insights! #35: Positively influencing customer decisions in the shop

Joubin Rahimi:
Great to have you back for a new episode of insights! My name is Joubin Rahimi, and today with Katja Moritz on the topic of „making decisions“. Before we get into it, would you like to say a couple of sentences about yourself for our listeners?

Katja Moritz:
Gladly. I'm Katja. I'm User Experience Manager at brytes, which means, together with my colleagues, we look at our customers' shops and improve them so that the shopping experience gets better for their customers. We help with processing and presenting information, making decisions and, finally, completing the purchase.

Joubin Rahimi:
Making decisions was your second-to-last point, and that's what today is about too. In the previous episode we talked about information, which we mostly need to make a decision. Although you can also make a decision without having information. But what exactly is the topic of making decisions about? At first it sounds pretty banal, everyone knows that. But actually there's a lot more behind it.

Katja Moritz:
Absolutely. Decisions accompany us every day. Today alone we've probably already made 15,000 decisions. Which socks do we put on? Do we get up or stay in bed another five minutes? What do we have for breakfast? Many of these decisions happen subconsciously, but many don't. Last time we talked about systems one and two, meaning information we can simply process subconsciously, which we then immediately translate into decisions without really noticing it. And more complex systems that we first have to understand, get to grips with, needing information to then make more significant decisions. And that accompanies us daily. And that, of course, then also applies to our purchasing behaviour.

Joubin Rahimi:
And in that context you said we tend to make easy decisions. I had a saying for that: there are no limits to laziness. But what does that mean, the ease of a decision?

Katja Moritz:
We're actually built to be lazy from the start, we want to expend as little effort as possible and get the greatest possible benefit for ourselves out of it. And when information is already known to us, it's cognitively easier for us to process it in the first place. That means certain things, people, brands, shops seem familiar to us straightaway and we need less effort to decide on a particular shop, for example, because we already know it, it's already familiar. It doesn't require any new effort to reassess that shop.

Joubin Rahimi:
When I buy something online, do you already distinguish between what and where I buy?

Katja Moritz:
Exactly. And of course you also decide on certain products then. If you have a product you buy regularly, that purchase decision will probably come very easily to you. You just ask yourself, do I need this again now or not? Coffee grounds, you probably always buy the same one. Do I just want to top that up? That's one decision. But if you say, oh, now I fancy trying a new one, then you have to decide. Should it be beans? Should it already be ground? Might I want to buy a grinder to go with it? Is it more chocolatey or nutty? Whatever it may be. There are a great many decisions involved there.

Joubin Rahimi:
I buy whatever's on offer. (laughs)

Katja Moritz:
Do I buy it on offer or am I willing to spend more money? That, too, is a decision you make.

Joubin Rahimi:
But every decision has a downside too. Let's take the example of socks: if I put the socks on today, I can't put them on tomorrow. Or if I buy something, the question is, does it fit? I'm giving something away after all, I'm giving away money and I might not be sure, and then I make the decision anyway. How do you deal with the pain of spending money? There must be some kind of balance to that, or precisely no balance at all.

Katja Moritz:
Exactly, there's a principle for that called Pain of Paying, meaning it's painful in the first place to give something up. We're used to wanting to keep everything we have. So I might give you money and you give me socks. But I can only do that if I feel the socks are worth the money. That means through certain information we can highlight that added value again and show that this is really what the product brings you. But there are also situations like shipping costs, a very popular example, which people really don't like paying because there's no physical added value behind it for them. Many shops offer it for free too, which is perhaps another positive incentive. But shipping costs tend to be seen as something negative because you feel you're not getting as much in return as if you could put that five euros, say, towards a genuinely physical product. And behind that lies the principle of loss aversion, meaning you lose those five euros, and as a rule you'd weight that more heavily and see it as a bigger loss than the possible gain you might get in another situation.

Joubin Rahimi:
And that's also why one of the tips is: don't charge shipping costs, essentially spread them across your average number of items per order, because customers then buy more so as not to lose those five euros in any case.

Katja Moritz:
Exactly. And many shops use that too, with a certain threshold for basket value. And we can see in our own data, for example, that when there are customers who set that threshold at 50 euros, we see a great many customers in the range up to 30 euros. Then there's a real drop-off, and then the basket value rises again, because that exact piece of information, that from 50 euros something is free of shipping costs, can be deployed at precisely such moments. And that then encourages customers to put even more products in the basket. And that's why we get this pattern where we see the number of baskets really drop off shortly before that 50 euro mark.

Joubin Rahimi:
So it makes no sense at all to say I'll offer free shipping from 40 euros, at the returns threshold, but rather to deliberately set it higher, because then you push that extra ten euros forward.

Katja Moritz:
That probably also depends on your products. How much margin do you have? How affordable are your products? Do you have many products in the very low price range, or are your products generally more on the expensive side? If you're in office supplies, for example, and mostly selling pens and pads, then 50 euros might already be a lot to reach that value. In the private sector that may be different from the business sector. But if you're a wine retailer, for example, then 50 euros might not be that much at all, and the thresholds there often lie in a higher range anyway.

Joubin Rahimi:
And perhaps also more understanding, because glass, special packaging, and heavier. When the customer buys, they make a decision. And I understand that's a complex process. How can I torpedo that? What are examples of how it shouldn't be done, because then I put someone off their decision or simply confuse them? If I confuse someone, they might not want to buy at all. Or do they want to buy after all? Are there a few bad examples of how it definitely shouldn't be done?

Katja Moritz:
For one thing, you naturally have to present that product information well as a first step, to even give the customer the chance to assess this product at all. You can, of course, also put them off again later in their customer journey. Perhaps they arrive with a specific goal, want to buy a very particular product, put it in the basket, are almost at checkout, and then you show them other products again. If they're very focused, that can of course put them off buying the actual product. Because then they might look at other things again, want to browse here and browse there. Then perhaps they see something else they'd need to discuss at home first. Shall we get this together? Then the decision gets postponed to the next day or to a later point. And then it's perhaps forgotten again and the whole process was abandoned. So it's important to respond to the situation and provide that information at the right points, so the customer feels good about their decision and also has the sense that they can really assess everything correctly and isn't afraid of getting something wrong.

Joubin Rahimi:
Or being taken advantage of.

Katja Moritz:
Or that too.

Joubin Rahimi:
And what can I do to give, say, a bit of a decision nudge? I'll call it that. Come on, do it now! Not everything's been resolved yet, but do it now!

Katja Moritz:
You can highlight certain information. You can simplify the journey by offering the option to complete this process at several points along the way. If I'm on a product detail page and, for example, I only have the option to add the product to the basket right at the top. But I scroll down, read through the texts, read reviews, then maybe step out of the room for a moment, come back and I've already forgotten. There, I could give another reminder, for instance, or add a button further down for adding the product to the basket now, which essentially follows along as I scroll. Then this whole topic is a bit more present for me as a user and I have the option to make a decision at any time. What's also often the case is that customers add products to their wishlist and the shops then send out emails saying, hey, you still have something on your wishlist, you could just buy it now, or, hey, you were interested in this, it seems you quite like this product.

Joubin Rahimi:
As fast-paced as we are, decisions that seem really important can suddenly not seem so important a day later. That's what I take from your example with the basket or the wishlists. What are another two or three tips you'd give in the context of decision-making?

Katja Moritz:
There, you can of course achieve a lot with the customer through the presentation of certain information. If I want to buy a product, I can naturally ask myself, do I really need this today, or is it fine if I buy it in two weeks? Might it even get cheaper then? Flights are probably a good example there. Do they tend to get more expensive or cheaper the closer that flight date gets? And there, I might also be able to create an incentive through scarcity. That means I show the customer quite clearly, yes, it might become cheaper again at some point, but perhaps the seats simply won't be available any more because they're sold out. Especially with finite products, maybe not necessarily with a software licence, but with physical products it's often a tool that's used to create scarcity. What's really important there is that this scarcity should genuinely be real. That means, please don't start displaying notices somewhere saying this product is only available three more times if that isn't true.

Joubin Rahimi:
With software there's no scarcity, but there is a price increase: from such and such a date, and that's another impulse.

Katja Moritz:
Exactly. The same applies to shipping costs: free orders that might then be time-limited, tied to a specific offer, that kind of thing.

Joubin Rahimi:
You see that really intensely in travel industry.

Katja Moritz:
Black Friday, Cyber Monday, these are really classic examples where products are deliberately placed in the shop as top deals of the day and then genuinely only with a limited-time availability.

Joubin Rahimi:
That's another fascinating topic, Black Friday and Cyber Monday. That's the manifested scarcity of an entire industry. The industry, or retail, has managed to create a kind of Valentine's Day just for the Christmas business, where we now sell an awful lot. And accordingly, most people expect great deals there, which isn't actually the case if you look at the data. But what does that do to the brain in such a moment? If I know a Black Friday is coming in three weeks, how does our brain change in the process of making decisions?

Katja Moritz:
It's often the case that you have certain products in the back of your mind that you might want to get in the near future. And then you often actually ask yourself, do I buy this now, or could I get an even better deal on Black Friday? And there we're back to the principle of loss aversion, meaning a possible loss is weighted more heavily and perceived more negatively than a possible gain. This means the mere chance that there could be a discount on Black Friday usually leads most people to decide to wait and see. Even if the product then costs just as much as usual, if it's still reduced by 30 percent on that day, then I have the feeling I've got a good deal. Because especially on such days, it's often the case that prices rise slightly shortly beforehand, so that a special discount can then be shown for that day.

Joubin Rahimi:
Thank you for the insights on all these fascinating topics around decisions. And if you have any questions or suggestions, feel free to drop them in the comments below or send us a direct message.