Latest / Marketing Psychology with Fexingo: Behavioral Triggers, Persuasion, and Consumer Behavior / How the Labeling Effect Changes Consumer Identity
Transcript
- Lucas: Luna, I want to start with a question. Have you ever been called something by a brand that made you think, wait, is that who I am now? Luna: You mean like when a store rewards program says 'welcome back, VIP' and you sort of stand a little taller? Lucas: Exactly. That's the Labeling Effect in action. It's a psychological principle where giving someone a label — 'loyal customer,' 'early adopter,' 'eco-conscious shopper' — actually nudges them to behave in ways that match that label. Lucas: And I think it's one of the most underused tools in marketing because it's subtle. You're not pushing a discount or a deadline. You're just re-framing who they are. Luna: Before we go deeper — if these marketing conversations have sparked something you've actually used, honestly, if today's episode was worth a coffee to you, there's a link where you can buy us one. It's buy me a coffee dot com slash fexingo. No pressure at all, just a way to keep this show ad-free and independent. Lucas: Yeah, it's a small gesture that goes a long way for us. And listeners like you are the reason we get to dig into this stuff every week. So, thank you. Lucas: Now, back to labeling. There's a really clean study from the Journal of Consumer Research back in 2017 that I want to walk through. Luna: I remember that one. They ran a field experiment at a car wash, right? Lucas: That's the one. The researchers took a group of customers and simply told some of them, 'We'd like to thank you for being one of our loyal customers.' Just that. No coupon, no points, no free wash. Lucas: Over the next six months, that group spent about 20 percent more than a control group that was thanked generically. The label 'loyal customer' created a self-perception that they then acted on. Luna: Twenty percent is huge for zero cost. So the mechanism is basically self-perception theory — you observe your own behavior through the label and adjust to match it. Lucas: Right. And marketers can use this in a bunch of ways. Think about subscription boxes like Stitch Fix. They don't just call you a customer. They call you a 'style member' or a 'trendsetter' based on your preferences. Lucas: That label primes you to think of yourself as someone who cares about style, so you're more likely to keep the box and engage with the recommendations. Luna: American Express does this too with their 'card member' language. Not 'customer,' not 'user.' It's 'member.' That implies belonging and status. Lucas: Exactly. And it works because labels tap into social identity. We all have multiple identities — parent, runner, coffee snob — and when a brand activates a particular identity, it becomes more salient. Lucas: There's another study I love. Researchers gave people a label like 'environmentally conscious' and then measured their likelihood to buy eco-friendly products. The labeled group was significantly more likely to choose green options, even if the price was higher. Luna: So it's almost like a self-fulfilling prophecy. But is there a risk of backlash if the label feels inauthentic? Lucas: Absolutely. If you call someone a 'loyal customer' but then treat them poorly, the label becomes a source of resentment. It has to match the actual experience. Lucas: And there's a darker side. Negative labeling can be just as powerful. If a brand categorizes someone as a 'bargain hunter' or 'price-sensitive,' that customer might internalize that and stop considering full-price purchases. Luna: Which is why some retailers avoid segmenting customers too visibly. They don't want to pigeonhole someone into being a discount shopper. Lucas: Right. So the practical takeaway for marketers is: be intentional with the labels you use in your messaging, loyalty programs, and even customer service scripts. Lucas: Instead of saying 'thank you for your purchase,' say 'thank you for being a valued customer.' Instead of 'you bought this,' say 'our style-conscious customers love this.' Luna: It's a small wording shift. But the car wash study shows it can have a real revenue impact. Lucas: And it compounds over time. The more you reinforce the label, the more ingrained the identity becomes. That's how you build brand loyalty that isn't just transactional. Luna: One more thing — online communities. When a brand calls its users 'creators' or 'contributors,' that can drive engagement on forums and social media. Lucas: Great point. Reddit calls active users 'contributors,' not just 'users.' That subtle label encourages quality posts. Same with GitHub — they call you a 'contributor' when you push code. Luna: So whether it's a car wash or a coding platform, the label shapes behavior. It's a classic behavioral economics nudge. Lucas: And it's ethical as long as it's truthful. You're not tricking anyone. You're just highlighting an identity that they already have the potential to adopt. Lucas: I think the next frontier is personalization at scale. Imagine a streaming service that calls you a 'genre explorer' or a 'binge-watcher' based on your habits. That could change how you navigate the platform. Luna: Netflix sort of does that with their categories, but they don't label the viewer directly. There's an opportunity there. Lucas: Exactly. And it's low-cost. No discounts, no points system — just a shift in language. That's why I love the Labeling Effect. It's pure psychology applied to marketing. Luna: Alright, so our one takeaway: review your customer-facing language. Are you labeling your customers in a way that reinforces the behavior you want? Lucas: That's it. A small change that can build a stronger brand relationship. Thanks, Luna. Luna: Thanks, Lucas. And to our listeners, we'll see you next time.