“Human nature is perpetual. In most respects, it is the same today as in the time of Caesar. So the principles of psychology are fixed and enduring. You will never need to unlearn what you learn about them.”

-Claude Hopkins, Master Copywriter

Hopkins wrote that in 1923, in his book Scientific Advertising.

(It also happens to be the book I’m currently reading and the inspiration behind this week's newsletter 🤓)

Hopkins shared timeless psychological principles he uncovered during his profitable career in advertising.

Then, on a more recent note, psychologist Robert Cialdini spent time analyzing results from social psychology studies and his own experience with sales (like learning how to sell cars) and discovered 7 principles of persuasion.

The psychological principles he uncovered share a striking similarity to Claude Hopkins's work published almost 100 years ago.

In other words, regardless of the advances in AI, new social media algorithms, and marketing trends, they will always be effective.

So, now the real question becomes:

“How can I use these psychological principles in my marketing to generate more sales for my small business?”

Well, that’s what I’m breaking down today.

I’ll break each one down, and then give you examples of how to use them in your marketing so you can cut through the digital noise, communicate your value, and sell more of your products and services to the people you want to serve.

3 Psychological Principles You Can Use to Boost Sales for Your Small Business

(I was going to cover six, but this newsletter would become unreasonably long. So I’ll cover the other 3 in the next edition.)

1.The Power of Perceived Value

In one study conducted at the University of Basel in Switzerland, researchers placed 3 bottles of Italian wine in front of participants.

All 3 bottles looked exactly the same.

The only differentiating factor was that participants were told the price of each bottle.

• One was inexpensive, at $10.
• Another was mid-priced, at $35
• And the third was expensive, at $65.

Which wine do you think participants rated as the best tasting?...

…If you guessed the expensive one, you’d be right.

Here’s the kicker…

All three bottles were exactly the same wine.

It was only the perception that the wine was expensive that made it taste better.

So, how does this apply to your products and services?

Cheapness is NOT an Attractive Appeal

We want bargains, sure. But we want more than anything to feel that we can afford to eat and have and wear the best.

It's human nature—we equate value with price.

Think about it.

When was the last time you bragged about getting the cheapest option?

Probably never. But I bet you've probably mentioned treating yourself to a luxury item when you got a good deal on it.

(Like my girlfriend, who just spent $600 on a Burberry Jacket because it was on sale from the usual $3000.)

We're hardwired to believe that if something costs more, it must be better. It's not always logical, but it's how our brains work.

The Art of Price Anchoring

Now, before you rush off to triple your prices, hold up!

Simply shouting your expensive offers from the rooftops won't cut it. There's an art to this, and it's called price anchoring.

Here's how it works:

1. Keep your prices high, but then anchor them against something even higher.
2. This makes your (already high) price seem like a bargain in comparison.

Hot Tubs and Home Extensions:

A new quality hot tub isn't cheap—we're talking around $10,000. That's a significant chunk of change for most people.

But here's where the magic of price anchoring comes in:

Users reported that having a hot tub feels like they've added an entire new room to their home. It becomes a space for relaxation, social gatherings, and even improving health.

Now, how much does it typically cost to add a new room to your house? You're looking at north of $30,000, easily.

So, here's how a hot tub salesman might present the offer:

(Feel free to picture the stereotypical hot tub salesman. Let’s call him Chaz. You know the type—flashy Hawaiian shirt, gold chain, slicked-back hair, and a smile that's just a bit too wide.)

"You know, most of our customers say that having a hot tub feels like they've added an entire new room to their home.

Which, typically, would set you back over $30,000.

But you could get that same feeling of extra space, plus relaxation, health benefits, and a touch of luxury, all for just $10,000?

That's exactly what our premium hot tubs offer. It's like adding a new room to your home for a third of the price!"

…Despite the cheesy delivery, you've got to admit... he's got a point. 🤔

Suddenly, that $10,000 hot tub doesn't seem so expensive, does it? In fact, it starts to look like a bargain!

That’s the power of price anchoring.

By comparing your offer to a much more expensive alternative (in this case, adding a room), you're framing your product as a high-value, cost-effective solution.

Your Turn: Applying Perceived Value to Your Business

So, how can you apply this to your business?

1. Identify your 'expensive alternative': What costly problem does your product or service solve? What expensive item or service does it replace or enhance?
2. Highlight the value gap: Show how much your customers are saving by choosing your offer over the more expensive alternative.
3. Focus on feelings and benefits: Notice how the hot tub example isn't just about space, but also about relaxation, health, and luxury. What emotional or lifestyle benefits does your offer provide?
4. Use concrete numbers: When possible, use specific price points. "Over $30,000" for a room addition vs. "$10,000" for a hot tub is more powerful than vague terms like "expensive" or "affordable".
5. (Bonus) Create tiered pricing: Offer good, better, and best options. Your mid-tier option will seem more attractive when sandwiched between a basic and a premium option.

Remember, perceived value is just that—a perception.

Your job is to shape that perception by strategically presenting your offers in a way that highlights their true worth.

2. The Allure of Exclusivity: Making Your Customers Feel Special

Our brains are hard-wired to value things that are rare or becoming rare.

It's a survival instinct from our caveman (or woman) days.

Since you’re a reader of this newsletter, I’m going to assume your marketing skills are adept enough to have come across this one before—so I’ll keep it brief.

Types of Scarcity in Marketing

1. Limited-Time Offers: "Only 24 hours left!"
2. Limited-Quantity Offers: "Only 5 left in stock!"
3. Exclusive or Members-Only Offers: "VIP access only"

Each of these taps into our fear of missing out (FOMO) and our desire to be part of something special.

Rolex: A Case in Point

My friend recently got married over the summer.

While traveling in Italy, he wanted to buy a Rolex to mark a milestone in his life.

If you’ve ever walked into a Rolex dealer asking for one of these, then you’d know the typical response. Which is…

…”there's a waiting list.” (sometimes years long!)

This is by design.

They deliberately limit the production of their most popular models, like the Daytona and the Datejust.

That’s why it's so hard to get your hands on a new Rolex—and why they're expensive.

But more importantly…

It’s Not About Quality

Sure it's a great, Swiss-made watch…

But you’ll notice that they aren’t wasting time selling you on how the features of their watch are better than other watches.

What Rolex is really selling is status—to be part of an exclusive group.

This scarcity does two things:

1. It makes Rolex watches even more desirable. The harder they are to get, the more people want them.
2. It maintains their premium image. You don't see Rolexes on sale or in excess stock.

The result?

Rolex watches often appreciate in value over time. Some models even sell for more than their retail price on the secondary market.

By controlling supply so tightly, Rolex has turned their watches into more than just timepieces.

They've become coveted treasures that people are willing to wait and pay top dollar for.

Ethical Scarcity: Creating Exclusivity Without the Tricks

My friend ended up buying a different watch. The whole manufactured scarcity thing left a bad taste in his mouth.

But you don’t have to take it to that extreme.

Here are three ways to create scarcity and exclusivity authentically:

1.Create genuine time-based urgency:

Launch your new product or service for a limited time, or offer early-bird pricing (that actually ends).

2. Limit access strategically:

Instead of unlimited subscriptions, open registration only a few times a year.

3. Use scarcity language wisely:

"While supplies last," "Limited spots available," "One-time offer" – use these phrases, but use them honestly.

Combining Scarcity with Perceived Value

Remember our hot tub example?

Now imagine the salesman giving you the previous spiel, but adding this:

"...but this pricing is part of our black Friday sale, and ends Friday at midnight. Plus, we only have 5 left in this model."

Suddenly, that $10,000 doesn't just look like a bargain—it looks like a bargain you need to grab RIGHT NOW!

The Bottom Line

Scarcity, when used ethically, can be a powerful tool in your marketing arsenal.

It taps into our deep-seated psychological triggers, making your offers more appealing and pushing hesitant customers off the fence.

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​3. Risk Reversal: How Guarantees Can Boost Your Sales

We humans are a risk-averse bunch. It's why we look both ways before crossing the street, and why we hesitate before big purchases.

Guarantees tap into this psychology, removing the risk and making it easier for customers to say "YES."

Types of Guarantees that Drive Sales:

1. Satisfaction guarantees: "Not satisfied? Get your money back!"
2. Try-before-you-buy offers: "Take it for a spin, then decide."
3. Performance-based guarantees: "We promise X result, or your money back."

Each of these tells your customer, "We believe in our product so much, we're willing to take on the risk."

Notice how you put all on the risk on your side of the transaction.

You’re making it so that they have nothing to lose.

Zappos: Guarantees in Action

Zappos is an online shoe retailer, is famous for its 365-day return policy.

You can literally return shoes a whole year after buying them!

Sounds crazy, right?

But here's the thing: This policy actually decreased their return rates.

Why? Because it built so much trust that customers became more loyal and careful with their purchases.

Implementing Guarantees Effectively

1. Choose the right guarantee: Match it to your product and customer needs. A 5-year guarantee might make sense for a car, not so much for an online course.
2. Make it stand out: Don't hide your guarantee in the fine print. Show it on your website where you’re making the offer.
3. Fulfill your promise: A guarantee is only as good as your willingness to honor it. Be prepared to follow through.

The Ultimate Offer: Combining Value, Scarcity, and Guarantees

Let’s come back to our hot tub salesman and add one more layer:

"As part of our Black Friday sale, this hot tub is available for just $10,000—but only until Friday at midnight. We’ve got 5 left, and they come with a 90-day 'Love It or Leave It' guarantee. If you're not thrilled, we'll remove it for free and refund every penny. You just pay for the cost of delivery."

That's an offer that's a lot harder to resist than just coming out with:

Hot tub: $10,000.

The Bottom Line

Guarantees are like a safety net for your customers. They catch people who are on the fence and give them the confidence to buy. When used genuinely, they not only boost sales but also build trust and loyalty.

So, what kind of guarantee can you attach to your offers?

Thanks So Much for Reading!

You're now ready to open your new hot tub business 😂

(Just kidding)

There’s actually a lot more I could say about this topic, but I don’t want to drone on.

What do you think...

Want me to expand on this stuff next week?

I could show you how to use each of these elements in an email sequence that will help generate sales. 🤔

Or I could share 3 more psychological elements that I wanted to include in this newsletter.

Just hit reply and let me know! ✌️

Keep Learning,

Nicholas

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