insights! #68: How digital nudging helps you reach more customers

Joubin Rahimi:

Great to have you with us again for a new episode of Insights. My name is Joubin Rahimi and I'm really pleased to welcome Denise, Denise Rettig, with us today. Hi, Denise.

Denise Rettig:

Hello Joubin, lovely to be here today.

Joubin Rahmi:

Yes, absolutely happy to. It's practically another first, because you're the first former employee we've had with us.

Which is a real shame, by the way. You were a working student with us and wrote your Bachelor's thesis. And I'd put it this way as to why everyone should stick around: this Bachelor's thesis should simply become standard reading for every e-commerce professional and online marketer.

So perhaps you could tell us a bit about yourself and about this standard reading.

Denise Rettig:

Of course, happy to. Right. I'm Denise Rettig. I'm 26 years old, and as Joubin just mentioned, for the past year and a half I was a working student at Synaigy responsible for the area of Behavioural Economics and User Experience. And I actually rounded the whole thing off with my Bachelor's thesis, which dealt with exactly this topic of behavioural economics. And why standard reading? Because I looked closely at how we can use a behavioural economics concept to improve the success of a B2C e-commerce shop. Can that work? Did it work? We'll definitely take a closer look at that today, I think.

Joubin Rahimi:

Yes, really fascinating. And I think there's one thing you also had to bring together. We're very pragmatic here. Our group isn't called TIMETOACT Group for nothing. Behavioural economics - what does that actually mean?

Denise Rettig:

Exactly. Behavioural economics. We look at it from a psychological angle: how do people behave in economic situations? That means, if I make a decision today in an online shop, do I buy the shoes on offer, do I buy them today, do I buy them tomorrow. So many decisions and so many process steps come into play, and behavioural economics looks precisely at how we actually arrive at this decision. When do we make decisions and how do we make decisions? And it's through that lens that I looked a little more closely at the decision-making behaviour of us as customers in e-commerce. Are we really that transparent? In fact, we're more transparent than we sometimes think. Because we always imagine it like this: in a bricks-and-mortar shop, we're of course visible. The sales assistant can see straight away whether I'm interested in the product or not. But in e-commerce, that's admittedly a bit trickier.

We all think we're somehow anonymous, but we click, we linger on pages and we add products to the basket or move them along. And because of that we're actually relatively easy to see through, I have to say. More transparent than you'd think.

Joubin Rahimi:

And how can an e-commerce operator manage to do more, well, what, more? More traffic? Or what did you measure it on?

Denise Rettig:

Yes, I looked at two very specific metrics, the conversion rate and the add-to-basket rate. And for e-commerce people those are definitely, I'd say, terms everyone can relate to. The conversion rate looks at how many people actually completed a purchase compared to the total number of sessions that took place. And with the add-to-basket rate we're one small step earlier, because there we look at how many people added one or more products to the basket compared to all sessions. And I looked at both of those, so I looked at how we can improve this success, because that's especially

Performance metrics for e-commerce people, how might we perhaps improve them a bit, or improve them a bit more?

Joubin Rahimi:

Okay, let's get into it. How does it work now? Now I want to do it.

Denise Rettig:

Very good.

That's the first important step. Exactly. As we already mentioned at the start, I looked at a concept from behavioural economics, digital nudging. I think that's been covered on the Insights channel once or twice before too. Because Brytes works with it every day and has already discovered, and released, loads of really cool things there. I looked into that too and wanted to know whether behavioural economics can do anything for e-commerce people or not. And you have to picture digital nudging as various user interface elements being used on the website, in the shop, to nudge us as customers a little in the right direction. I think we've all seen that once or twice, and it's no secret, if I see a message saying five customers ahead of you like this product, or five people are looking at this product right now, those are classic examples of digital nudges meant to make our decision-making a bit easier and move us towards completing a purchase.

Joubin Rahimi:

You're phrasing that very carefully.

Denise Rettig:

Exactly.

Joubin Rahimi:

Does it have little effect, or is it actually much stronger than you might think?

Now that you're phrasing it carefully.

Denise Rettig:

Exactly. I phrase it carefully because it very quickly gets lumped in with this manipulative term somehow. But it isn't that at all. Because with digital nudging, which is also what we do at Brytes, we pay very close attention to making sure the criteria for a digital nudge not being manipulative are genuinely met. We're always transparent, we don't mislead, we don't steer the customer somewhere they don't actually want to go, instead we always give them the choice: do you want this or don't you? And you just asked, is it powerful? And yes, it's definitely a powerful tool. We'll see that shortly in the results and findings of my work. Because digital nudging can really move the needle a lot.

Joubin Rahimi:

Since you mention it, do you have any figures?

Denise Rettig:

Of course, if we look at a conversion rate in an e-commerce shop, it's generally somewhere between 1 and 4 per cent, and everyone naturally wants to increase it. For everyone the rule is, the higher the better. And with nudges we were actually able to guarantee an uplift, or an increase, of up to 10, 11, 12 per cent. And that's a genuinely great figure. And for every e-commerce person definitely something worth taking a closer look at.

Joubin Rahimi:

So how do... So you've given two or three examples in the direction of nudges. Now I'm writing, when I... With hotels I always see it. There I always write underneath, one room left for this period, and that everywhere, on every channel. And how does that work? Is it that simple, or do I need to put a bit more thought into it as the person responsible for e-commerce?

Denise Rettig:

If it were that simple, we'd probably have had a solution much sooner, and I probably wouldn't have needed to write this bachelor's thesis either. Because it really is the case that nudging has to be applied in a personalised way. So digital nudges aren't an off-the-shelf product, which is why you can't say: cool, this nudge worked really well at company A, so it'll also work well at B, C, D and E. And that's why it's really important to look at, what target group do I have as a company? How do I interact with my customers? Do I use formal address, do I use informal address? Am I very casual in my wording? And I have to look closely at exactly when I place which nudge. And that's a really, really big topic at Brytes too, personalisation, that we have different nudges that can respond to the user at exactly the right moment. Because if, for example, I'm still unsure whether to book the hotel or not, then it does nothing at all to push me as a customer really hard towards buying or booking

Instead I first need to be met where I am. Where am I right now? And maybe the decision just needs to be made easier for me with a filter option or a comparison option.

And so it's really important to adapt to these specific situational needs and respond to them, and not just always play out the same nudge to every visitor on every page. Because that can end up being annoying at some point and have the opposite effect instead. That's really important.

Joubin Rahimi:

Like a newsletter sign-up popping up on every page, regardless of whether it's me or not, €10 off if you sign up now.

Denise Rettig:

Exactly, because then you get more of a rigidity setting in, and you're more likely to think, ugh, this site is annoying me. I don't know, I don't feel seen as a user at all. I just get spammed constantly, and that tends to have the opposite effect instead.

Joubin Rahimi:

So that means I have to recognise the situation the person, the user, is currently in and respond accordingly.

Denise Rettig:

Exactly right.

Joubin Rahimi:

Responding to it is easy, once you know where the person currently is.

Denise Rettig:

Absolutely right. And admittedly, that isn't always so easy because of the anonymity, since I'm not standing in front of the product like in a bricks-and-mortar shop, looking at it, touching it, maybe trying it on in a different size. Instead, I'm anonymous at first, on my own. And that's exactly why it's so important, as a shop, to look closely at these various measurement points of a website and see how quickly someone scrolls, how long they've perhaps looked at the product photos, or how much they've really interacted with on this page. With Brytes, for instance, we measure over 200 different points, so really, extremely thoroughly and extensively, to specify this situational profile as precisely as possible so that, in the end, the recommendation is the best possible fit.

Joubin Rahimi:

I always think it's great that you're pushing Brytes forward. It's a brilliant tool, but you don't actually need Brytes. In principle, anyone could measure these signals themselves and move forward with it. Are there signals where you'd say that's particularly clear-cut, or a correlation or interplay of two or three signals where you'd say that's totally obvious that now it's — I don't mean the Add To Basket button, that one's probably obvious.

Denise Rettig:

A really simple and also good signal is always my scroll speed. How quickly do I scroll down a page, and how erratically do I perhaps move my mouse? If I'm going very much from left to right, top to bottom, then I'm probably a user who isn't quite finding their way around and might still be searching, not yet knowing which product they actually want. Whereas very targeted click behaviour without much wandering already points towards someone who actually knows exactly where they want to go, and where you perhaps only need to reinforce that final bit of momentum, rather than starting earlier and saying, let me help you find the right product in the first place.

Joubin Rahimi:

That's annoying, of course. If you say, I want to put this in the basket now and buy it, okay, then you don't want a discount either. So as an e-commerce person, you don't want to give a discount at that point.

Denise Rettig:

Exactly.

Joubin Rahimi:

Okay. You said scrolling and mouse cursor is one channel. Do all channels behave the same, or is that different?

Denise Rettig:

Exactly. You're probably referring a bit to desktop versus mobile. Right, on the phone we don't have a mouse. There we have totally different signals, and I could really relate to that in my own everyday life too. Because I use my PC and my phone for completely different things. When I'm sitting on the underground or standing at the bus stop, I'll just scroll through quickly, maybe have a look at what I might like, what new offers there are. Whereas on desktop I'm very focused. And that's actually been established scientifically too, that we're in completely different settings depending on whether we're on our PC or on our phone. And it's really fascinating that quite different nudges then achieve quite different, let's say, success.

Joubin Rahimi:

Example. Well, I'm always simply wired.

Denise Rettig:

Yes, of course. You can relate to this quite well too, I think, because it really gave me an aha moment. With digital nudges on the smartphone, it's really effective to bring in a social reference, such as five customers before you thought this product was great, because we're all so conditioned on smartphones by spending so much time on social networks. I saw it recently on the underground. Next to me someone was buying shoes, on my right someone was looking at messages, and opposite someone was talking about the latest Instagram post. And you can actually see quite clearly that on mobile devices we're very, very strongly drawn to a social reference and social norm, that this is simply crucial and important for us, because we always expect — we upload something, we show something of ourselves, and we expect a reaction. We always get a like straight away, a confirmation, and that translates quite well onto the e-commerce shop. Because on the phone it's so obvious and so relatable for us to have a reference, that this also applies to online shopping. Because if I now see here on the smartphone that five people thought this was great, it was rated so highly, that has a completely different effect on me than if I see that displayed on desktop. And I could actually confirm that in my bachelor's thesis, and that was really fascinating. Whereas on desktop, it works really well to achieve a kind of cognitive ease, because there we're very much focused on gathering information, comparing products, and filter functions or product comparisons really add a lot of value there.

Joubin Rahimi:

Right, okay. Product comparisons are also much easier to take in. So you want to see it in table form somehow quickly, that's much, much harder on a smartphone.

Denise Rettig:

Absolutely.

Joubin Rahimi:

You've worked out quite a bit on this now. I got to read it too, you presented it to us as well. Is this bachelor's thesis of yours publicly available?

Denise Rettig:

Actually not yet at the moment. It's not out yet. But what isn't yet can still become. So as soon as it's out, I'll let you know.

Joubin Rahimi:

Then we can just link it below once it's out. And like I said, a reference work or learning resource for every e-commerce person. Right, that was great, a really great time. We always have working students with us, and it's always so much fun to learn new things then too. We learn so much new stuff from these things. You do too, I think the university does as well. It's a three-way thing in that setup. If someone now, say a friend, said I'd really like to write a bachelor's thesis, what would you simply tell that person to pay attention to?

Denise Rettig:

Well, I have to say, I've had really good experiences co-writing with a company. It's sometimes a double-edged sword, you really have to say that too. As you said... Because, as you also said, you have that three-way dynamic. You naturally try to involve the university, which tends to focus on it being scientific, having good theoretical input in there, but a company, of course, is also really keen on making it practicable, on really drawing out learnings from it. And that's not quite so easy at the start, to really find your footing there and fit it all under one roof within that limited page count. But being able to do this deep dive with a company and really see that I have real user data and I'm not just doing it theoretically — that's really valuable. That's not only valuable for everyone involved, but also for yourself, because you're doing something that actually has real substance, and where you can genuinely say, this comes from the real world, and it's not so far removed from us. So I'd say, go for it, find yourselves a company and give it a try.

Joubin Rahimi:

And I tell my fellow entrepreneurs the same thing, do more Bachelor's or Master's theses and give lots of freedom. Because, I'll break a lance for Gen Z here, though I sometimes argue the opposite too. But there are loads of motivated young people out there and that should be used and given opportunity far more. Especially that mix. I think that's really important. And you also said beforehand that there's a huge amount of literature. I know we have one or two people who studied that alongside their work and it's hugely valuable. But the more operational you are, the faster something like that gets forgotten.

Denise Rettig:

Absolutely.

Joubin Rahimi:

And then building in those obvious things. Just not done.

Denise Rettig:

I think the synergy effects are simply huge and shouldn't be underestimated, because science and practice in particular can be really well interlinked. And now we've also gathered loads of cool insights. So, more of that.

Joubin Rahimi:

Great. Thank you for taking the time. Yes, it's a shame you're no longer with us, but great that you get to gain lots of experience at a completely different type of company. I find that great too. It's also really important to see different sides. From my purely selfish entrepreneur's perspective, it's of course really sad. I'd also like to say thank you again to the whole team who worked with you. Katja, Isabel, Vasil, Eleni, quite a number of people you worked with there. It's also simply lovely to see everyone moving forward and growing.

Denise Rettig:

Absolutely. From my side too, another big thank you for even being able to do this with you all and for having so much support at all times, and for genuinely being able to draw on the most varied topic areas. From Data Science to Behavioural Economics, it all worked together really well. So, a big thank you from my end to everyone too.

Joubin Rahimi:

You're very welcome. Great to have had you here.

Denise Rettig:

Thanks for the invitation.

Joubin Rahimi:

You're welcome. Wishing us both a lovely weekend. Startup time isn't really free time, as you have now. So we've done the recording on a weekend today. So thanks for carving out the time for it.

Denise Rettig:

Yes, very welcome. Very welcome.

Joubin Rahimi:

Denise. Take care. See you again soon.

Denise Rettig:

Bye, Joubin.

Joubin Rahimi:

Bye.