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12 Cognitive Biases E-commerce Marketers Need to Know

Marketing and psychology are intertwined in ways we can scarcely imagine. Consequently, marketing experts know that human behavior is completely unpredictable and irrational. This fact alone has the power to greatly influence consumer behavior, which can lead to loss or sudden changes of interest, fewer leads or even sales.

What is the cause of this behavior? Let’s start with an exploration of cognitive biases. Many have heard about these since the concept was noted by Daniel Kahneman and Amos Tversky in a 1974 article and more than 100 cognitive biases have been identified since then. For marketers, this only complicates their decision making.

What is cognitive bias?

Cognitive biases are defined as “mistakes of reasoning” when people put more value on their preconceptions, past experiences and environmental or social factors than on reality. Scientists have identified dozens of cognitive biases. So, how can you build a proper campaign when consumer interest may shift at any moment?

The answer is simple. Understand the most important cognitive biases and use them to the campaign’s benefit: influence behavior by adjusting marketing campaigns to the people. Marketing experts begin the process by answering a few strategic questions, such as:

  • What are their targets, their thoughts, and common features?
  • What is their problem and what solution do I have for them to make a change?
  • Where is the target and how would they like to receive a possible solution from a company?

Some say there are three most important biases, others perceive five or six, but to be more comprehensive, we will look at the twelve most important biases that influence buyer behavior. Each has crucial importance in being one step closer to the consumer’s heart and mind.

Why are these twelve cognitive biases the most important?

Since 2013, Omniconvert has helped 18,261 websites to produce more conversions by doing human-driven A/B testing. That gave them access to more than 41,000 human-driven A/B testing experiments made by thousands of eCommerce websites. The Omniconvert team realized that the best web experiments are based on these 12 cognitive biases. Let’s dive into each of them:

1. Availability cascade

This is a self-reinforcing process in which a collective belief gains more and more plausibility through its increasing repetition in public discourse (or “repeat something long enough and it will become true”).

One of the most common examples is the iteration of news until it is implanted in people’s minds. News is usually reported as new information and especially unfortunate events have the tendency to be exaggerated to the public, often distorting the reality of facts.

One good example of using this cognitive bias comes from Brian Dean from Backlinko. He is considered a leading expert on SEO, managing an insightful blog where he dives into white hat SEO, promotion, and long-form content. He has become known as an SEO expert by appearing in the places people expect to see him. The more people see his name associated with SEO, the more they believe it is true, like a self-reinforcing cycle. This is how, over time, he managed to create a positive availability cascade.

How to use this cognitive bias in e-commerce:

  • Remarketing campaigns
  • Repeating the points of difference across the funnel
  • Exit-intent overlays

2. Bandwagon effect

This refers to human understanding once it has adopted an opinion (either as being the received opinion or as being agreeable to itself), it draws all other things to support and agree with it.

Some of the most common factors that influence this cognitive bias are likely to involve group-thinking, together with a great pressure to conform, a desire to be right and a need to be included.

The best examples that fit this bias include fashion, music, social networks, diets and elections. Wearing the same type of clothes or listening to the same music as some other people do is quite common. This also applies when adopting the same diet or using the same social network as everyone does. As for elections, people tend to vote for the candidate they believe is most likely to win.

How to use this cognitive bias in e-commerce:

  • Qualifying overlays or short quizzes that determine the most suitable products for each buyer (best color, best shape, best size)
  • Choice reduction overlays to push the visitors down the funnel

E-commerce marketers: learn the 12 most important cognitive biases to drive conversions. #ecommerce #NeuromarketingCLICK TO TWEET

3. Confirmation bias

This represents people’s tendency to search for, interpret or recall information in a way that confirms their beliefs or hypotheses.

This cognitive bias is present, for instance, in elections, where people tend to seek only the positive information or only the negative information about a candidate according to their opinion of the individual. The same tendency is seen with stereotypes, where people are more likely to forget or ignore stereotype-inconsistent information.

This is a natural disposition of humans, quite difficult to combat. However, the more people are aware of and accept the confirmation bias, the higher the possibility to be curious about opposing views and becoming more objective.

How to use this cognitive bias in e-commerce:

  • Consistency between the ads and the landing page
  • Remarketing campaigns
  • Choice reduction overlays & welcome gateways overlays

4. Fear of missing out

FOMO is a common concern that others might be having rewarding experiences from which one is absent. This social anxiety is characterized by “a desire to stay continually connected.”

The perfect example, in this case, is social media. Being connected most of the time with everything and everyone on multiple social platforms, people have begun to develop irrational distress if they are not up to date with every piece of information available. Even after disconnecting, the desire to connect once more is striking.

How to use this cognitive bias in e-commerce:

  • Create time & quantity scarcity
  • Display the stock availability for items which have a low stock
  • Emphasize the buying behavior of other visitors (3 people are looking at this product/last in stock)

5. Herd mentality

This refers to people’s tendency to follow and copy what most of them are doing. They are largely influenced by emotion and instinct, rather than by their own independent analysis. 

There are countless examples that imply this cognitive bias, especially in situations where consumerism is at its peak. To mention a well-known case, the Black Friday frenzy comes to mind. A study once concluded that the experience of shopping can be amplified when there is a large crowd around an individual, turning an otherwise bad experience into a pleasant one.

How to use this cognitive bias in e-commerce:

  • Show localized testimonials in ads and on the website
  • Show numbers regarding the number of sales/number of customers
  • Collect, disclose and amplify reviews & testimonials
  • Use referral programs
  • Show the most wanted and bestsellers – separate category/separate filters

6. Anchoring

This makes reference to people’s tendency to rely too heavily, or “anchor,” on one trait or piece of information when making decisions (usually the first piece of information that we acquire on that subject).

As an example, brands use this cognitive bias to appear affordable and increase the perceived value of their products and services. They use techniques such as displaying the original price together with the discount, offering a suggestion that may be perceived as a popular choice, mentioning the most expensive item first, such as a subscription plan, or offering a lower price per unit if someone buys a product in bulk.

How to use this cognitive bias in e-commerce:

  • Enhanced e-commerce search
  • Start with a higher initial price with the purpose of discounting it in the sales season/promotion reminders
  • Recommendation engine
  • Real-time personalization

7. Framing

People draw different conclusions from the same information depending on how that information is presented.

In other words, people perceive the possible choice outcomes as gains and losses. On one hand, they tend to be more cautious when making a decision between two options presented as gains when the options are framed positively. On the other hand, when the same options are presented in a negative frame, people have the tendency to perceive them as a loss, thus perceiving the possibility of higher risk.

The industries in which this bias is most perceptible and this type of experiment works best include fashion, travel, furniture, sports apparel, electronics, cosmetics and books.

How to use this cognitive bias in e-commerce:

  • A/B test different ways to communicate the same benefits (save 10 euro vs get 10 euro, etc.)
  • Personalize the shopping experience based on previously gathered data about the visitors in order to determine the best framing for each step in the funnel

8. Zeigarnik effect

People remember incomplete or interrupted tasks better than completed tasks. In other words, a desire to complete a task can cause a person to remember it until it has been completed, because its full execution leads to forgetting it altogether.

LinkedIn is a good example of using this cognitive bias to persuade its users to complete their profiles. Netflix also implies the same bias, by creating shows that end with a cliffhanger, convincing the viewer to watch the next episode (or “binge-watch”).

How to use this cognitive bias in e-commerce:

  • Remarketing ads & emails reminding about the products added to basket/visited
  • Trigger a notification with a discount code that can be used later
  • Reminder about products in the wishlist
  • Build a loyalty program and remind the customers about the unused rewards/points/discounts

9. Authority bias

This is the tendency to attribute greater accuracy to the opinion of an authority figure (unrelated to the content) and be more influenced by that opinion.

In advertising, this cognitive bias is common. Celebrity-endorsed commercials are very well received by consumers. However, with time, knowledge, and practice, this bias can be overcome to make an unbiased assessment.

How to use this cognitive bias in e-commerce:

  • Display a testimonial from an expert/public figure/other customer
  • Add badges of trust 
  • Numbers regarding number of happy customers
  • High rankings from existing customers

10. Loss aversion

This represents the disutility of giving up an object, which is greater than the utility associated with acquiring it (“save 20% if you buy now” has higher chances to convert than “get 20%”).

First mentioned in the economics field, this can be explained as people tending to fear a loss twice as much as they are likely to welcome an equivalent gain. In marketing, this bias is recognized from phrases such as “Limited-time offer!” “Everything must go!” “This opportunity disappears at midnight!” “Don’t miss out!” “Last chance to buy!”

How to use this cognitive bias in e-commerce:

  • A/B test different ways to showcase discounts (“save 15% if you buy now” has a higher chance to convert than “get 15%”)
  • Use countdown timers to show how long an offer has until it will expire 
  • Showcase how much time a visitor has to place an order so that they can receive it by tomorrow 
  • Use persuasive copy near the CTA (call to action)

E-commerce marketers: learn the 12 most important cognitive biases to drive conversions. #ecommerce #NeuromarketingCLICK TO TWEET

11. Reciprocity bias

In reciprocation tendency, people want to return the favor when someone helps them or give them a small favor. 

From a marketing perspective, this bias can be perceived in certain situations, such as: offering something for free at the beginning, assuring the well-being of customers, offering great customer service post-purchase, creating a memorable brand and offer experience, and building long-lasting customer relationships.

A great example is Spotify and its offer of a 30-day free trial for their Premium membership, which can be canceled at any time with no additional cost. This makes it difficult for people to stop the payment when the free trial ends, especially with its low cost.

How to use this cognitive bias in e-commerce:

  • Associate the order completion with a certain donation to a cause
  • Ask the visitor to round-up the order in order to make a donation 
  • Use a welcome gateway to salute/generate a positive emotion in visitors
  • Give a voice to your e-commerce and act for real in society

12. Hyperbolic discounting bias

This is the tendency for people to have a stronger preference for more immediate payoffs relative to later payoffs.

This cognitive bias is more often recognized in the concept “buy now – pay later”. As an example, EA Access creates for gamers the possibility of joining a program where the biggest results are available only later. However, gamers are likely to convert because they get immediate access to the vault.

How to use this cognitive bias in e-commerce:

  • Offer a free period of service
  • Give customers the option to pay less over a period of time
  • Allow your customers to experience your product first-hand as soon as they show interest (a free trial or a free sample)
  • Build a loyalty program around smaller rewards
  • Let your customers try before they buy or take the product home for an extended test run and return it for free if not satisfied

Cognitive biases and their effect on Conversion Rate Optimization (CRO)

From a marketing perspective, these twelve cognitive biases are connected with CRO (conversion rate optimization), a long term process created with the purpose of maximizing revenue and improving the user experience on a website. A/B Testing is one of the various tactics used to increase the conversion rate by experimenting with different elements of a webpage. 

Omniconvert has decided to take a different approach to A/B Testing and increase its performance through machine learning. This is possible by building a machine learning neural network using more than 500 data points from the users’ geolocation, technology, real-time behavior, past behavior, and traffic source.

Types of website experiments based on cognitive biases

Using these twelve cognitive biases, there are various experiments that can be conducted in order to improve the overall performance of a website.

Choice reduction experiments 

Choice reduction experiments prove that by establishing the most impactful filters (such as size, price, color or availability), the machine learning system will automatically detect, learn and adapt by encouraging disengaged visitors to use the most relevant filters and push them down the funnel.

There is one possible cognitive bias that fits this type of experiment: framing. By presenting the same information in different ways to generate various conclusions, and by persuading visitors to use the filters makes them unconsciously believe that the shown products are perfect for them if they match their size.

Here we can also include selective perception, the tendency for expectations to affect perception since people are predisposed to judge their surroundings based on their particular frame of reference.

Special offer experiments

Special offer experiments have shown that the current method to incentivize visitors to purchase by offering them a discount is futile. E-commerce businesses lose money through discount nudges by offering a too-high discount for customers who would have bought for less, not offering a discount and losing a customer who would have bought, or offering a discount to a visitor that would have bought in full-price.

All these three issues can be solved by constantly adapting and pushing the special offer experiment only to disengaged visitors so that the company receives the highest margin.

There are three possible cognitive biases that fit in this type of experiment: hyperbolic discounting, loss aversion and availability cascade.

Social proof experiments

For social proof experiments, a perfect example is the famous, where certain cognitive biases have proven to be most useful for their online marketing strategy. This method should be used only for visitors who are more likely to buy because of this nudge, and to test the look and feel, colors, position and the best moment to push the experiment.

There are three possible cognitive biases that fit in: herd mentalityfear of missing out and the bandwagon effect.

Instead of a conclusion

Roger Dooley has given an insightful interview for the Growth Interviews series at Omniconvert, speaking about the power of neuromarketing and frictionless tactics to enhance the customer experience. The podcast is live, so for more details on Roger’s book, Friction, and the importance of behavioral science, psychology, and neuroscience in business, be sure to check out this resource.

The information presented in this talk, just like the influence of the twelve cognitive biases, will only help optimization of the customer retention rate.

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