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Understanding human psychology and conversion rates

Sunday - July 22nd, 2012

Written by: Tristan Pelligrino

Understanding human psychology and conversion rates

Every day, millions of people buy products and services on the internet. While buying products online is very popular, it can be challenging for businesses to understand how consumer psychology can impact sales. The following guide explores the link between human psychology and conversion rates.

Traditional retail stores use a variety of psychological techniques to increase sales and improve consumer brand perception. For example, a recent research study asked consumers if they would prefer a coffee for 30 percent off or would prefer a coffee that was 30 percent larger for the same price. Many consumers indicated that they would prefer to buy a coffee that was 30 percent larger. However, buying a larger coffee is not as good a deal as buying a regular-sized coffee for 30 percent off.

Choosing the coffee that was 30 percent larger gave a consumer less value for his or her dollar than choosing a regular-sized coffee for 30 percent off. However, human psychology leads people to believe that a larger amount of something is usually a better value. However, in this example, the price per fluid ounce of coffee is lower when an individual choose a coffee for 30 percent off.

It’s possible to leverage ideas like this for online stores. By incorporating deals that give perceived value for consumers, it’s possible to boost sales and improve consumer brand perception. In addition, it’s often possible to incorporate these types of ideas with a minimal cost to a business or company.

One recent study also revealed that consumers are more likely to buy a product if they feel it is a good value compared to other products. For example, many traditional retail stores will put a very expensive item next to an item with a moderate price. While there will usually be poor sales of the expensive item, the presence of the expensive item can boost sales of the item with a moderate price.

Consumers don’t know how much a certain product or service should cost. However, providing an expensive item next to an item with a moderate price can help anchor the perception of value in the mind of a consumer. If a consumer feels that a product is very expensive, seeing the product for a moderate price may motivate him or her to purchase it.

The best way to leverage this is by putting high value items next to lower-priced ones on a website. While the high value items will probably not generate a lot of sales, they can be a great way to make a consumer think that a product or service is worth a lot of money. When he or she sees a product for a much lower price, he or she may be motivated to make a purchase.

It’s also important to use the concept of exclusivity to boost sales at an online business. By setting up part of an online retail store as a VIP section, it’s possible to make consumers feel that they are special. For example, some products and services will only be available to customers after they have made a purchase or after they have been registered with a company for a certain amount of time. This can be an excellent way to boost sales and gain free marketing exposure.

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