Anchoring bias: How the first impression drives our decisions (and your sales)

Definition and origin of the anchoring effect

What is the anchor bias?

The anchoring bias is a psychological phenomenon that occurs when a person bases their decision or judgment on initial information they have received, called an “anchor.” It's a form of cognitive bias that can affect how we interpret and respond to information.

The anchor can be a data, a number, a fact, or a perception that serves as a reference point in our decision-making process. Once this anchor is established, it is often difficult to break away from it, even when new or different information is presented. This phenomenon can therefore influence our decisions and judgments significantly, by pushing us to favor initial information at the expense of subsequent data.

How has anchoring bias been demonstrated?

The demonstration of the anchoring bias was made possible through experiments in cognitive psychology. Daniel Kahneman and Amos Tversky, two behavioral psychologists, were the first to highlight this bias. They conducted a series of experiments where participants had to make an estimate after being exposed to an anchor. The results showed that the anchor significantly influenced the estimates, even when they were arbitrary. For example, when participants were asked to estimate a percentage after seeing a random number, their answers tended to be close to that number.

These results are supported by other research studies. Studies have shown the effectiveness of anchoring in various contexts, such as salary negotiations or the setting of prison sentences by judges.

The impact of anchoring on our information processing and decision-making was demonstrated through these experiences, underlining the importance of this cognitive bias in our daily lives.

What is the difference between anchor bias, framing bias, and confirmation bias?

The anchoring bias, the framing bias and the confirmation bias are three distinct types of cognitive biases. Anchoring bias, as mentioned earlier, is the tendency to rely heavily on the first piece of information received when making decisions.

In contrast, the framing bias refers to how the presentation of information can influence our judgment or decision-making. This bias shows how sensitive our mind is to the formulation and context of information.

The confirmation bias, on the other hand, is our tendency to seek and prioritize information that confirms our existing beliefs, while ignoring or minimizing information that contradicts them. This bias can lead us to a biased view of reality by reinforcing our pre-existing beliefs.

Examples of anchor biases

To illustrate the impact of anchor bias, let's take a few concrete examples from the field of marketing and sales:

• Price fixing: Retailers often show a “pre-discount” price next to the actual retail price. This higher initial price acts as an anchor, making the discounted price seem much more attractive.
• Negotiation: To negotiate the price, the first amount mentioned often acts as an anchor, influencing the range of counteroffers. This is particularly visible in the real estate sector where the initial asking price sets the anchor point.
• Unit price: In the retail sector, displaying a unit price for multiple lots (for example, “$1 per unit, sold in lots of 3”) anchors customers on the attractive unit price. This encourages customers to buy the complete package, as the unit price seems advantageous compared to the individual purchase.

These examples show how the anchor bias can be used to influence consumer buying decisions.

The applications of anchor bias in marketing

Use of anchoring in pricing

In the context of fixing prices, anchoring plays a crucial role in establishing a point of reference for consumers. Several strategies can be used to exploit this cognitive bias.

One of the most common is to present premium products or services first. This sets a high price benchmark, making cheaper options more appealing.

Another technique is that of the “3 price formulas”. We create three price options and we make sure that the one we want to sell is the most attractive. For example, in SAAS, the formula with the greatest commitment can be made attractive by its cost/month.

Prices ending in 99 cents are also a form of anchor. This small detail can cause the product to be perceived as being cheaper.

Finally, the organization of the product range can allow the strategic use of anchoring. For example, by presenting the most expensive products first, you can influence the perception of the cost of other products.

Creating effective advertising campaigns

The effectiveness of an advertising campaign can be strengthened by using the anchor bias. The idea is to present consumers with initial information (the anchor) that will guide their perception of the value of your product or service.

For example, you can start your campaign with a strong message about the superior quality of your product or its competitive price. This establishes a positive anchor in the consumer's mind which then influences their perception of the following information.

Here are some anchoring strategies to consider:

• Price anchor : mention a higher price at the start of your campaign. This will make the real price of your product more attractive.
• Quality anchor : highlight the high quality features of your product right from the start. This creates a high expectation that can increase the perception of the value of your product.
• Comparison anchor : compare your product to a competitor product that is more expensive or of lower quality. This can improve the perception of the value of your product.

Anchoring can also be used to reinforce the impact of your advertising messages. For example, by using specific numbers (like “9 out of 10 customers recommend our product”) rather than general statements (“most customers recommend our product”), you can anchor a more positive perception of your product in consumers' minds.

However, caution should be used when using anchoring in advertising campaigns. Excessive or clumsy use can lead to skepticism among consumers. It is therefore essential to ensure the authenticity and relevance of your anchors.

Influence on the perception of product value

The anchoring bias can have a huge impact on how a product is perceived in terms of value.

In marketing, anchoring is often used to create reference points that influence the perception of the value of a product. For example, the initial price of a product can serve as an anchor that determines how other prices are received. If the initial price is high, subsequent prices may seem more reasonable in comparison.

Marketers can also use anchoring to highlight added value of a product. For example, by pointing out the potential savings made by buying a more expensive but better quality product, or by comparing the price of a product with that of more expensive alternatives.

It is also possible to use the anchor bias to influence the perception of quality of a product. For example, by presenting a product as being of high quality or luxury, consumers may be led to perceive the product as having a higher value.

In short, anchoring can be a powerful strategy to influence consumers' perception of the value of a product.

The applications of the anchor bias in sales

Anchorage-based negotiation techniques

In the field of negotiation, anchoring is a powerful technique that can influence the course of discussions. The fundamental idea of anchoring is to put a number or a proposition first, to create a mental “anchor” for the rest of the exchanges. The first number pronounced tends to be seen as a starting point, around which adjustments are then made. This is particularly relevant during price negotiations: the first offer presented often serves as a reference point for counter-offers.

However, the use of this technique requires a certain subtlety. It is crucial to define an anchor that is both ambitious and realistic, to avoid creating the impression of being unreasonable. In addition, anchoring can be used strategically by evoking reference scenarios or by highlighting the opportunity costs to influence the expectations of the other party.

It should be borne in mind that anchoring is not a guarantee of success. It is possible that the other party is ignoring the anchor, especially if it is perceived to be too high. The effectiveness of anchoring therefore depends largely on how it is used and on the specific context of the negotiation.

Optimizing sales scripts and sales pitches

Optimizing scripts and sales pitches is crucial to improving the potential of anchoring bias. Building a compelling sales pitch must be based on a clear understanding of the concept of anchoring bias.

First of all, it is crucial to choose the initial anchor wisely. It is this first piece of information that will guide the perception of the prospect throughout the discussion.

Sales scripts can thus be structured in such a way as to: introduce strong anchors from the start. For example, mentioning an impressive number related to product performance or popularity can serve as an effective anchor.

It is also recommended to prepare responses to potential objections by relying on the anchor bias. In the event of an objection to the price, for example, recalling the added value of the product can help to reorient the prospect's perception positively.

Finally, it is essential to repeat and reinforce the anchors throughout the argument to maximize their impact. Indeed, repetition is an effective technique to strengthen the anchors in the mind of the prospect.

Personalization of commercial offers

The personalization of commercial offers is also based on the anchoring effect. The idea is to personalize the anchor according to the needs, expectations or preferences of the prospect.

• For example, if a prospect has expressed an interest in a certain type of product, the offer could be presented in a way that highlights the correspondence between that product and the needs of the prospect.
• Likewise, if a prospect is particularly price sensitive, an anchor based on value for money could be used.

In any case, the important thing is to offer an anchor that is both relevant and convincing for the prospect.

However, it should be borne in mind that the personalization of offers requires a good knowledge of the prospect. This involves collecting and analyzing data about the prospect in depth, as well as a great ability to interpret and use that data effectively.

In summary, personalizing commercial offers using the anchor effect can be an effective strategy to increase conversions and strengthen the relationship with the prospect.