By Neel vithalani
When running an e-commerce business, you face many challenges. And trying to compete with the giants can be overwhelming if you don’t have a solid marketing strategy in place. The ultimate goal of any marketing activity should be to smooth the decision-making curve and proactively shape the consumer journey to buying the products they are supposed to buy. A little science can only help.
Marketers have put a lot of science into compelling marketing to influence consumer behavior. Among all methods used Targeting cognitive biases is the most popular and proven strategy. In this post, I’m going to discuss how to use cognitive biases in ecommerce marketing.
What are cognitive prejudices?
We make around 35,000 decisions every day, and that’s only possible with the help of a few shortcuts. For example, social media mogul Mark Zuckerberg never has to decide what to wear every day as he always wears the same combination of gray t-shirt and blue jeans.
To avoid the stress that can arise from making decisions, evolution has given our minds cognitive biases. These biases shorten the time it takes to make a decision by skipping cognitive processes through memory and perception. Cognitive prejudices, also known as mental abbreviations, aim to make our lives more logical and with less effort. So here’s how you can use them in marketing your small ecommerce business.
Confirmation failure
People believe what they want to believe, and affirmative bias drives that instinct. Our minds will process new information based on our existing beliefs. In ecommerce marketing, if you resonate and stay consistent with the buyer persona, you can use confirmation bias towards customers before and after the sale.
Use confirmation bias in the following areas to reassure buyers that they are in control of their purchase:
- Retargeting campaigns
- SSL Certificate (HTTPS URL) to mark your business as secure
- Consistency between PPC ads and product landing pages
- Data protection declarations and security IDs
- A problem-free right of return
- Congratulations messages on the final confirmation screen
- Confirmation emails with positive customer reviews
The lure effect
Many online stores will place a third asymmetrically positioned product on their landing pages to increase the invoice size. While customers inevitably have to choose the cheaper product from two available options, putting a bait on the side changes the customer’s decision. Here is an example:
For example, suppose you are looking for a dinner set and you have the following options:
12 piece dinner set by Brand A @ $ 30
20 piece dinner set from Brand B @ $ 55
18-piece dinner set from Brand X @ $ 95
If there wasn’t a third option, you would have likely bought the Brand A dinner set and found it to be the most affordable. However, by adding the asymmetrically positioned Brand X, Brand B appears to be the most attractive, yet affordable option, which ultimately increases sales.
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Loss aversion
This cognitive tendency can best be explained with the sentence “One bird in the hand is worth two in the bush”. Imagine a situation where I immediately offer you $ 20 or say I will give you $ 80 if I flip a coin and it shows up. You’d choose the $ 20, of course. But if I asked you to give me $ 20 and I gave you $ 80 when the coin comes up, you would be playing. In both situations, you will try to minimize your losses.
Giving people the feeling that they can use your product with no loss is a very effective conversion booster. Examples of using loss aversion in e-commerce:
- Free trials and samples
- Limited time discount offers
- Buy now to get X% discount
- Countdown timer
- Free expedited deliveries
You can combine loss aversion with FOMO (fear of missing out) to make your pitch look more attractive for marketing purposes.
Hyperbolic Discounting Bias
This cognitive bias leads people to seek immediate rewards rather than delaying them. If all results are positive, we tend to choose what is immediately available. For example, some marketers allow customers to purchase items instantly with a credit card and make payments in installments.
Other examples of hyperbolic discounting are:
- Offers “100% Money Back If You Don’t Like It”
- Loyalty programs with exchange bonuses
- Zero Interest EMIs
- Freemium subscription models
Hyperbolic Discounting is a powerful tool for selling products that are not within direct economic reach of your consumer base. Breaking payments down into small installments can help people feel more secure when making purchases.
Sink cost bias
The decreased cost bias or error refers to our tendency to stick to our decisions based on the time, money, or energy we have already invested. Imagine a scenario where you have tickets to a concert but have a severe headache on the night of the concert. Will you still go Despite the headache, chances are you will because you have already paid for the tickets and you don’t want your money to be wasted.
Here are ways you can get the sunken cost error of an ecommerce website to work:
- Many online shoppers leave a website when the website asks for their financial information. You can prevent this from happening by adding a progress bar to the website (e.g. 90% complete) that shows customers the progress and time they have already set for the purchase process.
- Encourage customers to stay by giving them a personalized experience that cannot be replicated on any other website. For example, IKEA allows online customers to design their own furniture. Customers risk losing their creations when they leave the site.
- A loyalty program that rewards customers for consecutive purchases on your website will ultimately encourage them to keep buying from you.
Over to you
Here I specifically focused on the cognitive biases that small online retailers can easily take advantage of. But do you know that your larger colleagues are already using them to great effect and any online business can benefit from this proven tactic.
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About the author
Contribution by: Neel vithalani
Neel is a creative who is always ready to handle anything that is innovative and that captures the masses. He is currently working with Orderhive. He is passionate about technology, business and psychology.
Company: Orderhive
Website: www.orderhive.com
Connect with me on Facebook, Twitter and LinkedIn.
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