Internet Travel Monitor - Marketing, Research & Tech

January 31, 2018

Research: How Customers Decide Whether to Buy from Your Website

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Sally’s finger hovered over the “Purchase” button. After hours of online sleuthing, she was pretty sure the green chair would complete her living room. It was the style and color she wanted, home delivery was guaranteed within three days, she had money in the bank to pay for it, and both the website and this particular chair appeared to be highly rated by customers. But Sally hesitated. Maybe she would take one more look at the local furniture outlet…

This fictional example is all too common. Global e-commerce sales exceeded $2 trillion in 2017, and are on pace to more than double by 2021. Yet average online conversion rates have remained doggedly low: Fewer than 4% of consumers arriving from desktop browsers buy, and the number is lower still for tablet and smartphone users (3% and 1%, respectively). These are a far cry from offline retail conversion rates, estimated to be 20%–40%.

Why do so few online shoppers convert to purchasers?

Consumer behavior research suggests that trust is essential to forming an intention to purchase. When trust is high, people are much more likely to take risks and engage in trade. In traditional business contexts, trust emerges and evolves in a physical space, and between two or more people interacting in person. But in the e-commerce setting, a prospective customer usually does not have any such contact, and so they must rely entirely on the digital experience. So, how exactly does consumer trust emerge online?

Researchers have tried to provide an exact answer to this question, one rooted in deliberative cognitive processes. They use decision models to describe sets of logical factors related to the formation of purchase intentions, such as an individual’s preexisting disposition to trust (it turns out that some people are naturally more trusting than others) or a website’s structural assurances (such as indicators of strong encryption and security, privacy policies, and return guarantees). Deliberative processes assume strong causal relationships, hard constraints, and that people expend explicit cognitive effort as they make their trust assessments.

While the notion of deliberative models is appealing, it does not explain research showing that many visitors ignore “hard” factors such as privacy and security policies, while being influenced by seemingly insignificant factors such as font styles and colors. Thus we were curious: Is it possible that online consumers also rely on less deliberative, “fuzzy,” instinctual processes, such as those commonly used in interpersonal trust situations? Could it be that online shoppers actually commit very little explicit cognitive effort when making the decision about whether to trust a website?

Such a view is consistent with the work of Steven Sloman, a cognitive psychologist who argued that people are “parallel processors” who utilize two complementary reasoning systems. One system of reasoning is deliberative, rooted in symbolic structures, rules, and established patterns of logic (think algebra). The other system is associative: diffuse, approximate, and nondeliberative, based more on personal experience and intuition than on formal rules. The associative system is not irrational per se, but it may not be consistent with formal rational logic.

Our study explores two hypotheses. First, we expected that when evaluating whether to trust a website while making low-risk decisions, consumers tend to rely on deliberative and explicitly logical reasoning processes. However, our second hypothesis was that when faced with higher-risk decisions, online consumers are more likely to turn to associative (intuitive) reasoning processes. Our reasoning was that trust matters more for bigger, riskier decisions — and prior research suggests that intuitive reasoning is a critical component of trusting someone.

To explore the hypotheses, we designed a laboratory experiment in which 245 research subjects were asked to visit the website of a genuine 17-year-old Australian bookstore that was unfamiliar to them, and then to make some purchase decisions. Subjects were randomly split into six groups, each exposed to different experimental conditions. Some subjects were presented with the authentic website, while others were exposed to a crippled version that lacked key pieces of information (for example, e-commerce security certificates and product return policies). Some were told that they would be asked to explain their decision reasoning — a technique designed to explicitly trigger their deliberative/logical thinking processes — whereas others were asked to complete a task designed to lead them to rely on their intuitive reasoning system. Finally, all subjects made two decisions: (1) whether they would purchase a book — a hypothetical, zero-risk decision with no real-world impacts, and (2) whether they would provide personal information such as their name, phone number, and home address in order to receive a $20 gift — a higher-risk decision because it had real-world outcomes.

A longitudinal logistic regression analysis was conducted to fully understand the trust differences across these six groups, and this revealed two major findings. First, when faced with the hypothetical, zero-risk decision, our subjects relied on deliberative (rule-based, logical, rational) processes. Second, when faced with an actual, and therefore riskier, decision, many of our online shopping subjects turned to associative (intuitive, diffuse, approximate) processes.

The message from our study is clear: When making decisions involving risk, such as an online purchase from a website, consumers tend to rely more on intuition than on deliberation. This is important because it challenges the established deliberative perspectives of consumer trust formation and offers an explanation as to why things like aesthetics, professionalism, and other implicit clues matter for building online trust.

Understanding that online consumers do not always engage deliberative processes, but often rely on intuition — especially when making higher-risk decisions — has profound implications for redesigning online consumer experiences. “Simple” changes (such as page layouts and choices of fonts, images, and colors) may be far more critical to associative trust-formation processes than we previously understood. Our findings suggest that what seem like merely aesthetic design choices may actually be the way your customers learn to trust you (or don’t). And that will influence whether they decide to make a purchase.

Copyright 2017 Harvard Business School Publishing. All rights reserved. From
By Derrick Neufeld and Mahdi Roghanizad.
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