Defining a Good Reputation: How People Decide Your Worth
Mar 9, 2017 9:43:00 AM / posted by The Reputation X Team
It takes more than just a great product to get consumers to purchase from you. Understanding consumer purchasing behavior is necessary if you want to attract first time customers, and it’s especially important for turning first time customers into return customers.
71% of online purchases begin with a search. Whether on Google, Amazon, or a more specialized retail website, few people are going directly to what they think they want. They’re comparison shopping—garnering a list of potential items that fit their needs, and then making a decision from there about what to buy and what to pass on.
In order to have a better chance of your product being the one they ultimately decide to purchase, you need to understand the psychology of the search and the individual factors at play.
The Online Marketplace
Americans spent over $256 billion on online purchases in 2015, according to a study by Statista. That’s a sharp rise from just three years earlier, when $186.2 billion was spent in the online marketplace. Growth has been both immense and steady year after year, and it shows no signs of slowing down. Leading the eCommerce pack by a massive margin is Amazon, which in 2015 accounted for $92.45 billion of the total amount spent, about 36% of all total sales online.
Also rising steadily is the amount that Americans spend online. In 2015, the average American spent $1,542 on online purchases. This is another area where growth is only expected to increase. By 2021, research suggests that each individual American will spend $2,109 on online purchases, a rather conservatively estimated amount when you consider that with the rise in shipping standards and practices more people are buying items online that they formerly would have bought from brick and mortar stores.
It’s not just clothes and kitty litter that people are purchasing, it’s televisions and barbecue grills and mattresses—big ticket items with big costs to match. No matter what your company is selling, it’s no longer enough to sell it locally. If you want your business to grow, you have to tap into the eCommerce market.
The Psychology of the Consumer
Selling isn’t easy, but it’s not a complete guessing game either. Consumers don’t always act rationally—it’s a lot easier to deduce that you want something than to say why you want it and to justify your spending with a concrete need. Many purchases are driven by the subconscious, satisfying an innate need that can’t be quantified.
But there are some clear behavioral patterns that dictate consumer psychology and influence how individuals make purchasing decisions.
Consumers are driven by emotions more than anything when shopping the online marketplace. In fact, many purchases aren’t just influenced by emotions, they’re directly determined by them. Looking at data from fMRI neuroimaging, researchers were able to determine that when evaluating brands, it’s personal feelings and experiences that shape behavior, more so than brand attributes, features, and facts.
Feelings, not attributes, ultimately dictate a purchase
Positive emotions toward a brand are more important than trust and other judgments when it comes to influencing consumer loyalty. It’s feelings, not attributes, that ultimately dictate a purchase.
The tricky thing about consumer emotions? They’re mostly out of your control. There is one emotion you can effectively help regulate though, and that’s likeability. There’s an episode of It’s Always Sunny in Philadelphia where Dennis Reynolds, as Vice President of a beverage called Wolf Cola, brings consumer support to his side after a public relations nightmare only to lose all his customers when he reveals that he doesn’t like dogs.
Though fictional (and clearly so…who doesn’t like dogs?), it does highlight an important part of consumer relations: be likeable, and customers will want to purchase from you. Be unlikeable, and you’ll lose them all. Research from the Advertising Research Foundation supports this—likeability is the most predictive measurement of whether an advertisement will increase a brand’s sales.
Factors That Influence Consumer Purchasing Decisions
You may not be able to regulate human emotions, but there are some tried and true rules about purchasing decisions that you do have the power to affect. There are the fundamentals, which is ensuring that the product you are selling meets the needs and wants of the people you are attempting to sell it to, but beyond that, there are a series of factors that all commerce businesses should be aware of when selling online. Here are the big ones:
Where you rank in the search engines matters—a lot
You’re not going to sell to anyone if they’re not seeing your product in the first place. When a consumer is looking to buy a product, a lot of the time they type a relevant query into the search box. Pages upon pages of results come up, but in almost all instances, it’s only those at the very top that are going to get clicked on.
53% of all search clicks go to the top search result
53% of all search clicks go to the top organic listing on the page. The second listing gets 15% of the clicks, the third gets 9%, the fourth gets 6%, and the fifth gets 4%.
If your page is coming up as sixth on the page, you’re mostly out of luck if you want to pull in purchasers that way (of all the millions of results below the top five, individuals view less than 2% of them). You might be thinking you can just take a shortcut and allot a portion of your marketing budget to paying for ads at the top of the search page. Turns out, you’re better off spending that money on a good SEO expert. Paid ads get just 13% of total clicks.
You need to take reviews seriously
If you can’t see and touch something, how do you know that it’s exactly what you want and need? For a majority of online consumers, online reviews take the place of physical assessments—and they hold just as much weight. 67.7% of online purchasers are influenced by reviews. And these reviews don’t just show up on specific review sites. A business who has a negative article come up about them in a search query risks losing as much as 22% of customers.
And here’s a stat from Moz that’s bound to make your heart stop: Have four or more negative articles associated with your product or company and you’re likely to lose 70% of your potential customers.
But it’s not all doom and gloom. Negative reviews can sometimes have a positive effect if you demonstrate an appropriate, timely, and professional response -- or if it’s clear that the review was done with malicious intent. To counteract the potential of negative reviews turning away customers, always respond to them quickly and with tact and care, while also taking measures to encourage customers to leave good reviews.
Word gets around
Social media is a large facilitator of eCommerce purchases. Facebook in particular is responsible for 63% of the social media driven purchases made on Shopify-supported stores. Social media serves to benefit (and harm) your business in two ways. There’s your own presence on the site, which based on what you post, how you post, how often, and how you engage with users can affect your brand’s likeability and therefore subsequent purchases of your products.
There’s also what people say about you and who they say it to. Marketing plays into this, too, but not as much as you might expect. On Facebook, users are only clicking about one out of every 1,961 ads they see. So while ads aren’t getting completely ignored, they’re not a significant part of what’s driving users to make purchases. Efforts to attract more followers are worth it, though. 51% of Facebook users and 67% of Twitter users are more likely to purchase from brands that they follow.
You’ve got to be the best at what you do
Competition is fierce, and people are always talking. Produce a great product and provide great service, otherwise you’re likely to get left behind. People gather information about a product in a variety of ways—through their search box, through face-to-face conversations with brands or with family and friends, through new media and old media—and your reputation across those different channels is what will turn words into purchases.
Don’t give people a reason to leave a bad review or tell their friends and family negative things about you. You got in the business to do good work, and you must maintain that in order to succeed.
Be the market standard
People don’t always know why they like the things that they like. For instance, Heinz ketchup, which despite not being considered a superior ketchup based on taste, is still a favorite thanks to another factor—its familiar, thick consistency.
You might think that taste matters more than consistency when you’re talking about a food product, but society’s preferences don’t always align with what makes sense. Fancier ketchups may taste better and have better ingredients, but they’re lacking in that familiar texture. Not all markets are dictated by a standard preference, but many are. If your product belongs to one of these markets, consider the standard and try to improve without deviating too sharply.
Don’t get too fancy with language or design
Customers are drawn to products and brands they can understand. The term for this is “cognitive fluency,” which refers to how easy it is to think about something and our tendency to ignore the things that are too difficult.
Cognitive fluency helps you sell more
Fluency guides our thinking, and it guides our purchases, too. Companies with easy to pronounce names outperform those with hard to pronounce names. It plays into that all-important aspect of human emotions. The easier something is to comprehend, the more attractive it is. Cognitive fluency inspires familiarity, which in turn influences trust and likeability.
Customer Retention Through Good Reputation
Getting new customers to buy your product is crucial for success, but it’s also only half of the battle. Retaining customers takes a different approach, and it can’t be an underestimated part of your business plan.
Repeat customers are generally responsible for 40% of a business’s revenue, so if you’re budgeting all your marketing dollars to bringing in new business, you’re missing some serious opportunities for growth. The lifetime value of a repeat customers increases the more they buy your product.
- A customer who has purchased from you once has a 27% of purchasing from you again
- After two purchases, their likelihood of buying again increases to 45%
- After three times, there’s a 54% chance they’ll return
A repeat customer already knows what you’re offering, how you operate, and whether that satisfies their needs and wants.
The Purchasing Formula
It’s impossible to understand the many nuances that influence a consumer’s purchasing behavior, nor can you conceivably control many of these factors. But by being aware of the journey a customer follows in the lead up to purchasing a product, you can put your effort where it matters.
All purchases start with a moment when a customer decides they need something. Whether that need is legitimate or not doesn’t seem to matter much (remember, it’s emotion, not logic, that drives buying behavior).
From there begins the search for product information, followed by the product evaluation. This is where consumers decide which variables must apply to the product they’re going to purchase, and what they definitely do not want. Then there’s a decision and a purchase, followed by use of the product and an evaluation. Many times, that evaluation is shared with others. Finally, the consumer is in the post-purchase period, which is when they decide whether to be a repeat customer.
As a company, you have control over very few of these steps. The best you can do is offer a superior product that adheres to what your customers want and doesn’t deviate too far from the accepted standard.
When it comes to capturing customers online, good reviews and proper responses to negative reviews bolster your likeability, affecting the emotions of future searchers and making them more likely to purchase from you. This of course circles back to making sure you’re seen in the first place. Focus on image first—making it positive and getting it out there—and the customers will eventually come.
Originally published by Reputation X as Defining a Good Reputation: How People Decide Your Worth
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