, friends, coworkers, or the entire community.
Cognitive biases result from shortcuts
Source: https://www.shopify.com/blog/13-cognitive-biases-ecommerce
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