Image of Temper.io pricing page with the highest plan shown from left to right

Anchoring

Definition:

Anchoring is a cognitive bias (sometimes called focalism) which results in people’s decisions being overly influenced by the first item of information they come across. This means that once an anchor is set, it becomes a subconscious reference point for all subsequent decisions or judgements. This means that people make decisions by adjusting away from anchor.

For example, if a pricing page shows the highest priced plan first this will create an anchor for all the other plans to be compared against. By doing this the organisation sets the highest anchor price it can and so it will help make its other plans appear more cost effective than if they had shown the cheapest plan first.

Image of Temper.io pricing page with the highest plan shown from left to right
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This pricing plan from Temper.io is one of the few plans I have come across that effectively use the  anchoring effect by placing their most expensive plan on the left. Most organisations follow the herd and display their cheapest, often free plan, on the left.

The anchoring effect has a number of characteristics:

  • It creates a perceptual distortion which can cause inaccurate judgement and errors in interpretation of information.
  • It is difficult, if not impossible, to overcome as it works in the subconscious mind.
  • It causes people to automatically adjust other relevant information according to the anchor information. This can often cause people to focus on a specific feature or characteristic purely because of the anchor information.
  • The bigger the difference, the more powerful the anchor can be on a decision. For example, unrealistic and irrational anchor prices have been shown to have a greater influence on judgments than more realistic anchor prices.

Implications for conversion rate optimisation:

Always show the most suitable anchor information first in communications. This means displaying your highest priced plan on the left and the lowest priced plan on the right.

Keep it simple and focus on one thing. The anchoring effect encourages simplicity and keeping to a single marketing message as that will become the anchor that everything else is compared to.

Conclusion:

Anchoring embeds a piece of information in your customer’s mind and so be sure to focus on the most salient benefit of your proposition. Avoid too many messages at once as this will reduce the likelihood that the best anchor is set in your customer’s brain. Anchors can persist in the customer’s mind for a long time and so consistency of messaging over time is also a powerful weapon to reinforce existing anchors.

Lastly, always remember to display the highest price on the left and the lowest on the right. For discounts the alternative may be best. By displaying the smallest discount on the left you set a low anchor which makes larger discounts appear even more appealing.

Resources:

Conversion marketing – Glossary of Conversion Marketing.

Over 300 tools reviewed – Digital Marketing Toolbox.

A/B testing software – Which A/B testing tools should you choose?

Types of A/B tests – How to optimise your website’s performance using A/B testing.

Digital Marketing and Insight