Tales of the Irrational Shopper
Observations around consumer behavior and the underlying psychology
Bill Gates once said, “Your most unhappy customers are your greatest source of learning”. Now the question is — what exactly do we mean by unhappy customers? If Tolstoy had to define it, he would probably say — all happy consumers are alike; each unhappy consumer is unhappy in his own way!
Marketers and business owners across the globe have been studying consumer behavior for ages devising the best possible ways to attract consumers’ eye—sugarcoating with shiny wrappers in an attempt to differentiate among a plethora of similar products. Even then, a grey area arises where retailers are dumbfounded by why a customer chooses one product over another. Contradictory to traditional thinking — consumers are rational beings weighing costs and benefits to make the optimal purchase decision — customer decision-making is much more intuitive. Experts on consumer psychology would tell you that it’s mostly the irrationalities that drive consumer decision-making.
Adventures of the Irrational Digital Consumer
While donning the consumer hat, do you always think logically? Or, do you let the hat talk to you and make decisions — something like the Sorting Hat, except here we sometimes end up buying the excessively priced candy, or magazines that we know we will never end up reading at the check-out counter?
So what are these thoughts that drive you to an online shopping site, browse for an hour add about 10 items to your cart, and then log out not buying anything at all? Or, go for an investment plan which says 80% chances of success instead of one that highlights 20% chances of loss? Or, more simply, buy a product online from a site that has the ‘buy now’ button in yellow instead of another website that has the same written in red? You won’t have an answer because customers themselves aren’t aware of their hidden biases.
Humans — we still are referring to consumers here only human sounds better with the heavy psychological context — often use mental shortcuts or heuristics to make decisions and in doing so they often conform to cognitive biases or errors in judgment opposing rationality. An example of that would be the ‘availability bias’ which when simply put indicates people make decisions based on the most recent or easily available memory associated with it. For instance, you decide to stop ordering food online even though it’s the cheapest and most convenient option for you at the moment merely because you had a bad experience with the delivery guy last time. There are various other biases and behavioral phenomena that cloud rational judgment leading to incoherent and inconsistent purchase decisions and also causing nightmares and sleepless nights for marketers and retailers.
Designing the Psychology
Dan Ariely, a well-known psychologist and author of the bestseller ‘Predictably Irrational’, significantly observed that now with the new digital world, it has become much easier to transform irrational consumer behavior to optimal outcomes because the decision-making environment can be so designed keeping in mind some of the common biases and psychological nuances.
Let us take a peek at the below cases:
- More is not really better!: Imagine wanting to buy a T-shirt online, a rather simple one but with around 5000 T-shirts to choose from, you forget the actual point of your digital quest for apparel. Contradicting the traditional principle of More is Better, experts like Daniel McFadden are of the opinion that making a choice is actually exhausting for the human mind, most people do not relish choices. They are inherently lazy and make economic decisions out of habit rather than rational thought. The design of a digital platform can actually accommodate this fact by probable categorization of the t-shirts in such a way maybe with themes, trends, or prints and colors, that it helps the user to identify the sort of type he may prefer. The experience of buying a simple t-shirt online has to be a complex thought-out process wearing the consumer’s shoes.
- Taking care of visuals: The concept of visual salience can also be applicable to the discussion of digital irrational consumption. Salience is the external information that stands out to consumers and is more likely to affect their thinking. Studies actually showed a correlation between purchase and font size. The smaller the font of the price is written in, the higher rate of conversions. (Coulter & Coulter, 2005) Or, adding perhaps the calorie count beside the food selection menu can make a regular burger lover switch to buying a three times more expensive salad.
- Social animals: Consumers are after all, at the very core, social beings and this reflects in their irrationalities in the form of confirmation or authority biases or simply the bandwagon effect (herd mentality) seeking confirmation from fellow customers or confirming their choice is perfect if someone in authority or influential also subscribes to or advocates the same choice. Digital platforms can harness a community feeling through design — enabling a social media link or including excerpts showing other consumers using the same product with blogs or testimonials written by other people.
- Theory of relativity: Dan Ariely points out in his book that consumers seek value by not its price but by comparing it to something else. An online subscription to a movie may have three plans — the basic and the premium are clearly differentiated, however, the price of the middle plan is only perhaps INR 50 less than the premium, wouldn’t you then ignore the actual prices and go for the premium plan thinking yourself to be highly privileged?
Digital Nudge
Irrationalities in consumer decision-making may be a function of everything under the sun but they can certainly act as an important factor in digital experience design. Businesses, thus, need to connect with the irrational consumer mind and underlying psychology eventually guiding them to concrete actions through effective customer experience design. Specific and well-thought-of experiences can pour out a seamless flow for consumers to make decisions when confused. Nobel laureate Richard Thaler uses the term ‘nudge’ to express this point. So, if the next time, before buying something you hear voices in your head, like Disney’s Inside Out, don’t freak out — you’re just being irrational!
