How to Use the Halo Effect and Illusion of Effort to Win Customers
Brian Russell, Managing Director | February 02 2024
The human mind is incredibly complex. Throughout our day, whether we realize it or not, our brains are constantly making tiny shortcuts that help us make decisions. While we may not be aware of these tiny shortcuts, they are incredibly influential and powerful forces in shaping how we perceive individuals, organizations, and products.
Two cognitive biases that stand out are the Halo Effect and the Illusion of Effort.
The Halo Effect, a cognitive bias deeply ingrained in human psychology, casts a bright light on everything it touches. It’s the rose-colored glasses you have during the “honeymoon phase,” where positive impressions of people, brands, and products in one area positively influence our feelings in another area.
The Illusion of Effort is a phenomenon where individuals perceive their productivity or the value of their work as higher simply because they’ve put in more effort or time, regardless of the actual results or output. For example, you might be willing to pay more for a handmade good that took 15 hours to create, than an item that only took two hours to make, because the amount of effort directly correlates with the quality or value of the outcome.
Understanding the Halo Effect and Illusion of Effort is super important for crafting a compelling marketing strategy for direct-to-consumer brands. Let’s dive in and explore these cognitive biases and how they shape our interactions with brands. We’ll look at examples of how it drives modern marketing strategies.
Exploring the Halo Effect
Imagine a scenario where a candidate, let’s call her Sarah, walks into an interview at a top-notch marketing agency. Sarah is impeccably dressed, exudes confidence, and presents herself as polished and professional. Sarah made such a great impression with the hiring manager, and within the first few minutes of the interview, the manager was already impressed.
As the interview progresses, Sarah showcases her skills and experiences, and clearly articulates her past successes. She may stumble over a question or two, but since she made such a great first impression, the higher manager’s initial favorable impression spills over to influence their evaluation of qualifications, competence, and suitability for the role. Sarah’s minor flaws or shortcomings may be overlooked or downplayed because of the great first impression she makes.
On the other hand, a candidate who enters the interview with a less favorable first impression may struggle to overcome this initial bias, even if they possess equal or more relevant qualifications and skills.
This is just one example of how the Halo Effect takes hold of our decision-making and appraisals. It can hinder our ability to think critically about other peoples’ traits, and we may overlook or disregard certain obvious flaws in both people and products. Since Sarah made such a great first impression, the hiring manager’s brain was constantly looking for information to affirm what she already knew to be true, known as confirmation bias, leading to keeping those impressions long lasting.
A compelling example of the Halo Effect is the Theranos scandal. Theranos, a Silicon Valley startup founded by Elizabeth Holmes, promised revolutionary advancements in blood testing technology. The company claimed to perform a wide range of medical tests using just a few drops of blood.
The Halo Effect played a significant role in shaping perceptions of Elizabeth Holmes and Theranos. She projected an image of confidence, charisma, and unwavering conviction in Theranos’ mission. Her compelling vision and persuasive rhetoric captivated and influenced investors, partners, and the media, creating a halo of admiration and trust.
She also forged partnerships with prominent people and institutions, like healthcare providers and the former Secretary of State Henry Kissinger and former Secretary of Defense James Mattis. These partnerships solidified the legitimacy to Theranos’ claims, further enhancing the Halo Effect associated with the company.
However, there were several serious flaws and inaccuracies in Theranos’ technology and testing procedures. Despite the evidence of deception and misconduct, the Halo Effect around Elizabeth Holmes and Theranos initially shielded them from scrutiny and skepticism. The truth initially came out, but this example shows the power of the Halo Effect.
Hint: listen to our podcast to hear more about Theranos and the Halo Effect.
It’s important to note the Halo Effect is not limited to our perceptions of people or in the workplace. We can see how the Halo Effect can alter our decision making on everything from.
Applying the Halo Effect to Your E-Commerce Brand
Making a great first impression is key for e-commerce brands wanting to take advantage of the Halo Effect. Here are some actionable tips for e-commerce brands to capitalize on the Halo Effect.
High-Quality Visual Branding
Take the example of above with Sarah’s interview. Sarah walked into her interview meticulously dressed, confident, and poised. This first impression applies to your website and branding, too. Invest in visually appealing website design, product photography, and branding elements that evoke positive emotions and associations. Use high quality imagery and design elements to create a halo of professionalism, sophistication, and trustworthiness.
Make sure you consider all customer touchpoints, too, from your website to follow up emails, and packaging.
Influencer and Celebrity Endorsements
The Halo Effect explains why influencer and celebrity endorsements work so well. If your product is seen being used or endorsed by an influencer or celebrity who has a positive public image and reputation, those feelings and emotions can transfer to the brand, enhancing credibility, desirability, and status.
Stanley, a drinkware manufacturer, had incredible success with its well-known influencer campaign. The brand partnered with influencers to bring the Stanley name to the forefront of consumers’ minds, making them more aware of the brand, and making them have more favorable perceptions.
Positive Reviews and Testimonials
Showcasing positive reviews signals to potential customers, “hey, people like us, and you will, too!” Social proof is extremely powerful and reinforces the perception of the brand’s reliability, quality, and customer satisfaction. It’s a surefire way to amplify the Halo Effect.
We love the social proof section on Casper’s website. It features a bold, engaging headline, visually appealing images, and the customer’s first name and location. It’s nice, clean, and persuasive.
What is The Illusion of Effort?
The Illusion of Effort is a psychological bias that suggests that people tend to value things more when they witness the work being done. The higher the perceived effort that goes into something, the higher the customer may be willing to pay.
Why are people willing to pay more? We often associate perceived effort with quality, assuming that something requiring more effort to create must be superior. Plus, products presented with an interesting story about the effort can evoke emotional connections that can increase perceived value.
A study conducted by Andrea Morales, an assistant professor in marketing at the University of Southern California, supports this theory. The study provides insight into how consumers reward firms that demonstrate high effort. Participants in the study were presented with scenarios involving a real estate agent creating customized apartment lists. The lists were said to be created either manually (high effort) or using a computer (low effort). The results revealed that the list created with high effort increased ratings by a staggering 36%, leaving participants more satisfied with the outcome when the perceived exertion was higher.
How the Illusion of Effort Applies to E-Commerce Brands
This psychological bias can be applied to direct-to-consumer e-commerce brands in several different ways.
For example, e-commerce brands can allow customers to personalize products according to their preferences. As a result, the customer will see the customization as high effort and value it more.
A great example of this is Stitch Fix, a personalized styling service that takes the effort of searching for clothes off your shoulders. They use elements in their business model to create the Illusion of Effort. The customer fills out a detailed style profile and receives five clothing items handpicked by a stylist based on your preferences. This creates the illusion that a person is putting in time and effort to hand select your wardrobe, even though it’s primarily driven by AI and technology.
In terms of an e-commerce website, an intricate and elaborate website may create the Illusion of Effort. For example, virtual try-on experiences and customization tools will actively engage the consumer and allow consumers to feel like they are actively contributing to the final product.
Levi’s does this well. Their "Virtual Stylist" tool uses AI to recommend outfits based on your style preferences and then allows you to virtually try them on. This personalizes the shopping experience and gives the illusion of a curated wardrobe, even if the user didn't put in the effort to choose each piece themselves.
Other companies have adopted augmented reality technology to help shoppers visualize how clothing would look on their own bodies. Last September, Walmart introduced its Be Your Own Model experience that allows users to virtually try on clothing using their own photographs and AR tech. Amazon Fashion partnered with Snap last year, providing SnapChat users the ability to virtually model branded glasses and sunglasses using AR filters.
Storytelling is a powerful way to evoke an emotional connection with an audience to increase perceived value. Brands that leverage story-telling techniques in marketing and social media campaigns to depict the effort and craftsmanship that goes into creating products can enhance the Illusion of Effort.
Luxury brand Dior leverages storytelling on social media by showcasing the process of handmaking their handbags. By revealing the intricate behind-the-scenes work, Dior justifies a higher price point, capitalizing on consumers’ perception of the brand’s dedication and quality.
Progress bar indicators on websites give the Illusion of Effort, too. For example, Kayak, a popular trip-booking website, conducted an experiment to test the effect of the Illusion of Effort on user satisfaction. They created two different website experiences. One group was shown immediate booking results, while the other group was made to wait for 60 seconds. However, during the 60-second second waiting period, the second group was shown behind-the-scenes animations illustrating the effort the website put in to fetch information. Interestingly, both groups received the same results, but users preferred the second site because they appreciated the perceived transparency of witnessing the work done. This is a great example of how Kayak capitalized on the Illusion of Effort.
Service providers, like Houzz, a company that connects homeowners with interior designers and contractors, can leverage the Illusion of Effort, too. In many cases, using a long-form format on a website can create the perception that customers’ inputs are being heard, which can lead to an increase in conversions. The long-form format does a couple of things to foster loyalty, trust, and engagement. It can convey a sense of thoroughness, attention to detail, and responsiveness to customer needs, leading the customer to feel confident in their interactions with the brand.
Putting it into Action: The Halo Effect and Illusion of Effort
By understanding and harnessing the Halo Effect and the Illusion of Effort, you can gain a powerful edge in today's competitive e-commerce landscape. Remember, perception is reality, and these biases play a significant role in shaping how consumers perceive your brand. Put these insights into action to create a lasting positive impression and watch your brand soar!
Get in touch with the experts at Function Growth to take your direct-to-consumer business to the next level.
P.S. Don't forget to check out our podcast episode for a deeper dive into the Illusion of Effort and the Halo Effect in action!