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Five Ways To Use Behavioural Economics On Your Website

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What Is Behavioural Economics?

Behavioural Economics (BE) combines psychology and economics to understand how and why people behave in the real world. Unlike traditional economics which treats human behaviour as being based on pure logic, BE factors in irrational behaviour and tries to understand why this might be the case.

BE is useful for businesses as it can be used to encourage changes in behaviours by their potential clients. These can take the form of ‘nudges’ which are small interventions which can encourage individuals to make different decisions.

In this blog post, we take a look at five different ways you can use BE on your website to influence the behaviour of your website visitors.

Five Ways To Use Behavioural Economics On Your Webste

There are many different ways of using behavioural economics on your website. We look at five simple way to incorporate BE into your businesses website.

Social Proof

When we think about social proof, the first thing that comes to most peoples minds are review and testimonials but there is a lot more to it than that.

Social Proof is when we are influenced by other peoples behaviour, especially when we are in a situation where we are unsure. We copy other peoples behaviour as we perceive this to be the correct action. It could also be called “Herd Mentality”.

As mentioned, the most common form of social proof is the review or testimonial. These are first hand accounts of someone’s experience of doing business with you. Research has shown that 92% of consumers read reviews online and 54% of online shoppers read reviews for everything they purchase.

Lens Digital - Review
Example of social proof in form of a review

We can also use case studies to showcase how we have helped a client. At Lens Digital, our preferred format for case studies is Problem, Solution, Outcome; what problem was the client having, what solution did you implement and what was the outcome.

The examples of social proof that we have given so far are all one-to-one. However, you can also use the one-to-many form using data to do social proof en-masse. In the example below, taken from a website we built for the Employers Construction Industry Association, we use data about the number of members to highlight how popular the association is within the industry,

Social proof on the ECIA website

If you have an e-commerce store, then another way to display social proof is to show how many people are also viewing the item at the same time – as shown in the example below on the NGX website. This also nudges in a couple of additional ways; urgency and scarcity. By showing this message, you are indicating to your visitors the popularity of the item and that they might miss out if they don’t buy it now.

Social Proof - NGX

Additional ways of including more social proof to your online store include adding “customers who bought this, also bought” and showing how many units are left in stock.

Social proof is an important way to add authenticity and validity to your products and services. We have only touched on a small number of different ways you can use it.

Scarcity

As humans, we always want what we can’t have. This is the exact way that scarcity works. In BE, scarcity is the perception or reality that a resource has limited availability whether that is time, money or goods. Whilst the potential client only has to believe that there is scarcity, you need to consider the ethical (and legal) implications of creating a false scarcity that encourages people to purchase your products or services.

In the example below, booking.com highlights that over 75% of the possible accommodation options are unavailable for the chosen location / date and time. 

Example of scarcity on the booking.com website

They use additional nudges to encourage you to book now. By offering free cancellations and no prepayments, they are removing any risk that you might associate with making the booking. 

Scarcity - booking dot com - property
Additional nudges on booking.com

UK furniture retailer are famous for the seemingly never ending sales. In this example, they are using a countdown alongside the discounted price to encourage you to buy before the products returns to its higher price.

Scarcity - DFS
The (in)famous DFS sale

Netflix have a whole category of programmes that you can only stream on the platform. Some of them are new and exclusive whilst some of them are classic.

Scarcity - Netflix
Only on Netflix

In this Instagram post, the The Gray Goose in Gilmorton have used scarcity to encourage people to book their Sunday roasts. They could have added social proof to the post by including popular / award winning / world famous.

Limited Slots Available

Scarcity can be used in a number of creative ways to nudge your website visitors to act with urgency.

Pratfall Effect

The Pratfall Effect is a theory developed by psychologist Elliot Aronson in the 1960s, and according to the theory you can become more appealing or likeable by admitting or demonstrating your own flaws. In marketing terms, you can use the Pratfall Effect by sharing your brand’s flaws, weaknesses and mistakes.

It famously takes 119.5 seconds to pour a perfect pint of draught Guinness. This has been used by them, in different forms, across a lot of their marketing.

Pratfall - Guinness
It takes 119.5 seconds to pour a perfect pint of Guinness

It is always good to review 5 star reviews for our business but research has shown that consumers perceive that it looks false if a business only has 5 star reviews. Conversions actually hit a peak at around 4.8 stars before they drop off as the rating approaches 5 star.

Pratfall - Reviews

In fact, you can use negative reviews to your benefit. Take Snowbird Mountain, a ski resort in Snowbird, Utah , they regularly use their negative reviews in their marketing. In their case, this help them to position themselves in the market; great skiing but not for beginners.

The Pratfall Effect can be tough to implement. You need to admit your flaws and failings but in an authentic way without doing a Gerald Ratner.

For those that don’t remember Gerald Ratner, he ran Ratners, a major British jewellery store. He once said; ‘People say, “How can you sell this for such a low price?”, I say, “because it’s total crap.”‘. This caused the value of the company to drop £500 million and it nearly collapsed.

Choice Architecture

Choice architecture is the presentation of choices in a way that will impact or influence the decision making. In simple terms, the way that you present the choices can influence the choice that someone makes (or conversely doesn’t make).

One of the most famous studies around choice architecture relates to jams. The study found that the more choice that someone had, the less likely they were to make a choice. In the study, a table with 24 jams attracted a lot of interest but fewer sales than a table with just 6 jams on it. 

Using default options is a powerful tool as it helps removing any doubt from the user by, in effect, making the choice for them. They still have the choice to make a different decision but gives them a starting point from which to make their decision.

Users can be overwhelmed by choice so limiting the number of choices can help them to make a decision. At the end of our blog posts, we present 3 other posts that you could read. This keeps it simple for users to decide what they want to read next.

Choice Architecture - Limited Choice
Choice Architecture - Limited Choice

Normally, when information is presented to us, it goes from lowest price to highest price. However, if you start with the highest price, then it can make the other price options seem more appealing. This is something that MailChimp does on their pricing page. The default view is also to show the monthly pricing which makes it feel better value than the annual price.

Choice Architecture - Framing
Choice Architecture - Order of Presentation

As we have seen choice architecture, at a basic level, is about the presentation of the choices but it can be combined with other nudges to reenforce the choices.

Curse of Knowledge

Curse of knowledge is something that we have already covered on our blog

As a business, you are the expert on your industry and product / service – your client might not be. The Curse of Knowledge is when you assume that the person you are talking to has the same level of knowledge as you. You need to make sure that you talk to them in a language that they can understand. 

The language you use may vary on whether the person is knew to your business or not. 

Test, Test, Test

The key thing in Behavioural Economics is to test. What might work in one scenario might not work in another.

For websites, we can use A/B  testing to validate a theory. We can show 50% of website visitors one option and 50% of visitors a different option. The key here is to understand the differences between the two options and to ensure that they are not widely different in that you can’t measurably understand why one option works over another. 

Conclustion

As you can see Behavioural Economics nudges are a powerful tool that you can use on your website to help influence your visitors. We have only skimmed the surface of what can be done but if you need any help on implementing it on your website, then please do contact us.

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