How filters boost sales according to behavioural economics

How filters boost sales according to behavioural economics

In 2005, the psychologist Barry Shwartz got on stage at Ted Global to explain some of the ideas from his book The Paradox of Choice. In his New Balance trainers, gym socks and shorts, he told the audience the story of a colleague who had done a study on participation and investments in voluntary retirement plans. That colleague had been lucky enough to get access to investment records from Vanguard, one of the biggest investment firms to this day. So the study was a big deal.

But while the researchers may have expected a certain pattern in the data, what the study discovered went completely against everything that made logical sense - as behavioural economics often does. They noticed that for every 10 mutual funds offered, the rate of participation in the retirement plan went down 2%. That meant that if Vanguard offered 50 plans to choose from, participation in the retirement plan would drop by a whopping 10%. So what was happening? Participation was low because there were too many options to choose from. As Shwartz concluded, some choice is better than none, but that doesn’t mean that more choice is better than some.

The paradox of choice

It seems counterintuitive, but offering more choices can cause something called analysis paralysis, a term that basically means you have so much choice you can’t make a decision. Although Shwartz talks about it in his book, it’s also the moral of the story in Aesop’s fable The Fox and the Cat. The fox boasts about having more escape options than the cat, but when the hounds come, he struggles to make a decision because of all of those options. The cat on the other hand, has only one option, and runs up a tree.  

If we apply the idea of analysis paralysis to the world of eCommerce, it should be that everyone, everyday is unable to shop online. There is simply too much choice. Yet people are buying online without much trouble because User Interface (UI) developers have found a way to offer choice while also reducing analysis paralysis. If you implement the same tricks, you can have the same success in your online store.

Don’t overwhelm your customer if you want to convert

The eCommerce conundrum is that you want to give your customers choice so that they can find and buy what they’re looking for. The paradox of choice says that giving too much choice will reduce the likelihood of a purchase. So how can you still offer lots of choice, but at the same time also reduce the number of choices available to a customer? The answer is filters. By being able to filter down their search, your customers reduce the amount of choice they have while at the same time feeling like they have choice. It’s genius. Although we like options, the act of making a choice can become a burden. Filters can help reduce the number of choices a customer has to make in the purchasing process.

What should your filters be able to do?

There are some basic filters that every eCommerce store should have. And just so you know, even some big shops don’t properly implement them. You should be able to filter by category and price. Brand is also a useful filter, and size if you’re selling clothes. Filters should also change depending on the product you’re looking up as each product will have its own filtering process to streamline the search. 

Add some spice to your filters

To make it even easier for customers to find what they want you can add some extra spice to your filters. 

Give your customers real-time results so they can immediately see what they’ve filtered. This means they don’t have to take that extra step of pressing a button. By doing this, you’re again taking one more step out of the purchasing process. 

Make sure that your filters are mobile friendly. It might sound obvious, but there are some pretty good filters that fail once they move to mobile. Do the tests. 

Add dynamic filters. Dynamic filters mean that when an item is out of stock, the filter that represents that item doesn’t show. This is like analysis paralysis inception. Reducing the choice within the choice reducer to help customers make a choice more easily!

Choice can cause an escalation of expectations

There’s another downside to choice that we haven’t mentioned yet. And it’s another behavioural economics problem. When you have so many choices something called the escalation of expectations occurs. This basically means that you expect to find the perfect product because there are so many choices. When you finally do get the product, you’re less satisfied because your expectations were so high in the first place. 

Applying this to your eCommerce store, one way to make your customer more satisfied is by reducing the number of options they have during the final step of the process. Filters allow you to provide lots of choices, making your shop attractive to the customer, and gradually reduce those choices, making it easier for the customer to come to a final decision. If a customer has too much choice, there’s no excuse for failure and the escalation of expectations begins. If they’re disappointed with their choice when they receive the product, they blame themselves thinking there was a better option that they missed. Understanding this makes filters seem even more vital to the sales and customer satisfaction process. 

What options do I have for eCommerce filters

Now that you understand the behavioural economics behind filters and why they’re so important, you can understand why your customers do certain things. You can understand why you’re getting site visits but maybe not conversions. 

Using a tool like Motive Commerce Search makes sure that customers aren’t faced with analysis paralysis so that you can convert more site visits into sales and create a more enjoyable, and positive shopping experience for your customers. Motive Commerce Search offers mobile friendly, dynamic filtering while real-time results keep searches dynamic and customisable. Filters allow shop owners to create a filtering experience that matches their product catalogue. 

Motive Commerce Search doesn’t just do this with filters though, it does it with each aspect of the eCommerce search experience, which makes choosing the easiest choice you can make.