Irrational Shoppers: 3 Ways to Boost E-Commerce Conversions With Behavioural EconomicsConversion Rate Optimisation
Well not quite.
The truth is emotion goes right to the heart of every purchase. Appealing to consumers’ hearts is a fact of life in E-Commerce, and business returns have been proven time and time again in ‘behavioural economics’—a buzzword-heavy but highly useful take on things.
Ultimately, growing your business means engaging consumers on a human level. Giving them reasons to connect with your business and build a relationship with your brand.
So how can we create these relationships and drive conversion in E-Commerce?
Well it turns out taking advantage of consumer behaviour to boost conversions and sales might be easier than you think—the secret is just staying smart about consumers’ motivations.
So here are three simple strategies built on consumer behaviour...
1. PRICE ANCHORING
The strategy behind ‘price anchoring’ is simple: price is always relative.
“Nothing is cheap or expensive by itself, it is only in comparison to something else,” say eConsultancy. “After seeing a £250 hamburger on a menu, a £65 steak seems quite reasonable. An £89 T-shirt looks cheap next to an £18,000 bag.”
Truth is, consumers hitting your pricing pages don’t know whether your products offer good value straight away. Instead, they work it out by comparing the price of your products to others—finding an ‘anchor’ price.
To boost conversions all you need to do is make sure you have the right ‘anchors’ on display.
HOW THE ECONOMIST DO IT
The Economist magazine infamously nailed this tactic on their website, as Dan Ariely explains in his TED Talk. The website gave consumers three prices for three subscription options:
Online only: $49.99/year
Print only: $99.99/year
Online + print: $99.99/year
Seeing these options, 84% of consumers went for a bigger spend with the online and print package, while just 16% bought the cheaper online only package. Meanwhile zero consumers went for the print only option.
So why did the Economist offer a third option—the print only package—that they never sold?
Because of price anchoring.
Given a straight choice between the cheap online only, and the expensive print and online package, a massive 68% of consumers went for the cheaper option instead.
But keep the expensive print only package on display, and the revenue-boosting online and print version looks like a bargain, which dramatically changes consumer behaviour.
Of course, you don’t need to invent whole new packages—and you definitely don’t need to start manipulating your prices. You just need to make the most of your careful pricing calculations by making sure consumers see your prices in a context that helps them see the value.
2. SOCIAL PROOF
If you’ve made a single online sale then you already have a massive marketing asset—your existing customer(s).
No matter how on point your marketing strategy is, consumers will always listen to other consumers before they listen to you. This hands your business another easy way to boost conversions: let your existing customers do the persuading for you.
The simple way to nail social proof is putting customer reviews front and centre.
When products with over five online customer reviews enjoy a massive 270% higher conversion rate—up to a staggering 390% for more expensive luxury products—the results speak for themselves.
But even with numbers like these many retail businesses still hesitate to set up transparent online reviews. We get it: nobody wants to broadcast negative reviews.
So here’s the upside. Social proof works better with a sprinkling of bad reviews. In fact, products displaying an average of 4.5 stars from customers are more likely to convert and sell, than products with 5 stars.
Simply put, honesty is your best policy online.
Consumers want to see what your current customers think before they’ll make a purchase, but they also know when your story is too good to be true. So boost your marketing budget with ‘social proof’ by enabling reviews, and embrace the less than stellar responses too.
Scarcity has to be one of the oldest tricks in the E-Commerce handbook, and for good reason—it’s built on instinctive human behaviour.
As consumers, we’re all wired to want what we can’t have. The ‘scarcity bias’ means we’ll just assume that a product in short supply must be worth having.
Managing scarcity is at the core of successful E-Commerce. You’re already grappling with changing online demand and running low on warehouse stock—simply spelling that out for consumers actually makes your products more exciting, so it’s a great way to encourage conversions and sales.
Highlight high demand and limited supply with messages like these on your product pages:
‘2 left in stock in UK Warehouse’‘127 people looked at this’
‘6 people are looking at this’
‘Order in the next 1 hour 17 minutes for next day delivery’
Scarcity tactics like these have been proven time and again. But handle with care...
Getting scarcity wrong can harm your conversion rates. One study found that “when consumers interpreted scarcity claims as a sales tactic, the positive effect of scarcity claims on product evaluation would be diluted.”
That means you have to genuinely run low on the stock before you advertise it. If consumers think you’re just dressing up your stock levels or delivery policies to drive sales, they’ll abandon your site in droves.
So while scarcity is a great trigger to add to your web pages, it has to be built on a solid back end. At minimum, you’ll need an E-Commerce platform that can accurately track orders and stock levels in real time before you can pass that information over to consumers.
Once again, making the most of consumer behaviour comes back to being transparent across your operations, not just on one webpage.
BEHAVIOUR IS BIGGER THAN A WEBPAGE
Get behaviour right and strategies like price anchoring, social proof and scarcity can transform your conversion rates.
But real results take more than a few nifty tricks on your product pages. Like we’ve seen, these behavioural strategies only work when you use them transparently—when consumers trust that you aren’t just using these triggers as cheap sales tactics.
And earning that trust is always a bigger commitment, a push for quality and consistency that goes right to the heart of your E-Commerce strategy.
To get more behavioural strategies and discover how they work in your wider E-Commerce growth strategies, download our eBook Beyond the Hype: Four Fundamentals For Sustainable E-Commerce Growth now.
19th April 2018