What is the Halo Effect?
How Does the Halo Effect Apply to Marketing?
Nutritionists have been misleading you.
Not all, but some for sure. What’s worse, most of the time the lie is not their fault... Because you create the lie for them.
Studies show that when you eat an 1,000 calorie meal, you will believe you are eating 21% less calories at Subway than McDonald's. And when you go to order a side dish, like cookies and soda pop, you'll likely buy an extra 339% more calories at Subway than McDonald's.
What's going on? Isn’t Subway healthier than McDonald's? Why do we have such a glowing aura of Subway that causes us to overindulge?
The problem is, you are experiencing a constant error in your psychological evaluation due to the halo effect.
What Is the Halo Effect?
In 2005, Apple Computer sales were up 68%. Apple opened their first store in Canada. The iTunes store sold it’s 500 millionth song. Profits was up 384%. And the Apple stock was up 177%.
Some believe this was from the success of creating Intel-based Macintosh computers.  Some believe it was the success of their latest desktop, the Mac OS X Tiger.
But if you were to ask Marketing Hall of Fame inductee Al Ries, Apple’s success came from a halo effect bestowed on a single word: iPod. 
In 2004, 10 million iPods were sold.  It was a hot commodity. Rather than just letting the iPod run its course, Apple place their bets on a winning horse. Apple took the world by storm with TV ads, print ads, and billboards touting its iPod.
They doubled-down on the iPod product line, introducing the iPod shuffle in January, the iPod mini in February, and the iPod nano in September of 2005.
People went crazy over Apple. iPod sales surged to 42 million.
Yet iPod and iTunes together only account for 39% of Apple's sales.  How did Apple’s total profits soar 384%?
From creating a halo effect.
The halo effect is a positive experience of one product, which creates a positive view of another product you have never bought.
Apple placed their bets on the iPod and won. People had a positive experience after buying and using the iPod. As a result, all product sales increased.
Motorola did the same thing with the Razr cellphone. Motorola’s revenue soared $5.5 billion from 2004 to 2005. Yet only 17% of Motorola’s cellphone sales came from the Razr phone.
Each product was a masterpiece, that led to millions of product sales for their company. Thus creating a glow or “halo” around the product and company.
Edward Thorndike first discovered this mental shortcut in 1915. He later showed it’s affect on people with his famous 1920 study.
A Notable Experiment and Test on the Halo Effect
Edward Thorndike’s 1920 Discovery: Finds Constant Error In Psychological Ratings
In 1915, Edward Thorndike noticed a list of traits describing a person. When he looked at the list, it felt too orderly to be neutral.
So in 1920, Thorndike set out to replicate the study, to see if he could find the bias he thought affected him. 
Thorndike asked to commanding officers to rate their soldiers. He gave them a list of physical qualities, such as neatness, physique, and energy. He also included a list of personal qualities, such as loyalty, responsibility, and selflessness.
His goal? Thorndike wanted to see if the ratings of one quality affected the ratings of the other qualities.
Turns out, he was right.
The ratings of one quality Often started a trend in the rest of the results. For example, if a Soldier was given a high Physique score, is also given a high score in intelligence, leadership, and character. On the other hand, if an officer had a negative view of a soldier, it would create a Negative trend.
From this study, Thorndike coined the phrase “Halo Effect.” Since then, Other studies have shown how the halo effect can influence your perception on products and companies.
The halo effect can also work in the opposite direction (called the “Reverse Halo” or “Horns Effect”). Like in Thorndike’s study, if someone dislikes a person or object, they will have a negative perception about other qualities about that person or object.
So why do we get so starry-eyed after buying one great product? After all, one great product doesn’t mean the others are great too.
So let’s look at what’s going on.
Why the Halo Effect Exists
Have you ever had a good feeling about someone, but you could not place your finger on why?
One explanation is the halo effect.
The halo effect exists because when you have a good feeling about an object or person, you assume all qualities about that person or object must be good.
Once you confirm what you believe is true, you are more likely to stick with it. Like the Cheerleader Effect, you imagine other related objects, attributes, and people to also have positive traits.
This is similar to what you do when you profile or stereotype a person.
You get an idea about someone based on their race, gender, age, clothes, or age. Then, you make other guesses and assumptions based on what information you have.
Let’s look at how the halo effect can affect your business.
Examples of The Halo Effect In Marketing, Business, and Advertising
Physical Attractiveness and the Halo Effect
Attractive people can get away with murder. Or at least, you are less likely to suspect them of doing wrong.
According to the Halo Effect, you are likely to give someone who has one positive attribute, other positive attributes that they may or may not have. For example, if you believe a celebrity to be attractive, you might also believe they are kind or intelligent.
Attractiveness may also affect how successful you think someone is.
In a recent study, a thin White woman was thought to have greater life success, attractiveness, and personality than a heavier White woman. The participants also believed the more attractive woman to be more friendly and trustworthy. 
How you dress can affect how successful others view you too.
In another study, men who wore made-to-measure suits had higher confidence, success, salary, and flexibility than men who wore an off-the-peg suit. For the women who wore a tailored suit, compared to those who wore a trouser suit, they were thought to have higher confidence, flexibility, and salary. 
Like it or not, appearance matters. But not only your appearance, but also the appearance or brand image of your business.
The Health Halo Effect: How Subway Makes You Fat
They say you are what you eat. But they left out one important detail: your food can play tricks on your brain.
In 2007, Pierre Chandon and Brian Wansink discovered how the halo effect changes our view of food. As a result, healthy food can decrease how many calories you think you actually eat. 
Chandon and Wansink asked Subway and McDonald’s diners to estimate the calories in their meals. They discovered that people believe a 1,000-calorie Subway meal contained 21% less calories than a 1,000-calorie McDonald’s meal.
What caused this to happen?
People believe Subway to be healthy. As a result, they viewed the food to be healthier than it actually is: less calories, less sugar, and less fat.
What’s worse, people who eat at Subway are more likely to order more side dishes, also increasing the total calories they eat.
In a follow up study, Chandon and Wansink gave 23 students a coupon for a 12” Italian BMT sandwich (a 900 calorie meal). Another 23 students were given a coupon for McDonald’s Big Mac sandwich (a 600 calorie meal).
Each student was asked if they would like to order a soda fountain drink or a chocolate chip cookie with their sandwich.
The students who ate at McDonald’s consumed 648 calories, an additional 48 more calories. However, students who ate at Subway consumed 1011 calories, an extra 111 calories. That’s an extra 56% more calories!
The Halo Effect Turns Organic Food More Nutritious, and Delicious
Cornell University ran a study with 115 people, ready to eat what was brought to them.  Each person was given three pairs of food: Yogurt, potato chips, and cookies. In each pair, one item was the regular item, the other was organic.
The participants believed that the organic food was lower in fat, had fewer calories, and was more flavorful. These participants were willing to pay 16-to-23% more for the organic food.
Of course, it would not be a good psychology study without a catch. It turns out that all of the food they ate was organic. The halo they had on organic food was only a placebo.
Food facts aren’t the only way you can create a halo effect. Here’s a simple trick to “borrow” someone else’s halo, and place it on your product.
Influencer Marketing, Celebrity Endorsements, and the Halo Effect
Creating a halo effect often takes time. But what if you could cut the time in half by borrowing somebody else’s good will?
There are people who your customers admire and respect. They listen to their advice, buying the latest products that will enhance their life.
These people are influencers.
When an influencer uses a product or service, there is a transfer of trust. And with that transfer of trust, a halo is placed on that product.
For example, if Derrick Rose wears Adidas shoes, he indirectly says he supports the Adidas tribe.
Perhaps after winning a championship, Rose shares how the Adidas shoes helped him to stay in the game longer, giving an explicit endorsement of the product. In fact, Rose has his own signature line of Adidas shoes, perhaps the lightest ever at 9.8 oz.
Some of Derrick Rose’s followers who want to be like Rose will buy Adidas shoes. Some might do so because they want to be associated with Rose. Others might value how light the shoes are. Still others may think Rose’s shoes were lucky, helping Rose win the championship.
Whatever the reason customers buy, the good feelings they have towards Derrick Rose is transferred to the product with every endorsement.
But what happens if an influencer gets caught snorting cocaine or caught in adultery?
Trust is lost. And this can cause people to lose trust in the products that the influencer used. Thus, the horns effect.
The Horns Effect (Or, The Reverse Halo Effect), and How It Can Cripple a Business
On November 25, 2009, The National Enquirer published a story claiming that Tiger Woods had an extramarital affair.
In the days and months that followed, Woods’ admitted his infidelity. As a result, AT&T, Gatorade and General Motors ended their sponsorship deals with Woods.
But the damage had already been done. A December 2009 study estimated the shareholder loss from sponsorships caused by Woods' affairs to be between $5 billion and $12 billion.
Thus the negative attribute of Tiger Woods’ infidelity transferred to each product, a result of the Horns Effect.
The Horns Effect is also known as the “Reverse Halo Effect,” “Negative Halo Effect,” or the “Devil Effect.” The Horns Effect happens when an undesirable trait influences other traits of a person or object.
In theory, Gatorade will hydrate you the same way it did before Tiger Woods’ scandal as it will after his scandal. And it’s flavor will be the same.
But people do not buy products just for the product. They also buy products because of what it represents.
Although you cannot stop someone from misusing your product, there are steps you can take to disassociate yourself from the person, and problem.
Applying The Horns and Halo Effect In Your Business
Upsells, Downsells, and Cross-sells. Odds are, a company that has sold you one product, has tried to sell you another. And in many cases, you trusted them enough to purchase again. Since the first product was quality, you assumed that the second would be as well. To earn your trust, some vendors will even go so far as to lead with a product they lose money. Then they will upsell you on the second, pricier product. A similar scenario occurs with down-sells and cross-sells. However, a downsell will be less expensive and the cross-sell could be either or. Would you like some fries with that?
Brand Reputation. Corporate brand names go a long way when it comes to consumer choices. Oftentimes, consumers will select a product based on the brand. They will not take the time to properly assess their options. In a sense, the company has won their blind trust. For example, let's say you are purchasing an MP3 player in the early 2000s. The first product to come to mind would be Apple’s iPod touch. In fact, you probably wouldn’t even bother comparing it to other MP3 players, such as the Microsoft Zune. You would have assumed the iPod is a superior product due to the popularity of the product and brand reputation of Apple.
Design: Have you ever visited a website that was so ugly you immediately hit the back button? Chances are, you have. Poor design, whether it be for a website or a product is an immediate turnoff for a customer. In contrast, we may trust a business website that is well-designed because it signals they know what they are doing. In a sense, we’re judging a book by its cover.
Unbias Growth Prioritization: Every idea must stand on its own merit, regardless of who proposes it. When the CMO proposes a new idea, it’s hard to stand up to them if you believe your job is on the line. You may also be unaware how they carry themselves affects how good an idea is. If you rather seek truth than catering to office politics, you need a system in place to weigh the idea, not the person. One way you can do this is by keeping the ideas anonymous.
Business Reputation. As the Thorndike study showed, people who view you with one positive trait, will believe you have other positive traits. Warren Buffet once said, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.” If you keep a good reputation, then more people will trust you. And people like to buy from those who they know, like, and trust.
Appearances Matter. Love it or hate it, there are psychological factors at play when it comes to how you look, and how you dress. The minute someone meets you, you have already made your first impression. If you look put together, people will assume other parts of your life is put together. But poor grooming can also be a major distraction. Even if you work from home, while you can let down your hair, it’s valuable to keep good habits when you do meet people face-to-face.
Your Network = Your Net Worth. Jim Rohn famously said, “You are the average of the five people you spend the most time with.” When it comes to relationships, you are greatly influenced by those closest to you. They affect your thinking. They affect your decisions. Eventually, their halo (or horns) start to become yours. Pick who you surround yourself with wisely.
Books on The Halo Effect
- The Halo Effect: . . . and the Eight Other Business Delusions That Deceive Managers by Phil Rosenzweig
Related Cognitive Biases
- Association Fallacy
- Cheerleader Effect
- Confirmation Bias
- Contrast Effect
- Placebo Effect
- Propinquity Effect
The halo effect happens when a customer makes a judgment about a person, business, or product which makes a positive impression on them. This causes them to see other characteristics of that person, business, or product in a positive light as well (i.e. the halo), even if they do not know if this is true.