The final variable in the Marketing Experiments conversion sequence is “a” for anxiety about following through with a purchase.

Some of this anxiety is about the product, some is about you as a retailer. You must address both. And unlike friction (resistance) which must be minimized and balanced with an attractive incentive, anxiety needs aggressive overcorrection on your website.

Ecommerce anxiety comes in a number of flavors, including fears about:

• Quality of the product
• Quality and reliability of your customer service
• Will the item arrive on time?
• Will the product be as described or as appears on screen? Is it the right color or size?
• Will it fit? Is this item true to size?
• What if the product needs to be returned?
• Is this site secure (privacy, credit card information)?
• Is this really the best price?

Today’s post will focus on anxiety on the product page specifically.

Addressing Anxiety About the Product on Product Pages

The e-tailing group conducted a consumer survey last summer and found that product descriptions were the most important to help make a purchase decision, followed by the merchant’s guarantee, stock availability and quality of images. (One can assume for certain categories like jewelry and apparel, images are even more important).

The survey also found:

• 76% believe content is insufficient to complete research or purchase online “always, most often or some of the time”
• 79% “rarely or never” purchase a product without complete product information
• 72% will abandon a site for a competitor or research further online, typically finding what they want elsewhere

Product Descriptions

One of the most effective ways to address customer fears in product descriptions is to research what actual buyers of the product care about by reading customer reviews — including reviews on other sites like Amazon, Buzzillions and competitors.

Product Images

Multiple views and zoom tools are very helpful for customers to get a closer look of a 2-dimensional image. Showing products in context can dramatically improve conversion because it shows the relative size of an item, what it can hold, how it looks on a person and so on.

The increasing use of video merchandising like Martin + Osa’s shop-by-outfit and Tiger Direct’s video reviews/demos are also effective.

Customer Reviews

There are many statistics touting the virtues of customer reviews, even negative reviews, improve conversion because it gives customers more information about a product (that doesn’t come out of a marketer’s mouth) and a better sense of trust.

Beyond just having reviews, the usability of your reviews can improve conversion, like allowing customers to hone in on 1 star reviews or 5 star reviews:

Or allowing products to be rated by attributes:

Amazon also allows customers to vote reviews as helpful and not helpful, and shows the top positive and top negative reviews, and allows search within all reviews:

Pluribo is also an exciting technology that uses natural language data mining to summarize a product’s strengths and weaknesses extracted from a number of product reviews. So far, it’s only available for select categories on Amazon through a Firefox browser extension.

But Amazon doesn’t have all the review-toys, Shoes.com uses Bazaarvoice’s Ask & Answer product, and Shoeline has its own Return-o-Meter to reduce customer fears about products.

Stock Availability

Showing that an item is in stock is good usability, as well as sizes and colors in stock without the customer having to add to cart to find out. Nine West does this well with rollovers and broken outlines:

Overstock creates a bit of anxiety — good anxiety (urgency) on products close to selling out:

Limited Inventory!
Sell out Risk: VERY HIGH
In Stock if you order today: Leaves our warehouse in 1-3 business days.

Note the buying guide link and “you can always remove it later” assurance are appropriately placed as these are other fears customers may have.

If you’re new here, welcome! And thanks for subscribing to Get Elastic. Friday is Blogger Digest day where we highlight posts from other blogs that are of value and interest to online retailers and Internet marketers.

• Rand Fishkin’s 10 Irrational Human Behaviors and How to Leverage Them to Improve Web Marketing is a phenomenal post based on Chris Yeh’s Outline of Predictably Irrational: The Hidden Forces that Shape Our Decisions. It’s full of interesting facts and take-aways - very relevant to ecommerce. Example:

III: The Cost of Zero Cost

In the real world, this effect was demonstrated by Amazon’s free shipping. After Super Saver shipping was introduced, Amazon saw sales increases everywhere except for France. It turned out that the French division offered 1 franc ($0.20) pricing instead of free pricing. When this was changed to free, France saw the same sales increases as elsewhere. Another real-world example: People will wait in line for absurdly long times to get something for free. Free is one of the most powerful ways to trigger behavior.

Lessons to Apply to Web Marketing:

*Offer free stuff, but make sure you get ROI from it (traffic/ad views/email addresses/etc)
*Be prepared for the fact that people will ENJOY free stuff more than normal, simply because it is free. Use this to your advantage and give away to those whose love & affection you need (reporters, bloggers, pundits, haters, etc.)
*Making people work to get something for free is a great way to trigger behaviors that might otherwise cost a fortune (think web surveys, information classification, data entry, etc.)

• Kevin Hillstrom illustrates how search overstates Email ROI.

• A recent ForeSee report shows many retailers’ e-stores declined in customer satisfaction this year, one of the hardest to fall being Gap. ForeSee suggests the 4-in-1 checkout diluting the Gap brands may be to blame, but it could be a mix of factors.

• Have you so far tuned out of the Twitter talk on the blogosphere and feel the need now to get up to Tweet? Check out 20 notable posts about Twitter.

• ShopNBC and MyWeddingFavors report huge conversion gains from using video online. Are we far away from video being the new product image? Anna Yeaman from Style Campaign interviews Kendall Rhodes on online video production and success strategies.

• In Should all Departments Have “Customer Experience” as their Number One Priority? Arianna from PlumberSurplus explains a situation involving a return that the retailer had to disapprove because it fell outside of its RMA (Returned Merchandise Authorization policy). She asks retailers to join the discussion on where the line should be drawn between company and customer responsibility, when should you meet in the middle and when does it become completely unprofitable to do so?

Hope you all had a wonderful New Year.

It’s the end of an exciting year for Get Elastic. Thank you to all our readers who have subscribed, forwarded, Tweeted posts and voted for Get Elastic in various contests. Happy New Year to you all, and if you’re a new reader, here’s a recap of the best of Get Elastic, 2008!

January

Webinar:

12 Things Retailers Must Learn from Christmas ‘07 with Linda Bustos of Elastic Path Software + companion blog post

3 posts to check out:

Cross-Selling Tips for eCommerce
Hack Week Part 2 - Using Google Trends for International Search Marketing
Using Geo-IP to Tailor Content Delivery

February

Webinar:

Love Your Landing Pages with Ayat Shukairy of Invesp Consulting + blog recap

3 posts to check out:

Continue Shopping Means What?
Make Email Look Good In Gmail - 8 Design Tips for Images-Off
Social Media With a Side of SEO: Hold the Spam

March

Webinars:

Jon Stewart or Oprah: What’s Your Website Personality? with Carolyn Gardner of Sitebrand + blog recap
Effective Merchandising: What Sells? with Mike Svatek of Baynote + blog recap

3 posts to check out:

Tracking Affiliate Orders Through Telephone Sales
Tips for Tracking Offline Orders: PPC and Catalog
How to Ask for Customer Reviews - Nicely.

April

Webinar:

Web Analytics for Online Retailers with Eric T. Peterson from Web Analytics Demystified + blog recap

3 posts to check out:

Optimizing for Product Colors: Long Tail Gold or Duplicate Content?
Why Innocent Emails Get Flagged As Spam
Email Marketing Trend: Animated GIFs

May

Webinar:

The Key to PPC for Online Retailers with Ryan Gibson from the Rimm-Kaufman Group
+ blog recap

3 posts to check out:

Top Online Retailers Not Showing Up on Google!
PPC Advertising: Are You Selling Yourself In Your Ads?
404 Not Found Pages: The Good, The Bad & The Funny

Free White Paper:

How to Write an Ecommerce RFP

June

Webinar:

9 Ecommerce Innovations: What’s Now & What’s Next with Jason Billingsley of Elastic Path Software + blog recap

3 posts to check out:

Asking Customers to Go Steady: Tips for Repeat Orders
Using Product Images to Reduce Size and Color Fears
Improving Product Descriptions Using Competitor Customer Reviews

July

Webinar:

3 Things to Die For: Web Analytics Unleashed with Avinash Kaushik from Google Analytics + blog recap

3 posts to check out:

Can Product Images Improve Conversion? Showing Products in Context
Stop Google Analytics From Stealing Your Valuable AdWords Keyword Data
Should You Remove Keywords With Low Click Through Rates?

August

Webinar:

The Art and Science of Choosing Ecommerce Technology with Bernardine Wu of FitForCommerce + blog recap

3 posts to check out:

Yes Virginia There Is a Santa Claus & He Searches for Free Shipping
Holiday SEO: Using Amazon Bestsellers for Keyword Research
The Psychology of Numbers in PPC Ads

September

Webinar:

I Know I Should Be Testing, But with Bryan Eisenberg of Future Now Inc. + blog recap

3 posts to check out:

Optimizing Product Reviews for Different Buyer Personalities
Do Hacker Safe / McAfee Secure Badges Increase Sales?
Uncovering the Hidden Profit Treasures of Your Company

October

Webinar:

Holiday Wishlist for Mobile Commerce with Bill Mirabito of B2C Parnters + blog recap

Delivering an Integrated Ecommerce Experience for Empowered Customers with Josh Lannin of Oracle and Peter Sheldon of Elastic Path Software + blog recap

3 posts to check out:

Free Shipping: Got It? 10 Ways to Flaunt It
How to Find an Online Reputation Manager
Crutchfield Email Covers 4 Buyer Personalities

November

Webinar:

Multi-Store Retailing: Perks and Pitfalls with Jason Billingsley of Elastic Path Software + blog recap

3 posts to check out:

Should Retail Email Sell or Inform? An A/B Split Test Case Study
Tapping Twitter to Understand Customers and Develop Personas
CSN Stores Eases Howsers Last Minute FUDDs

December

Webinar:

Dangerous Marketing Ahead: How to Break Bad Habits and Survive a Deep Recession with Jeff Molander of Molander & Associates and Jonathan Salem Baskin, author of Branding Only Works on Cattle
+ blog recap

3 posts to check out:

Reducing Friction in the Sales Process
Where Will MAP Pricing Lead Online Retail?
Are Cash Discounts the Worst Incentives?

Once again, thank you for reading, subscribing to, commenting on, blogging about, Tweeting and forwarding Get Elastic with others in 2008, and we look forward to carry on the ecommerce marketing conversation with you full bore into 2009.

Get Elastic reader and ecommerce blogger Scott Wilson (aka That Software Guy, The Cart Blog and @thatsoftwareguy) informed me today of a new merchandising tactic on Amazon. It appears Amazon has replaced its “Better Together” cross-sells with bundling. Of course, this could be a split test, but Scott and I both can see this technique in action when we visit Amazon.

Before - Better Together

Screenshot credit: Register Hardware

After - Frequently Bought Together

The customer now has the option to add all 3 to the cart, or pick of the 3. Giving the customer some choice but not too much choice is key here. I imagine the uptake would be far lower if the customer was presented 5 or more choices, simply because it requires too much thinking and could cause a “paradox of choice.”

Word choice: Frequently Bought Together vs. Better Together

Though Better Together sounds more smooth, it could be that there is a higher degree of social trust with “Frequently Bought Together” — it’s more clear on why the cross-sell is presented (rather than head scratchers like marmite and .Mac software. Of course, this could be a short-term test.

I also spotted some product pages pitching “Best Value” cross-sells rather than “Better Together” which may be more appropriate in this economy:

Personally I think this is a great idea, and it’s another reason I’d love to be a fly on the wall in the Amazon web analytics war room.

Offering a chance to win a shopping spree is a great way to attract customer reviews without paying-for-production. Often this is done through email or on a post-purchase thank you page — but this is the first time I’ve spotted the incentive on a product page:

This screen shot is from Macy’s.

A couple weeks ago I posted a Frictionary — a collection of design elements that cause resistance with customers on ecommerce sites (and may cause the customer to abandon the sales process). As mentioned in the post, friction exists in the mind of the customer and, while you can’t eliminate friction completely, you can take steps to minimize it (one way is to adjust your site design and usability).

You also want to “balance” friction with incentives to stick around and actually buy something — from you.

Incentives include dollar discounts, % discounts, free shipping, free gift with purchase, no tax, buy one get one free and so on. While at the Marketing Experiments Landing Page Optimization workshop last month, we spent a good hour and a half discussing incentives, during which I “Tweeted” (sent out a short message over the social network Twitter) a quote from Dr. Flint McGlaughlin:

“Worst incentive you can offer is a cash discount - Dr. Flint McLaughlin” (before I knew how to spell his name)

I received a lot of direct messages from my Twitter community asking for an explanation, which is a little hard to do with the 140 characters Twitter limits messages to. A blog post is more appropriate.

Personally, I don’t know if a cash discount is better or worse than free shipping, free gift card, free gas card, free clock radio or dinner with “The Real Shaq.” And neither do you — unless you test it. Different products, different customers, different economic conditions — there’s no cut and dry answer.

The rationale

Dr. Flint specializes in marketing tests, so I can’t imagine he’d make this statement lightly. Here’s the rationale — it’s all about Perceived Value. When you offer a dollar discount, the benefit to the customer can never exceed the face value of the discount. You could offer a $10 discount on a $100 product or free shipping which might cost a customer $15, $20 or more (depending on what you want to charge for shipping).

Similarly, you may test a $10 rebate against a $20 gift card (which may be restricted to regular priced merchandise only). Again the perceived value is higher with the $20 face value of the card. Plus, the customer may never redeem the gift card, or redeem it and spend more than its face value. The point is, there are some incentives you can invent or inflate a value for, but a cash discount is always equal to its nominal value.

Cash discounts also devalue the product somewhat, which is why many manufacturers favor MAP (minimum advertised price) policies.

Measuring the impact of an incentive

How do you choose a winner in an A/B test? Pick the higher conversion rate, right? Not necessarily. A higher conversion rate doesn’t mean a better ROI if one incentive actually carries higher net costs for you as a retailer (the wholesale value of the free gift, the actual shipping cost for a product etc).

Marketing Experiments held a call-in web clinic last year called Finding the Ideal Incentive: How We Increased Email Capture by 319% with a companion research brief if you want to see the results of some testing Dr. Flint’s team has done. Worth checking out.

You could also use your email open rates as an indication of which offer-in-subject-line was more compelling at first blush — this factors out the impact of friction in the buying process which also impacts your ultimate conversion and ROI (i.e. it was a slam-dunk offer but the landing page fumbled).

What does the customer really want?

If a customer is going to make a rational decision that he/she is better off with $10 off or free shipping - we assume the customer has access to more information than he/she actually has available in a split test. If I’m asked whether I’d prefer $10 off or free shipping, I want to know how much shipping cost I save. Since I’m only shown one of the incentives tested, it comes down to “do I care” about the incentive I’m presented with.

An incentive’s attractiveness to the individual depends on 3 P’s: the Product, the Purpose of the purchase (want vs. need) and the Personality of the customer. In this economy, many are simply not buying luxuries, so a simple “free shipping” offer bounces off the screen. If the customer thinks “I can’t buy regular priced items anymore” — a 10% discount may make them feel they can justify the purchase since they’re “saving money.” (Think of the customer who drives halfway across town to buy the loss leaders in the supermarket circulars).

Similarly, bonus gift cards mean “you have to spend money again to benefit” which scares the cash-strapped or “you have to shop here again to benefit” which doesn’t impress the non-loyal.

And here lies the problem with A/B split tests - you’re measuring the behavior of the majority rather than matching the motivations of the individual. But without really good personalization strategies and tools, it’s difficult to execute the latter.

If we could understand which incentives match an individual’s continually shifting wants and needs, and target them accordingly, there would be no best or worst incentives. Anyone found this tool yet?
.

If you’re new here, welcome! And thanks for subscribing to Get Elastic. Friday is Blogger Digest day where we highlight posts from other blogs that are of value and interest to online retailers and Internet marketers.

• Did you woo customers with generous return policies this holiday? Maxim Mironov illustrates how every 1% of sales returned requires an additional 10% sales to offset.

• Scott Roon and Jascon Carncross from eBags.com share their ecommerce video production tips at VideoRetailer.org.

• Avinash Kaushik shares strategies for multichannel analytics to track sales driven by offline channels.

• If you’re itching for some audio-visual learning, check out Marketing Experiments’ year-end webinar Lessons Learned: Our analysts reveal the top takeaways from our 2008 optimization research and the companion research brief covering case study results from research partners.

• What does 2009 and the future hold for CRM? Could it be emotional targeting? Evan Schuman discusses the ethical ramifications of marketing software that interprets consumer communications through the Internet.

• For something a little different, Chad White and Smith-Harmon put together some retail-email marketing themed Mad Libs for you to download and enjoy.

Get Elastic is taking a little holiday and will return on Friday with our regularly scheduled link-love programming.

All the best to you and yours!

Why cross-sell when you can bundle?

Product bundles are a great way to increase average order size, deliver a value proposition and even creatively sweeten the deal when MAP (minimum advertised price) regulations apply to a product (offering free or discounted bundled items).

Walmart is promoting value bundles this year on everything from computers to toys. Here’s a recent email:

And here’s a close-up of one of the bundles’ product pages:

“Get more, save more and spend less when you buy these items together.” Brilliant. Customers can even choose their options right on the product page and the total updates itself at the bottom.

The US Supreme Court ruling in Leegin Creative Leather Products Inc. vs. PSKS Inc. (pdf) in June, 2007 made it legal for a manufacturer to set and enforce MAP (Minimum Advertised Price) for resellers of its product, and pull the line or sue retailers who violate.

Correction:The Supreme Court ruling found that minimum pricing policies are legal and do not represent a violation of U.S. antitrust statutes.

Why Manufacturers Enforce MAP

There are many reasons why manufacturers may impose such pricing policies:

• Manufacturers want to protect brand image, which discounting can work against for premium brands and new, innovative products
• High margin is an incentive for retailers (who are the manufacturer’s extended sales force) to promote these items more than others (although without the ability to offer price breaks, it’s harder to incentivize consumers to buy)
• Maintaining MAP or MSRP maintains retail value so manufacturers can retain wholesale pricing
• To prevent bargain basement retailers from underselling other resellers of the product (who may discontinue selling these brands or complain to the manufacturer)

MAP doesn’t necessarily apply forever, especially for seasonal products or categories like consumer electronics where new models are constantly hitting the market. But under a MAP policy, a product must be sold at a MSRP (Manufacturer’s Suggested Retail Price) until the manufacturer permits a markdown.

How MAP Affects Retailers

Some retailers will benefit from the level-playing field (smaller retailers, those with higher operational costs or lower efficiency and retailers with a reputation for excellent customer service), and enjoy extra margin to boot. Though certain industries will suffer, especially in this economy, as sales velocity doesn’t occur until the price moves South. For example, HomeCenter.com reports certain price-sensitive product lines sell $150,000 per month when discounted vs. $10,000 when sold at MAP.

Another downside is inventory costs. If in this economy, people are hanging on to their older model consumer electronics rather than buying the latest models, that inventory is going to back up. Without the ability to markdown, the retailer must deal with the stale stock. The manufacturer has received its money, but also loses as it won’t be refilling inventory for resellers.

And as with any rule, MAP is bound to be broken. Online retailers are already using “click to see price” in pop-up windows, “add to cart to see price” and “email for quote” tactics. Retailers who take the high road and adhere to MAP pricing often find themselves forced to lower prices to compete, or honoring price-matches once discounters run out of product.

Break MAP at Your Own Risk

Technically, concealing price from product pages is akin to a brick-and-mortar store showing one sticker price, and a salesperson verbally offering a price break to a customer in-store. It’s not an advertised price, nor a displayed price. But that raises the question — if it’s not advertised in email, PPC, shopping engine or other promotional material — is showing a sub-MAP price on a product page really “advertising”?

Retailers who walk this thin line must be careful not to let these prices slip through data feeds and into shopping engines, search engines or any other promotion. Even with diligence, it’s easy to get caught breaking MAP. Spy firms like NetEnforcers Inc charge upwards of $100,000 per month to mystery shop online retailers on behalf of manufacturers and have already caught many in the act. Offenders are notified by NetEnforcers to correct pricing which is typically restored within a few hours. If the seller is not a licensed dealer, the seller may be slapped with copyright infringement.

Alternative Incentives to Discounts

Most manufacturers don’t balk when retailers offer free shipping, gift with purchase, gift cards with purchase or a % off an additional, non-MAP protected item when promoting a MAP item. So long as the dollar value of the product is not reduced, everything’s cool. Offering coupon codes is another way to reduce the price without reducing the price, but be very careful that you don’t advertise the coupon to be applied to the MAP product (that would be advertising). To be safe, if you’re offering a coupon code, always mention which items are excluded from the promotion. For example, Austad’s has a special landing page that lists all the excluded brands and a brief explanation at the bottom:

Email offer:

Landing page also shows the same image as above (to re-assure customer is in the right place) and includes this at the bottom:

What About the Consumer?

Obviously consumers don’t like paying more for products, especially in this economy where people expect everything to be on sale. (On the flip-side, if consumers stop buying non-essentials, however discounted, they actually come out ahead).

Consumers skilled at online comparison shopping might be frustrated to find no price breaks (with the exceptions of retailers who break MAP or on factory refurbished products), or may hunt out free shipping offers and other incentives. Comparison engines that display the total cost including taxes and shipping will aid these customers, as will those that provide seller ratings to help them decide who to ultimately buy from.

Internet Retailer raised the question “will consumers continue to shop the Web if they can’t get better deals online than in store?” and cite research by Forrester, the e-tailing group and Carnegie-Mellon University:

• 49% of counsumers shop online for convenience, 46% for selection and 43% for value (Forrester)
• Price was important to 80% of online shoppers, but ranked fifth among benefits of shopping online (e-tailing group)
• Online consumers are willing to pay $1.72 more on average to buy books from brand-name retailers than unfamiliar merchants (Carnegie-Mellon)

“I don’t see it leading to a mass exodus from the Internet, because lower price isn’t the dominant reason people get value from the Internet,” says Carnegie-Mellon professor Michael Smith. “But taking away the little guys’ pricing advantage will strengthen the hand of the large players.”

In this economy, manufacturers of premium brands and non-essential products (purchases which can be deferred without severe loss of standard of living) likely have to give a little, and remove restrictions earlier. So the whole MAP thing might not be as much of a headache for retailers after all.