You can’t have a successful business without consistent revenue growth. Unfortunately, often, revenue is one of the biggest and most daunting day-to-day challenges you face.
Maybe you work nights and weekends, giving everything you have to this company you built from the ground up—only to end each month with just enough to keep the lights on.
Or maybe right now your numbers are through the roof, but you’re terrified that a simple change in the market could send everything tumbling down.
Either way, you know: there has to be an easier way to keep a consistent line of funds coming into your business without losing your hair in the process. And that’s where anchoring comes in.
Anchoring is a psychological tool that plays on the anchoring bias, our natural tendency to use the first piece of information offered in an interaction as a frame of reference to base decisions around. It involves using your pricing, your marketing message, and even your branding to help shape the meaning of your product or service.
Imagine that all you have to do to increase sales is place your pricing next to a competitor or create a catchy tagline. Sounds too good to be true, right?
I’ll be honest. There’s no guarantee that anchoring will solve all of your revenue problems permanently. But by implementing anchoring in your sales and marketing strategies, you can differentiate yourself from the competition, better demonstrate your value, and make purchasing your product or service an easy decision for customers.
You don’t have to be a psychologist to apply anchoring to your business. By following these three steps, you can make simple tweaks to your existing strategies and campaigns.
1. Frame Your Product or Service in the Right Light.
Why is anchoring an effective sales tool? Well, it comes down to psychology. As humans, our brains naturally crave understanding. We look for patterns and relations, even when they aren’t there because comparing items allows us to evaluate their value and meaning.
Whether you like it or not, customers create a point of comparison in their minds when they learn about your product or service. Maybe they’re comparing you to a direct competitor down the street. Perhaps they’re thinking about a national brand that provides similar services.
You have no control over what your customers are exposed to from outside sources. But you can take steps to frame your product or service in the best way possible, so customers have a better perception of your brand when they draw comparisons.
We typically think of numbers and statistics as entirely objective. After all, how can numbers lie? But numbers can easily be used to bring perspective to an issue, situation, or a brand—intentionally or otherwise.
Here’s another example like the surgery mentioned in the video above. When the COVID-19 virus first started invading the U.S., people were terrified (and rightly so). The thought of hundreds of people dying from this highly contagious virus was a huge concern. And every day, the local news would share the rising number of cases city-wide, which only increased our fears.
One of the worst spikes we saw in Denton County was over 1,300 cases in a single day. Terrifying, right? Especially when you consider that most days in 2020, we only had a few hundred cases a day.
But when you consider that Denton County has a population of over 887,000, it’s a different story. That number of cases makes up only .15% of the population. Similarly, the 18 deaths on that same day only represented 1.4% of all cases. But when you consider the fact that 18 families lost someone they love, it paints the statistic in a very different light.
2. Don’t Let Your Customers Set Your Price Anchor.
The anchoring bias is so effective that many psychologists believe it drives other cognitive biases, including the planning fallacy and the spotlight effect. Research even shows that it can influence courtroom judgments—and that prison sentences can be swayed depending on the anchor used.
Considering all of this, it’s clear how anchoring can influence your customers’ perception of your brand. So what happens when you don’t take steps to create anchors for your business?
Customers naturally create anchors of their own depending on their perceived value of your product or service. That value can depend on any number of factors, from pricing and quality to appearance and reviews. Some brands can get lucky, and customers may determine that their brand lands on top. Others, however, may find themselves fighting a losing battle.
You have probably heard the question, “What’s the value equation?” at least once or twice in your business career. Before I left the traditional marketing world, I used to say, “It’s what you get divided by what you pay for.” And I truly believed that.
But that’s not true. The real value equation is what you get divided by what you pay for in relation to something else. That something else plays a huge role in the perceived value of your product or service, and it’s often subconscious.
If you don’t actively shape your “something else,” you can’t know the value your customers assign to your brand. This puts you at a severe disadvantage.
You might think customers aren’t buying your product or service because the price is too high and drop it, only to lower your overall profits even more. You could suspect you’re targeting the wrong audience and spend thousands reaching out to a group that isn’t interested in what you have to offer.
But if you intentionally set the anchor for your offering, you can potentially sell for an even higher price point and engage with people who would never consider you otherwise.
Here’s an example of how a marketing company could use anchoring to influence their perceived value.
3. Highlight the True Differentiating Value of Your Product or Service.
There’s nothing the traditional marketing world loves more than feature sets. Turn to a local channel, and I guarantee you’ll see dozens of ads all highlighting special capabilities and applications for brands that inherently do the same thing.
What these local businesses—and many national chains—have yet to discover is that customers don’t care about feature sets. If your product or service doesn’t have a true differentiating value, your features won’t catch and keep your customers’ attention.
Let me clarify something here. Your value does not come from your features. A vast majority of customers couldn’t care less about the horsepower of their car. What matters is how their car makes them feel.
Many entrepreneurs struggle to identify the thing that really sets them apart from the competition, especially after focusing on your features for years. Back when I worked at Frito Lay, I experienced this frustration firsthand.
Taking a step back and looking at what you do in a broad sense can make a significant difference.
Combine Anchoring with Mindstate Marketing to Make the Biggest Impact
Revenue problems can keep you up at night. When you have invested so much in your business, the last thing you want to think about is having to close your doors for good.
Fortunately, anchoring can help you position your brand in the best light possible, so customers recognize the value you provide and invest in your product or service. And because it’s easy to do, you can apply anchoring to grow your sales without adding significant stress to your plate.
If you want to make a long-lasting impact on your bottom line, the best way to attract and retain customers is Mindstate Marketing. As introduced in my book Marketing to Mindstates, Mindstate Marketing combines proven principles of psychology, behavioral science, and neuromarketing to help entrepreneurs jumpstart their business. It teaches you how to tap into your customer’s subconscious to refresh your brand, redesign your marketing, and reinvigorate your business.
Don’t leave the future of your business up to chance. Get the Mindstate Marketing Starter Package for $39 to learn how to take control of your revenue and achieve the results you’ve worked so hard for.