When consumers browse your online store, their minds are full of observations, questions, doubts, desires, and opinions. To truly influence their buying decisions, you need to understand—at some level—what’s happening in their heads.
Understanding consumer psychology gives you insight into the decision-making process, allowing you to personalize and adapt your marketing strategies.
In this article, we’ll explain two principles of psychology that apply to ecommerce shoppers—loss aversion and the framing effect—and explain how to use these concepts to your advantage.
How Loss Aversion Can Help or Hurt
Loss aversion is a psychological principle showing that people strongly prefer avoiding losses over acquiring equivalent gains. In other words, the pain of losing something is stronger than the joy of gaining something.
Loss Aversion Example
Let’s say you lose $100 at the beach. You’re devastated, and the whole day is ruined for you. Now imagine you find $100 on the beach. You’re pleased, but the emotional impact of gaining money isn’t nearly as intense as what you’d feel if you lost the money.
That’s loss aversion in action—but how does this apply to ecommerce?
A Double-Sided Coin
People’s tendency to be loss-averse isn’t necessarily a bad thing. In fact, many marketers rely on loss aversion to increase sales! Scarcity tactics like limited-time offers trigger the fear of losing out, increasing the chances that people will buy something.
But loss aversion can work against you, too.
Shopping online comes with significant risks for buyers. If a brand isn’t well-known or trusted, they might worry that the website is a scam set up to steal their payment information. Consumers also know there’s a chance the product won’t be what’s described.
Shipping presents its own host of headaches—and questions. Will the product get damaged or lost? Will it be stolen from my doorstep?
With the risk of loss weighing heavily on their minds, consumers aren’t always willing to hand over their money. Your job is to convince them that they have nothing to be afraid of—that no matter what happens, they won’t lose their hard-earned cash.
That’s where a shopping guarantee comes in.
Combatting Loss Aversion: The Psychology Behind a Shopping Guarantee
A shopping guarantee is an assurance you make that customers will have a safe, secure shopping experience. In essence, you promise to uphold your terms of service, committing not to cheat or take advantage of customers.
How Do Shopping Guarantees Work?
Shopping guarantees can either come directly from your brand or from a trusted third party like Norton Shopping Guarantee. When you rely on a third-party guarantee, you emphasize that your store is verified and backed by another organization, which increases your credibility.
Every shopping guarantee will have its own promises. For example, here’s what Norton Shopping Guarantee with Package Protection by EasyPost offers:
- $1,000 Purchase Guarantee that provides a refund if a purchase isn’t as described
- $100 Lowest Price Guarantee that refunds customers the difference if you lower prices on your site within 30 days
- $10,000 Identify Theft Protection if a shopper has their personal information stolen
- Package Protection that covers loss, damage, and porch piracy
The Impact of Guarantees
So, how does a shopping guarantee help overcome the effects of loss aversion?
Research shows that money-back guarantees (which are a critical component of shopping guarantees) have a significant impact on sales.
As one study puts it, “In addition to cognitive effects, [money-back guarantees] evoke a positive emotional response, thereby increasing consumers’ purchase intentions and willingness to pay a price premium.” Another concludes that “selling with [money-back guarantees] increases retail sales and profit.”
Essentially, offering a shopping guarantee tells customers, “You don’t stand to lose anything when you buy from us. If things go sideways with your purchase, you’ll end up with a replacement or refund.”
When you put their minds at ease, consumers are more likely to overcome their loss aversion and make a purchase.
What Is the Framing Effect?
The framing effect is the principle that the presentation (or framing) of information impacts decision-making. Let’s look at an example that also happens to reinforce the power of loss aversion.
Say someone wants to buy a new safe. One store’s product description says, “Keep your valuables safe.” Another says, “Don’t lose your valuables.” See how the wording frames things differently? According to the loss aversion principle, the second store is more likely to make sales, as buyers will feel a strong desire to avoid the pain of losing their valuables.
When it comes to ecommerce, framing is everything. Think about the product descriptions, images, and reviews on your site. Think about what you say in ads or content. Every piece of information you give shoppers frames your store in a specific way, either positively or negatively.
In addition to written text and visual elements, you can frame your products using a subtle but powerful element: the trust badge.
The Role of Trust in the Online Shopping Experience
Trust is a foundational element of customer acquisition and retention. Before making a purchase, customers need to know they can trust your store. One survey shows that consumers believe that trust is more important than price.
How can you build trust with first-time site visitors?
One of the simplest ways is to design an attractive, intuitive, professional-looking website. As this research paper says, “Web users need to feel the website is well designed, organized, timely, and accurate to believe web vendors' trustworthiness.”
But you can go beyond a usable, well-designed site—try adding trust badges to your store. Trust badges are graphical elements located at various places on the site, including product and checkout pages. Though unobtrusive, they help give browsers a sense of security and confidence.
The Baymard Institute has observed the effect trust badges have on consumer confidence, stating that “any parts of a checkout page with trust badges, reassuring microcopy and a general visual ‘robustness’ are often perceived as being ‘more secure.’ while parts without these visual clues inspire less confidence.”
Use Psychology To Your Advantage
It’s easy to start viewing consumers as nothing more than a source of revenue, but it’s important to remember that they’re human, with unique experiences and thought patterns. When you understand their concerns and anxieties, you’ll be better able to overcome barriers to conversion.
Norton Shopping Guarantee with Package Protection by EasyPost can help. The app allows you to add trust badges and a shopping guarantee to your ecommerce store, emphasizing your credibility and minimizing shoppers’ fear of loss.
Ready to boost trust with shoppers? Download the app for free or request a demo to learn more.
