It's a common belief that ecommerce is all about the numbers. But what you need to know can hurt your business more than anything else. The truth is that many cognitive biases impact buying decisions and conversion rates, including social proof, authority bias and an overabundance of choice. These biases can lead to poor choices by customers who make irrational assumptions based on what others are doing (either online or offline).
Social Proof
Social proof is the idea that if others like something, it must be good.
This can be a powerful tool for your ecommerce growth. Suppose you see other companies using testimonials from happy customers or reviews from satisfied customers (both on their website and social media). In that case, this will make you want to try out those products. Social proof also works for ratings and the number of likes on Facebook pages - because people tend to trust what others say about products over their opinions about those same items!
If your business has been around for years, chances are there's some level of social proof built into how people perceive your brand's reputation within its industry—and it might seem like an obvious strategy worth pursuing when trying to gain new customers through advertising campaigns or even word-of-mouth referrals from existing ones!
Authority Bias
Authority bias is a tendency to believe that people in authority have better information and are more trustworthy than those who aren't. This can be a problem for ecommerce sellers, as consumers are often more likely to buy from someone they trust—and if you're an authority on your domain and industry, people may assume that your recommendations are better than those from other sources.
The best way to combat this cognitive bias is by building relationships with key influencers within your niche. You can do this by commenting on their content or sharing it with others through social media platforms like Facebook or Twitter (which we'll talk about further below). It's also essential to read up on what these influential figures have said and learn how they operate so you can emulate their success!
Choice Overload
If you're a retailer, you must reduce the number of choices your customers have. This can be done by using a process called elimination. For example, when shopping online at Amazon, do you feel you need every product they offer? Or there are too many options, and it's challenging to decide. The truth is that we all have different values and needs when it comes time for us to buy something—and those values may be different from those of others in our lives who also want certain items on their shopping lists (or wish they had more). So why not combine these two things: create fewer options for each product category, so everyone has access but still gets what they want?
Anchoring Bias
Anchoring bias is when a reference point influences you. For example, if you are buying something new, your brain will adjust its expectations based on how much money you have spent in the past on other products. That's why it can be so easy to go into debt when buying things like cars or houses—you don't know how much money you'll need until after the purchase has been made!
Anchoring bias can cause bad decisions because we're drawn towards initial numbers (like $1). If I asked you what percentage increase would make up an extra 10% profit margin on an item at Costco but then told me 90%, which one do you think people would choose? The answer should be obvious: small numbers seem more likely than large ones!
Hyperbolic Discounting
Hyperbolic discounting is a cognitive bias that makes us believe something will be more valuable in the future. For example, if you're buying an iPhone for $1200 today, but it's going to cost less tomorrow when Apple releases its next-generation model (which we assume will be even better). It makes sense for you to hold onto your old one longer because the new model isn't worth what you paid for the old one.
Hyperbolic discounting can hurt ecommerce growth by making users think about how much money they could save by sticking with their current website and app instead of switching platforms entirely or updating their technology every year. This leads them down a path where they cannot make significant changes or adopt ideas and new seo strategies fast enough, which ultimately means fewer sales overall.
The Effect Bias
Thinking that one thing will produce a particular result. You think your new logo will change how customers see you.
It's possible, but it's not likely.
The solution:
1) Test it. Only act once you have data proving or disproving your point.
2) Ask yourself whether the result is logical. If you can't imagine how a logo, a word, or a design could affect sales, then it's probably just an assumption.
Does yellow make people buy more? Hmmm... it's possible, but I can't come up with any reason why that would be true, so I'm going to throw that one out.
Loss Aversion
Loss aversion is a cognitive bias that causes us to avoid loss, even when it's less damaging than the gain. It's more potent than the positive emotions we feel when we gain something—and this can be overcome by framing the problem differently.
This means that if you want to grow your ecommerce business, you need to make sure that your customers perceive their purchases as profitable or beneficial for them.
Zero-Price Effect (free!)
The zero-price effect is a cognitive bias that causes people to perceive something as being more valuable if it is free. In other words, we tend to value things with a price tag less than those without one.
This happens for many different reasons:
The result? You'll see your sales go up when you offer your customers something free and down when you charge for it!
Conclusion
It's important to remember that these are common cognitive biases which can be overcome with effort. The key is understanding what you want from your ecommerce store and ensuring that the messaging is consistent across all of your marketing channels. It might take some time to adjust your thinking, but it will pay off in the end—both for you as an ecommerce business owner and your customers!
