Effective financial marketing requires not just knowing the right channels to push your marketing through, but a solid understanding of how your audience uses and reacts to those messages. Welcome to financial marketing psychology 101: the key principles of human behavior.
Without understanding the psychology of your audience, your financial firm may fall behind in using the most honed tactics. While most financial marketers don’t think about the nuances of human behavior, it’s vital to understand why humans behave and are programmed to react to certain stimuli and situations.
Having a solid grasp of psychological principles will help you to effectively craft messages and visuals, create financial marketing campaigns that resonate with your target your audience, and set up a foundation for better brand perception, awareness, and lead generation.
Start by Building a Buyer Persona
A good start to understanding marketing psychology is to create a buyer persona which, according to HubSpot, is a semi-fictional representation of your ideal customer based on market research and real data about your existing customers.
When creating your buyer persona, consider including customer demographics, behavior patterns, motivations, and goals. The more detailed you are, the better. Learn more about building buyer personas in our article “How to Build Buyer Personas for Better Marketing”. After you’ve built your buyer persona, it’s time to start thinking about the psychology behind it.
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Let’s explore 10 key psychological principles of behavior that will help shape better financial marketing tactics.
1. Priming
Consider using subtle semantic techniques on your website to influence website visitors’ subconscious memory to recall key indicators of your brand later. It works kind of like that word association game, Catchphrase. Not only are words a good form of priming but colors and images as well. For example, if your financial tagline includes the bold word “financial integrity” and is used as a key element across every page of your website and in all ads and marketing materials, a visitor may subconsciously ascribe honesty, compliance or fiscal due diligence as a characteristic of your services through priming.
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2. Reciprocity
Have you ever received a gift from someone and instantly felt their warmth and need to return the favor? You probably experienced reciprocity on a personal level. This principle can be applied to marketing and business as well.
Reciprocity doesn’t mean you’ll need to burn all your marketing budget. Think about ways your firm can bring in new clients by giving them a “free resource.” Some ideas to explore may including offering a free hedge fund ebook to website visitors who sign up, receiving a complimentary broker consultation, or inviting users to sign up to beta test your new trading platform.
3. Peer Comparison & Social Proof
Think about being at a restaurant with a group for dinner and everyone orders a salad except for you. Then at the last minute before the waiter leaves, you end up ordering a salad saying, “might as well join the crowd!” This is an everyday representation of peer comparison and social proof.
A way to use this principle in marketing is to consider what do successful people have that potential clients don’t? Maybe it’s a financial advisor who has a deep understanding of price movements. In that case, position one of your more successful advisors as an “influencer” on social media by having them regularly share market insight. With enough shares and likes, social proof will be created, the optics of which will help reinforce the thought leadership and expertise of your firm to help build your brand, following and potentially earn new clients.
4. Scarcity
Using the scarcity tactic is exactly how it sounds. The idea is to make your product or service seem rare or exclusive. Try this with potential clients by explaining there’s only a few spots left in your special Managed Futures Webinar, that seating is limited at your next event, or let them know they’ll be part of an exclusive roster of clients. Scarcity works almost every time.
5. The Baader-Meinhof Phenomenon
The easiest way to think of this is seeing a brand or product once and then having it pop up everywhere as time goes on. This principle is demonstrated very clearly in Google retargeting ads (check out our post Behold! The Marketing Magic of Retargeting). Retargeting ads appear to follow you online after you’ve visited a website (and have gotten “cookied”). You may notice that these brand ads seem to be everywhere you are – from news sites to social media – and thus, you’ve just experienced the Baader-Meinhof Phenomenon, which is proven to be effective in helping keep a brand at top of mind.
6. Loss Aversion
Just like scarcity, loss aversion works exactly as it sounds. People just don’t want to lose anything or may have a fear of missing out (FOMO). In the instance of providing a service, it may work to create additional exclusivity around what you offer by announcing that there’s only 10 seats left in your risk management seminar, or perhaps you are a private wealth manager with diminishing capacity who can only take on three more clients. In the financial industry, this specific marketing tactic could be problematic with regulators, so be sure to apply it honestly and with compliance in mind.
7. Foot-in-the-Door Technique
This is a common sales tactic. Instead of asking for someone to buy into all of your services with an hour long conversation up front, try approaching them in small increments instead. Start at having a 15-30 minute chat without asking them for business. This is the start of building a relationship and it will eventually lead into a longer conversation and maybe even new business. This incremental way of getting to know your prospects is commonly used in nurture email marketing drip campaigns, which can easily be created using marketing software such as HubSpot. This principle is particularly relevant to financial services where trust and relationships must often be built through cumulative long-term efforts.
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8. Environment Effect
Without even realizing it, sometimes our decisions are made by the environment around us through subconscious cues. For example, one may be more prone to buying a basketball jersey while at a Bulls game as opposed to buying online or in a store. The same goes for pitching financial products or services. If you’re trying to close the deal with a new client, talk to them where they would most likely be using that product or service. Perhaps it’s at their office or at a financial conference or industry event. Getting creative and marketing your services within these surroundings may very well work in your favor to attract prospects.
9. Expected vs. Surprise Reward
Rewards aren’t always as tried and true as we think they are. It’s interesting because expected rewards often decrease someone’s motivation or desire to buy something. However, giving a surprise or unexpected reward often increases that same motivation. For example, instead of telling a client up front about free trades, certain savings, or extra perks of opening an account, consider stating later in the conversation that you’ll be happy to also give them a special limited-time rate, free retirement checklist or tax planning guide. This way, they will feel they are receiving extra unexpected value.
10. Clustering
Humans have short attention spans and a limited capacity to remember. Clustering similar topics together can be helpful in keeping their attention and remain at top of mind. Topic clusters are multiple pieces of content grouped by a shared topic and related subtopics. We wrote about this very topic in our post Inbound Marketing Building Blocks: Exploring Topic Clusters and Pillar Pages
Topic cluster pages offer comprehensive coverage of a specific subject. Think about this type of wording in your content marketing strategy and focus on how long form content is written. This means being clear and concise while still containing proper keywords. Clustering is also a core component of the Inbound Marketing philosophy and can also help support a great user experience as well as search engine optimization.
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Once you’ve started by building your buyer persona(s), revisit this list of psychology principles to develop and apply these concepts within your financial marketing strategy. By connecting your financial content and tactics to these common human behavior principles, you’ll find greater success in appealing to your target audience.
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