The Anchoring Bias: How your first piece of information influences your customers decisions
It’s episode 2 of The UK Apprentice (aka people you don’t want to hire) and the challenge was to create small, personal cheesecakes to sell to a corporate client.
While the men went to the client with a pricing strategy of between £8-£4, the women started their negotiations at a whopping £15 per cheesecake.
“15 pounds!” A visibly shocked Lord Sugar exclaims.
The staggering amount for a mini cheesecake left everyone gobsmacked.
“For that price people would expect to receive a cheesecake that feeds eight people — not just a mouthful.” Baroness Brady chimes in.
They weren’t the only ones questioning the price. In fact many people thought £7 was asking too much.
BUT The corporate client agreed to take 50 units striking a deal for £13.80 per cheesecake, (although this was later reduced to £11 because of the look of the product.)
How did they manage to pull that off —
Anchoring in copywriting is a psychological technique that leverages the human tendency to rely heavily on the first piece of information offered when making decisions.
By setting an initial “anchor” point, copywriters can influence a reader’s perception of value, price, or other aspects of a product or service.
The most common use of anchoring in sales is in discounts — the original price serves as an anchor and the discounted one suddenly seems like a bargain.
Take for example: You go to a store All the shoes are £300, except one with a £150 label and suddenly it feels cheap. You go to another store, and see the same pair of £150 shoes among the £55 ones and suddenly they seem expensive.
In the case of The Apprentice, by going in with a high price the clients anchored themselves to the perceived value and price of a premium, quality cheesecake allowing them to negotiate to a lower and still think it was a bargain.
Here are some key aspects of anchoring in copywriting:
- Establishing the anchor: Copywriters often use anchoring to create a reference point for their audience. This can be done by presenting an initial price, highlighting product features, or using comparisons to establish perceived value.
- Adjusting perceptions: After establishing an anchor, copywriters can adjust readers’ perceptions by highlighting discounts, offering added value, or emphasizing unique selling points. This helps readers compare the product or service to the initial anchor, often resulting in a more favorable perception.
- Using data or statistics: Anchoring can also be achieved by using data or statistics to set a reference point. By showcasing the product’s impact or effectiveness, copywriters can establish a sense of value that influences the reader’s decision-making process.
And companies can use Anchoring creatively:
- The Decoy (Putting overpriced items on the menu first)
Serendipity 3 is a restaurant in New York City, that sells a $69 hot dog. The Haute Dog is grilled in white truffle oil, as is its pretzel bread bun, topped with medallions of duck foie gras, black truffles, caramelized Vidalia onions, heirloom tomato ketchup and, of course, mustard (Dijon, with black truffles).
But while it’s a World record-breaking hot dog (the most expensive hot dog), they didn’t make it to just sell it. If you want to eat it you have to pre-order it.
Not only did it get instant attention and awareness — it also helped anchor their other food.
You see, once you anchor your value as to how expensive a hot dog on the menu is suddenly their $27.95 cheeseburger seems a more reasonable choice.
That’s why Rolls Royce sell their cars at luxury yacht conventions.
Anchoring is closely related with the concept of “framing” — presenting your words in the best frame of reference to achieve your goal.
I would use it every time I wrote a Press Release, whenever I wrote a promotional ad, and in my events emails — it’s all about tapping into your audience’s perception, setting a context, and framing your content around something they can already visualise.
2/ Changing the context to make the price seem lower
How much would you pay for a 474g (17oz) bag of coffee?
£2? £5? £20?
and how many cups of coffee would that make?
What about £45?
“Ridiculous” I hear you say — but wait — Nespresso sells a single pod for 79p (99c)
Nespresso uses Anchoring to change the way we purchase coffee — When we think of a cup of coffee, we don’t compare it to a bag of coffee but to the cost of a cup — And suddenly that 79p Nespresso pod is a bargain when compared to £4 at Starbucks.
3/ Change the context to make your product more valuable
In the 1930s, People were more likely to buy emeralds or sapphires for engagement rings — that was before De Beers made diamonds the natural choice for romantics.
Its 1947 tagline, “A diamond is forever”, helped anchor in its customer’s mind the durability of the stone twinned with the eternal nature of love.
But that wasn’t all — because people had never bought a diamond before, no one knew exactly how much they should pay for a ring.
To help their customers visualise how much a diamond should cost, rather than putting a price, De Beers compared a diamond to two months’ salary.
By using the anchoring bias De Beers created one of the most, successful campaigns in the world.
Anchoring in copywriting is a powerful psychological technique that allows writers to guide readers’ perceptions and influence their decision-making process.
By carefully setting an initial reference point and strategically adjusting perceptions, copywriters can effectively communicate a product’s value and persuade potential customers to take action.
