The following is a guest contributed post to MMW from Tal Schwartz, CEO of ClickTale.
For online retailers this holiday season, the most wonderful time of the year seems to have been struck by the Grinch. The 2015 holiday shopping season is predicted to be the slowest since 2009, and in order to compensate for an economic forecast so frightful, many retailers are doing something not at all delightful: announcing that they will not be offering the deep discounts so many online shoppers expect in the run up to Christmas and New Year’s.
As CEO of ClickTale, I spend a lot of time coaching some of the world’s top online enterprises on how to optimize their websites for exactly this kind of downturn. The key to end-of-year success for online retailers lies not only in proper planning, but also in a sharp, super-focused strategy that takes into account consumer psychology. To make this holiday season as sweet as possible, our in-house Web Psychologist, Dr. Liraz Margalit, suggests taking these key tips into account:
Q: Which types of products should be emphasized on e-commerce sites this shopping season?
A: When consumers are feeling uncertain, they tend toward rational rather than emotional decision-making. The question the uncertain shopper asks about a purchase is not “How does this make me feel?” but rather “Is it worth it?”
Thus, consumers this holiday season can be expected to gravitate toward products that are perceived as having long term value. Trendy products that could be considered frivolous or just “nice to have” will be less likely to appeal than products positioned as durable, long-lasting investments.
Retailers need to push “Is it worth it?” products to the top of their offerings, and adapt existing product descriptions to stress long-term value rather than short-term “feel good” benefits.
Q: How can online retailers mitigate consumer disappointment over shrinking discounts?
Major retailers will be offering more items at full price, and minimizing promotions this holiday season. At the same time, consumers collectively expect the deep discounts of previous holiday seasons – which are simply not viable this year – and will be disappointed when they don’t find them.
How can retailers mitigate consumer disappointment over shrinking discounts? A good start would be to de-emphasize price by highlighting product suitability.
Today’s advanced personalization options can take into account consumer mindset and not just past behavior. This can help ensure that the “wow” factor of a highly suitable product presented to the right consumer at the right time will trump the expectation of a deep discount.
Q: How can companies generate the feeling of urgency that motivates online consumers to impulse shop?
“Urgency” refers to the feeling that taking action in a given situation is so crucial that the natural tendency to put off decision-making is secondary. Especially in a time of low consumer confidence, retailers should aim to create the urgency that eliminates the impulse to stop and over-consider a purchase.
How can this happen? Retailers should not hesitate to use loss aversion as a motivator to create urgency. In other words, when making decisions, people will typically exhibit greater sensitivity to the feeling of losing something rather than the feeling of gaining something. This can be based on limited product availability (“Only 2 left at the price, grab yours now!”) or time limitation (“This price available only for the next 30 minutes!”).
Q: What cues can online retailers send customers to help boost sales?
Our basic psychological need for group belonging is compounded in times of uncertainty. When people lack confidence, they seek approval for their actions. Consumers are no different.
This holiday season, retailers need to reinforce group thinking by highlighting product popularity, and bringing consumer reviews or even just “likes” to the forefront. Retailers need to make customers feel that they’re in good company when they buy a given product.
Q: Is there still hope for the 2015 holiday shopping season?
Absolutely – all is not lost! The finality associated with the end of an old year and the beginning of a new one is a powerful motivator, especially when combined with the collective holiday shopping experience.
In other words, people will be buying, and buying a lot. The question is: will they be buying from you?
Retailers that effectively win over consumer hearts and minds with smarter personalization, more effective creation of urgency and collective experience, and more sophisticated product framing will be the winners this holiday season.