Boost Sales: Psychology-Driven Strategies for Customer Acquisition and Retention

Posted on Mar 15, 2025 in Business Administration and Management (BAM)

Growth: Expand Your Customer Base

  • New Sales Channels (Distribution): Reach more customers through diverse channels.
  • Geographic Expansion of Markets: Target new regions for growth.
  • Cost of Customer Acquisition: Optimize spending to acquire customers efficiently.
  • Lifecycle: Implement penetration and skimming strategies.

Re-Purchase: Increase Customer Purchase Frequency

  • Satisfaction in Product Use Phase: Ensure customers are happy with your product.
  • Customer Loyalty Programs: Reward repeat customers to foster loyalty.
  • Brand Positioning & Brand Loyalty: Build a strong brand that customers trust.
  • Ensure Continuous Availability at the Point of Sale: Make sure your product is always accessible.

Increase Average Purchase Value

Increase spending per customer during their purchase process.

  • Promotions for Volume of Purchase at Point of Sale: Encourage larger purchases with incentives.
  • Restrictive Discount Policy: Use discounts strategically to maximize revenue.
  • Cost of Customer Acquisition: Balance acquisition costs with purchase value.
  • Transaction Cost: Minimize transaction costs to improve profitability.

Multi-Product Company Strategies

  • New Customer Segments: Target different customer groups with tailored products.
  • Products with Differentiated Attributes: Offer unique features to stand out from the competition.
  • Brand Attribute: Private Label: Leverage private label brands to reach new markets.
  • Price Attribute: New Customer Segments: Adjust pricing to attract specific customer segments.
  • Design / Quality Attributes: Direct Competition: Compete on design and quality to gain market share.
  • Customer Acquisition Cost: Manage costs effectively when launching new products.
  • Product Cannibalism?: Consider the potential impact on existing products.

Line Extension: Expand your products with new shapes, colors, sizes, ingredients, or flavors within an existing product category.

Brand Extension: Expand a brand name into a new category. Leverage brand recognition and prestige. Offer multi-brands with different options to appeal to various purchase motives. Be mindful of potential product cannibalization.

Pricing Psychology

1. Hyperbolic Discount: Focus on the perception of present money. Offer immediate rewards to incentivize purchases.

  • Limited-time offers
  • Coupons for immediate use
  • Free shipping over a fixed quantity
  • Offer different pricing options

2. Mental Accounting: Understand the perception of money.

Expectations (-$3.99 – $3.50 – $3.00)

1€ – beer at supermarket = 1€ – beer at a beach vendor – Pay-saving

  • Retail price or always discount (sale section)
  • Use special occasions for spending (birthday, tax refunds, bonuses)
  • Payment by credit card

3. Loss Aversion: People prefer to avoid losses rather than acquire equivalent gains. Consider tolerance of uncertainty. Perceived risk is greater than expected gain.

  • Free trial periods – Return policy: 60 days – free returns
  • Reinforce the message: SAVE

Attributes and Framing

Framing: Present information in a way that highlights either positive or negative aspects of the same decision.

Choice between two options.

People tend to choose options with higher numbers, as they believe higher is better.

Actions:

  • Font used on description & Color of web
  • Accurate description – added value adjectives (Swiss clocks)
  • 120€ discount VS 20% discount

EXAMPLE: Bean Soup VS Tuscan Bean Soup (Organic farm Salmon)

Priming: Expose people to a certain stimulus to influence their behavior (positive – negative).

  • Product feature emphasis
  • Pics of manufacturing process
  • Music in a restaurant/shop
  • Color priming
  • Brand priming

Halo Effect: A person’s evaluation often influences the perception of other attributes that are not directly related to that person.

Attractiveness

  • First impression – pictures
  • Endorsing product (influencers)
  • Brand reputation (product extension – Apple Watch)

Health Halo Effect (Attributes)

  • Labeling
  • Bio
  • Organic (free chemicals + 100% natural)
  • Eco (full supply chain)
  • Vegan
  • Carbon footprint

Options and Choices

Cognitive Recharge

  • Product categories
  • Order of categories
  • Filters
  • Unlimited products?

Decoy Effect

Customers change their preference between two options when presented with a third option.

Decoy: asymmetrically dominated

ALWAYS 3 products

Default

Assigns to buyer “automatically”

Pre-established decisions

Automated process

  • Added combined product by default
  • Client needs to opt out
  • Travel insurances
  • Assigned seat for fights
  • Suggested products
  • Newsletters

Anchoring (Options)

Accept and rely on the first piece of info received before making a decision.

  • SEM / SEO
  • Big SAVED / DISCOUNT sign
  • Image selection: what pops 1st

Customer Experience

Endowment

  • Free trial period
  • Return policy
  • Product customization

Herding

Take decisions influenced by what others are doing.

Individuals making decisions as a group that they would not make as an individual.

  • Group options
  • Review system (+ platforms)
  • Testimonials
  • Social media

Heuristic of Affect

Decisions based on feelings

Reflective judgement

Appeal to feelings

  • Christmas
  • Cat image

Peak End

Experience is an average from multiple past experiences

Peak might create bias

1 bad experience can eliminate 10 good ones

  • End on a high note (concert bis)
  • Reviews: CONTACT them
  • Improve customer experience / Gain back bad reviews / Benefit for leaving a review

Core Component

  • Material features of the product
  • Variations necessary to meet local differences
  • Legally mandated requirements: approvals required

Packaging Component

Extrinsic attributes: do not provide utility to product but will be the way to make it available on the market: packaging, label, quality, brand name and price.

Support Services

  • Customer service
  • After sales service
  • Attributes Augmented product
  • Additional value beyond the product

After Sales Service and Technical Service

  • Repair and maintenance
  • Requires physical presence on the field
  • Direct implementation or collaboration

Stages

Stage 1 – Scoping

Stage 2 – Business Case

Stage 3 – Product Development

Stage 4 – Validate/ Test

Stage 5 – Product launch