••

On average, merely five in every hundred visitors of online stores actually purchase a product. This, despite the fact that in offline, brick and mortar stores more than twenty-five out of a hundred visitors make a purchase. Why is this gap so large? The answer can partly be found in the ways in which vendors adapt their promotional appeals to the unique individual preferences and needs of their customers.

•••

Based on insights from behavioral economics, marketing, and his own groundbreaking research on Persuasion Profiling, Dr. Maurits Kaptein developed a mass-market personalized technique that enables you to treat online visitors as an offline vendor would. Kaptein combines a thorough description of our knowledge of sales psychology with an understanding of interactive technologies to demonstrate the opportunities these technologies offer for personalization. Kaptein discusses novel research results on the individual effects of well-known persuasion strategies, and discusses the ethical issues that arise in large-scale personalization efforts.

•••

The result is a vivid and clear introduction to the science and art of real time and personalized persuasion on the Internet. It is an introduction that is certainly indispensable for marketers but is also unmissable for you, the consumer

•••

••

Maurits Kaptein

Persuasion Profiling

•••

How the Internet Knows What Makes You Tick

•••

•••

•••

•••

Business Contact Publishers

Amsterdam/Antwerp

••

© 2015 Maurits Kaptein

Business Contact Publishers

Original title Digitale verleiding

Cover design Loudmouth

Author photo Milan Vermeulen

E-book design Zeno

ISBN 978 90 470 0878 1

•••

This ebook was based on the 1st edition, 2015, ISBN 978 90 470 0872 9

•••

WWW.BUSINESSCONTACT.NL

••

In memory of Professor Clifford I. Nass.

•••

Thank you.

•••

•••

Prologue

•••

Of all the books you could be reading right now, you chose this one. Why did you choose to read this book instead of one of the other books out there? We’d all like to believe that we’re reading the book we’re currently reading because its content is interesting; after all, you specifically selected this book because it best suits your current wants and needs, and it was the best quality–price trade-off you could find.

Similar reasoning applies to all the other product purchases we’ve ever made: my current shoes are fantastic value for money, and my car is the best I could afford. But when I think about my T-shirt, I have a minor problem: I’m currently writing this introduction as I sit on the couch wearing a Vans T-shirt, and I cannot help but notice that this particular T-shirt (dark blue with white letters that say ‘VANS’), purchased for $25 in an outlet near San Jose, is probably not the absolute best value for money. Don’t get me wrong: I love this shirt, and I love the brand. But I’m convinced that it should be possible to find the same quality dark blue T-shirt with a number of meaningless white letters for a lower price. These observations sometimes make me doubt my own choices: Why did I end up paying $25, instead of a possible $7, for a fairly plain T-shirt?

Who am I?

Before we delve into the product choices I’ve made, it’s only fair to introduce myself briefly. For more than 10 years, I’ve been studying consumer decision making. Consumer: that’s you every time you buy something. My academic research focuses on the reasons for specific purchases, and I have meticulously studied the motivations behind seemingly trivial economic choices. In this book, I focus primarily on the choices made by people who are not clearly driven by the price–quality trade-off. Basically, I’m interested in why I bought the VANS T-shirt. However, in recent years, I’ve become convinced that motivations that go beyond price and quality affect all purchases and many other aspects of human behavior. Hence, I’ve conducted research on a variety of economic and lifestyle decisions from a psychological perspective.

At the start of my academic career, I studied economic psychology: the psychology behind economic decisions. I focused primarily on fads, and I wondered why some products that are virtually useless are suddenly purchased by almost everyone. Perhaps you remember the Tamagotchi…

After studying fads, I started studying online consumer behavior. Initially, I studied usability, simply put: Where should the ‘buy now’ product be located so that people can find it easily? And for the last five years, I’ve examined the use of psychological sales techniques in e-commerce.1 Through research at the Technical University of Eindhoven (the Netherlands), as well as at Stanford University (USA) and the Aalto School of Economics (Finland), I’ve tried to understand, and ultimately predict, why people do or do not buy certain products. I have primarily studied online purchases because in online commerce, we can directly measure people’s behavior. Using current technologies, we can monitor consumers continuously and this allows us to structurally study their behavior. Our recent ability to track people’s online activities provides a surprisingly useful research tool for studying consumers’ decision-making behavior. The Internet, and specifically online commerce, can be regarded as a telescope or microscope – whichever you feel is more influential in physics – through which human behavior can be studied.

Based on my own research, and that of many others,2 it’s easy to conclude that consumer behavior is not driven solely by the price–quality trade-off. You might have bought this book just because a colleague recommended it; or perhaps you bought it because it’s is a bestseller, indicating that many other people have already bought it. But, then again, perhaps none of these applied: You might have just bought the book because it was on a very special one-day sale. This last argument is probably why I bought my VANS T-shirt.

 We like to believe that these ‘extra’ bits of information (the product is a ‘bestseller,’ ‘special offer,’ or ‘popular with friends,’ etc.) contribute to our informed rational choice. The fact that a product is a bestseller is a sign of quality (why else would so many have bought the product before?), and special discounts change the price–quality trade-off: As the price goes down and the quality remains the same, we’re clearly winning.

However, recent psychological research shows that if one randomly adds this kind of information to products, the effects remain the same. If we pitch a book to consumers, asking them how much they are willing to pay for it, and we subsequently pitch the exact same book to another group of similar customers, stating that it is ‘almost out of stock,’ we find that people in the latter group are willing to pay a higher price.3 And, surprisingly, the message does not even have to be true! It seems that we automatically respond to the extra bits of information surrounding the product without necessarily contemplating their effects on the price–quality trade-off.

In this book, I will refer to these ‘extra’ bits of information, in line with other researchers who have studied purchasing behavior,4 as ‘persuasion principles’. Some researchers, managers, and marketers have different names for these bits of information; they call them influence principles, sales strategies, persuasive messages, or sales tactics. However, in all cases, we are considering these ‘extra’ information. Persuasion principles refer to information about a product or service that is not a direct property of the product or service itself. If a product is ‘almost out of stock,’ which could be caused by poor stock planning on the part of the seller and might have nothing to do with the product itself, this fact still influences our willingness to buy it.

Persuasion principles are not new; they have been studied and used for hundreds of years by good sellers, debaters, and other professional influencers. What is new is the structural use of these principles in online communication to influence and persuade customers while they browse the Internet. This book will detail how this is done.

Selling about 20 years ago

Not so long ago – about twenty years or so – we would go to a physical store every time we wanted to buy something, a few nutty mail-order consumers excluded. After finding and entering the store, it wouldn’t be very long before we bumped into the seller – an influencer by nature. We would start talking, and within minutes, the first persuasion principles would enter the conversation. For example, we would be alerted to the fact that our neighbors owned the exact same vacuum cleaner that we were examining and had never experienced any problems. A few minutes later, we would walk out as the happy new owners of a shiny vacuum cleaner, only to find out later that the neighbors didn’t even own a vacuum cleaner.

This seller, a great influencer, would be able to persuade a small number of customers per day to make this purchase; they would likely be pretty costly for the consumer electronic store to employ; and not all the customers would appreciate the little sales talk.

Luckily, we have recently entered an era of online shopping. We no longer need to leave the comfort of our homes, we do not need to get wet when it’s pouring, and we do not have to talk to sellers. Likewise, the consumer electronics company does not need to employ sellers and can now sell to more people at once. Just to illustrate: A shopkeeper in South Dakota would previously have served his whole town, about 50 families. Today, using the Internet, the same shopkeeper can sell to virtually anyone. We can’t deny that selling has changed.

At first, this change sounds good, efficient, and enjoyable for both the customer and the seller. It also sounds almost too good to be true and, in all honesty, is not true. While we currently do sell online, we are actually very bad at selling online. In physical stores, conversion rates – the percentage of customers who enter the store and end up buying something – ranged from almost 100 percent (the supermarket) to about 12 percent (the electronics store). However, the average online merchant would be delighted with a conversion rate of about 5 percent. On average, current online conversion rate runs between 0.5(!) and 2.5 percent.5 So while we reach more people, thanks to the advent of e-commerce, we seem to be losing our ability to sell them something. Apparently, we are getting worse at convincing individual customers to make purchases.

Who should read this book?

This book describes the things we forgot in our fairly rapid transition from offline to online sales. The book highlights one of the reasons why online conversion rates are surprisingly low compared to offline ones. It also looks at how recent scientific studies, those examining the use of persuasion in particular, can directly contribute to an increase in online conversion if those studies are applied well. This book, at its core, shows how we went from a large impact with small reach – the seller was a good influencer but could affect only a limited number of people – to a gigantic reach with only limited impact.

To put the impact back into online marketing this book describes ‘persuasion profiles’:6 profiles that, for each individual customer, describe which psychological persuasion principles are most effective. Persuasion profiles are the next step in increasing the impact of online marketing.

While this book is especially useful if you are trying to sell things online, or intend to in the future, it’s even more significant for consumers; which we all are! It is useful to know how persuasion principles are used to influence your behavior. It is valuable to understand why you are specifically offered certain products, news articles, status updates, etc. while your colleagues and friends are offered completely different promotions. With knowledge about the different ways in which you are actively being persuaded while you browse the web, you, as a consumer, can guard against the developments that I describe. Persuasion profiles will impact the future of online marketing, customer relations and multi-channel campaigns – my apologies for the marketing jargon. If you know how these profiles are created, and how their use affects you, you will be able to better protect yourself against unwanted influence.

•••

But let’s start where it all began: the physical store...

•••

•••

1 My own research is not limited to the use of sales techniques in e-commerce. I have been studying more broadly how people can be influenced (or persuaded) by interactive systems. However, this book focuses primarily on e-commerce not because this is the only interesting human behavior but because the infrastructure of e-commerce makes studying people’s behavior extremely easy.

2 For a good introduction, see Cialdini, 2001. Also of interest are the articles by Gretzel and Fesenmaier, 2006 and Eisend, 2008. However, this is only the tip of the iceberg with regard to the social psychological research that shows that our behavior is driven by more than a rational price–quality trade-off.

3 An example of this effect can be found in Verhallen and Robben, 1994. I will further detail this study in one of the later chapters.

4 For an example of this, see Cialdini and Trost, 1998 and Fogg, 2002. Many more examples exist, but these provide useful introductions.

5 Note that estimated conversion rates differ tremendously between branches, studies, and countries. However, the main point is almost always replicated: Offline conversion is much higher than online conversion.

6 It is not just online selling that is likely to be affected by the use of persuasion profiles. It is likely that in the near future the application of these profiles will reach far beyond selling. However, we will discuss the possible applications of persuasion profiles in later chapters.

1 – Why this book?

•••

‘Is this all?’ asks the cashier. I say ‘yes’, put the book The Philosopher and the Wolf on the counter and grab my credit card. This happened about half an hour after I walked into the bookstore looking for a book for my upcoming trip to a scientific conference in Hawaii.7 While purchasing a book may seem trivial, many things happened in that half hour before the book changed owners and it went home in a plastic bag. And we need to understand all these events, all the steps in the sales process, to figure out why conversion rates are much lower online than offline.

•••

The question ‘Why this book?’ therefore requires a detailed answer: the idea that this is the ‘best’ book for the ‘best’ price is not sufficient. There are so many books; could it ever be possible to make the absolute ‘best’ choice from among all of them. While I love to make good choices, and might be fairly intelligent, I simply do not have the time for an elaborate analysis of the pros and cons of each book. Luckily, there are lots of other reasons why I had just purchased The Philosopher and the Wolf. To understand these, I need to recap the events in the half hour before I got to the checkout counter.

Let’s put things in perspective: The day I bought The Philosopher and the Wolf was the day before I began my next plane trip. The trip would take more than twenty hours, and I was sure that it would be relatively boring, without any form of entertainment. This thought was quite annoying, so I decided I needed a new book. Although I often buy my books online – I generally do not like conversations with physical salespeople – I knew this was not going to happen this time: two books had already got delayed en route from the distribution center to my house, and I really wanted something new before I left.

So, I put on my coat and walk to the bookstore. Now I do have a favorite bookstore, and I know how to get there. However, please note that if I had not been able to find the store, or had no idea of the existence of book stores in general, I would never have made it to the final check-out stage: paying for the actual book.

•••

After entering the store, I walk straight past the novels (these are generally not my taste), the spiritual books (also not quite my taste), and head for the science and philosophy section, way back on the left side of the store.

I know my chances of finding a good book in this section of the store are good, as I already own more than half of the books on display here. I know my way around the shop and do not have to spend time wandering all over the store to find the right section. It is not too large and has a great layout, making it possible to oversee its entire selection. This enables me, and other customers, to quickly get to the selection of books that we want. But obviously, this is not always the case: it does happen that I cannot find something in a store, even though the item is actually in stock.8

So let’s recap, up to now I have found the store and located the selection of books that interests me. Next, I have to select the ‘best’ book from the roughly forty books that remain. Fortunately for me, a helpful sales associate approaches: ‘Looking for a gift?’ Wearing my T-shirt and sweatpants, I apparently do not appear as a credible buyer of popular scientific or philosophical books. ‘No, it’s for me,’ I answer.

‘Then I can recommend this book,’ says the sales associate as he picks up Philosophy for Dummies from the display table and shows it to me. ‘Just this week alone, I have sold four copies of this. It is a real bestseller in this genre and it is an easy read.’ I look somewhat concerned and suspicious. First of all I perceive the choice of that book to be an underestimation of my intelligence, but the sales pitch troubles me even more: Do I really look like someone who buys bestsellers?

The seller quickly notices that this choice is not for me and looks around for an alternative. He slowly walks to the leftmost display table: the specials. ‘Perhaps this is something for you?’ And he points to the book I Feel, Therefore I Am by Antonio Damasio. ‘Already have it,’ I reply. Nevertheless, that is a far better choice by the sales associate. He probably sees my face clearing a bit.

I look around the specials while the sales guy wisely keeps some distance. The Philosopher and the Wolf catches my eye. I remember that a year ago this book was recommended to me by a friend, and now it is right here on sale.9 Unlike the first attempt by the seller – recommending a bestseller – the recommendation of my friend seems to influence me: I know he often reads books that I can appreciate. Therefore, his recommendations matter to me. And to be honest, I don’t mind a bargain.10 So, my decision is an easy one.

‘Thanks for your help,’ I call to the clerk, while I walk over to the checkout desk and place the book on the counter.

The online sales process

Obviously I have a reason for writing about my recent book purchase in such detail – a book I can recommend by the way. The bookstore I just described has a ‘conversion rate’ of twenty eight percent: more than 1 in 4 people who enter that store leave with a book.11 The most successful online bookstores such as the international giant Amazon.com achieve conversion rates of only around 10 percent, if they are lucky. That is not even half the rate of their physical counterparts, and, what is even more striking, is that 10% is the envy of most competitors in other online segments.

My purchasing process for The Philosopher and the Wolf would not have differed much online from what took place offline. Online, I also need to first find the actual store. If I know a store, it’s simple: I just type in the address in my browser. And if I don’t, I go to a search engine and find the store that offers the product (a book) that I want.

This first step is finding the store. This is very important for online sellers, although it is often not included in the conversion figures. After all, if you can’t find the store you can’t buy anything! Therefore, the first attempts to increase the success of online stores mainly focused on increasing the ‘reach’ of a store. The current online marketer is known for trying to exploit the new medium to increase the store’s reach as much as possible: they focus on higher rankings in search engine results, more links to the shop, and catchy easy-to-remember names,

After finding the online store, step two of the sales process is quite clear as well: the consumer searches product categories or views the recommendations. When I digitally look for a book, I ignore the novels and ‘walk’ towards ‘the corner’ of the online store where books about science and philosophy are on display. Much of the attention of web engineers is currently focused on this second step: online stores test their layout to make sure that people can find the categories they are looking for easily. Because many online vendors have a range of stock, many times greater than the offline stores, this step is crucial in online selling.

In addition to offering products in different categories, many smart online stores use formulas and algorithms to actively offer specifically targeted products. These ‘recommendation systems’,12 for example, keep track of what you were looking for when you entered the shop, for example: ‘Novel: Dean Koontz’. Their formulas ensure that you are offered a number of books by Mr. Koontz. And it does not stop there. People who read Dean Koontz also read Stephen King, and hence the store will offer books by that author too. Where the live salesperson tries to select a book for me, mathematical formulas do it online.

Once the selection of products has been reduced to a manageable number, then it’s up to me to make my choice, throw the book in my virtual shopping cart, and check out.13 This is similar to the fourth step of the offline sales process described above.

What we often miss online, however, is step three: the conversation with the sales person. While web technology is already capable of making a selection of products for us, it often ignores an important part of the process; interaction with the seller. Of course, many people would gladly forgo this part, as avoiding real contact with the seller is a popular reason to buy stuff online. Yet, I believe this third step, the active influencing – or ‘persuasion’ – by the salesperson, partly explains the current conversion gap between online and offline sales. They not only recommend a product – which is what the ‘recommendation engines’ from Amazon and the like also do – but they use persuasion principles to actively convince me: ‘This book is a bestseller’ and ‘This book is on sale now!’ These types of arguments are still often omitted online.

More importantly perhaps, the seller was able to analyze my lack of response to ‘This book is a bestseller’ and adjusts his persuasion strategy accordingly. This active and dynamic use of psychological persuasion in the sales process is a natural given for good sellers, but is for the most part lacking online. We just seem to miss out step three.14

Recently, there have been definite signs of step three emerging online: you do encounter ‘special’ and ‘bestseller’ offers. And increasingly, websites show how often a product is purchased, if it is a bestseller, and how many are still left. These persuasion strategies are already increasing the conversion rates of many online sellers. This is starting to bridge the gap between online and offline selling. But still these websites are nowhere near as effective as real life salespeople. Good salespeople keep track of the conversation: they remember which persuasive argument works for you and which do not. The seller doesn’t just select a product for you; they also carefully select the right argument to successfully sell that product. The salesperson learns and adapts by observing your behavior. In doing this, the salesperson implicitly creates a profile, not only about the type of product you want, but also about how this product should be pitched to you. And, in part, it is this profile that makes an offline salesperson more effective than our online sellers.

Searching for impact

In an online store you are not assisted by a real-life salesperson who can gradually adjust their strategy during the conversation. Nevertheless, the way you are persuaded can essentially be the same. In this book I will show you how, on the basis of the studies and experiments that I carried out with Dr. Dean Eckles and many others, the natural, age-old sales process can be carried out online. You will see how in the course of time we have evolved from a small ‘reach’ with high ‘impact’ (and by the latter I mean: the influence that the seller has on a single person) to a huge reach with hardly any significant impact. This transition began centuries ago with the introduction of the printing press. Much later, marketing campaigns in mass media channels dramatically increased the range of physical stores: many vendors could now potentially reach out to millions of customers. The advent of the Internet has ultimately led to a situation in which anyone with an Internet connection can sell products to virtually everyone else in the world. The reach therefore is enormous, but the impact of each individual sales attempt is often minimal.

The first thing that online retailers tried to do was increase their reach by ensuring that their stores could be found (discussed in detail in Chapter 3), which even today is still a major concern. And that’s not without reason: being easily discoverable by the right customers increases not only the reach of online stores, but also their impact: they ensure they attract the right audience.

The next step was that online sellers started to focus on making sure that the customer could find the right products (Chapter 4). This is accomplished by the use of so-called ‘recommendation systems’, that use mathematical algorithms to select the right products for the right customer. You might wonder how these recommendation systems work, and what they know about you. What kind of profile do they create and what information do they need to do so? Chapter 4 will give you a peek behind the scenes of the current ‘intelligence’ of computers.15

Even though these steps have improved the impact of online selling over the past fifteen years, online sales systems are still performing a lot worse than the offline salesperson. This is where our psychology comes into play: we will study not only how the brain works (Chapter 5), but also the psychological principles that persuade people (Chapter 6). There is a lot to gain for online sellers, because the developments in online marketing have, so far, not paid enough attention to the consumers’ decision-making processes. There is actually a lot known in psychology and marketing about this subject even though the knowledge is only sparsely put to use online. Despite the fact that the difference between offline and online impact, to a large extent, can be explained by the absence of active and interactive psychological influence, focusing on the use of persuasion in online selling will change the future of marketing.16

After reviewing the key insights from psychology, our journey takes us through uncharted territory. How can we best apply our knowledge of psychological persuasion? First we will carry out some experiments that demonstrate that a single, well-chosen persuasion principle is often more effective than using a multiple of principles simultaneously (Chapter 7). Next, we will discover that individuals respond differently to psychological persuasion (Chapter 8) and that they are consistent in their responses; meaning that if you can be persuaded to buy shoes using one method, then you can be convinced to buy a new phone in the same way.

Then we will arrive at the ‘missing link’, step three in the sales process: persuasion profiles. What real-life salespeople do, online sales systems can also do now, thanks to persuasion profiling. You will discover new research into online selling, first to prove that our theory of persuasion profiles actually works (Chapter 9), and later to find out how we can create a profile that describes which persuasion principles you are the most susceptible to (Chapter 10). This profile is dynamically adjusted based on your responses to persuasion attempts from multiple online stores. The profile is then used to select the most appropriate persuasion strategy.

Persuasion Profiles are the ‘marketing currency’ of the future. They change your online shopping experience and follow you in applications that reach far beyond the web. Not only will you be persuaded while making a product purchase or even trying to lose weight using a mobile application that tracks your activity patterns, but similar profiles will likely be used to persuade you to make a choice for a political party as well, More and more applications will use technology to – consciously or unconsciously – influence your behavior using ‘persuasion’.

We will end this journey with a discussion of the implications of persuasion profiles for your privacy and autonomy: The use of persuasion profiles does raise ethical questions after all.

How online persuasion works

From the bricks and mortar store owner that learns that you like to buy what the neighbors also bought, or rather what they could not afford, this book guides you to the use of persuasion profiles: Individual profiles that online stores can use to create the same impact as the bricks and mortar store owner. Persuasion profiles based on your personal reaction to persuasion strategies are still fairly new, but certainly not transient. The technology is ready. We can measure how you react and we can calculate what strategy works best for you personally. And you, you’re ready too, though maybe you have not realized it yet. Your response to your bricks and mortar sales clerk in reality will be no different from your reaction to this new technology.

However, it does feel different when a website or an online store maintains your profile compared to your local shop owner. Despite the fact that persuasion is everywhere – people influence each other, the newspaper affects your opinions, and television ads try to persuade you to buy something – many people with whom I speak at conferences find this new technology unethical or downright scary.

Persuasion profiles are scary. Indeed, there are some major differences between the profiles online and the store owners who know how to sell you something in person. The persuasion technology is theoretically able to follow you, not just in a single store, but across all stores that you visit online. And it does not stop at the online store: your reactions to psychologically based persuasion can be recorded when you use social media, when you use an online voting guide, or even when you seek help from an online psychologist. The technology has the ability to track you in places where the store owner cannot.17

Moreover, the technology can remember and store much more information about you than any bricks and mortar store owner can. Because you return every week, and that neighbor trick apparently works time after time, the salesperson easily remembers it. But when you have been away for a couple of weeks on vacation that knowledge easily fades away. With digitally-stored persuasion profiles, things are quite different. The profile can be stored permanently. All information about all your reactions to persuasion principles can be stored, used and perhaps even sold to third parties. These two properties, their use in multiple situations and the almost infinite availability of information, make persuasion profiles scary.

But we have not reached that point yet: technology can measure or remember anything and everything, but it’s still rather stupid. While the seller in the bookstore immediately recognized that I was really not impressed by the bestseller approach, an online seller can not just ‘see’ this. The online store has to learn these facts based on your mouse clicks and your purchasing behavior. It will therefore be some time before the technology has reached a point where it has the same impact as sellers in the real world. Fortunately for you, the consumer, you are here at the right time to witness this. And if you are an online seller you will, by reading this book, be one of the front-runners in persuasion profiling.

Summarizing

Salespeople have more impact than online stores because they use personalized psychologically based persuasion strategies. Online stores, and other technologies that try to influence us, can also increase their impact by using persuasion. This book explains how. On the one hand it outlines how you can use persuasion to influence people’s behavior. On the other hand it also explains how you, as a consumer, can defend yourself against such tactics.

Each chapter focuses on a different aspect for increasing the impact. At the end of each chapter I will summarize the main points so that you can scan through the summaries and decide which are the most interesting for you. What follows is a brief summary of the ‘sneak preview’ this chapter provided about the contents of this book:

•••

• Economic decisions are not just based on rational decisions

• Psychological persuasion principles play a large role in the human decision-making process.

• In order to sell anything a store first has to be findable.

• Secondly, the customer has to be able to find the product in the store’s stock

• Salespeople can use psychological persuasion principles to increase the chances of a sale.

• Just like a good salesperson remembers which persuasion tactics worked for a particular customer, online stores can learn this too. In which case the online store uses a persuasion tactic.

• Persuasion profiles bear many similarities with good salespeople. But they are bit scary too: They can be used in more than one store at the same time, retain endless data and be kept indefinitely.

•••

More than 95 percent of people that read this first chapter have finished reading this whole book with great pleasure.18

•••

•••

7 That weekend I would fly off to Hawaii for a conference called HICSS 2013: The life of an academic can be hard, but surely is not on those days.

8 For me IKEA is a store where this happens frequently. Every time I go there I am unable to find anything I like. However, I often visit friends who seem to buy great stuff there. I just can’t find it myself.

9 Thanks Dr. Joris Janssen for recommending the book to me!

10 I buy discounted products fairly often. However, I am quite aware that discounted products are often not really cheaper: often sellers increase prices just before offering the product at a ‘discount’. In online commerce price fluctuations can be huge. For examples of this see http://www.camelcamelcamel.com.

11 Here again, estimates of conversion differ greatly. This one is based on a day of counting at my own local bookstore.

12 Recommender systems, the technology behind these digital recommendations, are a hot topic of research. See for example: Gretzel & Fesenmaier, 2006; Ochi, Rao, Takayama & Nass, 2010; Ricci, Rokach, Shapira & Kantor, 2011. In Chapter 4 I will describe ‘recommender systems’ in more detail.

13 The check-out process in online shopping has proved non-trivial. Many customers fail to buy products that they put in their shopping carts. This is a very active area of user studies: how do we make sure the check-out process is simple enough?

14 An aspect that is often overlooked in step three is the power of reciprocity: the salesman helps us find the products, so we feel inclined to return the favor by buying a product. See for more information about reciprocity: Komorita, Hilty & Parks, 1991.

15 Of course there are many books on ‘how to be found’ (called Search Engine Optimalisation (SEO)) and on ‘recommender systems’. I will give a brief introduction in this book, but for more information see Ricci et al., 2011.

16 Some readers might question whether the material in this book will actually become real. However, some of the things I describe are already happening as we speak.

17 By now the tracking of consumers is starting to be regulated. In Europe regulations are pretty strict: online marketers are no longer allowed to follow everyone everywhere. However, the exact compliance with these new regulations remains to be seen.

18 There you go, a bit of psychological persuasion. Just so you can get used to the idea.

2 – Reaching more and more people

•••

‘Yes, this is a great book!’ remarks the bookseller while he scans the price of my book. The seller from the previous chapter has followed me to the cash register, as I apparently have to check the book out with him. He carefully places the book, The Philosopher and the Wolf, on the counter.

‘We have a few more books like this on offer. What would you think of Justice by Michael Sandel? Normally it would cost you $15, but you can get it for $10 today.’

•••

… (I ponder) …

•••

‘Allright, add that one as well...’

•••

While initially I only needed a book for my flight to Hawaii, I now end up with two books. While walking out I start to analyze my purchases. I really didn’t need two books; the two that I ordered online are on their way and I am sure they will have arrived by the time I return from Hawaii. What is more, it was never my intention to buy more than one book. A short book for the trip to Hawaii, that was all. The bookseller obviously thought differently...

•••

During our short time together, the bookseller has apparently been able to learn some things about me and use them to influence me. First of all, the seller has seen what kinds of products I like: books about philosophy, but not for dummies. Then, he has noticed that I’m not necessarily looking for a bestseller. The fact that many people have already bought the book doesn’t seem to matter much to me. But when I saw a special offer I was quickly sold.

While checking out, the seller made full use of his insights: he sought out the right product – another philosophy book – and used the correct persuasion principle, the discounted price offer. The seller found the correct item and offered it to me in the right way. Because of this combination of product knowledge and mode of delivery, the seller was able to persuade me into an unplanned purchase.19

Using persuasion to create impact

‘Impact’, in the remainder of this book, will be defined as the ability to influence the consumer during an individual sales moment. This is obviously an over-simplification, since impact will often likely depend on previous contact, and contacts with others too. But it is not overly simplistic: this definition of impact is very useful in illustrating the differences between sales in the physical store and sales in the current online stores.

Let’s take a closer look at impact and place it in its historical context. We start at a time – several centuries ago – where virtually all forms of influencing decision processes took place in person, just like my own interaction in the bookstore.

In those times the impact that a persuader – the seller – had on their ‘target’ – yes, someone just like you – was very high, assuming he was a good salesman. Because each interaction was personal, a good influencer could adapt to his target, readjust, and apply a variety of possible psychological strategies (although many of them had not yet been formally described at that time; that would not happen until many years later) thereby exerting a lot of influence. So the traditional seller had a lot of impact.

This impact from person to person, the ability to influence others, was deemed an important quality even in ancient times. The ancient Greeks esteemed Peitho, the god of persuasion. He is perhaps not as well-known as Aphrodite and Apollo, but his existence in Greek writings indicates that the Greeks valued person-to-person impact. In addition, we know of Aristotle’s argumentation theory. It is still used and taught today, teaching you how you can influence people. Aristotle’s concepts of ‘logos’, ‘ethos’ and ‘pathos’ are also known as the three ways to influence people; through logic, through credibility of authority, or by the use of emotion. The ancient Greeks were already busy increasing impact.

Reaching the masses

Given that the impact of communication between two people can be very significant, and for centuries people have been engaged in describing, explaining, and increasing that impact, there remains a limit to the range of human-to-human communication. Even Aristotle, over his whole lifetime, could only talk to a limited number of people. His impact on each individual with whom he spoke may well have been astounding, but the range of his impact at that time probably left something to be desired.

After the era of pure human-to-human communication, other forms of communication appeared. Mediated communication increased the range of people affected: a single person was able to reach out to multiple people at once. Figure 1 illustrates the human-to-human impact we know from ancient times, and it further shows how the range of our communication evolved over time: how many ‘targets’ an individual influencer could reach in different times.

Before the advent of things like the printing press, radio and television, the reach of people was quite small. Aristotle could talk to only a few people, and his writings were available to only a handful of students. In principle however, his books could be read by more people than the writer could personally appeal to thus extending his range. In Aristotle’s time books were still scarce, but the printing of books became cheaper over time. After the invention of the printing press in 1440, an author could reach thousands, if not hundreds of thousands of people. Through radio (± 1890) and television (± 1920) the range of potential influencers further increased. Today we are at a point where an influencer – and that can be anyone – has the potential to reach the entire world.

•••

Figure 1: An overview of reach and impact over the years. It is clear that reach has increased tremendously: technology has allowed us to reach more and more people. Impact starts high: a good salesperson can really influence individuals. In order to keep a bit of the suspense, I have not yet extended the line for impact. I’ll do so in figure 2.

•••

At first people were shocked by the dramatic increase in the range of communication. At the time of mass media’s ascent, the power of the mass media was frequently described and criticized by communications experts.20 Researchers mostly focused on the devastating effects: mass media with such a huge range would spoil our children and our societies. We, the people, would be transformed into an inert mass that obeyed the many attempts of mass media raining down on us. These initial doomsday scenarios about the impact of mass media have not completely come true.

Recently, we have added the Internet to our mediated communication options, which has greatly increased the available options for those trying to influence others. Television and radio were available to only a select number of influencers. Today, anyone, anywhere, can potentially reach the entire world population. Finally, the presence of media in our lives has also changed over time: where we spent a few hours a week in front of our television in the past, most of us can now be reached at any time: by our smartphones and computers we are always connected.

Using the Internet we cannot just reach a huge number of people; we can address these people personally too. An influencer can show you a different message than the one he shows your neighbor. You can imagine that this development led to further discussions by communication scholars: Numerous scholars have warned how our world will perish because of the huge reach of the Internet. There are already several theories about internet-based influencing and its disastrous consequences. Writer Eli Pariser, echoing scientist Dean Eckles, mentions the ‘Friendly World Syndrome’: because we see only filtered information on the Internet and actually see only what we like. This changes our worldview. We think the world is more like us than it actually is. The consequence of this would then be that we become less tolerant of dissent, and end up getting more polarized and fragmented.21

Influencing more and more people

How does the initial impact of human-to-human communication compare to the increased range? In Figure 2, the dream of every marketer and the nightmare of communication scholars is shown: we reach more people, and we maintain impact, so our overall effect grows. As the range increases and the impact remains constant, the effect grows and the inert masses are sent in every feasible direction.

The ultimate effect of an influencer – the dotted line in Figure 2 – could be formalized as a function of the impact of each attempt to influence, and the number of attempts that one makes – the range. So:

E = B × I

•••

The effect, E, is equal to the range, R, multiplied by the impact, I.22 This simple formula basically says that if you can reach and convince more people then the effect of your message is huge. Both reach and impact directly contribute to the effect. As long as the impact remains the same, as shown in figure 2, and the range increases exponentially, the effect will ultimately skyrocket.

•••

Figure 2: Another graph showcasing impact and reach over the years. This time I have extended the impact according to the marketers’ dreams: it remains constant. The total effect is drawn too. Effect is a function of impact and reach. Due to the growing reach and the constant impact, the final effect explodes. Again, this is the dream scenario.

•••

A dream come true