Zack talks about one of the tricks of the trade that online brands use to optimise purchase conversions. You can find him tweeting and talking about similar tidbits on Twitter @NH_Zack.
E-commerce has dramatically changed the way in which consumers, well, consume.
There are various optimisation tricks that e-commerce stores will use to boost conversions. This blog post will run through the one technique that all e-commerce websites should be optimised for.
This technique is called decoy marketing.
It’s so easy to implement.
It makes perfect sense.
There’s no reason to not be doing it.
It can increase targeted conversions and is an effective way to optimise product listing pages for specific products.
And here it is…
Decoy marketing: What is it? Why should I be using it?
Decoy marketing does exactly what it says on the tin.
It markets one product or service by using other products or services as decoys, thus drawing attention to it.
The most famous example of this technique, and the one most marketers cite, was used by The Economist.
The Economist have got a serious handle on their marketing. For years, they’ve come up with witty ad campaigns that have attracted the attention of the public.
However, it’s their subscription package pricing structures that of interest to this blog post.
Check out the image below. Do you notice anything strange?
If you haven’t, I’ll give you a clue: Check out the prices.
The print subscription and the print & web subscription cost exactly the same amount, $125.
Dan Ariely, who first drew attention to the pricing of the Economist, has spoken at length about how our behaviour may be guided to taking certain actions.
As Dan has highlighted, we don’t have any way to internally value items if we don’t have a prior knowledge of them.
Value is a contextual phenomenon. It relies on an antagonistic set of information. For one thing to be judged as expensive, there must be a similar item that we can judge as inexpensive to allow us to arrive at this conclusion.
Think about it. For something to be thought of as expensive, we need a yardstick to measure it against.
It is clear which option The Economist are nudging consumers towards: It’s the print and web subscription, with the print only subscription acting as a decoy.
The print only option is balancing out the difference in price between the two real objects The Economist are marketing, the online only subscription, and the all-in web and print subscription.
As a result, people were swayed to purchase the all-in option. In a study of 100 people, 84% of people opted to purchase the all-in option. The test was repeated with the middle option removed (despite nobody actually opting for it in the first test), and the amount of people who went for the all-in option dropped to 68%.
That’s a change of 16% – just from the way in which the ad was laid out and how a decoy was used. The other prices were not altered or represented in any other ways. The thing that caused the increase in conversions was the presence of a decoy.
It made people feel like the all-in option was better value. Why was this?
Because they had something to measure it against. The middle option was the same value, so they went for the all-in option, so it looked like they were getting more for their money. In reality, they were getting the exact amount for their money that The Economist wanted them to have.
Decoy marketing and e-Commerce
Now we know what decoy marketing is, let’s take a look at how your e-commerce brand can make use of it.
It’s difficult to optimise your average grid style layout for decoy marketing.
This is simply because of the fluid nature of these pages. Items can be ordered and reordered according by name, price and date added.
However, on static pages, where product listings are not fluid but fixed, it’s a doddle.
Check out the prices page from the guys over at Buzzstream (a tool we love at EN).
Note the price difference between the cheapest and most expensive options. That’s a difference of $229 dollars – pretty hefty. The difference between the ‘plus’ and ‘premium’ packages is also steep at $159 dollars.
However, the difference in price between the ‘starter’ and the ‘plus’ package is only $70.
With the additional users, a shed load of extra contacts and link searches, that looks like great value for money.
To further establish this point, Buzzstream have added some subtle visual cues to help encourage conversions on the middle option. It is slightly bigger than the other options, thus having dominance on the page. The phrase ‘most popular’ is also included, suggesting that out of the three, that is the tried and test option, the one that most people go for, therefore the one that you should buy, too.
This is online decoy marketing in its purest form.
Let’s break this down into a simple visual form.
We would expect ‘Option B’ from the above example to command the most conversions. Of course, people will still purchase options A and C. That’s totally cool and is what we want – we want people to end up with the product that is right for them.
However, if we want to encourage conversions of a certain product, perhaps because it has a greater profit margin, or because you have an abundance of stock, this is one of the ways that we do it.
It’s sneaky. It’s simple. It’s quick.
Most importantly, it’s flexible. It allows us to use it in conjunction with other techniques, such as visual nudges or subtle, smart web design to attract further attention to it.
Try it out and see what you think.
Get in touch with any success stories that you have.
Similarly, we would love to see any examples that you’ve seen of this technique in the wild.