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Ultimate E-commerce Psychology Guide

E-Commerce Psychology Guide

Data, creatives, products, AI, conversion optimization, A/B tests, there are lot’s of discussions on e-commerce field. We try to understand what is going around on our store and optimize using technical tools. However we don’t discuss enough the psychological triggers and issues for better performances.

Now in this post we’ll discuss what is e-commerce psychology and how to use it to design and run your store for higher conversions and revenue.

Ecommerce has many advantages. However, still, you’re selling something. You need to convince your customers to buy from you.

This is where behavioral science gets in the game.

“Selling ice cream on the beach in the summer is easy. Raising people’s expectations, engaging in their hopes and dreams, helping them see further— that’s the difficult work we signed up for. From now on, your customers know more than you do about your competitors.” – Seth Godin

Loss Aversion

Here is the deal. Pick a number from one to six and I’ll throw a dice. If you predict dice, you’ll get $100.

Not a lucky day? You’ll give $10 to me.

There is no limit, you can join the bet as many times as you want. Would you join? Probably not, right? At least most people tend to not join. When you think rationally ⅙ chance you’ll get $100 and ⅚ chance you’ll lose $10.

So if you play it as long as enough, eventually you’ll win. Still something prevents you from joining the game.

Loss Aversion is the tendency to avoid losses over gains. Studies have shown that losses are twice as powerful, as psychologically, gains.

One of the best examples of loss aversion is insurance products and companies. People pay for insurance to protect themselves from highly unlikely events.

Most of the time these events never happen. Your house doesn’t burn out, your car doesn’t get stolen.

However, you tend to still pay for the insurance.

Halo Effect

Let’s say you need a new computer and walk into a tech store. There are two different sales consultants. One is well-dressed, and the other one is casual.

Which one do you prefer to talk about your new computer?

In most cases, you walk into the well-dressed first.

Our general impression of a person influences how we feel and think about their character, skills, and other personal attributes. Basically, your general impression of a person (“He’s nice!”) impacts your evaluations of that person’s other specific traits (“He’s smart, too!”) even though they are unrelated.

Want to make a sale? There is no excuse for a broken store, poor user experience, using fake proofs, or poor-quality of photos.

Your store’s looks and feel make or break the first impression of your customers. Don’t waste your chance.

Mere-Exposure Effect

You’re about to buy a detergent. There are two brands. One from you know, the other is a new brand you see the first time.

Which one do you prefer?

Most people prefer products that are familiar to them.

This effect explains our tendency to make preferences for things only because we are familiar with them. Because of this, it is also known as the familiarity principle.

I love ecommerce and keep in touch with different founders and marketers in different countries, categories, and stages. The most common thing is new founders generally don’t have a clear understanding of their ideal customer profile.

When you don’t know your ideal customer profile, it’s easy to lose your focus. Well, what happens when you lose your focus?

You try to build awareness of one target. Maybe you haven’t made a sale yet but you built a relationship.

Then you just change your target audience and boom, you now need to start building everything from scratch.

Let’s face it. Ecommerce is not easy to sell. It has lots of different components. You should have a clear vision and target, unless everything mixes up, all of
your efforts, energy, and ad budgets just go to trash.

The most important tip for ecommerce brands for this effect is to know your audience.

Work on your marketing approach. How do you stand out from the crowd and grab your audience’s attention?

It’s important to make your audience know you…

Because it’s super hard to buy something from people you don’t know…

Use remarketing and remarketing campaigns wisely…

And finally, have a valid email marketing strategy from the first day… Keep updating your audience.

Zero Price Effect

You’re in your local grocery store. There are two hot deals of the day. The first one is $1 instead of $2 and the second one is free instead of $1.

Discount amounts are the same. Each of the deals saves $1 from you.

Which one do you pick first?

Lots of research shows that most people are attacked by the free ones.

The zero price effect is a phenomenon whereby when the price is exactly zero, the demand for a good, service, or commodity is significantly greater than the demand when the price is even slightly above zero.

Pratfall Effect

You invited your college to give a conference about your success, business experience, and career. There are hundreds of students waiting for your conference.

Finally, it’s your turn, you walk into the stage, and boom. You just fall on the stage.

How will this affect your speech? Does this make the audience like you more or less?

This is a common psychological effect and lots of research proves that these mistakes make you more likable to the audience.

The Pratfall effect states that people who are considered highly competent are more empathetic than those who are not competent when they make a common mistake.

Curse of Knowledge

Did you get a support ticket or live chat messages that seem so meaningless to you? Like people asking obvious questions?

It’s a sign that you’re in the curse of knowledge.

The curse of knowledge is a cognitive distortion when one communicates with others assuming that others have the background knowledge to understand them. This bias has also been called the curse of expertise by some authors.

The Decoy Effect

Imagine that you are about to buy wine. There are two options. One bottle is $10 and the other one is $30. Which one do you prefer?

Now think that there are three options. The first one is $10, the second one is $30 and the third one is $50.

Did your preference change?

Most people’s behavior changes in this situation.

When choosing between the two options, adding a third, less attractive option (the bait) affects our perception of the original two options.

Use the decoy effect to make your bundles more attractive or the product you want to sell faster.

Also, it doesn’t have to be a product or bundle, you can use this effect for shipping options too.

If you don’t offer free shipping, making a much more expensive “fast shipping” offer makes your original shipping offer seem cheaper.

Paradox of Choice

Let’s imagine that you own a local food market. One of your friends says that one of your competitors opened a new display table with 24 different jams.

You know “it looks awesome, you should do that, bla bla”…

You check out your jam table and you have only 6 different jams.

Should you get new jams to sell? Can more choices lead to more sales?

If you follow your friend’s advice, you’ll make a huge mistake!

Having many options to choose from, rather than making people happy and ensuring they get what they want, can cause them stress and problematize decision-making.

Decision-making is a hard process that we tend to avoid as human beings. Your strategy should help people to make decisions easier, not harder.

There are a few ways to help your customers. The first one is categorizing your customers. Don’t let them explore all of your products to find the best product for them.

Talk with your customers and understand how they explore your category. Use your categories smartly and let your customers directly see products.

Have similar products? Highlight new products, or best sellers. This will also help your customers to decide which one to choose.

Last but not the least, utilize the filtering section wisely. Are you a fashion brand? Then you should have a size for the filtering option and let your customers see the only products that have the variant for their sizes…

Bandwagon Effect

Did you ever go to a concert just because your friends went? Or did you buy a shoe because your schoolmates bought one?

Well, you’re not alone.

People sometimes do things because mainly other people are doing it, regardless of their own needs, beliefs or wishes. The term “bandwagon effect” originates from politics but has wide implications commonly seen in consumer behavior and investment activities.

Here is the secret to unlocking the power of psychology for your ecommerce brand.

KNOW YOUR CUSTOMERS VERY WELL! Do whatever it takes but know your audience like they are your friends…

When you do know your audience, you can focus on one segment and use the bandwagon effect to benefit from it.

For example, instead of spending huge budgets for influencer marketing, you can just focus on a bunch of (macro or micro) influencers your audience follows.

Then you can send some freebies or samples to these influencers and get more results…
Also, don’t forget to create this effect on your store.

Try to get photos from your audience with different incentives and use them on all of your marketing creatives.

It makes you real and shows your target audience that already similar people use your products. It’s a huge deal!

Summary

Thanks for getting to this point.

I tried to explain the most fundamental psychological phenomena to you. Hope you’ll find something useful for you.

Increasing conversion is not about your button colors, the position of the button, etc.

My recommendation is don’t waste your time and energy trying something meaningless for your customers.

Don’t forget to check out Growth Guide, Marketing Guide and Conversion Optimization Guide.


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