Commentary

3 ways retailers can leverage psychology to succeed online

Jay Radia, CEO and co-founder of Yieldify, writes that many online retailers fail to push customers to purchase through subtle psychological triggers and cues. In fact, some online retailers (unintentionally) make it more difficult to find the products that customers are looking for.

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February 5, 2019

By Jay Radia, CEO and co-founder, Yieldify

Retailers have long faced the challenge of bridging the offline and online experience. However, from product placement to customer incentives, some retailers do not leverage the lessons learned offline to drive conversions on their e-commerce sites.

Research shows 95 percent of all purchasing decisions are made subconsciously. While brick and mortar retailers have mastered the art and science of merchandising, many online retailers fail to push customers to purchase through subtle psychological triggers and cues. In fact, some online retailers (unintentionally) make it more difficult to find the products that customers are looking for.

Together we'll explore how brands can use basic psychology principles in their e-commerce experiences to target the right customer at the perfect point in their journey. While all seven principles of persuasion can be applied to retail, let's look at three ways you can bring the online experience in line with physical retail to better understand consumer behavior and drive conversions.

We're all in this together

When you consider the hierarchy of human needs, one of the most important is the need to feel a sense of belonging. Brick and mortars frequently nurture this through loyalty programs and shared experiences. Think in-store events, exclusive sales and other perks that make customers feel like they are part of a larger community. So, how can online brands create a sense of "we're all in this together""?

Online beauty brand Glossier frequently crowdsources its new products, including its best selling Milky Jelly Cleanser. By allowing customers the chance to add their input to the creative process, retailers like Glossier give customers a reason to be invested in the brand.

They're not the only retailer catching onto this idea. Design Toscano has implemented similar customer feedback campaigns to allow customers' opinions to be voiced. When a customer idles on a page, or goes to exit the site altogether, the retailer asks a simple question about what they were looking for. By gathering this feedback, retailers can make better decisions about products and promotions for their customers, and customers feel like they are being valued.

Get it before it's gone

By now, most retailers should understand that customers are more likely to make a purchase if they believe that the product or service they're interested in has limited quantity or will only be available for a short period. Consumers place more value on items that are in short supply.

Clothing brand Supreme has mastered the art of scarcity. Each week, they release a limited number of items in their brick and mortar stores, and customers know that the long lines in store are worth it to avoid high resell prices on eBay.

Online, this can be replicated by showing messages like "only five left in stock!" or "purchase in the next five minutes for free shipping." The travel and entertainment industries have natural caps to tickets, so it's easy for them to leverage scarcity online. SeatWave, a ticket reseller, saw over a 155 percent uplift in conversion by using messaging that highlighted a limited timeline and quantity available for customers who had added tickets to the cart but had intentions of abandoning the site.

Clothing brands can also replicate this with flash sales. Australian menswear company M.J. Bale used an enticing offer and a countdown clock to inspire a sense of urgency to purchase when customers showed signs of abandonment. As a result, the company saw a conversion rate uplift of 117 percent across the three-day sale.

You jump, I jump

Possibly one of the strongest psychological principles in a marketer's toolkit is the idea of social proof. There's safety in numbers and consumers are more likely to hop on the bandwagon when they see other people purchasing. Think of the long lines outside Apple stores on product launch days — everyone wants to take part in the latest trend. In store, it's also much easier to see which items are flying off the shelf and which are going untouched.

Social proof can take many forms, but there are a few simple ways for brands to show this online. Some retailers will show messages like "other customers have bought this item" or "six other customers have this item in their cart."

Based on Yieldify's benchmark data from over 200,000 customer journey campaigns, brands that use dynamic social proof can drive conversion rate uplifts from 6.6 percent, up to as high as 48.3 percent depending on the targeting criteria, with the average falling around and 8.5 percent increase.

By tapping into consumers' fear of missing out, brands can increase average order values and drive more sales. Global travel brand Megabus leveraged this by showing customers how many other customers were booking trips at the same time. This proved successful with the company seeing 2.4 percent uplift in conversions.

While all of these tactics can prove successful on their own, the best e-commerce marketers know that it takes a balanced approach that utilizes a mix of strategies. At first glance, many brands may brush off these basic psychology principles, but when applied correctly they can make all the difference in optimizing the customer journey.