Remember the time when you went to buy a regular coke at the multiplex but ended up buying a large? Why did this happen? Let’s break it down. First of all, when you buy a ₹250 multiplex ticket, ₹90 for a coke despite being expensive seems reasonable because you compare it with the price of the ticket. Secondly, when they ask you to add ₹20 to make it large, this additional cost starts to seem even smaller in the whole scheme of things. This a classic example of the Perceptual Contrast Principle at work. As much as we would like to believe that we are making rational choices, our brain is not hardwired to do that. The irrationality of decision making comes from the environment, conditioning and to some extent individual personality.
Approaching a design problem keeping Persuasion Principles in mind can make a big difference in not only facilitating user’s decision making but also in getting more conversion leading to a positive impact on business. To give you a glimpse of how persuasion works, I’ll take you through a comparative persuasion analysis of two fintech companies which provide online platforms for mutual fund investment, Goalwise and FundsIndia. Why Fintech companies? They tend to have major bottlenecks when it comes to customer conversion. Users are generally very skeptical about putting their money into the market. So, using persuasion principles is essential in wining user’s trust and getting an upper hand over the competitors.
Let’s see how both Fintechs are using persuasion principles to influence user behavior.
People don’t think in absolute terms, we tend to make decisions on relative scale by comparing one thing with another, present in the same context. Goalwise is using this principle to make their returns look more amplified.
On the other hand, FundsIndia does not seem to be doing anything to leverage the power of perceptual contrast.
In social situations, we have a tendency to pay back what we receive from others because we feel indebted when someone does us a favor. Last week, Manish, a friend of mine was looking for an investment advisor. I suggested two advisors from my network. One of them went unprepared and the other went with a basic portfolio recommendation based on the information I gave about him. Manish felt more confident and indebted to the second one as he had done his homework before the meeting.
Goalwise is translating this real world experience into the digital world by giving users a full breakup of their mutual fund recommendation upfront. This is a great way to make users feel indebted and leverage the reciprocity principle. Thereby ensuring that users are much more likely to proceed with their investment, leading to higher conversion and lower drop offs.
FundsIndia is just giving a long sign up form to get started. There’s no way to know about their portfolio recommendations or offerings without Signing Up, which is a big turnoff for new customers. However, they are using the reciprocity principle in a different way by highlighting that their online account is FREE.
Free is not just another discount, it’s a complete different game altogether. In the book ‘Predictably Irrational’ Ariely did an experiment with the Lindt truffles (particularly prized) and Hershley’s Kisses (ordinary chocolates) to find out the power of free. In the first experiment he offered customers a truffle for 15 cents (about half of its cost) or a Kiss for 1 cent. 73% customers chose the truffle and the remaining 27% chose a Kiss. In the next experiment, he offered the truffle for 14 cents or the Kiss for free. Even though the price change wasn’t too significant, there was a drastic change in the behaviour. Some 69% of the customers chose the Free Kiss, giving up an opportunity to get the Lindt truffle for a very good price. The reason for this shift in behaviour is that people feel ‘free’ item carries no risk which makes it so alluring.Beyond the free account, Funds India could also offer an investment guide to users as a freebie to get started, (which they are already showing below the fold. Would be good to promote it upfront). Adding an additional freebie along with the free account can further enhance the positive impact on conversion rates.
The way to earn customer loyalty is to make them commit to something and announce it publicly. Then they will feel compelled to stick with it.Goalwise, as the name suggests is using the principle as their value proposition. When the user commits to a goal, he/she feels the compulsion of fulfilling it. The company keeps on emphasizing on this by showing on the dashboard whether you are on track with your goals or not.
They have also incorporated gamification by showing the ‘longest streak’ and ‘rank’ which acts as an incentive for the users to keep on investing.
They can further enhance the persuasion potential of this by figuring out a way to make users announce their goals publicly.FundsIndia is also using this principle by asking users to share their peer rank and percentile on Facebook. Commitments made in publicly are harder to break, so users will not only try to stick to their commitment but also try to get better at it. Additionally, it also acts as a social proof for other potential customers.
We tend to have more trust in things that are popular or endorsed by people that we trust.Apart from showing customer testimonials and 20,000 Goalwisers around the world they show investments made in the last 24 hours by other Goalwisers which acts as the 'Wisdom of the Crowd' – approval from a large group of people.
FundsIndia is also using the classic way of leveraging social proof by showing customer testimonials, however these reviews can be made more relatable by showing the age/work profile/pictures of reviewers and/or by pulling reviews directly from their Facebook/Google accounts.
We follow the people who look like they know what they’re doing.Goalwise has taken this principle to a whole new level by showing the portfolios of advisors and other team members at Goalwise who are investing their own money on Goalwise. It makes the platform appear more authentic. In addition to that, they are also well-known for their customer service and have 5-star rating on their Facebook page.