A Pretty Woman Beats a Good Loan Deal


Marketers are constantly facing the challenge of how to make an offer more attractive to their customers. Will free shipping garner more orders than a $10 coupon? What about a 10% discount, or a free tote bag? Smart marketers know there is only one way to definitively answer this kind of question: test the options in the marketplace. (Soon, perhaps, neuromarketing technology like fMRI brain scans may reduce the need for field testing…)

One South African bank trying to boost their loan business did just that. They mailed 50,000 customers a loan offer, and used several variations in the direct mail package. First, the offers included a range of randomly selected interest rates – presumably, the interest rate (along with repayment terms) is by far the most important criteria for whether a loan offer is appealing. More significantly for our interests, the bank also included several “psychological features” – details of the mailed offer that had nothing to do with the loan itself but were intended to “frame” the offer in some way or otherwise alter customer behavior. The researchers seem to have been surprised not only that these irrelevant offer changes boosted the response of their offers, but actually offset the impact of higher interest rates on loan signups.

Inconsistent with standard economics, some of the psychological features also significantly affected take-up. The average effect of a psychological manipulation was equivalent to a one half percentage point change in the monthly interest rate. Interestingly, the psychological features appear to have greater impact in the context of less advantageous offers and persist across different income and education levels. In short, even in a market setting with large stakes and experienced customers, subtle psychological features appear to be powerful drivers of behavior. [Emphasis added. From What’s Psychology Worth? A Field Experiment in the Consumer Credit Market, Marianne Bertrand et al, 2005.]

The experiment featured a rather dramatic range in interest rates – 3.25% to 11.75%. They also incorporated different features in the offer, including different descriptions of the loan, a comparison to competitive products, varied photos of males and females, and subtle suggestions.

There’s a lot of information in that study, but here’s the part that I found to be most startling:

For the male customers, replacing the photo of a male with a photo of female on the offer letter statistically significantly increases takeup; the effect is about as much as dropping the interest rate 4.5 percentage points… For female customers, we find no statistically significant patterns.

Overall, these results suggest a very powerful effect on male customers of seeing a female photo on the offer letter. Standard errors however do not allow us to isolate one specific mechanism for this effect. The effect on male customers may be due to either the positive impact of a female photo or the negative impact of a male photo.

I find it amazing that the effect of a mere photo of a woman on a loan offer was equivalent to nearly a 5% difference in the loan interest rate – a huge dfferential in the lending world.

Will slapping a photo of a pretty woman on your direct mail piece boost response rates? If you are marketing to men, maybe. Women seem to be much less affected by irrelevant photos, according to this test. That might be good news – women shouldn’t be negatively affected if a female photo is used in an attempt to boost male response. (Note that this test did NOT evaluate the use of more extreme photos, like the bikini babes I discussed a few weeks ago.)

I think the real takeaway from this research is that marketers should never assume they know what is going to work – testing different offers, different presentations, and even a crazy idea or two – is the only way to know what will REALLY make an offer take off.

  1. cw360 says

    The timing of this post is great! We are actually just about to start a web optimizer test, testing a very similar concept. The funniest part, our attractive business woman photo, is the same photo you used in this blog post.

  2. Chris Higgins says

    Its great to see this sort of testing carried out on a commercial scale. I’ve seen similar research before, but generally from universities, and with far fewer numbers.

    Typically the findings are fairly consistent – add a photo of an attractive girl and men like it, but if you go too far and the image becomes too overtly sexual, it actually becomes a negative influence. I supose thats the part of the testing that a commercial enterprise (like this bank)doesn’t want to risk their brand name with.

  3. BusinessCaster says

    You’re right! The lesson here: test, test methodically and learn.

    We provide practical advice for entrepreneurs — for no other reason than to see them succeed. But, one thing often stands in their way — something that I know that many would be interested in you/your colleagues investigate: “test phobia” – that fear of conducting methodical testing — particularly in the area of marketing.

    Does it stem from the fear of having key assumptions challenged? Is the fear that if assumptions are misguided that a new (perhaps unknown and/or costly)set of strategies need to be implemented. What’s the neuromarketing take on the fear of testing? Let us know.

  4. Jenny Buel says

    Wow that is a great point about using a woman in advertising.
    One very important thing that I have learned from some of my work online is that testing is everything. You never know when a little change that you do on your website could mean a 5 or a 10 percent improvement.
    Again thanks for a great article. I have bookmarked your post.

    1. Roger Dooley says

      I couldn’t agree more, Jenny. Blindly implementing techniques one reads about (even here at Neuromarketing!) is risky. Test, test, test.


  5. Joseph Keijzer says

    What an interesting article! I was wondering if the original research paper from the South African bank is still available since the link to it is dead.

Leave A Reply

Your email address will not be published.