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Exploring Online Shopping Behavior: How website characteristics affect likelihood of purchase and basket value on ecommerce sites

May 26th, 2016

Traditionally, brick-and-mortar stores have displayed their products in their windows, enticing passers-by to come in and learn more, perhaps meet and talk with the owner and other shoppers, and, ultimately, fill their shopping baskets and purchase the goods.

Today’s digital stores (ecommerce websites) are striving to achieve the same goals as their brick-and-mortar counterpbrick-and-mortararts, with varying scopes of products ranging from unprecedented breadth (e.g., Amazon) to narrow specialization (e.g., your local cupcake bakery).

Though ecommerce stores come in a myriad of types, and specific factors influence how customers shop at different websites, they all share one thing in common: Store owners are always on the outlook for some generalizable principles and ideas to test in their specific conditions in hopes of maximizing revenue.

Which website characteristics increase the likelihood that a visitor will make a purchase? And, since shipping costs are a considerable expense, how do you increase the likelihood that a customer will spend more money per shopping session?

Let’s look at a recent study exploring the effects of website characteristics on online shopping behavior and basket value, and how those effects depend on product characteristics.

 

The study

In March 2016, professors Girish Mallapragada of Indiana University, Sandeep R. Chandukala of Singapore Management University and Qing Liu of University of Wisconsin published the results of a study exploring the effects of product and website characteristics on customer shopping behavior and basket value.

The authors analyzed the shopping behaviors of 2,000 consumers over one year, collected from the ComScore Web Behavior Panel. The data encompassed 773,262 browsing sessions and 9,662 purchase transactions at 385 online retailers across 43 product categories.

 

Method

The researchers scored all websites on product variety offered and on two types of functionality: navigation and communication.

Navigation functionality captured the extent to which a website facilitated browsing through content, site maps, layout and updates.

Communication functionality captured the extent to which a website offered communication features such as email, chat rooms and message boards.

They also scored the products on their hedonic and utilitarian characteristics using a previously developed scale.

Hedonic products (e.g., jewelry) would be rated highly on items like “fun,” “exciting” and “delightful.”

Utilitarian products (e.g., office supplies) would be rated highly on characteristics like “effective,” “functional” and “necessary.”

 

Results

Which factors predict likelihood of purchase?

In the browsing stage, the researchers found that the following factors are significantly related to purchase:

  • Previous purchase (previous customers are more likely to buy again)
  • Session duration and page views (more engagement leads to increased likelihood to purchase)
  • Broad scope of products (more variety leads to increased likelihood to purchase)
  • Communication functionality (more communication features lead to decreased likelihood to purchase)

 

Which factors predict higher basket value?

Among the customers who made a purchase, the researchers found that the following factors are significantly related to basket value:

  • Page views (more page views were associated with higher basket value)
  • Session duration (longer sessions were associated with lower basket value)
  • Broad scope of products (more variety associated with higher basket value)
  • Communication functionality (more features associated with lower basket value)
  • Navigational functionality (more features associated with higher basket value)

 

However, the effects of navigational and communication functionality depended on the characteristics of the products consumers were shopping for. Namely:

 

  • Communication functionality lowered basket value for utilitarian products, but not for hedonic products
  • Navigational functionality lowered basket value for hedonic products, but increased basket value for utilitarian products

 

The authors suggest that people buying utilitarian products might be looking for relevant information about the product on the page instead of communication functions, which might be perceived as clutter and add to friction. On the other hand, people buying hedonic products might be looking for self-affirmation through engaging in a dialogue with others and find communication features helpful.

 

Key takeaway

If you are selling utilitarian products, your page might benefit from rich navigational functionality, while if you are selling hedonic products, your page might benefit from rich communication functionality.

In both cases, you want to entice your customers to engage with your pages and check back often, which would ultimately lead to more purchases and higher basket value. Having a variety of products to choose from, and earning the loyalty of returning customers also helps increase the likelihood of purchase and basket value.

 

You might also like

Exploring the Effects of “What” (Product) and “Where” (Website) Characteristics on Online Shopping Behavior [Executive summary from the Journal of Marketing]

Ecommerce Chart: How a low conversion rate can be a good thing [From MarketingSherpa Chart]

B2B Marketing: Customer-focused site design for book ecommerce drives order volume up 211% in three years [From MarketingSherpa Case Study]

Ecommerce Marketing: Time spent on site boosted by 50% with transition from flash sale to retail for fashion site [From MarketingSherpa Case Study]

 

How Customers Read Reviews: 4 takeaways for marketers from a business school study

August 27th, 2015

For over a decade, MarketingExperiments has stressed the importance of customer reviews.

When our Customer Ratings Tested Web clinic was originally broadcast in 2004, Shopping.com was the third-most popular ecommerce site in America, and Amazon’s annual revenue was a mere 7% of what it has since become.

In the ten years since, customer reviews have gone from being a supplemental component of our marketing strategy to the single biggest influencer of consumer behavior. In a 2013 survey by Dimensional Research, 90% of customers responded that their buying decisions are influenced by online reviews. A similar study conducted by Retailing Today found that 81% of consumers conduct online research before making major purchases.

With the knowledge that customer reviews are now one of the most vital components of our marketing collateral, how can we make sure that we are presenting our reviews in a way that best serves our customers?

New ecommerce research by Dr. Raffaele Filieri hopes to answer that question.

Filieri specializes in consumer behavior and digital marketing at Newcastle Business School, whose recent double accreditation by the Advance Collegiate Schools of Business (AACSB International) puts it in the top 1% of business schools in the world.

His independent study, “What makes online reviews helpful? A diagnosticity-adoption framework to explain informational and normative influences in e-WOM,” published offline in the Journal of Business Research, not only confirms that customer reviews carry more clout than almost all other marketing efforts but, for the first time, reveals how customers actually process online reviews.

Below are four key takeaways we can learn from his research:

 

Takeaway #1. Customers process review data quickly

In his study of brands such as Kia Motors and TripAdvisor, Filieri found that customers are not carefully reading review data. Instead, they are scanning it quickly.

When processing review data, users are looking to gather as much information as they can in the shortest amount of time possible. Users don’t want to search for or through reviews; they want quick visual summaries of the sentiments of other customers.

As marketers, we must be aware of this fact and provide prominent, easily scannable customer reviews whenever possible.

Read more…

Mobile Marketing: 4 takeaways on how to improve your mobile shopping experience beyond just responsive design

August 24th, 2015

We all know by now that mobile has become an important tool for ecommerce consumers.

However, do we treat it with the same level of investment that it deserves? What experience are we giving our customers: a desktop replica or something better?

In Q1 of 2015, 59% of all retail time was spent on mobile devices, according to comScore’s State of the U.S. Online Retail Economy in Q1 2015. That’s right — consumers spent more than half of their online shopping time on their tablet or mobile device.

Yet, only 15.4% of total digital commerce dollars came from mobile sales.

That leaves a lot of opportunity for marketers and designers when it comes to the mobile shopping experience.

At the MarketingSherpa Media Center at IRCE 2015, Daniel Burstein, Director of Editorial Content, MarketingSherpa (sister company of MarketingExperiments), spoke with Gregory Casey, User Experience Designer and Architect, eBags, about how eBags goes beyond normal responsive design to create a truly mobile-adaptive experience.

Watch the interview or read on for four takeaways Gregory shares.

Read more…

How a B2B Company Increased Banner Clickthrough 956% by Capitalizing on Quick Wins

August 10th, 2015

When it comes to testing, it’s exciting to focus on big tests, but being too focused on large-scale changes can hinder marketers from seeing smaller opportunities to test. Oftentimes, small tweaks to ads, copy or smaller webpage elements can lead to dramatic lifts. Cindy Lu, Senior Marketing Manager of Digital Marketing Strategy, VMware, is more than familiar with the lift potential quick wins can offer.

“For each company that I’ve actually worked at, I’ve had the opportunity to quickly identify some of the low-hanging fruit opportunities,” Cindy said. “It generally blows everyone away in your organization because they didn’t realize such small tweaks could have such meaningful impacts on actual conversions.”

At MarketingSherpa MarketingExperiments Web Optimization Summit 2014, John Tackett, Manager of Editorial Content, MECLABS, sat down with Cindy to discuss the five optimization lessons she learned from testing VMware’s website and conversion funnel. One of the most important lessons Cindy highlighted was identifying and capitalizing on quick wins.

 

Watch the session excerpt to learn how one of VMware’s quick win tests resulted in a 956% increase in clickthrough.

Read more…

Why Selfishness Is the Key to Successful Marketing

July 9th, 2015

Philosophers [must] become kings … or those now called kings [must] … genuinely and adequately philosophize.” —Plato

Flint McGlaughlin, Managing Director and CEO, MECLABS Institute, remarked about Plato’s quote in The Marketer as Philosopher — “One might substitute the term ‘marketer’ for the term ‘king.'”

In order to best communicate as marketers, we need to sometimes slow down and ask “why” we are doing the “what.” This includes considering the reasons for the various elements of brand collateral, images, calls-to-action and testimonials we insert onto our pages.

I recently came across a test that highlighted for me some of these challenges that marketers often face when balancing the “why” and the “what.”

That’s why in this post I want to show how we can use the MECLABS Conversion Heuristic to really drill down on these specific elements while giving you a process in which you can apply a methodology to creating and optimizing all of your marketing collateral.

 

MECLABS Conversion Heuristic

 

This heuristic is just that — a heuristic. This means it is simply a mental shorthand used to convey an idea or approach. This is not a mathematical equation and you cannot solve it. However, it does work similarly to an equation in the idea that the coefficient preceding the letters indicates that value’s level of importance.

Therefore, motivation, with a coefficient of four, is more important in the conversion than anxiety, which only has a coefficient of two.

With that being said, let’s start by evaluating the customer’s motivation on a page and how each element can cater to that motivation.

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The Baskerville Experiment: Font and its influence on our perception of truth

June 25th, 2015

“Can we separate the form of the writing from its content?” – Errol Morris

“Is it ever possible to understand the meaning of a work of art as separate from the way in which we receive it?” – Lynne Conner

Source: The Pentagram Papers, 44th Edition

 

In the spring of 1980, Academy Award-winning documentarian Errol Morris (“The Thin Blue Line,” “The Fog of War”) first encountered philosopher Saul Kripke’s seminal book, Naming and Necessity. After reading the book, Morris became fascinated with the theory that words and our interpretation of them are singular manifestations of all of the individual characteristics (seen and unseen) that comprise them.

More specifically, Morris was consumed with the idea that typeface itself might have an innate power to influence our fundamental perception of truth.

“Yes, we read the word ‘horse,’” Morris wrote, ”but we also see the letters, the typefaces, the shape of the word on the page. Is this not part of the meaning? Do we more readily accept (as true) sentences written in one typeface rather than another?”

Read more…