What is Marketing Psychology? + Ways to Increase Conversions

Marketing psychology uses human behavior insights to increase user engagement by guiding purchasing decisions. Learn how to use it to increase your conversions.

Flash sales. An influencer’s sponsored post. Subscription tiers.

What do these things have in common? They’re all examples of marketing psychology principles in action.

To successfully market your product or service, you need to understand not just what your customers want but also what drives them to make decisions — especially purchasing decisions.

Marketing psychology takes this practice a step further by delving into the principles of how people think, feel, and act. Knowing all of this will help you to fine-tune your marketing strategies, leading to more qualified leads and increased conversions.

What is marketing psychology?

Marketing psychology is the study of how marketing techniques influence our thoughts, emotions, and human behaviors.

By applying common psychological principles to your strategies, you can gain a deeper insight into your customers’ behavior. This understanding helps you influence customers to make purchases or take specific actions.

The brain functions in unique ways, creating shortcuts to assist in decision-making. By tapping into these mental shortcuts, you can effectively grow your audience and improve your marketing campaigns.

In short, understanding the how and why behind people’s thoughts and actions enhances marketing efforts and helps develop a stronger brand identity.

HawkSEM’s lead strategist, Chloe Derse, explains why marketing psychology is important.

“I think marketing psychology plays a huge part in running successful campaigns – from the targeting to the ads, to the landing page experience,” says Derse.

“Every step is an opportunity to better connect with your target audience and establish trust, and trust is key for someone to convert.”

6 psychology principles to boost your marketing efforts

These six marketing psychology principles can improve your messaging, your marketing campaigns, your ability to attract new customers, and your conversion rates.

1. Loss aversion and exclusivity

Loss aversion is the human tendency to feel the pain of loss more strongly than the pleasure of gain (even if the outcome is the same).

In other words, we would rather avoid losing $100 than be given $100.

This can be seen in marketing tactics that create a sense of urgency in order to avoid loss (think flash sales, coupons, and limited inventory).

Similarly, exclusivity is all about making a product or service seem more desirable and hard to come by through limited access. These two marketing tactics overlap because of the customer’s fear of missing out — i.e., FOMO.

How to use loss aversion and exclusivity in your marketing strategy

It pays to tread lightly when it comes to loss aversion and exclusivity.

While implementing these strategies, remember to keep your copy honest and refrain from overusing tactics that could desensitize your audience from the excitement of a good sale.

Plan and promote limited-time offers and sales

(Image: Madewell.com)

Capitalize on loss aversion with special pricing and limited-time offers on your website every once in a while. This is particularly useful for ecommerce businesses, although service-based businesses can certainly benefit as well.

Promote these sales through your other marketing channels, like email marketing, paid social media, and paid search, to create a buzz around your limited offer.

But keep in mind that some demographics and target audiences might find too many markdowns off-putting and minimize that critical sense of urgency.

So consider your audience before maxing out discounts and (over) hyping your offers.

Share scarcity alerts and countdowns

(Image: JCPenney.com)

It’s safe to say JCPenney’s target audience looks a little different from Madewell’s.

Not only does this “doorbuster” sale promotion take over their homepage, but it also includes a countdown to emphasize that sense of urgency.

While countdowns and scarcity alerts may not work for every sale or every brand, they can be a super effective sales strategy to get customers to convert faster.

Highlight inventory availability

(Image: forloveandlemons.com)

Imagine: You walk into a clothing store and see a t-shirt on display that you love. After combing through the rack, you can only find one in your size. It’s your lucky day.

Now you not only love that shirt, but you probably feel like there’s no time to waste and take that bad boy to the checkout.

Inventory availability alerts on your website act the same way and can give customers the extra push they need to make a purchase by letting them know how many more of an item are in stock.

Consider “invite only” and “early access” offers

(Image: LiquidIV.com)

What’s more exclusive than invite-only or early access offers?

With these exclusive marketing techniques, your customers can beat the crowds (and get the best sale price) — like this email offer from Liquid I.V.

Leverage qualifications and waiting lists

(Image: Google.com)

Is it a Jedi mind trick? Or just good ol’ marketing psychology? When your audience has to work a little harder to even consider a conversion, it makes them more likely to make a purchase in the end.

By requiring qualifications or signing up for a waitlist, your audience will feel a small sense of accomplishment just by “getting in.”

(Image: Carvana.com)

What’s more? Waiting lists and pre-qualifications allow you to collect email addresses, which can be used to retarget those qualified leads later on.

2. Social proof

Social pressure exists throughout life, from childhood to adulthood. As a psychological phenomenon, social proof occurs when people use the actions of others to inform and validate their decisions.

(Check out this article on social proof for a wild example involving the rise of the shopping cart — no, really.)

If you’re new to a brand’s website and you’re looking to buy business software from them, it’s very helpful to see social proof elements, like testimonials, reviews, or logos of brands that are current happy customers,” explains Derse.

“It eases some of the worries that can crop up when you’re wondering if it’s a legitimate product, and again comes back to the trust element.”

These psychological elements of trusting others’ experiences and wanting to be like people we know reach into the world of online shopping as well.

How to use social proof in your marketing strategy:

Be honest: When’s the last time you made a purchase without reading the reviews first? And who under the age of 50 hasn’t been even a little swayed by an influencer’s product endorsement?

Social proof is one of the most commonly used psychology tactics in digital marketing — and for good reason. Here’s how to use it in your marketing strategy:

Ask for (and incentivize) reviews from customers

(Image: Lulus.com)

When it’s time to hire a plumber, how do you filter through the top results? Are you more likely to purchase a product with three reviews or 3,000?

Reviews are mega valuable to your audience because they help people do their due diligence before converting. And reviews are mega valuable to your business because they help you build trust.

But how do you get more reviews?

1. Provide a stellar experience. Not only should your product or service be excellent, but so should your customer service — starting from your first impression. Meaning your website is easy to navigate and understand, you always answer your phone and email, and any concerns are quickly remedied.
2. Ask! (And incentivize.) After a customer makes a purchase, send a follow-up email. How do they like the product so far? Is there anything that could be better? If so, do your best to correct any issues. Then, a few weeks later, I sent another email asking for a review. Don’t be afraid to incentivize reviews: Offer a chance to win credit for another purchase or a free gift.
3. Use the correct verbiage. Before asking for a review, think about providing some guidance. What kind of answers do you want? Formulate some specific questions around that.
4. Make ‘em accessible. From your website to your social channels to your email blasts, make it easy for customers to leave a review with the click of a (prominently placed) button.
5. Communicate with bad and good reviewers. When a customer leaves a review, reply. If it’s a good review, take the time to thank them sincerely. If it’s a negative review, it’s still a positive opportunity. Reply, acknowledging their disappointment and offering a tangible solution. Everyone makes mistakes, and potential customers will be relieved to learn you’re a trustworthy brand.

Create and share case studies

(Image: HawkSEM.com)

Case studies take reviews to the next level. For service-based businesses, case studies allow your prospects to learn how you solve real problems.

Case studies, which include real client names, problems, solutions, and specific numbers, are often the last piece of information people need before seeking a consultation.

Add badges for achievements to your site

(Image: Hootsuite.com)

In addition to reviews, adding badges to your website (especially landing pages) proves your validity and authority in the space. Don’t hold back! It’s okay to brag.

Share user-generated content

(Image: Instagram.com/aerie)

User-generated content is a win-win because it’s free content marketing. But more importantly, it gives your brand an instant boost of credibility. This is especially true for ecommerce businesses — just check out Aerie’s Instagram account.

Consider influencer marketing

(Image: TikTok)

Reaching out to influential profiles on social media to promote your brand is an excellent way to get more traffic, earn trust, and increase conversions.

The numbers don’t lie: Half of millennials trust product recommendations when they come from influencers. One-third of Gen Zers have purchased a product based on an influencer’s recommendations.

And no, it doesn’t have to be from a big celebrity name to work.

In fact, influencer marketing can actually be more effective (and affordable) when brands partner with “micro-influencers” who have a slightly smaller following.

First, find influencers who have relevant interests and audiences to your brand. Then, reach out and offer a free sample of your product or service in exchange for promotion on their page.

You can set the expectations and guidelines.

Add testimonials to your website and marketing channels

(Image: Monday.com)

Once your reviews start rolling in, add them to your website and landing pages.

Attach a name, face, and job industry or title to each testimonial on your site when you can. This provides context that helps the reader trust what’s said. Videos showing how your service has made a difference to customers can also win you loyalty and encourage people to explore your company further.

Highlight customers who use your brand

(Image: HubSpot.com)

You don’t need a full-blown review from every customer. Just sharing the names and logos of customers who use your product or service can be credible enough for prospects to trust you.

…and use numbers

How many customers have you served? Years in business? How much ad spend have you managed? Share specific numbers to prove you’re the real deal.

Similarly, showcasing certifications you have will prove you’re trustworthy and have the knowledge to serve your customers well.

3. The decoy effect

The decoy effect is a psychological strategy in which brands present their consumers with different purchase options, including a “decoy” option intentionally designed to make a more expensive option look like a better deal.

This impacts the customer’s purchase decision.

How many times have you purchased that extra-large popcorn because it was basically the same price as the medium? Or how about when we buy two products instead of one because the second purchase was at a reduced rate?

The decoy effect can provide validation for a choice and help customers feel accomplished because they saved money (hello again, loss aversion!).

How to use the decoy effect in your marketing strategy:

Offer three membership or subscription options

(Image: Zoom.com)

Does your business offer subscription options or membership tiers? Derse gives us an example of the decoy effect where one option is the cheapest, and the next two are the same or very close in price.

“A streaming service might have a basic plan ($6/month), a premium plan ($12/month), and a premium plus bundle ($13/month) where you get access to another streaming service as well,” says Derse.

“People will interpret the premium plus bundle to be the best value and will opt for what they think is the best deal (even though it’s the most expensive), whereas most people would opt for the basic plan if the only choices were basic and the premium plus bundle,” she explains.

Ecommerce: spread out your pricing options

(Image: Apple.com)

Here, Apple uses an expensive higher-level storage option to make the middle choice seem more desirable (this is also called the Goldilocks effect).

In this scenario, each iPhone storage option doubles from 128G, to 256GB, then to 512GB.

While the cost from 128GB to 256GB is an extra $100, the cost between 256GB and 512GB jumps by $200. This makes the middle choice seem like the most economical option — or, as Goldilocks would say, just right.

4. Reciprocity

Reciprocity is the idea that you’re likely to return the favor when someone does something for you. In marketing, we see this with lead magnets such as downloadable checklists or free samples in exchange for an email address.

First introduced in Influence: The Psychology of Persuasion by Robert Cialdini, reciprocity is a great way to connect with your target audience for the first time.

How to use reciprocity in your marketing strategy:

Create free guides and tutorials

(Image: HubSpot.com)

HubSpot is a supreme leader in offering free, valuable materials (in exchange for your email address). From free trend reports to checklists to templates and guides, HubSpot really knows how to lean into the power of reciprocity.

Offering value to your audience can come in many forms — like Warby Parker’s at-home try-on option and their quiz to find the right frames:

(Image: WarbyParker.com)

Offer a free sample with purchase

(Image: Sephora.com)

Another way to offer value at a low cost is to offer free samples to loyal customers. For example, Sephora offers two free samples for every order from customers who sign up to be “Beauty Insiders.”

Promote a free trial

(Image: ParamountPlus.com)

Give prospects a taste of what you have to offer with a free limited trial. This helps you really narrow in on high-quality leads who will become loyal customers — and filter out flaky folks who wouldn’t stick around anyway.

5. Color psychology

There’s a reason why a certain popular fast-food chain uses a lot of red in their restaurant interior and packaging design. The same goes for why hospital rooms are often painted calm, soothing colors like light blue.

Consumer research shows that colors can influence how marketing messages are interpreted. This is especially true when it comes to persuasion and your brand’s impression.

In fact, they can even trigger specific feelings, particularly when purchase intent is high. Color psychology is one of several neuromarketing techniques employed in marketing psychology today.

You can use the principles of color psychology to:

• Run better-informed A/B tests
• Create recallable and impactful brand logos and website design
• Create captivating and recognizable content

6. Anchoring

Anchoring is a psychological principle where people rely heavily on the first piece of information they encounter when making decisions.

This initial information sets a reference point that influences their perception of value and their subsequent choices.

How to use anchoring in your marketing strategy:

Showcase discounts and savings

Displaying both the original and discounted prices highlights the savings more effectively.

For example, Proton shows the original, discounted, and percentage saved for their subscription plans. This makes the discount clear and sets a reference point that makes the discounted price seem like a great deal.

By presenting the higher original price first, customers perceive the lower, discounted price as a significant bargain, prompting them to take action.

Use comparative pricing

Offering multiple pricing options can make certain choices seem more attractive by comparison. Proton’s subscription tiers — Mail Essentials, Mail Professional, and Proton Business Suite — illustrate this well.

The mid-tier Mail Professional plan appears more economical and desirable by positioning the Proton Business Suite as the highest-priced option.

This comparative pricing helps customers feel they are making a smart financial decision by choosing the middle option, which offers the best balance of features and cost.

Highlight initial offers

Presenting a high initial price followed by a lower price can make the lower price appear more attractive.

For instance, if a premium subscription plan is priced at $20 per month, introducing it first makes a standard plan priced at $10 per month seem like a bargain.

This strategy taps into the anchoring effect by setting a high reference point, making subsequent lower prices more appealing.

It can be particularly effective for subscription services or tiered pricing models where customers are looking for the best value for their money.

How psychology improves your marketing

Now you know what marketing psychology is, but you might still be wondering if you should put your precious budget and time into understanding and using it.

The answer is yes, you should. Here’s why:

1. Anticipate irrational behavior

People often make decisions based on emotions rather than logic. By understanding these emotional triggers, you can create campaigns that resonate more deeply with your audience, encouraging them to take action even when it seems irrational.

2. Influence decision-making

Marketing psychology helps you tap into mental shortcuts that people use to make decisions.

These shortcuts (or what marketing psychologists refer to as heuristics) allow you to design marketing strategies that guide potential customers toward a specific action, such as making a purchase or signing up for a newsletter.

3. Enhance brand trust

Applying psychological principles can help you strengthen your connection with your audience.

When customers feel understood and valued, their trust in your brand increases, leading to more loyalty and referrals.

4. Optimize campaigns for better results

Leveraging insights from marketing psychology, you can refine your campaigns to achieve better results.

This means creating messages that speak to your audience’s needs and desires, leading to improved conversion rates and more qualified leads.

5. Gain a competitive advantage

Incorporating psychological tactics into your marketing strategy sets you apart from competitors.
By proactively influencing consumer behavior, you can identify and attract more potential customers, ultimately driving business growth.

Marketing psychology vs. cognitive bias: an ethical dilemma?

Here’s where things get complicated.

Consumer psychology is deeply intertwined with cognitive bias. Discussed most famously in Daniel Kahneman’s Thinking Fast and Slow, cognitive bias is the psychological theory that our brains mostly use shortcuts when processing information.

These shortcuts are influenced by emotions, social pressure, memory recall, and selective attention and deeply impact our decision-making process.

This is a survival tactic. If we took our sweet time agonizing over every decision in our day-to-day lives, our energy expenditure would be through the roof.

So, cognitive bias allows us to make lower-risk decisions more quickly. But it also makes us bad at decision-making.

Marketing psychology leans on cognitive bias, which frankly feels like taking advantage of our poor decision-making abilities (see: manipulation). And it can.

But the beauty of marketing psychology is that, when executed ethically, it actually helps you connect with the right audience faster without pulling in unqualified leads in the process.

How we use marketing psychology at HawkSEM

It can get pretty nerdy around here. Not only do we stay sharp on our digital marketing techniques — we also rope in our marketing psychology know-how on the daily.

Derse explains that one theory she employs often is reactance theory.

“This basically suggests that people resist being told what to do, as they perceive it as threatening their freedom,” she says. In other words? Messaging matters. And it’s wildly important “to put yourself in the shoes of someone receiving a message.”

“In our jobs, this translates to writing effective ad copy and landing pages,” she continues. “Being too forceful or pushy in any messaging may end up pushing potential customers away.”

The takeaway

These psychological theories not only improve your marketing strategy but also your customer experience.

And while marketing psychology tactics have been used for coercion, those unethical efforts will ultimately fail.

Consumers are smart, after all. They know how to do their research and aren’t afraid to abandon an untrustworthy brand.

Marketing psychology works when you believe in your product or service and its ability to improve the lives of a subgroup of folks. If your messaging comes from a sincere place, using marketing psychology will only make your outreach more effective.

And if you want a little help along the way? Well, we’ve got you covered.

This article has been updated and was originally published in January 2020.