Consider the two facts that i am a human & i am a mammal. Based on these two facts can we make an assumption that all mammals are humans ? Of Course that would be a mistake on our end. This error in judgement based on an assumption is what we call a 'Behavioural fallacy'.
Behaviour fallacies, are cognitive biases i.e a deviation from rational thinking. They are a proof of how our thinking and decision making can get compromised, biased and manipulated on a daily basis. Being aware of these fallacies can help us avoid the lapses in rational thinking. As a marketer you can use these to your advantage or even avoid pitfalls when planning strategies or campaigns. In this post i talk about three of the most common ones but you can have a look at the entire list of cognitive biases here.
Imagine a dice that roll 2 sixes for a straight 10 times without any cheating, many people would make an assumption that it will roll 2 sixes one more time ? Even if we believe that the past has no control over the future we tend to make that link and think the chances of getting the 2 sixes again is very high. This is what we call as Gambler’s fallacy where a player comes up with their own calculations to justify their bets.
Just like when you are rolling a dice you don’t know what number is going to turn up. In the same way we don’t know how our campaigns are going to end up based on the performance of past campaigns. Just because a certain strategy or marketing funnel worked for a certain brand doesn't mean that it will work for every other brand. Of Course there are frameworks but to believe you can keep repeating the same actions and get the same result is asking for trouble.
Loss aversion fallacy
Behavioral economist Dan Ariely in his book, 'Predictably Irrational' talks about how in any transaction we tend to focus more on what we may lose in the bargain than on what we stand to gain. This “Loss aversion” fallacy refers to people's tendency to prefer avoiding losses to acquiring equivalent gains i.e. .it is better to not lose $5 than to find $5.
"we prefer things we already own over other stuff"
If your marketing pitch can make the user feel that they will lose something by not responding then you are leveraging the loss aversion fallacy in your strategy. People would take any measure to avoid a loss and what your campaign is doing is warning them of a drastic consequence unless they act now. One very common example is the limited offer campaign that has a deadline that can trigger the target audience to feel the urgency and take action.
Sunk cost fallacy
Imagine you were at the movie ticket counter about to pay for your ticket when you realise that you are missing a 500 rupees note. Would you still go ahead and buy the ticket ? most of us would. But now imagine you just bought a ticket for 500 rupees but just when you were about to enter the cinema you realise that you lost the ticket. Would you buy a new ticket ? Maybe, but it will take some effort & convincing. If you give it a thought, the extra amount spent in both situations is the same but the second scenario will be a lot more painful. This is because the “pain of paying” arises whenever you lose anything you own in this case the lost ticket. No matter what amount this will influence your decisions and behaviour.
"It hurts when you lose permanently something you value."
Digital Marketing campaigns are a perfect setup for the sunk cost fallacy to kick in. So if your paid campaign is not delivering the expected results. This could lead to further investment based on the reasoning that the resources already invested will be lost otherwise.
As marketeers, we have to be aware and conscious of our own biases as well. In hindsight we tend to start finding relations between our actions and results. Just because our last campaign was a success doesn't mean that our next one will be successful too. We have to make decisions on a merit base and not on past results. Don't let your past success make you get complacent and drop your guard.