How to Improve Conversion Rates By Using Customer Psychology

Why do people spend mindlessly on irrational purchases like luxury cars while failing to invest money that can compound at an astounding rate to help generate passive income later? 

Why is it that people can spend on a lavish meal but still yearn to cut coupons for a can of soup? What explains people’s behavior, emotional triggers, and why do they do what they do? Why do we procrastinate when we know it hurts our productivity? 

Is it irrational? Yes. 

Is it predictable? Absolutely yes. 

Getting insights on customer psychology helps identify the real reasons behind these varied instances of behavior which is admittedly hard to understand but easy enough to predict.

In a groundbreaking New York Times Bestseller titled Predictable Irrationality, author Dan Ariely turns the table down on the common assumption that we behave in fundamentally rational ways. 

As he puts it, ‍

“From drinking coffee to losing weight, from buying a car to choosing a romantic partner, we consistently overpay, underestimate, and procrastinate.” ‍

As a business owner, understanding this irrationality -- which in essence forms the crux of customer psychology -- is key to profits. 

Knowing customer psychology helps you sell more, sell better, go-to-market in style, carve out unimaginable market share, grow your business, sustain your brand and profit from it all. 

It also helps you run better ads, adopt a strong marketing strategy, create a winning USP, improves your conversion rates, and more. 

Let’s stick to conversion rates for now. To help you get there, here are a few ways to improve conversion rates by understanding customer psychology: ‍

Ask for What You Want. Push, Nudge, and Entice ‍

Too many businesses just assume that the “products will sell for themselves”. It’s nice if and when that happens but you can’t come to depend on it. 

So, you have to ask. 

No one gives you anything if you don’t ask for it. You can’t just sit there and wait for your potential customers to take action. 

There’s that thing called the “nudge”. In marketing parlance, we know this as a “Call to action”. 

Common examples that always work: 

• Start a free trial or Try for Free or Start for Free (freemium business models)
• Get it now, buy now, grab it now, and start now.
• Sign me up, Swipe to save, and click to download
• Subscribe, see how, take a peek, click to listen, and watch now

Calls-to-action might seem like a little thing; the immense push it gives for boosting conversions is anything but “little”.

Don’t Make Me Work Hard For It 

Following through with the “nudge” above, the next task is to remove “restrictions”. Offer your customers a path of least friction or the path of least resistance. 

Make it easy, almost natural to make your target customers choose your product. 

One of the fundamental principles of human psychology comes from the ever-so-large need for “making life easier”, and “don’t make me think or work too hard”. That’s it. 

Make it easier for people to choose, buy, and even spread the word (see social proof below) about your brand or products. 

Here are a few examples of how you do that with marketing: 

• Make “fast” shipping available for “free”
• Add comparison (between your own products) to help your customers pick the right products. 
• If your product has variants, allow them to choose sizes, colors, types, bundles, and more right on the product page. 
• Offer several ways to pay for their products (including payment plans to help people pay over a course of time)
• Upsell: Fries with the burger. Accessories with the main product. Extended warranties or service plans for a one-time only discounted fee. 

Social Proof & Word of Mouth

Spend enough time trying to build “word of mouth” and “social proof”, and you’ll set powerful wheels in motion that manifests itself in ways that’s insane to even comprehend. Social proof is powerful and it taps into the human psyche -- the way we’ve been hardwired as humans. It’s in our gene pool. 

Social proof is a powerful way for many people to make decisions (when making decisions itself is hard to do given that we have so many options when it comes to decision-making). 

No one puts it down better than Robert Cialdini in his mega bestseller book Influence: The Psychology of Persuasion

“Whether the question is what to do with an empty popcorn box in a movie theater, how fast to drive on a certain stretch of highway, or how to eat the chicken at a dinner party, the actions of those around us will be important in defining the answer.”

Social proof builds social currency. Social currency is what people use to make decisions based on a range of factors. 

These include -- but not limited to -- emotional triggers, real stories (from others just like them), and also societal acceptance. 

Netflix, for instance, is always pushing OTT content over to your screen based on what you watched earlier and based on what others watch -- including categories like “trending”, “Popular”, and so on. 

You don’t have to second guess yourself when it comes to the power of social proof -- it’s a classic and it always works. 

Build up social proof and use it to your advantage. 

Offer Multiple Price points (Let your customers choose) 

Depending on your business, your pricing strategy could differ. Whatever you do, don’t go for price wars and assume that the “lowest price” is a market differentiator: It’s not. 

Going down the “Lowest price in the market” lane only drives your business to the ground. 

With that out of the way, one of the best things you could do (if your business model allows for it) is to use a pricing table with a pricing plan. 

Now, you might think that if your prices are on a per product basis, you’d think that it’s not possible to have a pricing table (as shown below) for your business. 

The good news is that you can. You can indeed price your products on a per product basis and allow customers to stack on accessories, customer care plans, and other essentials on top of the product price. That’s one way to do it. 

The other way is to use the “subscription model” -- for a fixed set of products delivered regularly or to use smart bundles for a single price point (covering everything you include for the said pricing plan). 

‍By highlighting your most popular pricing plan -- for subscriptions, product bundles, or for monthly recurring fees (if you sell software, memberships, or anything else that lends itself well to this sort of pricing) -- and allowing customers to pick and choose their own pricing, you are essentially removing restrictions and friction.

Want to grow your business? Would you like to convert more by doing less? Do you need a comprehensive long-term strategy to help boost your conversion rates for eCommerce on an ongoing basis? Check out our Conversion Optimization services for eCommerce.