Amazon is considered the “Terminator” of e-commerce industry – they are constantly changing, learning and developing. Because there are so many shoppers at Amazon, they can experiment on a very large scale.
So it’s no surprise that when it comes to boosting Amazon’s sales, very few brands do it.
However, you might be surprised to learn that there are principles of psychological and behavioral economics that apply to their most effective sales tactics.
5 psychological principles that Amazon uses to drive sales
1. The principle of the peak
This principle holds that people will remember an experience when their feelings reach their peak, instead of mediocre experiences.
How does Amazon apply the Peak Principle?
Amazon applies the Top-notch Principle by not letting customers feel the two biggest pain in e-commerce: payment and shipping.
Amazon allows you to use the card to pay, so you do not see the money. Simply click the “Buy Now” button and the product is on your way to your home right away.
For VIP Members, transportation is also easy. One of the main benefits of VIP is “free” and fast shipping. You won’t have to wait for orders, so this online sales channel is much more attractive than similar products sold in stores.
2. Reciprocal principle
Reciprocity is a social norm, responding to a positive action with another positive action. That is why you feel indebted when someone helps you.
The book “Psychological moves in persuasion” has a summary of this reciprocal principle as follows: “Yes, you can accept it.”
For example, in one of Cialdini’s studies, customers are 42% more likely to buy if they receive a free piece of chocolate at the store.
How does Amazon apply the reciprocal principle?
An example of using the Reciprocal Principle to drive sales takes place in the Kindle store. Customers can see the content of the book thanks to the characteristics “Proofread”.
Because Amazon (and the authors) basically gave you a free gift by allowing you to read a part of the book, you feel indebted. Now your purchasing power is very high, you want to repay by supporting them.
The scarcity principle states that the rarer the product, the more people appreciate it than popular products. In his book Psychological Strikes in Persuasion, Robert Cialdini describes it as follows:
“Only when you have something limited edition you can satisfy, then the item naturally becomes rare and the more we want it.
However, we are less aware that this psychological reaction makes us more eager to own it; We just know we want to own it. “
How does Amazon apply this Scarcity Principle?
Amazon takes advantage of this principle in many ways. The “day discount” program, as shown below, implies that these deals are very good but few, only available for 24 hours. People consider them scarce, and therefore they are even paying higher than usual amounts.
Amazon also uses the scarcity principle in the Woot !. This offer has not only a “count time” feature, but also a “limited quantity” feature. Now customers feel this is an even scarier item (and thus, more attractive).
4. Principles of ruling.
The governing principle says that people tend to adhere to people in positions of power, such as the police, government leaders, professors and cognitive experts.
How does Amazon apply this Principle of Ruling?
This principle is used in cases where customers feel overwhelmed by having too many choices, and therefore need support. When “browsing” products, customers will see the “Amazon Options” label appear in most categories.
Customers will be excited but will also be overwhelmed because there are so many choices. And if someone asks for the best product, the answer is an Amazon product.
In the Editorial recommendations section, Amazon provides search information from third parties to help customers decide which products in the category are rated “best”.
So if they don’t trust customer reviews and they think the “Amazon Options” are a little biased, that’s okay. Still have an expert give them advice. Customers do not even have to leave their browser window to read it.
In behavioral economics, the default option is that pre-set actions are in effect if the customer does not choose to decline. Because this default does not require people to do anything, they can be a simple but powerful sales tool.
How does Amazon apply the default rule?
The “Register and Save” feature on Amazon is a power default. If the customer buys the subscription subscription periodically, they will get a small discount, so Amazon has turned it into the default customer-always-purchase function.
Not only that, the “Subscription and Savings” feature is preinstalled, so even the registration process is a default. One-time purchases will be more difficult than multiple purchases.
Without a doubt, the majority of Amazon’s revenue comes from applying these principles. In fact, in 2013, McKinsey estimated that 35% of what customers buy on Amazon is driven by suggested algorithms.
However, these power tactics are not discovered in a day. They are the product of years of testing and optimization.
That’s why, if you want to apply these principles to your brand, psychological testing is important. You must be willing to test the same principle in hundreds of ways.
Because Bezos relies on experiments, Amazon has rigorously tested these principles and adjusted until they are revenue generating machines.
According to MED