In our life, 95% of our decisions are not made rationally, but are driven by our emotions and made on a subconscious level. This gives a lot of room for those wanting to influence us, including retailers. We all might have heard about how brick and mortar retailers do it – playing certain music in stores, using scents to trigger certain emotions in us, and building their stores in a way to maximize shopping potential of their customers. But how do online retailers do it?
Some things are not so different, they just have to happen in an online environment. Things like social proof (a tool that shows us how many people are looking at a certain product) are just online version of having customers line up for a certain product in stores. There are many other things that could trigger our shopping behavior, and because we are all different, we are also influenced by different things. Online, there is a possibility to customize those triggers for each customer and that is both an advantage and a challenge.
Crobox, a Dutch startup offers an interesting solution to e-commerce players. What do they do?
They focus on a big pain of e-commerce players – conversion of visitors into buyers. They analyze the underlying reasons of what is it that makes a customer do the purchase. The moment the customer enters the website, his every move is analyzed and his profile is created. This is all done by algorithms. Those algorithms can predict purchase intent and help to create a personalized shopping experience –e.g. some people are more influenced by authority (expert recommendations) and some people more by scarcity (e-shop telling you that there is only 3 pieces left), so the relevant triggers appear to them.
As it is the case with machine learning, the more data the algorithm has about certain buyers, the better. Those insights are then combined with psychology, so the online retailer can have a good overview what are its customer like.
So the next time you are browsing through an e-shop and you put an item in your basket that you do not really need -that is why you did it.
Dear Eva, thanks for your interesting post! This actually made me think back of a minor I followed during my bachelor, called Learning from Big Data. During this class, our professor Gui Liberali, introduced us to Website morphing. Which is a system that automatically matches the basic “look and feel” of a website, not just the content, to cognitive styles. A person that prefers to be visually triggered and likes to see information in images will get to see a website with more of those, while one that is more analytical gets to see a page with more written information and numbers. If you are interested in the topic I would recommend you to read the papers on website morphing (https://scholar.google.com/citations?view_op=view_citation&hl=en&user=N8EXIaoAAAAJ&citation_for_view=N8EXIaoAAAAJ:u5HHmVD_uO8C)
Hi Eva,
Thanks for your post! Additionally to this, I think it’s quite interesting to also look at how the firm will be able to use the data in the future. Right now, they are collecting information to build a customer profile that will personalize the purchase experience – but in the future, they could analyze the data to identify possible consumer segments (those with similar behavior), identify which products and services they most frequently buy and consequently, it could help the research & development department develop new ones accordingly. The possibilities that big data/algorithms will enable the firm to explore are endless!
Great article and I think this is a very interesting question as online commercial interactions and websites have increased over the last decade. Answering this question would be important for business managers because it allows the establishment of different strategies. Furthermore, I think managers would also want to know why two consumers bought similar products, would it come from latent homophily, social influence, or exogenous factors. For example, if homophily is the reason, then a firm should promote its products directly to the friends of existing customers. However, if social influence is the reason, then a firm should motivate existing customers to promote to their friends. Also it would be interesting to measure what is attributable to the visibility of electronic product. This would inform business manager on how to place products on their website to optimize the demand.