What ICO Marketers Can Learn from Persuasion Experts
(This was originally posted on Kapitalized.org, an ICO advisory firm, which I write for. You can see the article there along with many others I’ve written for the company).
ICO Marketers are faced with a difficult task. Unlike the marketing departments of large corporations, initial coin offerings and their respective projects usually operate on a shoe-string budget. As such, marketers for crypto-projects end up adopting alternative, guerilla marketing strategies in order to get more done with less.
Even still, that doesn’t mean every single ICO is successful. As mentioned in a previous article of ours, most ICO’s in 2017 failed. Only 41% of projects would end up being successful, with the remained 59% either failing to reach their funding goals or fell apart despite succeeding in their crowdfunding.
What this means is that marketers face an uphill battle. Despite the fact that investors are collectively putting up billions into the various offerings on the market, that also means that there is an ever-increasing pool of competition out there. What legitimate ICO’s have to contend with, however, are the influx of mediocre projects that are more interested in cashing in on the ICO gold rush than contributing meaningfully to the ecosystem. Some investors are skeptical of ICO’s, thinking many of them to be fraudulent and “guilty” or being a scam before they “prove themselves innocent.”
It’s for these reasons that ICO marketers need to be willing to adapt and learn from other fields. The field of persuasion, psychology, human interaction and behavioral economics are all areas that can be insightful for marketers looking to stand out from the crowd.
Below are some of the most important insights for ICO marketers to consider;
Humans Are Emotional
Fundamentally, human beings operate on an emotional level and use logic to justify their actions. Several years ago, neuroscientist Antonio Damasio discovered that, when studying people with damage in the part of the brain where emotions are generated, found that they could not make decisions. Despite seeming to be perfectly normal and logically, their inability to feel emotion made making simple everyday decisions very difficult, even things as trivial as what to eat, what to wear, etc.
What this means is that at the point of decision, emotions remain a highly important determining factor. Negotiation professionals understand that building up a case or argument purely on a logical level is a strategy that is unlikely to be successful. They understand that the real factors driving decision-making are rooted more in the emotional side of our brains. Instead, they help others to discover for themselves what they want and what’s most advantageous for them. Of course, this involves uncovering the hidden problems, pain points, and unmet objectives that a party or individual has, and using what they already believe to elicit an emotional response. In a similar capacity, ICO marketer should have a well-developed idea of their ideal customer, or buyer persona, as well as what emotional pain points they have (and how your project solves them).
Regardless, the key takeaway here for ICO marketers is while features, technological advancements, and other aspects are important to the blockchain community, what makes potential investors and buyers act is an emotional reaction to these features. What’s the end result, how does this solution make them feel? Investors are willing to contribute to technical unsound projects as long as the vision and promise of these start-ups are strong enough.
Limited Supply and Loss Aversion
E-commerce experts, infomercial creators, and sales funnel designers all understand the power of scarcity. But while promises that supplies will last “for a limited time only” might seem overdone, the truth is that it still works after so many decades.
Robert Cialdini, professor of the psychology of selling and marketing as well as the author of Influence, is one of the foremost experts on the subtle factors that influence human buying behavior. One principle of his book states that people are motivated by the worry of missing out on an opportunity. The fear of loss motivates potential buyers more than the possible excitement of gain.
Many ICO’s are already incorporating some aspect of this principle in their ICO’s with hard caps on funding, ensuring that investors know that they can miss the proverbial boat. But while many start-ups already do something like this, scarcity can be applied in other ways as well. Companies that offer pre-ICO sales can provide generous discounts as one time offers for early-bird investors, for example. These discounts can diminish over time as the project becomes more popular, so investors that are still hesitant to contribute will know that they are losing out on a great deal if they procrastinate.
The idea behind reciprocity comes from sales psychology which states that when someone gives us something, we often feel compelled to give something in return and pay back their kindness. According to Cialdini, servers that brought checks to their patrons without bringing a mint, candy, or an equivalent saw average tips drop 3.3% in comparison to servers that gave mints. Shockingly enough, when servers brought two mints, average tips jumped up as high as 20%.
For ICO marketers, giving free tokens unexpectedly – even if just a small, symbolic quantity – can duplicate this effect. Bounties and token air drops are two methods commonly used to achieve this, helping kickstart communities that otherwise wouldn’t be aware of your token. Start-ups can take this to the next level by unexpectedly rewarding frequent community contributors on Reddit, Telegram, and other social platforms for their contributions. Even if they don’t end up investing in your token, they are more likely to spread the word about your generosity, which can create a ripple effect in terms of your brand awareness.
This can also tie into something known as the Baader-Meinhof phenomenon (also called the frequency illusion). The idea is that after you encounter something for the first time, you suddenly begin noticing it cropping up in everyday life more often. A person begins to unconsciously keep an eye out for that thing that otherwise wouldn’t register at all in their life. Although this is most often the case with certain products, such as cars, it wouldn’t be surprising if a similar principle extended to ICO’s. If someone first reads up on an altcoin that addresses, say, problems in commodity markets, that same person may begin to notice commodity related topics more frequently, reminding them of the ICO they first noticed. While this might not seem like a big deal in the grand scheme of things, it’s something that still makes a difference.
Admitting Your Flaws
One thing that normal business owners might be reluctant to do is fully admit, recognize, and admit to their flaws. Conventional advice might be to mitigate or downplay your existing weaknesses, but this isn’t always the right answer. It’s not a secret that consumers are skeptical of marketing claims – justifiably so. Often times, advertisements and marketing materials aren’t credible in their eyes, but one way to make your project seem more trustworthy is to acknowledge your projects shortcomings.
An article from the Harvard Business Review back in 2011 mentioned an instance in which Domino’s Pizza CEO Patrick Doyle took this very same approach to revitalize their business. While their original marketing rise to fame was the famous promise to deliver pizza to your door in 30 minutes, the quality of their food wasn’t the best. In an effort to change this perception about their product, they put an advertisement where the company flashed some of their customer complaints, such as “Domino’s pizza crust is like cardboard.” Their ads admitted that their pizzas weren’t the best, but that they were redesigning them while inviting customers to give their food another chance. Not only were viewers liked these advertisements, they actually gave Domino’s Pizza’s another chance, much to their satisfaction. If the company chose another strategy that didn’t acknowledge their weaknesses, it’s unlikely that it would have had the same effect.
What investors are looking for is trustworthiness, not perfection. Companies that show they are willing to be upfront with their errors, weaknesses, or shortcomings can find that these things won’t have as adverse of an effect as first imagined.
While on the topic, it’s worth mentioning that it’s preferable to anticipate future objections or concerns and address them proactively, rather than deal with them as they gain traction among the community. This is because when someone addresses a concern that a prospect is having before they even voice their concern, the potential buyer feels as if they are on the same page. In marketing materials, whether it be whitepapers, websites, or anything else, be upfront and honest with any concerns potential investors might have ahead of time.
Another important persuasion principle to keep in mind is that of social pressure. Groups of people, from crowds to markets, are influenced by the actions of their peers and the idea can manifest itself in a variety of ways. For one, if people begin to notice that other members of their social circles and peer groups (whether in person or in online communities) are getting involved in a project, it will begin to create an impetus to do the same. Like mentioned earlier, this can be achieved by bounties, coin drops, and other approaches.
Additionally, getting potential influencers on your side is another way of accomplishing a similar goal. Influencer marketing is a topic that we touched upon in another article of ours, “How to Market an Initial Coin Offering”, but it’s worth mentioning that while endorsements of celebrities and thought leaders can be beneficial, it’s important to know who your target market is as well as the type of thought leader they would respect. Floyd Mayweather’s endorsement of an ICO earlier in the year might mean something to his sports fans, but it wouldn’t carry much weight within the tech world. A celebrity might have a wide potential reach but lacks the credibility that a certain thought leader or industry expert might carry.
Marketers that are serious about understanding how sales psychology, human behaviour, neuroscience, and other fields intersect in business marketing would do well to study up on the works of Robert Cialdini (Influence: The Psychology of Persuasion), Chip and Dan Heath (Made to Stick: Why Some Ideas Survive and Others Die), John Caples (Tested Advertising Methods), and Roger Dooley (Brainfluence: 100 Ways to Persuade and Convince).
These resources and strategies can work well in any marketing campaign, but they work especially well with growth/guerilla marketing strategies, where the goal is to achieve exponential results from limited budgets.