Fact: Low online conversion rate

Even though online shopping experience may take a couple of hours a day from a user’s program and global e-commerce sales exceeded $2 trillion in 2017, the conversion rate is still small. Less than 4% of consumers coming from desktop browsers actually make the acquisition, and the value is lower still for tablet and smartphone users (3% and 1%, respectively). There is a big difference if you’re looking at the offline retail conversion rates, calculated at 20%–40%.

What scares the online consumer

Studies show that trust is pivotal for an online shopper to convert to a purchaser. As a natural tendency, individuals are more likely to take risks and make the acquisition when they trust the trader. In a traditional retail location, people can interact and test the products in a physical space where trust can evolve. This is a cry far from what happens in the e-commerce set-up when the user has no other tool than the online platform to gain his trust. 

How to gain consumer trust online

This might be the question that can lead to the source of the problem. Decisions models have been applied by researchers to answer this question such as individual’s preexisting disposition to trust (it turns out that some people are naturally more trusting than others) or a website’s structural guarantees (privacy policy, security, refunding assurances). The decision processes imply strong causal connections and constraints. There are lots of cognitive efforts made by individuals as they develop their trust. 

The instinctual aspects that influence decisions

The decision models cannot explain though how some consumers are being influenced more by irrational factors like colors and fonts and sometimes omit elements like privacy and security policies. From this, another question issued: what if the users rely on some kind of instinctual process like in real life interaction? And what if people involve very little cognitive effort when making decisions about whether to trust a website? Steven Sloman, a cognitive psychologist, explains that people are: “parallel processors who utilize two complementary reasoning systems. One system of reasoning is deliberative, rooted in symbolic structures, rules, and established patterns of logic (think algebra). The other system is associative: diffuse, approximate, and nondeliberative, based more on personal experience and intuition than on formal rules. The associative system is not irrational per se, but it may not be consistent with formal rational logic”.

The dose of reasoning applied in online purchasing. Research 

The HBR’s study follows two possible directions. In a low-risk decision, consumers apply more logical processes and when it’s about a higher-risk deliberation, consumers tend to lean on intuitive reasoning. So, trust matters more for bigger risk decisions. 

The experiment

The HBR designed a laboratory experiment in which 245 subjects were asked to navigate the website of a genuine 17-year-old Australian bookstore that was unknown to them and then to make some purchase decisions. 
There were 6 groups, each exposed to different conditions. Some of them were shown the authentic website, while others were exposed to a worse version that lacked key pieces of information like e-commerce security certificates and product return policies.
Some were told that they would be asked to justify their call — a technique meant to obtain their deliberative/logical thinking processes — whereas others were asked to complete a task designed to lead them to rely on their intuitive reasoning system. Finally, all subjects made two decisions: (1) whether they would buy a book — a hypothetical, zero-risk decision with no real-world implications, and (2) whether they would complete the form with personal information such as their name, phone number, and home address to receive a $20 gift — a higher-risk decision because it had offline implications. 

Results 

1.    For the zero-risk situation, the subjects relied on a logical decision.
2.    When faced with a riskier situation with real-life outcomes, the subjects applied diffuse and intuitive processes. 

Takeaways

Consumers often rely on intuition when it comes to higher-risk decisions. That’s why simple changes of layouts, fonts, and colors can have profound implications for consumer experiences.