Every time you click a product, add to your cart, buy something or make a specific decision, Amazon nudges you in some way leveraging consumer behavior and psychology.
There are limitless ways Amazon continues to use psychology, neuroscience and consumer behavior in their marketing and conversion strategy/testing, but we're going to be covering 13 nudges that are used on you every single day.
I will also be doing my best to link to resources for you to come up with your own ways to implement these nudges into your marketing strategy.
Price Anchoring
Let's start off with one of the most obvious you see all over Amazon's site: price anchoring.
Price anchoring is a cognitive bias where people rely heavily on the first piece of information, the "anchor", they come across when making decisions, especially in the context of pricing.
Amazon uses a lot of different nudges with their pricing that we'll talk about, but I personally think the price anchoring they use is the most prominent as you click through.
Price Anchoring can actually be done in quite a few ways (you likely also see it used a lot with pricing tables), but in this case Amazon has it ALL over their site with their deals.
Here are three examples, all in different places:
- We see a deal on the actual product page and you're shown the "Typical price" above the Deal Price, anchoring us on the initial cost.
- Again we're shown a deal, but this time it's on the Daily Deals page, before we even click into the product page.
- Finally, to show it's not just daily deals, the image of the TV comes from a quick search for TVs and is found scrolling down a normal page before clicking into the product page.
Each time Amazon makes sure to show us the "Typical price" point.
If you want to learn more about how you can incorporate price anchoring in your strategy you can check out my LinkedIn carousel on how how top creators are using price anchoring to drive more sales.
Scarcity and Urgency
Next up we have another two psychological principles we see used often on Amazon.
Both are closely related, but unique enough where I will be pointing them out individually as well.
Scarcity is one of of Richard Cialdini's 7 Principles of Influence (written in his book Influence), and we see it used often by Amazon.
Scarcity is a strategy that leverages the psychological principle of limited availability to influence consumer behavior and drive demand for a product or service.
In the examples above I show how Amazon:
- Shows how much of a limited time offer is claimed before the offer goes away.
- Tells us when stock is limited, and reminds us of the need to order soon if we don't want to miss out.
Similar to this, Amazon also employs urgency in many ways.
Urgency refers creating a need for immediate action for our customer. It involves creating a sense of time-sensitivity with an offer, promotion, or opportunity, nudging people to make a quicker decisions.
In the examples above I show how Amazon:
- Daily Deals
- Limited Time Offers
- Woot! Daily Deals
Daily deals work so well, Amazon acquired Woot! in 2010 which offers special daily deals and limited time offers across categories like home items, electronics, apparel, and more.
Both of these nudges play on our FOMO (Fear Of Missing Out) on offers, and both can be used in a multitude of ways to drive more sales.
You can see how Justin Welsh Uses 6 Psychological Nudges to Drive 1M+ in Course Sales a Year (including Scarcity)!
Bonus Note: We can't forget Prime Day! Amazon uses Prime Day as a way to use Scarcity, Urgency, Exclusivity and more!
Decoy Effect and Price Priming/Perception
Next up we have The Decoy Effect and Price Priming.
The Decoy Effect is a cognitive bias observed in decision-making when the introduction of a third option, known as the "decoy," influences individuals to change their preference between two existing options.
My favorite example of this is popcorn at a movie theater when you have a small popcorn for $3, a medium for $6 and a large for $7 - making the upgrade to large seem like a no-brainer if you're going to go with a bigger option!
You can see me use this example in a LinkedIn carousel going through 5 different psychological pricing strategies you can use in your pricing strategy (including The Decoy Effect).
Amazon uses this with it's pricing to get us to choose upgraded models of objects like TVs, but they also use Price Priming as well.
A study by Boomerang found that Amazon offered a $350 TV for $250 on Black Friday, a price that undercut most of its competitors. As it discounted the TV, however, Amazon spiked the price for an HDMI cable that went with it. Similarly, Boomerang found a case where Amazon sold a best-selling computer for 20% less than Walmart, but then sold a less-popular version for 29% higher.
Both of these examples can be used to change the perception of the offer they are running, or "priming" the price of that offer.
Foot In The Door, Loss Aversion and Reciprocity
It shouldn't be a surprise that we have to talk about a few things at the same time when it comes to some of the psychology behind what Amazon is doing.
Not only do a lot of biases, nudges and tactics have significant overlap, but Amazon is also literally nudging you in virtually every decision you make.
For this section we're going to be looking at:
- The Foot In The Door Technique
- Loss Aversion
- Reciprocity
Let's go through the list and discuss each of them starting with what they are, how Amazon uses them, and even how YOU can implement them in your strategy.
The Foot In The Door Technique: The foot-in-the-door (FITD) technique is a psychological strategy where a small request or commitment is made initially to increase the likelihood of a person agreeing to a larger request later on.
How Amazon Uses This: Amazon is CONSTANTLY using this with their services like Amazon Prime, Kindle Unlimited, Audible and more. They give you free month trials to services, which is a gentle nudge, and it increases likelihood that you will stick around.
How YOU Can Use This: This can be as simple as getting someone to join your email list. But, if you have a service of some sort, you can replicate Amazon's exact methodology by offering a free trial.
The Foot In The Door Technique layers us right into Loss Aversion AND Reciprocity, which is why I started there.
Let's start with Loss Aversion.
Loss Aversion: Loss aversion in marketing refers to the psychological phenomenon where individuals tend to prefer avoiding losses over acquiring equivalent gains.
How Amazon Uses This: If Amazon was to just use scarcity or urgency on their subscriptions like Prime, Kindle Unlimited and Audible and NOT give a free trial it wouldn't allow them to take advantage of loss aversion as well as they do. Instead of saying "Prime is available for $99 for just 3 months!" which creates scarcity and urgency, Amazon offers it free, allows you to HAVE it, and take ownership of it; therefore increasing the likelihood of you not wanting to lose it. Again, this works extremely well with recurring products/services.
How YOU Can Use This: Stealing Amazon's methodology here is likely the best route, but this can also be used as a nudge with pricing. The scarcity and urgency effect CAN carry over into loss aversion as people want to avoid losing their discount - it just tends to be much more powerful if you can find a way to give your audience ownership first.
And finally we have reciprocity.
This one is unique, but I wanted to include it because it is extremely powerful.
Reciprocity is another one of Richard Cialdini's 7 Principles of Influence, and something you should definitely be thinking about in your marketing strategy.
Reciprocity: Reciprocity in marketing refers to the principle of giving and receiving in a mutually beneficial way. It is a social psychology concept that suggests when someone provides a favor, gift, or positive action to another person, the recipient is more likely to feel obligated to reciprocate in return.
How Amazon Uses This: Amazon uses this with free trials, customer service, exclusive access and more. One way I wanted to highlight here, other than the free trials, was the way they give you a free sample of books. You not only feel reciprocity for the service, but also for the author!
How YOU Can Use This: The best way to hit on reciprocity is value. This can be done through your content, freebies you offer your audience, or even the amount of value you give with your PAID products (ie: blow them away and overdeliver). We saw this in a post my LinkedIn Carousel on Justin Welsh's course strategy here.
There's a lot of overlap with these nudges, but that just makes our jobs as marketers easier!
As long as you know how to position them in your strategy, you'll be able to find ways to take advantage of all three at the same time.
Authority and Social Proof
There's a lot going on in that image, but I promise we're going to break it all down.
For this section I'm going over Authority and Social Proof, and I'm sure you likely know a bit about each of them already, but I'm going to expand on how Amazon leverages them in their marketing strategy.
Let's start with Authority.
Authority is another one of Cialdini's 7 Principles of Influence, and extremely important.
So generally I talk about how we can BUILD our own authority, but for this I'm breaking down how Amazon leverages their authority to make you buy more.
Authority: The authority bias is when people tend to believe and trust what an expert says, just because they are seen as an authority figure.
How Amazon Uses This: Amazon knows of this authority bias and uses it's own authority to nudge our decision making. They use things like "Amazon's Choice" and "Overall Pick" to sway our decision making.
Bonus Usage: Amazon also uses the authority of others, like celebrities, when they have them create their own shops to promote to us. Leveraging the authority of others is extremely powerful and something we see used by brands every day.
As I said, most of the time I'm actually discussing ways you can BUILD your authority.
If you're looking to build your own authority, here are two great resources to read:
- How Alex Hormozi Borrows Authority To Build His Own (Case Study Article)
- How Top LinkedIn Creators Borrow Authority to Build Their Own (LinkedIn Carousel)
Next up is Social Proof.
You're probably getting sick of hearing it; but we've reached another of Cialdini's 7 Principles of Influence.
This is the fourth (and last, I promise) of the principles we'll be breaking down for Amazon.
Social Proof: Social proof is a psychological phenomenon where people tend to rely on the actions and opinions of others to make decisions, especially in uncertain situations.
How Amazon Uses This: Amazon has social proof everywhere. They use reviews better than anyone, and also share "Popular Brand Picks" and other popular items to sway our decision making.
How YOU Can Use This: Collecting testimonials is huge for your social proof. Don't wait to start. Take screenshots, ask for testimonials when overdelivering on value, and start keeping record of them NOW.
Justin Welsh is an absolute king of social proof among creators and solopreneurs and uses a loop of overdelivery (which I mentioned above when discussing reciprocity) to continue bringing in more social proof.
A bonus nudge here would also be Herd Mentality.
Herd Mentality refers to the phenomenon where individuals are influenced by the actions, behaviors, or preferences of a larger group.
Amazon uses this by allowing us to see the reviews that have far more 5* or by telling us how many people preferred/like a specific product.
Exclusivity, Default and Cognitive Fluency
Next up we have Exclusivity, Default and Cognitive Fluency.
Since Default and Cognitive Fluency will have some overlap, I'll start with Exclusivity.
Exclusivity: Exclusivity refers to the strategy of making a product, service, or offer available to a limited or select group of individuals, creating a sense of uniqueness, prestige, and scarcity.
How Amazon Uses This: Amazon uses scarcity and urgency in other ways, but they really nudge us with exclusivity when it comes to Prime and the advantages of having it. They give exclusive early access deals, exclusive deals only to us, their 2-day shipping (of course), and more.
When it comes to Default and Cognitive Fluency it may seem a bit obvious, but knowing the psychological bias, and how/why it effects your audience is key.
Default: Default bias in behavioral economics refers to the tendency of individuals to stick with the default option or pre-set choice when faced with decision-making scenarios. It suggests that people are more likely to accept the default choice, even if they have the option to make an alternative selection.
How Amazon Uses This: When coming to a product page you may notice that sometimes "Subscribe & Save" is the default option. Amazon uses defaults to try to nudge us into specific purchases, especially those with recurring fees.
How YOU Can Use This: You can test using Default options for upsells and order bumps, and also certain pricing tiers - as well as numerous other small nudges that can have a big effect over time.
On the topic of making it simple for our customers, we can move right into Cognitive Fluency.
Behavioral economist and Nobel Prize winner Daniel Kahneman says: “Human Beings are to independent thinking as cats are to swimming. They can do it, but they prefer not to.”
The easier we can make it for our audience, the better.
Cognitive Fluency: Cognitive fluency in behavioral economics and marketing refers to the ease with which people can process information or perform mental tasks.
How Amazon Uses This: This can be applied to so many things, from the UI of the website, to the formatting and so much more. But, one thing I want to highlight is how easy Amazon makes it to purchase with the use of their "Buy Now" button. One Click. Done.
Charm Pricing and Odd Even Pricing
These are really just two small bonus nudges for you that you can find all over the place, but important to note for Amazon making use of them.
Especially because they're easy for YOU to use as well.
Let's start with what they are, and I can give a couple easy examples to wrap us up:
Charm Pricing: Charm Pricing involves setting prices just below round numbers, like $9.99 or $19.95, to make them seem more attractive and create a perception of a lower cost.
This one is fairly easy to understand, and something you see on virtually every one of Amazon's pages - hence the need to at least make a quick mention to it.
Odd Even Pricing: Odd-even pricing is a strategy in behavioral economics and marketing that involves setting the price of a product just below a round number (odd pricing) or just above it (even pricing). This pricing strategy is based on the psychological tendencies of consumers and their perceptions of price points.
For example, pricing an item at $19.99 instead of a rounded $20.00.
You may see a "value" bag priced at $29.99, while a Louis Vuitton might be $2200.
If you want to learn about 5 psychological pricing strategies you can check more of them out in another of my LinkedIn carousels.
Final Notes TL;DR
You shouldn't get overwhelmed by this.
If anything it should excite you.
A lot of these are things you can very easily implement into your strategy, and many of them are things you don't need to at all.
TLD;DR - To recap, here are some of the nudges we discussed:
- Default
- Urgency
- Scarcity
- Authority
- Exclusivity
- Social Proof
- Reciprocity
- Loss Aversion
- Charm Pricing
- Herd Mentality
- Price Anchoring
- Odd Even Pricing
- Cognitive Fluency
- Price Perception / Priming
- Foot In The Door Technique
So maybe a few extra bonuses to top off the 13 we set out to discuss.
If you like learning about Science Based Marketing and want to be done with random, ineffective marketing, you can read through more Case Studies, subscribe to the free 2X weekly newsletter or even follow me on LinkedIn.
