Behavioural economics indicates that people are often irrational in their decision making as they are heavily influenced by biases that are in the unconscious mind. This means that conversion professionals can utilise knowledge of these ‘rules of thumb’ to nudge website visitors towards a particular behaviour. However, because people are not fully aware of these influences customer research cannot predict how they will respond to the use of such persuasive designs. Online experiments (A/B and multivariate tests) are the only true way of knowing how visitors will respond to a new web page or online journey. Organisations that use such experimental testing can potentially save millions of pounds by avoiding lost sales and benefit from an uplift in conversion.
Outlined below are insights identified from behavioural economics and the potential implications for optimising online conversion. Because context is so important in human behaviour some of these ideas may be relevant to your site, while others may not. This depends upon the nature of your site and how you generate income. However, from working in a Conversion team it is clear that behavioural economics is a valuable source of ideas for helping to optimise web pages.
1. Ownership focuses our attention on what we might lose!
Even partial ownership (e.g. a trial subscription) tends to make people more attached to what they have and make them focus on what they may lose rather than what they may gain. Ownership changes our perception of things and our aversion to loss makes it difficult for us to give it up.
A fantastic example of this is how Amazon promotes a free trial of its express delivery service Amazon Prime. This combines the power of FREE, that we cover later, with a limited trial that makes customers focus on what they will lose if they cancel their subscription. Try testing different trial promotions, or give more prominence to money-back guarantees, cooling-off periods (for financial services) and ease of returns for large or expensive items.
2. We are motivated by meaningful tasks and acknowledgement of our effort!
None of us like to think our effort is meaningless and we all appreciate positive feedback. Visitors want to know that any information you request from them is essential and not just for your benefit. People also like feedback to confirm they have successfully completed tasks (e.g. registration or add to basket) as this reassures and motivates them to continue.
When testing your registration process remove any fields that are not absolutely necessary and try different words or phrases to explain why each piece of information is required. Finally, test different ways or congratulating customers when they have completed a task or journey.
3. Everything is relative!
People find it difficult to make new decisions and like to compare things that are simple to compare (e.g. one LED TV against another LED TV). Until a person has made such a comparison they often don’t understand there own preferences or know what they want. Giving just two very different options will make it difficult for people to choose. They have nothing to compare either option with and they may not select your preferred option.
This is why sales people will often show you a premium option, a medium option and a value option that appears inferior. They know most people will choose the middle option. So by testing different alternatives on a given page may allow you to nudge visitors towards your preferred option. This could be different subscription options or alternative targeted content (e.g. recently viewed/wish list items etc).
4. The first time we go to purchase is critical for the price we are willing to pay!
Once a price has been established in our minds it will largely determine our perception of current and future prices. Sensitivity to price changes is heavily influenced by our memory of the prices we have previously paid or seen.
When launching a new product if you can associate it with a premium category you are more likely to be able to charge a premium price. Test different ways of presenting prices, change the location of the price, and see if by offering a premium alternative you can boost sales without having to make large price reductions.
5. The power of FREE!
The impact of offering something for FREE is often underestimated. People are afraid of loss and because of this FREE is a powerful motivator. As a result consumers will perceive a FREE offer as substantially more valuable than it really is.
This can result in the cost of offering something for FREE being easily outweighed by the benefit from an uplift in conversion. Alternatively, if you offer a free benefit as part of your proposition that perhaps your competitors don’t, then try testing the impact of promoting this as a FREE benefit of your service. But whatever you do don’t mention how much it actually costs.
6. Scarcity makes us value things more!
People value things that are scarce partly because they are loss averse. We are particularly motivated if we believe that we are in competition with other people to purchase a scare item. This is why eBay auctions can get out of hand and we end up paying far more than we originally planned for an item.
Stock level indicators (e.g. low stock, number of items left, bids etc) are powerful drivers of conversion. Scarcity is used everywhere online, including flash sales, exclusive pre-sale registration, offer ending soon, and limited edition item. Test, test and test!
7. We are more motivated by a cause than by money!
People are much more willing to spend time and effort for a cause than for money. This is because social norms are much more powerful motivators than cash. Research has shown that focusing on money can result in more independent and selfish behaviour and a reluctance to be involved or help others. People who believe in cause are much more passionate and more willing to offer to help others.
It can be advantageous to align your brand or site with relevant good causes as it helps to build loyalty. However, taking such an approach often needs to be part of a long-term commitment to a cause as people can react negatively if you chop and change according to short-term business needs. If you do go down this route focus on the material benefits to the good cause (e.g. Computers for Schools vouchers) rather than the actual value. Test different methods of giving to good causes to understand which most engage with your customers.
8. The power reciprocation!
We feel obliged to the future repayment of favours, gifts, good deeds and the like. Organisations can use this social norm to their advantage provided they offer help, advice or samples without obligation.
Online video guides are becoming the norm, but other ways to benefit from this rule include online tools and planners, free smartphone Apps, money off coupons and how to guides. The skill here is to find something that really catches the imagination of your customers so that they value it so much that they almost feel obliged to maintain their relationship with you.
9. Sex sells!
Great images of beautiful people grab attention and can help to sell product. Sex sells and will always sell because we respond to material differently when we are in a state of arousal. Neuroscience indicates that this is because it engages the pleasurable reward center of our brain. People also automatically assign positive traits to attractive looking people.
Try testing models of different age, gender or family groups on high converting pages to see if aligning the images more closely with your target audience improves conversion. People are naturally drawn to looking at eyes so this could also be incorporated in your tests.
10. Customers will procrastinate if you give them a chance!
People like to put decisions off until the last minute and avoid doing things that they don’t enjoy. To avoid visitors procrastinating use different strategies to motivate them to convert now!
Online only discount can be used to encourage visitors to sign up. Also have you considered using gamification techniques to make a recruitment email or registration process more interesting and enjoyable. You can also test different incentives (e.g. money off vouchers or prize draw entry) to see what attracts new customers the most.
11. If uncertainty exists people look to the actions of others to guide them!
People like to follow the crowd as they assume they know something they don’t.
If your site has built up a sizable number of subscribers ensure this is clearly sign posted on your landing pages. Inform visitors about what is most popular on your site and include testimonials from existing customers.
12 People respond more positively to someone they know and like!
People want to like organizations that they buy from and they respond positively to indications that you have similar values and attitudes to them. Companies that have a clear vision and strong customer centric culture can project this through their online presence to their advantage.
Market research can help you understand your prospects life style, values, interests and motivations. This can help you avoid having policies or promoting causes that conflict with your visitors’ vales and interests. Having photographs of real people who work for an organisation in relevant posts can improve how visitors relate to a website and have been known to significantly improve conversion rates. Further, the perceived age of a model on a page can also affect the conversion rate if they are too young or old compared to your visitor profile.
Sites that are perceived to use deception or trick customers into decisions may benefit from short-term gains in conversion but this is likely to be more than off-set by a loss from life-time customer value. Experiments have found that even a low level of irritation can make people irritated and act vengeful towards companies that annoy them.
13. People don’t like closing doors!
People like to keep their options open as it gives them a sense of control over their own destiny. Even when people are at the last stage of a transaction having a get out option (e.g. back to shopping) may be more motivating than than if you make it difficult to abandon or change items in the basket. Otherwise customers can feel trapped and out of control.
Test different sign-posting at each stage of checkout as it is important to communicate to customers where they are in the process and give them clear options. Try testing more prominent ‘Return to shopping’ or ‘Back’ buttons in checkout to see if it actually improves rather than decreases conversion.
14. The power of the written word!
People like to be perceived to be consistent and it is an important motivator of our behaviour. Inconsistency is perceived to be an undesirable personal trait. Commitment is the key to consistency and is the reason why Amway Corporation ask their members to record sales goals on paper. Similarly, just writing something positive about a subject can cause a shift in a person’s attitude and behaviour towards the views they express.
Reviews and testimonials are great for putting on your site but also they help reinforce attitudes and behaviour of those who write them. Have you analysed the value of customers after they have written a review? Test different ways of promoting testimonials and reviews and see if you can obtain permission to use them on landing pages.
15. Obedience to authority!
People have an almost extreme tendency to comply with the commands of someone in authority. Even the appearance of authority can be enough to influence our behaviour. Some brands also are so well respected in their market that they have a certain authority that their competitors lack.
For many years in the US an actor who played a doctor in a popular TV series successfully promoted caffeine-free coffee. It’s success was partly explained by his association with being an MD on TV. Personalities associated with your category or service can be powerful symbols of authority. Other sources of authority include independent surveys that benchmark your service. John Lewis (above) is well known for high service standards in the UK. Awards, and testimonials from recognized experts can also add to your credibility. Try testing different ways of indicating your authority to see what works best on your site.
16. Don’t underestimate the importance of presentation!
Expectations affect every aspect of our life and how you present your value proposition will influence how visitors respond to your site now and in the future.
Research can help you identify your potential customers’ expectations. If you understand new visitor expectations you can test aligning your key messages and presentation accordingly. For landing pages test different benefits for signing up and see if aligning content and imagery to reflect new visitor search activity improves conversion.
17. We put greater value on things that we have helped create!
The ability to customize a product by investing our own time and effort often leads us to value it more than something we buy off the shelf. Converse allows visitors to customize casual shoes and Moonpig.com enables customers to create their own greetings cards.
Where people value the ability to personalise a product this can be a great way of improving the perceived value of your product or service. Try testing in different categories or the level of personalisation to see what catches your customer’s imagination.
Thank you for reading and I hope I have generated some ideas for new online tests. A revised version of this article has been published on Usabilla.com.
The author: Neal Cole has over 20 years experience of working in market research and website optimization for some of the UK’s largest financial services providers and online retailers. Neal is currently a conversion specialist for a major online gaming company in Gibraltar. He is a full member of the Market Research Society and an Associate of the Chartered Institute of Marketing. You can follow Neal on Twitter @northresearch and view his LinkedIn profile.
Further reading: Influence by Robert B. Cialdini, PHD; Predictably Irrational by Dan Ariely (@danariely); the Upside of irrationality by Dan Ariely; The Wisdom of Crowds by James Surowiecki; Consumer.ology by Philip Graves (@philipgraves); Nudge by Richard Thaler (@R_Thaler). Thinking, fast and slow by Daniel Kahneman