10 Ways Cognitive Biases Come Into Play in E-commerce

By 2024, the eCommerce share of global retail sales is expected to reach 21.8%, and the share of online retail traffic generated by mobile 33%. The pandemic, no doubt, accelerated the growth of eCommerce even further, and businesses across the world are looking to capitalize on this irreversible consumer shift.

One approach is to leverage innate cognitive biases in eCommerce that nudge consumers to make quicker shopping decisions, shop more, and raise the overall ticket value of their eCommerce purchases. Cognitive Psychology describes a cognitive bias as a "systematic error in thinking that occurs when people are processing and interpreting information." These errors impact the decisions and judgments made by people. Around 175 cognitive biases have been identified so far!

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Cognitive biases and eCommerce

Research indicates that the economics of a shopper's consumption habits and patterns are deeply impacted by their personal cognitive biases. Savvy marketers are now leveraging key cognitive biases to reimagine the way they sell online, and this has translated to more sales. These adjustments feed into a consumer's thought process, nudging shoppers to make swift buying decisions.

Here's a simple example. As consumers, we're wired to build more trust if we know that hundreds of thousands of consumers have already purchased a product before us. By including this information at the point of sale, a consumer is more likely to purchase the product. It provides just the right ammunition, especially to a customer having second thoughts.

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Keep it authentic

While it's a smart strategy to leverage cognitive biases to sell more, there's a fine line between deception and showcasing authentic information. For instance, if only five consumers have bought a product and you mention that 10,000 have done so, this can be considered deceptive.

In the long term, it's a low-on-trust approach to making quick bucks. Instead, try to align your cognitive bias strategy with something that is already working for your business. Consider it a way to showcase authentic information that nudges consumers in the right way.

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Here are 10 cognitive biases to consider getting started with.

1. Building positive associations

The halo effect is when a person's positive or negative traits' spill over' from one personality area to another, in others' perceptions of them.

As consumers, we tend to cultivate biases towards products that are associated with a positive experience. For instance, say you have an online store that curates vegan products. Consumers loving the vegan milk produced by their favorite vegan brand are likely to try the brand's plant-based based mayo, even if they typically don't consume mayo. Once you audit your store's most popular products or a messaging that really worked, replicate those elements in future products and campaigns.

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2. Sound like your target demographic

The ingroup bias is a tendency where people offer preferential treatment to those they perceive as members of their tribe or group.

Human beings tend to gravitate towards others who they believe are just like them. In eCommerce terms, this translates towards curating a brand voice, persona, and messaging that sounds like your target consumer. Mirror the tone of the target audience you're trying to reach, as shoppers tend to gravitate towards brands, products, and messaging that speaks to them.

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3. Make the offer more attractive

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

Consumers often process information very quickly because they're trying to assess the best deal or value-for-money offer. Store owners can work out unique limited edition offers to nudge a consumer to make a quick purchase. For instance, you can offer free or discounted delivery if the purchase is made before a certain timeframe. Essentially, capitalize on that human urge for instant gratification. In this case, you're offering an opportunity to save on shipping instantly.

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4. Ride the trending wave

The availability heuristic is the tendency to be influenced by more recent memories or those that are unusual or emotionally charged.

The psychology behind this bias is that consumers tend to respond to something that relates to a more recent event or memory. For instance, if a celebrity was in the news for saying that they prefer a harness over a collar for their pet dog, then pet owners are more likely to prioritize buying a harness when shopping online. Being able to connect these dots as an eCommerce specialist will help you capitalize on what's trending and is in the consumer's mind space.

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5. End on a high note

The peak-end rule revolves around how people seem to perceive not the sum of an experience but the average of how it was at its peak and how it ended.

People tend to classify an experience based on how they felt at its more intense point, as well as how it ended. This pattern can be applied to the eCommerce shopping experience by ensuring that it ends on a note that enhances the overall experience. So, ensure that the check-out point of any transaction goes seamlessly and even inspires some customer delight. For instance, announcing a reward after a transaction can uplift the overall experience.

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6. Narrative matters

The Framing Effect indicates a tendency where people's decision-making is influenced by whether they are presented with positive or negative connotations.

One of the most popular examples of this bias is when brands leverage FOMO (fear of missing out) to entice a consumer to make a purchase. Consumers are always subconsciously trying to ensure they don't lose out on a deal, an opportunity, or a chance to be the first one to try a new product.

Brands that have excelled in building FOMO tend to sell more and fast. You can, for instance, plug in some real consumer experiences to build it up further. This also encourages consumer interaction once they have purchased and used a product.

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7. Offer social proof

The bandwagon effect or herd mentality is the tendency of people to mirror the actions and beliefs of those around them.

Even though individuality and personality are celebrated today, the human tendency is to feel safe in numbers and adapt to the status quo. eCommerce experts have exploited this cognitive bias to influence how people shop. For instance, showcasing more product reviews delivers comfort to consumers, and they are more likely to buy a product used by many others before them.

However, if the reviews are all picture-perfect, it could also make consumers nervous. Authentically displaying a mix of reviews helps consumers discern what's best for them. Another way to leverage this bias is to showcase bestsellers and popular products. Also, showcase happy customers through eye-catching imagery based on real photos and experiences.

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8. First impressions matter

Anchoring is the tendency to rely too heavily on a single piece of information, and usually, this comes through the initial perception.

When it comes to visual cues, shoppers always tend to recall and fixate on what they see first. It could be a price, an image, or a special offer. Making something attractive stand out instantly works as an anchor and nudges them to decide to purchase.

However, anchoring must be done right, or else it can backfire. Here's an example. If you want to encourage a consumer to buy a product in bulk or go for an annual subscription instead of a monthly one, anchoring should be done in such a way that they instantly understand how much a smart decision will translate into savings. If the price difference does not instantly register, you might need to relook at how it is anchored.

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9. Make it stand out

The von Restorff or isolation effect states that an item that sticks out is more likely to be remembered than one that blends in.

If you're trying to draw attention to a new product, offer, deal, or opportunity, blending in will not achieve the results you seek. Instead, see how you can make it stand out using color, design, text, and other visual cues. However, ensure that it's done with the right aesthetic sense, or else, it might get too overwhelming for consumers.

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10. Sell more with humor

The humor effect works on the simple principle that anything that is done with a sense of humor is more memorable and endearing.

One of the most popular examples is when people use memes to communicate, whether during a formal presentation or a Tweet. It spreads joy, sends a strong message, and makes the interaction completely memorable. Today, many brands are using humor in video campaigns, as well as in their brand messaging, to connect with consumers. Adding humor to your online store will make consumers enjoy their shopping experience a lot more.

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Get strategic about consumer biases

While we have showcased 10 cognitive biases that influence buyer decisions, it's worth doing your own research to understand how you can leverage more biases to your advantage. Conduct small experiments and measure the results. You may not get every experiment right, but as you progress, you will be able to identify the ones that really work for your business. Document these and build your own playbook for selling success!