5 Psychological And Behavioral Principles That Amazon Uses To Drive Sales
“We had three great ideas on Amazon that we have been loyal to for 18 years. They are the reason we are successful: putting the customer first. To invent. Be patient.”
Jeff Bezos, Amazon founder, president and CEO
Amazon ungating service is the brightest star in the eCommerce constellation, a star in constant evolution, refinement and growth, and it is not difficult to understand why: given that so many make daily purchases on its platform, the American giant continuously obtains data on trends, on the purchasing habits and on the search and navigation methods of an enormous amount of users, which allows them to build a shopping- oriented browsing experience in an increasingly perfect way.
For such a success, it is clear that data analysis is not enough. Amazon’s secret is how its engineers and marketers know how to interpret and use this information in light of the principles of psychological and behavioral economics applied to the most effective sales tactics.
Below, we see them one after the other.
5 Psychological Principles Amazon Uses To Drive Sales
1. The principle of peak and end (Peak-End)
This principle states that people remember an experience based on how they felt at the most intense point (peak, climax) and at the end, rather than the “during” of any single moment.
How does Amazon apply the Peak-End?
Amazon applies this principle by eliminating friction (i.e. the fears, difficulties, confusion and indecisions of the user) in the two most critical points of every eCommerce: payments (the peak) and shipments (the end).
In fact, when you think about it, when Amazon has your credit card on file, payments are essentially invisible. You can simply click “Buy Now” and the product is already on its way to your door. Or swipe the screen with your finger and that’s it.
For Amazon Prime members, shipping is also a breeze. One of the main advantages of Prime is “free” and fast shipping. Prime takes the friction (i.e. boredom and hesitation) out of waiting and makes buying the same product online more attractive in a store.
2. The principle of reciprocity
Reciprocity is a social norm that prompts the individual to respond to a positive action towards him with another positive action. This is why you feel indebted when someone does you a favor.
Made famous by the famous American psychologist Robert Cialdini in his book “The weapons of persuasion “, reciprocity can be summed up with the old adage: “Give to get”.
How does Amazon apply the principle of reciprocity?
An example of using reciprocity to drive sales can be seen in their Kindle store. Customers can take a peek at the content of a potential purchase using the “Read Extract” function, which allows you to read the first contents for free.
Besides the fact that “the appetite comes with reading” and it is psychologically more difficult to abandon an action that we have already begun to do, Amazon (and the authors) have essentially given you a gift by allowing you to read part of the book without obligation, which makes you feel indebted. You are now more likely
(subtly and irrationally) to buy that book because you want to return the favor.
3. Scarcity
The Scarcity Principle states that humans place a higher value on something in short supply and a lower value on things that are widely available. In his book Robert Cialdini describes scarcity in this way:
“When our freedom to have an object is limited, that object becomes even more attractive to us and we desire it powerfully; we don’t know why, but all we know is that we want it.”
How does Amazon apply this principle?
Amazon uses scarcity to its advantage in many ways. The Deal of the day, as shown below, implies that promo products are so good they won’t be missed: they’re only available for 24 hours.
Scarcity makes you perceive a product (and the offer attached to it) better than they actually are.
4. The principle of authority
The Principle of Authority states that individuals tend to conform to those in higher social positions, such as actors, doctors, professors and experts.
How does Amazon apply the principle of authority?
Amazon applies the principle of authority when people are struggling with multiple choices and therefore need help making a final decision. During the search phase, results labeled “Amazon’s Choice” appear in almost all categories.
Customers overwhelmed by a large number of choices take it for granted that if anyone knows which products are the best, it’s Amazon.
5. The “sign up and save” principle
In behavioral economics, saving time, memory and decision fatigue is a highly tempting prospect. Since the default settings within an eCommerce don’t require people to put any effort, they can be a simple yet powerful sales tool.
How does Amazon use these settings?
Amazon’s “Sign up and save” feature, for example, is a powerful use of default settings.
By offering customers a small discount in exchange for creating a recurring subscription, Amazon makes purchasing the product the default.
Not only that, but “Sign up and save” is pre-selected, so the sign up process is also predefined. A customer is forced to work harder to buy the product once than to buy it multiple times.
In conclusion
There is no doubt that a large portion of Amazon’s revenue comes from applying these principles. In fact, in 2013, McKinsey estimated that 35% of what customers were buying on Amazon was essentially driven by their persuasive selling algorithms.
However, these powerful tactics weren’t 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, you need to have a mindset that is brought to test, trial, failure and analysis. Why don’t you create a winning and solid business in a few months. You must be willing to test the application of the same principle in several ways. Or, you can rely on those who already have extensive experience in online sales, persuasion and web usability.
