How cognitive bias can impact conversion optimisation

The human brain is a complicated thing, and if you’re trying to understand your customers better, you’ll also need to understand what’s going on in their minds. Unfortunately this isn’t a simple task, because the way we humans think is full of shortcuts, gut feelings, and effort saving techniques that we call cognitive biases.

Our thinking is swarming with biases in order to help us pick the right information out without expending too much effort, and understanding some of these biases and recognising them in your customers could help you to increase your conversions online.

What is a cognitive bias?

In ‘The evolution of cognitive bias’, Haselton, Nettle, & Andrews say:

“Cognitive biases are systematic patterns of deviation from norm or rationality in judgement, and are often studied in psychology and behavioural economics”.

This means that when we think, view a website, or buy a product / service, we’re not thinking entirely rationally, as there are factors like emotion which are also influencing  our rational judgement. Our observations are being put through a number of filters which have been created from our learned experiences.

There are around 189 cognitive biases listed on a master article on Wikipedia, and it’s not reassuring to know that the human brain is not just limited to having one cognitive bias, there can be multiple biases going on in a person’s mind simultaneously.

A common cognitive bias is confirmation bias, which is the tendency to look for, remember, or understand information which confirms pre-existing beliefs. Plous, Scott (1993), The Psychology of Judgment and Decision Making

Image source: chainsawsuit.com

Buster Benson condensed Wikipedia’s mega list into 72 cognitive biases along with the infographic shown below. He says “If you look at them by the problem they’re trying to solve, it becomes a lot easier to understand why they exist, how they’re useful, and the trade-offs (and resulting mental errors) that they introduce”.

Benson categorises these biases into four groups:

• Too much information – where we notice things already primed in our memory, we notice bizarre or funny things, we notice something has changed, or are drawn to details that confirm our beliefs e.g. we remember adverts better when they have humour in.
• Not enough meaning – so we try and find patterns in sparse data, we simplify numbers to make them easier to process, and we project our current mindset and assumptions on the past and the future
• What should we remember – where we store memories differently based on experience, reduce events to their key elements, discard specifics for generalities, or edit memories after the event
• Need to act fast – where we favour simple looking options, complete things we’ve invested energy in, in order to focus we favour what’s immediate and in front of us, or be confident that what we do makes an impact

Image source: Buster Benson’s Cognitive Bias Cheat Sheet

Why is it important to understand cognitive biases?

It’s important to understand cognitive biases so that you can better identify how your customers’ minds work and understand how this affects their behaviour when on your website purchasing a product or service. Once you have identified the biases your visitors may have, then you can find ways to overcome or work alongside these biases in order to appeal to them better and reduce drop-off in your sales funnel.

Does it seem manipulative?

We’re not talking about tricking people into buying, that’s unethical, it won’t work, and it will result in a negative experience. What is important is to understand your customers better, and what effect certain parts of your sales funnel is having on your users’ thinking so that you can serve your website visitors better and increase conversions.

Some examples within the context of the Financial services industry

We’ve compiled some examples of cognitive biases, how they apply to financial services, and how to overcome them in your conversion funnel. Some are less well-known but can apply to real situations when purchasing online.

Use aesthetics and fluency within your signup funnels

The Aesthetic Usability Effect cognitive bias is defined by the Nielsen Norman Group: “a user’s tendency to perceive attractive products as more usable. People tend to believe that things that look better will work better — even if they aren’t actually more effective or efficient”

So, how can this be applied to a conversion funnel? If the funnel looks aesthetically good, there is a higher likelihood that people will perceive it as more fluent. Of course, if you have usability problems, fix those alongside improving the aesthetics.

A lesser known cognitive bias is processing efficacy: 

“Our judgement of something can be dramatically altered by how fluent it seems to process it and we engage more positively with high fluency experiences. Fluent processing can be facilitated by several variables such as repeated exposure to a stimulus, aesthetic attractiveness of the object, expressions that rhyme, and so on. By contrast, low processing efficacy occurs when we find something difficult to interact with or understand and so it requires more cognitive effort and strain, which results in a negative feeling towards it.” 

If you observe both these biases in the visitors of your conversion funnel (found through your research) – and identify that your funnel has drop-off at important stages, you can combine the learning that aesthetics and fluidity help make the experience more positive. You could test an optimised version of your conversion funnel to determine what impact this has on your users and whether drop-off reduces, and conversions increase.

A good example of combined aesthetics and fluency in a conversion funnel is Habito, an online mortgage broker.

 

Habito’s mortgage application funnel is aesthetically pleasing, and also appears fluent for a potentially long information gathering process, with a closed funnel and steps laid out to the left, and a progress bar shown at the bottom of the screen

Habito’s mobile site is clear and fluid

 

Riding the Bandwagon Effect

One bias that can apply in the financial services industry is the bandwagon effect.

“In its pure form this is the case where an individual will demand more (or less) of a commodity because some or all other individuals in the market also demand more (or less) of the commodity.” H. Leibenstein, The Quarterly Journal of Economics, 1950. The term ‘jump on the bandwagon’ appeared in American politics in 1848 when a circus clown used his bandwagon and music to gain attention for his political campaign appearances, which then influenced other politicians to do the same thing.

So, people are making rational choices which are based on information from others. This is how fads form (remember Tamagotchi, shell suits and lava lamps?).

This kind of behaviour can be seen within banking. It’s currently happening in that people are flocking towards challengers within the financial services industry, e.g. Monzo and Atom in banking, or online mortgage brokers like Trussle or Habito.

So, how can you use this to influence people within your funnel?

Challengers (e.g. online-only banks and mortgage brokers):

Challengers can embrace and the bandwagon effect and reinforce it within the conversion funnel for signing up new customers. A concept that still stands the test of time is social proof.

Cialdini defines social proof as: “The tendency to see an action as more appropriate when others are doing it… As a rule, we will make fewer mistakes by acting in accord with social evidence than contrary to it. Usually, when a lot of people are doing something, it is the right thing to do.” R. Cialdini, Influence: The psychology of persuasion (1987).

You can use social proof to communicate in the form of:

• Displaying trusted 3rd party reviews within your funnel, like Trustpilot
• Showing numbers of customers switching to your particular challenger product/service
• Reinforce why people are jumping on your ‘bandwagon’ – one way to do this is to show your USPs compared to the traditional alternatives

Trussle, a free online mortgage broker users social proof on the first stage of its funnel to show why people are using this new way of finding a mortgage online, rather than a traditional broker.

Established companies (e.g. traditional banks and brokers):

If you’re in an industry being affected by newer challengers, you may need to overcome this and fight against the bandwagon effect. It might be that the new entrants to the market are easier to use for the smartphone generation, but there are still reasons to choose a long established company within financial services over a challenger.

You can even go in the opposite direction and fight the case of the non-challengers e.g. mentioning why people stay (or why people are still with) your bank / service. Mentioning this within your conversion funnel could help to persuade the people who are considering both traditional and challenger options.

In this case too, social proof (such as 3rd party reviews) could help as a point of parity when people are looking into both options. There is also the  ‘status quo bias’ which could be tapped in to.

Another case for embracing the bandwagon effect would be within an industry where there are nationwide trends, for example in pensions.

There has been large efforts by HMRC in the UK to encourage people to open and contribute to a pension, so if you are a company providing pensions, then drawing attention to this within the funnel and highlighting the issue could help to move more people along and prevent drop-off in the funnel by helping them to realise they are making the right decision, others are doing it, and it is backed by an authority.

Reassure people after the conversion is complete

There are two cognitive biases to understand here, the first is choice-supportive bias, also known as post-purchase rationalisation, which happens when “someone who has purchased an expensive product or service overlooks any faults or defects in order to justify their purchase. It is a special case of choice-supportive bias.” 

In the context of conversion funnels, people want their purchase justified and to protect their ego from the thought or possibility of making a bad choice, in cases of impulse purchases, the truth may hurt so our brain softens the blow for us.

The second cognitive bias to understand is the peak-end rule.

Daniel Kahneman first studied the peak-end rule in 1993 by conducting an experiment where participants submerged their hand in water at 14ºC for 60 seconds, then they submerged their other hand in water at 14ºC for 60 seconds, but an extra 30 seconds with the temperature gradually raised to 15ºC (“still painful but distinctly less so”) – when asked which one they’d rather repeat, the majority chose the second trial, as they were in noticeably less pain near the end, even though they were actually in pain for 90 seconds compared to 60. The result of the study was that people’s experience of a painful or uncomfortable event is changed by what happens at the end.

Image source: The UX Blog

We can take these learnings about the peak-end rule, combined with the choice-supportive bias into conversion funnels. Justifying the conversion and making the end of the funnel positive can have an impact on how people viewed the whole process, and can make people ignore the more painful parts of the funnel (of course, if you have painful parts of your funnel, fix them too).

“Remember, your visitors may be making decisions based on emotions, and rationalising those decisions later” – ConversionXL 

One method of working with choice-supportive bias and peak-end rule is through post purchase rationalisation. You don’t have to literally rationalise why the purchase was a good choice, but more subtle and supportive messaging can work, and it’s still something that a lot of marketers aren’t considering because the benefits aren’t immediately obvious.

Usually confirmation pages are not seen as an important part of the funnel and can sometimes be neglected because the purchase has already been made, but it’s still optimisation and can help to encourage repeat business, positive recommendations, or fewer early cancellations.

An ecommerce site we’ve worked with utilises the peak-end rule by sending very reassuring (and funny) confirmation emails that surprise and delight.

 

This type of email works for this particular audience, who are purchasing quirky personalised gifts. In the context of a financial services business, you’ll need to find ways to reassure someone’s decision to sign up to an account, invest their hard-earned cash, or borrow a large sum of money.

You’ll have to find the right language to use for your audience (you can find this through surveys and reviews), along with the right messaging for this stage of the journey in order to support their decision.

And remember, you can get your reassuring messaging across via:

• Confirmation pages
• Confirmation emails
• Post-purchase nurture campaigns

Overcome ‘The Curse of Knowledge’

A bias that may affect you as a marketer (or your content or product teams) is the curse of knowledge. If the curse of knowledge affects you or your internal team, then it may be seeping into your website and affecting your customers too.

The curse of knowledge is what happens when somebody assumes what they are explaining is easy to understand, because the person explaining already understands it. We overestimate how much others understand what we are thinking.

 

A good demonstration of the curse of knowledge takes us back to 1990, when a Psychology graduate at Stanford University called Elizabeth Newton conducted an experiment with musical tapping.

120 songs were tapped out to listeners. Listeners only guessed 3 of the 120 songs, but before this happened, the tappers were asked to guess how many correct answers the listener would get. They guessed 50%.

Once we know something, we find it hard to imagine not knowing it, like the tune tappers in the experiment. This also applies in conversion funnels.

We find that companies don’t always sell from the customer’s perspective, but from the marketer/company/product owner’s detailed (or technical) perspective instead. They assume a level of knowledge that is only present in a small percentage of their website visitors and use language that is common in their internal teams.

To identify and combat this, you should first recognise your own biases as a marketer and research:

• How customers perceive your content
• What language they use (reading through your customer reviews and conducting surveys are good sources for this)
• What your existing customers understand about your product or service, and what problem it solves for them. A way that works for us (thanks to inspiration from Karl Gilis (slide 64) is to ask people what they would do if they no longer had the product or if it was taken away from them overnight – some of the answers might surprise you
• Use surveys and/or polls to understand the stage in the journey the visitor is at, that way content and messaging can be tailored to that stage and level of knowledge
• Provide them with ways to have their questions answered: FAQs, live chat – this can help clarify on the more technical information

Once you have gathered insights from the above, then you will be in a better position to put yourself in the visitor’s shoes, so you can better explain your product or service within the product pages, detail pages, and checkout of your funnel.

We’ve found some examples for asset finance to explain this better, one website is slightly suffering from the curse of knowledge, and one explains its service very clearly to its audience.

Santander Asset Finance

• Content is not specific to an industry, so isn’t relatable
• Content is within one section, so is more difficult to digest and break down
• Not all FAQs are related to equipment finance
• There are no clear next steps

Shawbrook Asset Finance

• Specific pages are made to cater to certain industries (in this case, agriculture)
• The page is structured well and each section explains a different area
• The types of finance explained in a digestible table
• There are clear next steps to guide people

 

Conclusion and take-aways

User research is key to understanding cognitive biases your website visitors might have. Once you have identified biases then you can start to hypothesise and test solutions like some of the examples above in order to improve user experience, conversions, and visitors’ feelings towards your website.

It’s also important to understand your own cognitive biases. It’s essential to try and remove any biases you have when you are conducting any research (e.g. confirming theories you already have and giving lower value to conflicting data).

In fact, there is even a bias called the bias blind spot – “People exhibit a tendency to believe they are less biased than their peers. College students believe they are less biased than their classmates, airline passengers believe they are less biased than other passengers” (Pronin et al. 2002)

Once you understand your own and your visitors’ biases, you will be in a better position to optimise your conversion funnel.

Take a look at the following resources to start your journey on understanding more cognitive biases.

 

 

 

References

Haselton, M. G.; Nettle, D. & Andrews, P. W. (2005). The evolution of cognitive bias

https://en.wikipedia.org/wiki/List_of_cognitive_biases

Plous, Scott (1993), The Psychology of Judgment and Decision Making

Buster Benson https://betterhumans.coach.me/cognitive-bias-cheat-sheet-55a472476b18

Pronin E, Lin DY, Ross L (2002) The bias blind spot: Perceptions of bias in self versus others. Personality Soc. Psych. Bull. 28: 369–381

50. Leibenstein, Bandwagon, Snob, and Veblen Effects in the Theory of Consumers’ Demand, The Quarterly Journal of Economics, 1950 http://areadocenti.eco.unicas.it/bianchi/LEIBENSTEIN.50.QJE.pdf
51. Cialdini, Influence: The psychology of persuasion (1987)

http://www.cognitivebiasparade.com/2014/09/post-purchase-rationalization.html

Kahneman, Fredrickson, Duration Neglect in Retrospective Evaluations of Affective Episodes, Journal of Personality and Social Psychology, 1993 https://pages.ucsd.edu/~nchristenfeld/Happiness_Readings_files/Class%209%20-%20Fredrickson%201993.pdf

Carmerer, Loewenstein, Weber – The Curse of Knowledge – The Journal of Political Economy 1989 https://web.archive.org/web/20150306005841/http://authors.library.caltech.edu/22171/1/1831894%5B1%5D.pdf

https://www.conversion-summit.co/wp-content/uploads/2018/06/Karl-Gilis.pdf slide 64