Mere token effect - Big Wins with Small Gestures

Hey there ?? - It's Sidd.

And guess what? It's Monday! I hope your week is off to an awesome start.

I spent my weekend diving into some fascinating behavioral psychology, and now I'm back at the keyboard, ready to share some gems with you.

I’m intrigued by how small gestures can influence big decisions. It’s not just about grand strategies; sometimes, the tiniest tokens can have the most significant impact.

Today, let’s delve into the "Mere Token" effect and explore how you can implement this in your business in just 5 minutes!

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Let's dive in and make this Monday count!

Reading Time = 5 minutes and 11 seconds

The Power of Small Gestures

Imagine you’re offered two choices:

1. Receive $900 in one year.
2. Receive $300 in one week.

Most people, as per Oleg Urminsky and Ran Kivetz’s study, would choose the second option. Immediate gratification wins!

However, when the choices included a small immediate token—$50 right now and the rest later—respondents chose the first option more often. This small token changed their perception of the future reward, making it seem more appealing.

This phenomenon is known as the "Mere Token" effect. Small gestures or tokens can significantly influence decisions and perceptions.

Three ways you can leverage the Mere Token Effect

1.Emphasize Short-Term Promises

People often need tangible short-term results to commit to long-term benefits. Imagine you're selling a fitness program. Instead of just talking about the long-term health benefits, highlight the immediate benefits, like increased energy or a quick drop in weight in the first week.

For example, a toothpaste brand might advertise "Whiter teeth in 3 days" prominently on the packaging, even if the fine print states the best results come after six weeks of use. The immediate promise grabs attention and encourages purchase.

Example: A hair care product promising “Visible shine in one wash” could attract more customers, even if full repair takes months.

2. Add Buy Now, Pay Later (BNPL) Options

BNPL options are a fantastic way to implement the Mere Token effect. The initial low payment serves as the token that makes the product feel more accessible and less of a financial burden.

This method is particularly effective for higher-priced items. The ability to split payments makes the purchase feel more manageable and immediate.

Example: Imagine you're selling high-end home appliances. Offering BNPL can allow customers to take home a premium refrigerator without paying the full amount upfront, easing the purchasing decision.

3. Incentivize Actions with Gifts and Discounts

This is the most straightforward application. Every action you want your audience to take can be incentivized with a small token, like a discount or a free gift.

Fintech services often use this strategy effectively. For instance, a company like Wise might offer cash bonuses for referrals, while Uber provides free rides or discounts for bringing in new users.

Example: A subscription box service could offer a free box for every friend a customer refers. This not only incentivizes referrals but also boosts customer loyalty.

Ways to implement it in your business or Industry

For Digital Businesses/Tech Startups:

Focus on short-term wins. Highlight immediate benefits users get when they start using your service. For instance, an app could emphasize a free trial period where users get full access to premium features.

• Example: A project management tool could offer a free one-month trial with no feature restrictions, encouraging users to experience the full benefits without immediate commitment.

For DTC Brands:

Use labels and tags like “Organic” or “Natural” prominently. Offering small discounts or free samples can also make a big difference.

• Example: A skincare brand could give away a free sample size product with every purchase, making customers more willing to buy the full-sized product later.

For Service-based Industries (e.g., Consultancies, Agencies):

Provide free initial consultations or mini-reports. These small tokens can help build trust and showcase your value.

• Example: A digital marketing agency could offer a free website audit. This small gesture can lead to bigger projects once clients see the value provided.

Understanding the Mere Token effect and leveraging it effectively can transform your marketing strategies. Small gestures can lead to significant impacts on customer perception and behavior.

If you want to dive deeper into this fascinating topic, I recommend the book “The Psychology of Price” by Leigh Caldwell.

Also, the link to the paper of the study we talked earlier is here

So, what do you think of today’s newsletter?

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You can also check out the previous newsletter on the Halo Effect by clicking here.

See you next Monday.

Until next time,