For consumers, online and off, parting with money is a psychologically painful experience. And research has shown this is even the case when purchasing highly desired items. Indeed, the pain of payment is a significant barrier to ecommerce conversions and is thought to be a key driver of the average shopping cart abandonment rate of 67 percent across the industry.
In his detailed explanation of the principle, above, Dan Ariely points out that delaying the actual act of paying—separating it in time from the buying decision—reduces discomfort. This is why, he says, it’s easier to spend money with a credit card than with cash. Even more painful, he explains, is increasing the number of transactions necessary—paying for each bite of a meal at a restaurant, for example.
In other situations, however, prepaying increases enjoyment and decreases anxiety. Magazine subscriptions, for example, require an initial painful purchase, but allow the reader to enjoy each subsequent issue pain-free.
In the context of online purchases, there are several common factors that increase or accentuate the pain of paying. Multi-step purchase funnels and slow-loading checkout pages, for example, force shoppers to consider—and possibly question—their decisions. Presenting prices in foreign currencies, too, forces extra consideration during the conversion process, increasing anxiety. Another common hurdle is the appearance of unexpected costs, which 56 percent of shoppers identified as the reason they would abandon a shopping cart.
Besides avoiding these common obstacles, what can be done to decrease the pain of paying? Here are three simple ideas that are worth testing:
The biggest advantage of bundling several products together is that it reduces the likelihood of several smaller purchases—each representing a pain point. Beyond this, however, bundling offers an appearance of increased value, showing shoppers several items for one manageable price. A successful bundling experience could, also, help increase average order values.
2. Bracketing and Anchoring
Extensive research has shown that consumers rely heavily on the first piece of information they receive (the anchor) when making decisions. If a magazine is advertised as $10 per issue, for example, shoppers will be more likely to spend $20 on a book. If the magazine is advertised $2 per issue, consumers will value the book at a lower price. Combined with bracketing—which establishes a range using prices or suggestions of price such as “50% lower than average,” for example—anchoring can significantly ease the pain of payment.
3. Buy Now, Pay Later
For subscription services and all-inclusive resorts, prepaying is an obvious strategy for reducing the pain of payment. But retail websites can leverage this too. Through the promotion of gift cards, for example, retailers can encourage prepaying—especially if there is a small discount associated with the initial purchase. Another tactic—used to great effect by iTunes—is delayed invoicing. Instead of issuing a bill after each purchase, iTunes waits until an account balance has reached a certain threshold and then issues a single invoice for the entire period. This allows consumers to shop and buy freely without thinking about the actual purchase process.
The pain of paying is a formidable obstacle to completing a purchase online. But, by testing strategies for addressing this point of friction, it’s possible to reduce the anxiety of purchase and, ultimately, create a more enjoyable and profitable shopping experience.
This week, Brooks Bell has invited its clients to Raleigh, NC for an exclusive day-long workshop with Dan Ariely. The workshop is a special pre-conference event leading up to Click Summit 2014.