Anchoring Effect: We get stuck on little numbers

In Analytics by Mark Neigh

Is the height of the tallest redwood tree more or less than 1,200 feet?

What is your best guess about the height of the tallest redwood tree?

Anchoring Effect

If you’re anything like the guests at the San Francisco Exploratorium, you probably guessed around 844 feet. But, when the first question was changed to 180 feet, the average guess was 282 — a 66% difference.

Nobel Prize-winning psychologist Daniel Kahneman did this and other research to show a cognitive bias called anchoring. The anchoring effect happens when we use an initial piece of information to make subsequent judgments. In this case, mentioning 1,200 feet caused people to guess higher, while 180 feet dragged guesses down.

In a more disturbing study, judges with 15-plus years of experience reviewed the details of a shoplifter’s case. Then, before making a sentencing judgment, rolled dice rigged to always show 3 or 9. On average, those who rolled 9 said they would sentence her to 8 months, while those who rolled 3 sentenced the defendant to 5 months — an anchoring effect of 50%.

Anchoring Effect and Fundraising

Kahneman did another interesting study with guests of the Exploratorium. He asked guests if they would make an annual contribution to “save 50,000 offshore Pacific Coast seabirds from small offshore oil spills?” Some guests were first asked an anchoring question, such as, “Would you be willing to pay $5…?”

The results are compelling.

On average, those with no anchoring question said that they would donate $64. When the anchor was $5, their donation went down to $20. But, when the anchor was $400, the average donation rose to $143.

Using Anchoring Effect in Fundraising

These are just a handful of the studies that show how seeing a number—even a random number—can have an outsized effect on our rational thinking.

How might we apply this to our fundraising?

While there is no such thing as “best practices” when it comes to neuromarketing, here are two anchoring effect ideas worth testing:

    1. Use multipliers to increase your dollar handle — Hopefully you’ve already done the hard work to develop dollar handles that provide tangible value to your donors.
      You might even have been able to work out a dollar handle with an unbelievable perceived value, say $1.76 provides a hot meal or $5 to put a Bible in the hands of a Christ-seeker.You might test never using that low dollar figure in order to avoid the anchor effect. Instead of leading with $1.76 provides a hot meal, try $88 provides 50 hot meals.
    2. Limit the low end of ask arrays — Since any number can become an anchor, test leaving out anything on the low end in your ask arrays. If you’re building a donation page, you might start by figuring out your average online gift and rounding up.

      If you’re using a calculated ask array, you might test leaving off the average and low asks. So if your control is: low | avg | high | open, you might test: high | open.

     
    The anchor effect can be very powerful. I hope you test it in some upcoming appeals. If you do, email me at mneigh@masterworks.com and let me know how it went.