Anchoring Effect is a familiar term in sales. However, not everyone clearly understands how to apply this weapon of capturing customer psychology to promote and increase sales. In the article below, let's learn what the anchor effect is and how to apply it effectively in business!

What Is The Anchoring Effect?

Anchoring Effect is understood as a cognitive bias that causes customers to focus on the first information they receive (called 'anchor').

During the decision-making process, 'anchoring' occurs when individuals use initial information to make subsequent judgments. Information consumers will rely on previously available data to compare and make purchase decisions.

How does the anchoring effect work?

The anchoring effect works by first simulating a price level and then rising to a higher price level. This higher price is often considered by customers to be closer to the original price and lower than other prices.

This pricing strategy is applied in the field of Marketing and negotiation because it greatly affects customers' purchasing decisions as well as the amount they are willing to pay for your product or service.

An example of the anchor effect:

Imagine when you are at the milk tea shop and see the price list for a cup of milk tea in size S is 50,000 VND. Right after that, you see a cup of milk tea in size M priced at only 55,000 VND.

You will feel that the size M milk tea cup has a very reasonable price and can choose to buy it without hesitation. However, if you only see the price of a milk tea in size M at 55,000 VND without comparison, you may feel that it is just a normal price, even a bit expensive.

Therefore, the "anchor" in this case is the size S milk tea cup, which is the factor that determines the value and influences the customer's purchasing decision-making process.

How to apply the anchor effect in business and sales

Business and sales are perhaps the fields that exploit the anchor effect the most and are the most flexible. Here are ways to apply the anchor effect effectively in business and sales:

• With online sales on social networks, instead of publicly disclosing prices, business owners can cleverly use unrelated information to create a strong impression, highlight product value, and stimulate buyer's opinions. It helps them feel like the product is a bargain, encouraging them to make a purchase decision.
• In an in-store setting, arranging high-value products in the front helps prevent customers from being overwhelmed by the store's prices and services. It creates a smooth shopping experience and increases customer choice.

• Using inferior products as benchmarks can enhance customer satisfaction with your product. This anchoring effect is often widely applied in the real estate industry. When real estate agents guide customers to visit high-priced apartments first, creating a sense of comparison, and then making them Visit the main apartments to enhance impressions and promote shopping decisions.
• Emphasize the total price before discounts: This strategy is often used in promotions. Emphasizing the total price before discounts creates an especially strong discount effect, making customers feel like they are getting a special deal.

Influencing factors when applying the anchor effect in sales

Below are factors that will likely influence the anchoring effect in business and sales:

Customer's feelings when making a purchase

Emotions when making a purchase play an important role in the customer decision process. Research shows that this state of mind can increase or decrease their ability to anchor or resist. To clearly understand and accurately assess customer emotions, consultants need to have a lot of experience in understanding customer psychology.

Customer purchasing experience

People with more shopping experience and social skills are often less susceptible to the anchoring effect. Therefore, consultants need to have a lot of experience and good customer retention skills to apply the anchor effect well.

Confidence of consultants/sales staff

Confidence is an important factor when applying the anchor effect in consulting sales. Not all customers are easily drawn into the anchor effect, so during the sales process you need to show your confidence to create trust in customers.

Product features, price, and quality of the product

In addition, factors such as product features, price, quality, as well as total cost to customers also play an important role in purchasing decisions, compared with competing products in the same market segment.

In the nutshell

Psychological effects in business and sales play an extremely important role for every business. Effective application of the anchor effect can motivate customers to make more positive and faster purchasing decisions, helping to increase business revenue.

In addition, customer service also plays an important role in building satisfaction, reducing churn rate, and maintaining customer loyalty.

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