When selling products or services to customers online, merchants need to understand what kinds of levers to employ/initiate to get consumers to take the all-important purchasing decision. The main challenge surrounding this is the fact that human behavior is often irrational and difficult to understand. This can leave merchants scratching their heads about high shopping cart abandonment rates or wondering why certain promotions work better than others.
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Ecommerce executives should make a guided effort to study online consumer behavior, understand the types of personalities consumers have, and aim to give those buyers a positive online experience that will ultimately end in a successful purchase.
Research has proven that there are ways to present information to shoppers based on their personality traits that will increase the chances of getting that particular shopper to make the desired purchasing decision.
For example, Amazon uses their wide assortment of products to appeal to those shoppers who want to find the best product for the lowest price. They carry this assortment across a vast array of categories and are able to offer unlimited choices because they sell products from 3rd party partners in addition to their own inventory.
Amazon is betting that patient shoppers looking for the best deal will trust their large assortment to have the product they are looking for at the best possible price.
Additionally, Wayfair uses user ratings, reviews, and fast shipping time to appeal to those buyers who don’t want to conduct in-depth research before buying a product.
Instead, these buyers rely on the ratings to trust they’re purchasing the right product, and know they will not have to wait long for their product to arrive.
While this seems like common sense – both Amazon and Wayfair are appealing to the personalities of their various shoppers – most online retailers still struggle with truly understanding their customers and prospects.
Research Provides Clues to Understanding and Influencing Buyer Behavior
A study conducted by the Journal of Business Research showed how a hierarchical approach to human behavior can signal intention to purchase online. The study looked at four main ways to understand the influences that determine or impact buying decisions. These four forces give merchants a lens through which to understand how to help shoppers make a positive buying decision.
Economics of information
Simply put, consumers tend to prefer the mode of buying that has the best ratio of search costs (i.e. time needed to find the ‘best’ product for the lowest price) and the expected benefits of making a decision. Think back to the Amazon example here – for many categories and products, Amazon has minimized the search effort because shoppers trust that Amazon has the best array of choice at the fairest possible price.
Cognitive costs consider the costs stemming from search-related cognitive processes. Typically, consumers try to optimize their decisions regarding price and quality of products, as well as regarding reliability and credibility of online merchants. At the same time, they seek to minimize the cognitive costs associated with evaluating alternatives and making decisions.
This is why the Wayfair example of ratings and reviews works so well. Wayfair is eliminating cognitive costs for consumers by making them comfortable with the quality of the product without having to search other places to gain that comfort level.
The lifestyle approach studies sociodemographic characteristics of potential consumers, their way of life, and patterns of spending time and money. Research has found that online shopping behaviors are related to consumer perceptions of time control, desired control of the shopping environment, and need for social interaction.
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Many of these needs can be met in familiar ways – ratings and reviews, more images, videos and comparison charts (these help consumers control the shopping environment). Additionally, by integrating components like chatbots, merchants can even meet the need for social interaction online.
The contextual influence approach analyzes the influence of navigational aides as well as atmosphere. There are four main contextual traits:
1. Surface traits
Surface traits are the immediate determinants of behavior. Typical examples are proneness to bargaining or a tendency to favor health-promoting products.
2. Situational traits
Situational traits affect the surface traits positioned on the next hierarchical level. For example, there are many different situations in which a consumer can act in a health-promoting way. A good nutritional supplement merchant, for example, will use such traits to ensure that shoppers feel they are doing the right thing for their health.
3. Compound traits
Compound traits often develop during socialization. However, they are shaped not only by external influences, but also by the interaction of one’s learning experiences and socialization history with the traits at the highest level of the model (elemental traits).
4. Elemental traits
Elemental traits refer back to genetic predispositions and the sort of behavior that is “born in”.
Understanding Consumer’s Personalities Should Lead to a Leg Up
Retailers use what they know about consumers to push buttons that will hopefully lead to a sale. The hierarchical model of personality presented in this research provides a good integrative framework for understanding the predictors of online consumer behavior.
For merchants who want to leverage this knowledge of consumer behavior, motivating customers to make repeated purchases online and promoting customer loyalty, personality models provide an explanation of the most relevant underlying factors and processes.
Merchants have access to virtually infinite consumer data—from shopping cart abandonment rates to lifetime customer values. The key is to be able to leverage this information to provide shoppers with the incentives, discounts and offers that will most likely interest them and lead them to have an enjoyable enough experience to complete a purchase, become a repeat customer, and ultimately a brand advocate.
Doing this requires not only the ability to analyze all of the customer behavior data at hand, but also an intelligent incentive platform that can help you present information to shoppers in such a way that plays into their behavioral traits and makes them want to buy more. As a result, merchants who invest time and money into understanding their buyers will be able to create highly personalized and differentiated shopping experiences that are considerably more profitable than the alternative.
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