We’ve all been there. You go online to have a browse and mere minutes later you find yourself £100 lighter, having just ordered the latest something or other. You may then find yourself regretting your low levels of self-control and resenting the purchase. On the surface, it would seem like the business you just bought from just did a great job in convincing you to buy their products – but in reality, they may be the ones on the losing side…
For the past few decades, businesses have been mostly focused on the journey of their customers from the first point of contact to purchase, often neglecting the emotions ignited after shoppers have made their decisions. This has done a great disservice not only to the customers and businesses involved, but also to the environment.
Research from Cognitive Psychology has revealed that after going through an experience such as an online purchase, people don’t remember the ‘average’ of the experience, we typically recall the last thing that happened and the emotional peak (the best or worst moment). This is called the ‘peak/end principle’. It means that although brands make a sale, a seemingly positive thing, if they spark negative emotions during or at the end of the experience, the customers’ view of their entire brand may become distorted over time.
Why is this important for businesses? Returns are the silent killer of brands. Not only do they affect the bottom line by shunting revenue (Post Purchase Regret costs UK retailers an estimated £20 billion every year), they also affect your customers’ perception of you. Not to mention the environmental impact that returns have – just think about the carbon footprint, the plastic packaging and product wastage… What if customers were offered an experience that allowed them to make more meaningful purchases?
The solution? In order to protect your brand and reduce the propensity of returns, you can employ behavioural economics & psychological insights to your online journey. Don’t worry, not many retailers are doing this… Yet.
We’ve been passionate about behavioural insights in digital and pioneering neuromarketing in the last fifteen years, which has enabled us to amass a body of knowledge that has the power of supercharging your brand – and your bottom line.
Interview with a Consumer Neuroscientist
Max Wiggins, Consumer Neuroscientist at LAB, runs us through the thinking behind our new framework.
Q: Why is regret important in the consumer experience?
A: We know from our experience running biometric tests just how important emotions are during the customer experience. The smallest of sour emotions can lead to drop-off. We therefore found it strange that online retailers were doing very little to manage their customers’ post purchase regret – a sharp emotion that is increasingly becoming associated with online purchases.
As mentioned above, we know that customers’ memories are biased in that we recall emotional events and the last thing that happened, not the ‘actual’ experience. We realised the size of this problem and began to understand a whole set of much bigger knock-on consequences that PPR could lead to (e.g. brand degradation).
Q: Why are behavioural economics & psychology best placed to reduce Post Purchase Regret (PPR)?
A: We know from research that PPR can arise from (1) under-consideration: not enough time spent and so the belief that better alternatives were missed, or (2) over-consideration: too much time was spent browsing and so the belief that original desires were lost.
Both of these rely heavily on the customer’s perception of choice. And that’s why our method employs principles from Behavioural Economics and Psychology: they allow us to most appropriately influence choice perception to make the experience as meaningful as possible. By slightly reshaping the customer experience, we enable customers to get the things they really want and so the likelihood of PPR diminishes.
Q: What companies can use the framework you’ve developed?
A: Our methodology can be used by a wide-range of online retailers and FMCG companies. In this sense, it’s extremely versatile. As the method is not a one-size-fits-all, it means that each company who harnesses the PPR methodology would be served a bespoke framework tailored to best fit your company’s authenticity and offering.
Get In The Know
If you are interested in reducing the environmental impact of your business, boosting customer satisfaction and increasing revenue by reducing returns, get in touch with us. We’ll give you exclusive access to our research and the unique methodology we’ve created to reduce the propensity of returns.