Emotional eCommerce Ups and downs in the online experience - July 2017 - Klarna
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Research Report July 2017
Emotional
eCommerce
Ups and downs in the
online experience
www.klarna.com
Based on research by University of Reading, School of Psychology and Clinical Language Sciences: Lynne Bell, Dr Julia Vogt, Dr Rachel McCloy and Prof Laurie Butler. Commissioned by Klarna Executive summary More than half of all online transactions are abandoned before completion. But what psychological and emotional factors cause this behaviour? This study pulls from existing research to investigate what consumers love and hate about online shopping and draws new conclusions on how retailers can improve the online journey to enable a smoother, frictionless experience. It examines many of the diverse factors that impact consumer decisions. From demographics and social influence to website design and usability. And explores some of the powerful emotional drivers like risk, trust, satisfaction and regret. Applying behavioural psychology, it provides practical recommendations for retailers looking to improve online completion rates, enhance the online shopping experience and encourage successful sales. In this way, it helps retailers to design payment processes that work with people’s preferences. Creating small experiential ‘nudges’ at the digital point of sale has the potential to significantly boost business. 2
“Some consumers
like to use their
online baskets as
a wish list or as a
digital prompt for
further evaluation.”
To buy or not to buy?
Estimates of shopping cart abandonment rates, range from 25-75%i. Between 40-50%
of potential transactions are abandoned at the first stage of the checkout processii,
where consumers are requested to login or register as a new customer. Transaction
losses are also reported at all subsequent stages, particularly where billing information
is requested before shipping information is presented.
Studies show that the most common Recognising intent For example, some consumers like to use
reasons for cancelling transactions are: their online baskets as a wish list or as
Before we can begin to tackle issues
a digital prompt for further evaluationxi.
• Having to register for an of cart abandonment, it’s important
Interestingly, the more product
account (33%)iii to understand what motivates consumers
information available, the more likely they
• Fees for alternative payment to place products in the cart in the
are to add it to their basket and use it for
methods (25%)iv first place.
future reference.xii
• Lack of trust in site security (23%)v In physical stores, cart intention is simply
‘to purchase’ – the customer sees a
• Slow checkout processing (27%)vi product, they like it they put it in their
• High shipping costs (27%)vii basket then buy it. Online purchasing
is much more complex.
• Concerns over entering details
on public WiFi (15%)viii Many instances of cart abandonment
result from alternative uses of a shopping
This is backed up by customer
cart, where purchase was never intended.
preferences:
That’s why it is impossible to aim for
• 52% prefer to buy without 100% conversion.
registrationix
• 56% favour one-click purchasingx
3
4
What causes cold feet?
Browsing, analysing, selected and placing an item in the basket, involves a relatively
large commitment in terms of time and effort. So why do so many shoppers hesitate?
What is it that leads them to ditch their goods when they have come so far?
• Security fears • Issues of trust
Privacy and security concerns are Trust in an online merchant plays an
Emotional baggage
paramount in the minds of online important mediating role in subduing
shoppers when divulging personal risk. Customers are less likely to
Emotional factors such as fear, anxiety, and financial information. These use a payment system, even if it is
shame, guilt, or doubt may result in can supersede concerns over secure, if they feel that the company
hesitation. Hesitation is a key factor products and servicesxiv. Assurance is not wholly to be trustedxvii
in predicting online shopping cart statements and third party seals can
• Brand loyalty
abandonment, particularly at the final help to allay consumer fearsxv
Online brand trust, is determined
payment stage where security fears or
• Risk of exposure by a different set of factors to offline
fear of regret may lead to reconsideration
Fear of transaction risk tends to brand trust. Privacy, security, and
of the purchase. These can include:
increase with transaction size. It can information quality are additional
• Customer irritation be assuaged by providing online predictors of online brand trust,
Website navigation can significantly payment protection against fraud along with brand name, past brand
impact consumer irritationxiii. Eroding such as that provided by credit cards experience and word-of-mouth
the customer experience, it can make communication. Brand experience
• Decision styles
them cross, less likely to invest time has been shown to influence brand
Differences in decision making styles
and effort and more likely to abandon familiarity and satisfaction, and is
and propensity to make decisions
the purchase the main predictor of brand trustxviii
based on ‘rules of thumb’, rather
than reasoned consideration, can
moderate perceived riskxvi
Hesitation is a key factor in predicting online shopping
cart abandonment, particularly at the final payment
stage where security fears or fear of regret may lead
to reconsideration of the purchase.
5
Don’t underestimate
how hard it is for some
shoppers to deal with
the complex, cognitive
processes involved in
ordering online.
• Spontaneous purchase • Going mobile
Customer Often resulting from lapses of self- Shopping by mobile increases the
control, inner strength or resolve, frequency of purchase.xxii This could
experience
unplanned purchases can be be due to increased convenience
lucrative for retailers. The less the and the formation of habitual online
Don’t underestimate how hard it is for customer is required to think about shopping behaviour, particularly for
some shoppers to deal with the complex, inputting data, the more likely they low cost, repurchase items. In the
cognitive processes involved in ordering are to make a purchase without UK, 31% of all eCommerce traffic
online. Faced with global choice, too much consideration. That’s the is already reported to be carried out
countless decisions and, of course the beauty of one-click purchase – in on mobile devicesxxiv
man-machine interface – the physical fact, 33% of mobile shoppers believe
• Payment options
‘experience’ can make or break a sale. one-click purchasing creates a more
Credit and debit cards remain
positive shopping experience.xx
• Customer expectation and friction the most popular mode of online
A website’s vividness and social
Transaction inconvenience is often payment in the UK. But PayPal and
presence can also enhance impulsive
the largest predictor of transaction similar are close behind.xxv When
purchasesxxi. For example, by using
abandonment. Whether it’s having it comes to enthusiasm for mobile
ratings and recommendations at
to register before purchase; payments, this can be dependent
the checkout
entering large quantities of personal on personality and beliefs, with
information or technical glitches that • Aesthetics & design social influence exerting the greatest
slow the process or lead to repeated Visual attractiveness and consistent effect at adoption stagexxvi. It’s
data entryxix presentation can also boost worth noting that buyer anxiety can
purchasing by browsers. However, be reduced by not having to give
• Coupon redemption
some customers are wary of ‘style credit card information. Deferred
The terminology used – coupon,
over substance’ and too much payment and credit schemes can
discount or promotion – and whether
emphasis on design can put them encourage purchase, particularly for
prompts for codes are given can
off. High symmetry, low complexity, high cost items. In one study, 33%
affect feelings of price fairness,
blue hue, medium brightness and of e-consumers thought that online
purchase satisfaction and loyalty.
medium/high saturation tend to elicit shopping would be improved with
Requesting browsers to input a code
the most positive responsesxxii deferred paymentxxvii
can cause those without to abandon
their basket simply because they feel
they are being treated less fairly
6
and perceive themselves as more • Age appropriate
Demographic skilled in Internet usage. Males are While performance expectation and
differences also more likely to shop online as it social influence are the same for
is quick and convenient. Females, older and younger adults, barriers
however, report online shopping to such as value, risk, and tradition,
There are other factors outside the be less emotionally satisfying and were different. Overall, younger
individual experience that impact the lacking in social interaction. adults experience much fewer
virtual shopper’s emotional sales journey. barriers. “Millennials” make
For females, shopping can be
Attitudes to buying online, frequency 54% of their purchases online.
improved with the inclusion
and types of sale can all be affected by In “Non-Millennials” the figure is
of personalised online
basic demographics. Understanding slightly lower at 49%. However,
recommendations for products of
differences between age and sex, considerable generational differences
interest – either based on current
allows e-retailers to optimise their still exist in mCommerce (among
selection or previous browsing
sales environment for specific target device users) where 63% of
history. Women also show greater
audiences. And multi-channel retailers Millennials have made purchases
satisfaction in online sectors such
to understand why buying patterns using a Smartphone compared
as fashion retail where, in some
differ between online and instore and with only 8% of senior citizensxxxiv
segments, bargain shopping has
to modify their strategies accordingly.
been likened to a competitive sport. • Income & spending power
• Gender roles A regular income and greater
Women perceive loss of privacy to
Different hormonal make up, financial security can make shoppers
be greater than men. However, web-
brain connectivity, and information more likely to buy online. Similarly,
recommendations from friends help
processing between genders may go deferred payment options can appeal
to mitigate perceived risk. The same
some way to explaining differences to those who desire more flexibility
was not found to be true for men. All
in online consumer behaviour.xxviii with their finances, but have a lesser
in all, females are more responsive
impact on high earnersxxxv
Males are more likely to use fewer to negative stimuli and so are more
search terms and to spend less time cautious and better able to resist
viewing individual pages, but thus are temptation or delay gratification
more efficient at performing searches
7
Creating more emotionally intelligent online strategies
To help prevent drop outs and boost sales, online retailers must work to improve
the customer experience, increase motivation and better understand emotion at the
point of sale. Looking closely at the psychological drivers in these key areas allows
merchants to evolve more impactful customer engagement and retention strategies.
Based on the information in this report, here are some suggested recommendations
that can boost emotional appeal at the checkout and ‘nudge’ consumers to complete
the sale:
Improving
the consumer
‘ Nudge’ Recommendations:
3
experience
There are two fundamental routes by
1 Embed ‘one touch pause’
functionality into online
Encourage customers to shopping experience to
which people think, feel, and behave.
develop mShopping habits allow consumers to return
Emotional – quick, impulsive, by providing easy to use to same place.
and driven by feelings e.g. platforms that stimulate Distractions and competing tasks are
spontaneous purchases. their emotional response. likely to have the strongest impact
Consumers might use m-commerce on m-commerce transactions, which
This ‘automatic’ or ‘hot’ system is based
devices when already in a more automatic are carried out on-the-go or whilst
on our flight or fight response. It’s more
mode such as during their leisure time concurrently involved in other tasks (such
likely to occur when the shopper lacks
or while engaging in another activity as watching television). The introduction
time, or is buying for non-essentials
such as watching TV or commuting. of a pause button, allowing the user to
(fashion) and is stimulated by websites
Consequently, this can drive higher return to the same point if interrupted,
that are more image based. This would
selling rates when consumers use could prevent drop outs.
explain why mobile browsing tends to
m-commerce devices.
4
drive more spontaneous purchasing.
2
Logical – slow and based on
analytical thought such as
online price comparison. Ensure fluency so that the
Collect information to tailor transition to the checkout
This response is designed to overcome
‘impulse’ emotions and allow more
the website experience to page does not cause an
beneficial choice. More likely when the the consumer, product emotional purchase to
shopper has time, motivation and energy and device. switch to a logical one.
and is buying utilitarian products. It can If the checkout page is visually very
Monitoring and analysing individual
be stimulated by detailed information different from the rest of the website, it
buying behaviour and browsing history
and text based web-sites. can cause them to think twice about their
can determine if someone is more likely to
be an emotional or logical buyer. Based spontaneous purchase. Prevent this by
on these considerations, customized making sure the checkout information is
websites could offer personalised views informative (to prevent security fears) but
that target an appropriate consumer at the same time easy to understand and
experience. In a related vein, existing data visually appealing.
might show that a website is mainly used
at certain times (e.g. night) or are more
likely to be influenced by a product’s look,
brand reputation or credibility.
8
5 8 10
Facilitate ‘one-click’ Introduce design measures Consider offering a limited
purchasing to shorten the that promote website loyalty. time discount on items after
checkout procedure. Make product and information searching they have been placed into
Transactions are strongly influenced easy and efficient. The less time it the basket.
by the fluency and simplicity of the ‘costs’ the shopper the more likely they For wish-list browsers, visible and time-
checkout process. Low cost items at will return. Provide access to online limited price reductions can potentially
least, should be facilitated by one-click or communities and feedback systems trigger the shift from browser to buyer
minimal checkout procedures. Complex such as chatrooms, bulletin boards, and by providing a justification for immediate
processes, such as registering for a site, interactive events to increase satisfaction purchase. This works especially well for
are more likely to lead to abandonment for and brand trust. ‘hedonic’ or fun shoppers. Reaffirming
consumers particularly if they are under the value of a product by including
‘cognitive-load’ e.g. later in the day, when Encouraging product ratings at the checkout stage
they are tired, drinking or commuting.
consumer can also cue impulse purchasing.
motivation
6 While a great experience can motivate
many serious shoppers to buy, many
11
Offer consumers a clear The value and urgency of
will continue to browse, fill and abandon
and tangible incentive for baskets. Whether for product comparison products can be increased by
registering on a website. or just for fun. There will always be those emphasising that availability
In some instances, it may not be possible who want the emotional buzz of shopping is scarce.
to over simplify the website/checkout. without commitment to buy. So how
This can be achieved by suggesting
Where there are ‘costs’ to the user in can retailers incentivise these frequent
that only a few items are left or that
terms of time and effort, these can browsers, and turn them into buyers?
an item or price will only be available
be offset by appealing to the ‘logical’ for a certain time.
mindset – acknowledging the extra work ‘ Nudge’ Recommendations:
12
and providing an immediate benefit/
9
incentive for doing so e.g. register today
and receive free shipping/a discount.
Increase payment choice by
7 Target product
recommendations and
promotions to browsers.
offering alternative options
such as deferred payments.
Address gender imbalance By offering different options to pay
It’s possible to nudge consumers who
by increasing the social have spent long periods browsing but
later – for example Klarna’s Pay After
presence of a website to Delivery and Planned Payments –
have not placed items in their basket
the transaction can be made more
attract more women. with targeted notifications, product
achievable for certain customers.
recommendations or special promotions,
Encourage more female buyers by
based on their browsing history. Price
offering reviews, referrals and reward
guarantees can also be a powerful
schemes. Online avatars can also help
incentive for those who like to compare
create an emotional bond.
products across sites.
The introduction of a pause button, allowing the user to return to the same point
if interrupted, could prevent drop outs.
9
Manage the
emotional
‘ Nudge’ Recommendations:
15
journey
Positive emotions are more likely to
13 Ensure that the checkout
process is consumer
Introduce design measures centric, modifiable and
promote buying because they connect to
that create a ‘positive browse’. transparent throughout.
automatic processing. Negative emotions
such as fear, guilt, shame, or irritation Positive browse features can include A mismatch between expectation and
are not conducive to a sale. They signal offering expert advice, reviews and price experience can lead to negative emotion.
something is wrong, subconsciously comparisons. At the purchase stage, Slow websites, poor options, complex
causing the shopper to stop the sale, security assurances and price match processes, badly labelled items, lack
withdraw or re-evaluate their purchase. guarantees can help to assuage decision of information and surprise costs can
Successful online retailers will try, regret. Re-consider the use of codes, contribute to this. Consider visual
wherever possible, to induce positive and which can create feelings of unfairness indicators, progress prompts, easy-to
reduce negative emotions throughout the – try emailing promotional links instead modify order forms and transparent
purchase process. or offering rewards and promotions as costs to minimise shopper frustration.
customers fill their cart.
14 16
Keep form filling to a
Maximise website familiarity minimum, with real time
via marketing exposure storage of entered data and
including advertising and one-click repeat purchase.
word of mouth campaigns.
Minimise emotion related abandonment
Familiarity and trust are key for reducing at registration stages of the payment
fear and keeping up positive emotions. process, by keeping data entry to a
Keep websites consistent, ensure repeated minimum. Real time storage of entered
exposure through regular communication data will help to limit frustration at having
and include reviews, recommendations to re-enter data. Remembering customers
and referrals to build trust. when they return, and offering one-click
purchase, significantly reduces barriers
for loyal customers.
1017 19 21
Security information for Reduce checkout guilt Increase satisfaction
websites and apps should by providing cost and loyalty by providing
reflect their consumers’ updates throughout the immediate confirmation
different cognitive states. shopping experience. of order and good
Security and privacy information should Guilt can be evoked when consumers communication throughout
be clearly displayed at the checkout. see the final price of their shopping delivery process.
However, it should not be too salient at check-out. This can cause them After sales support is extremely important
to distract mobile shoppers who to abandon the entire cart – assuaging in maintaining customer satisfaction
are engaging in autonomic impulse their guilt by effectively punishing and brand trust – vital for customer
purchasing behaviour. A simple logo themselves. Instead, ensure baskets retention. If post-purchase fails to meet
such as a padlock is often enough. with running totals are clearly visible; pre-purchase expectations, then disparity
For computer based shopping, which give shoppers the option to easily creates negative emotions which makes
tends to be more ‘logical’ more detailed subtract items at the checkout stage; them less likely to return.
assurance seals and statements are and provide access to alternative
recommended to reduce perceived risk payment and consumer finance options
relating to the website payment. such as Klarna’s Pay After Delivery.
18 20
Website help functions Reduce regret by
should be available to reduce offering visible and
feelings of embarrassment. cost-free return policies,
and price guarantees.
Complicated checkout procedures and
use of technical language might cause Checkout is likely to be the place where
consumers to feel embarrassment if they consumers first come face to face with
can’t easily understand what’s being the overall costs of their basket. This
required of them. Intuitive website designs can act lead consumers to reconsider
and simple language can alleviate this. their decisions and trigger regret and
As can allowing them to ‘connect to a negative internal dialogue i.e. “I’ve spent
person’ using Live Chat and customer more than I should” or “I could have got
helplines. Positive web-engagement them cheaper elsewhere”. Focusing on
messages such as “we’re here to help”, price guarantees and easy return policies
can also help to ‘normalise’ fears and can often be low cost options for the
empower shoppers to stay with the sale. seller. Consumers rarely search any
further once purchase has been made.
And once they have the goods, the
‘endowment’ effect normally reduces
their desire to make a return.
“Positive web-engagement messages such as “we’re here
to help”, can also help to ‘normalise’ fears and empower
shoppers to stay with the sale.”
11Mapping out the journey
The online journey is complex, involving many different stages where the cart can be
abandoned. The following diagram depicts a psychological model which shows the
various emotional stages of online payment from cart to checkout. This is based on
the general psychological principles of human behaviour.
The ‘Sales Nudges’ are derived from the recommendations included in this paper and
are intended to steer the customer towards successful completion of a purchase –
these are numbered accordingly.
Figure 1. Model of online purchase stages (adapted from stages identified by Comedy’s et al., 2006)
Post-
Need Information Shopping Purchase Checkout purchase
recognition search cart decision
behaviour
Factors: • Browser/buyer • Usability • Motivation • Self control • Time • Satisfaction
• Information • Evaluation • Impulsivity • Cost • Regret
• Aesthetics • Ownership • Discounts • Ease of return
• Fluency • Risk/Trust • Repurchase
• Brand trust • Privacy/Security • intention
• Overchoice • Control
Nudges: 9: Product 2: Personalised 3: Pause option 5: One click See below 20: Price match
recommendations websites purchasing guarantees & free
7: Avatars returns
8: Chatrooms &
bulletin boards
13: Reviews & price
comparisons
Review Sign in/ Billing & Payment Order
shopping cart shipping Verify/edit
register details confirmation
items details
Factors: • Availability • Time • Discounts • Control • Control • Assurance
• Ownership • Shipping costs • Risk/Trust
• Control • Privacy/Security
• Privacy/Security
Nudges: 10: Limited time 6: Registration 13: Avoid discount 12: Alternative 15: Easy edit 21: Email
discounts incentives codes payment options confirmation
11: Emphasise 15: Progress bar 17: Privacy 17: Assurance seals
scarcity 16: Minimise statements & online payment
form filling protection
Multi-stage nudges: 1: m-shopping platforms; 3: Pause option; 4: Fluency; 7: Avatars; 14: Advertising; 18: Help functions; 19: Continuous cost updates
1213
“Wearable technology is likely to engender different online shopping attitudes and behaviours through increased convenience.” 14
Trends for the future
We are seeing a significant shift in UK demographics. Ours is an ageing nation where
older adults, increasingly constitute the largest buying segments and the highest
disposable incomes. Many of them regularly use internet and technology, however, the
impact of ageing on factors such as risk and trust will continue to influence their online
purchasing behaviour. Making them more likely to use laptops and less likely to make
spontaneous purchases.
Younger consumers, have different Increased competition for ‘mind share’
motivators and emotional experiences. and ‘time’ will drive more people to shop Fearless payments
They may be less fearful but quicker via their smartphones, while on the move
to show boredom or impatience. or completing other tasks. Retailers must
Increasingly mobile will become their manage these shifting expectations, Advances in payment technology are
primary shopping environment and their providing increasingly more personalised also likely to influence future online
decisions are likely to be more impulsive. browsing and checkout experiences shopping trends. Modern encryption
and finding new services to keep their may reduce much current anxiety over
offerings relevant and fresh. online fraud. Increased availability of
Millennials matter deferred payment and easy-access
online credit systems, such as Klarna’s,
will continue to increase accessibility to
Intuitive technology
Indeed m-commerce is currently being online shopping and reduce trust issues
driven by Millennials and Generation Z and other negative emotions associated
(18-34 year olds), who now account for The types of technology will also change with paying in advance for goods before
over half of all online retail purchases over time. For example, personal digital they are ‘experienced’.
in the UK. assistants may be advantageous in To manage these various complexities
removing unnecessary work from time in-line with consumers’ evolving
Merchants are waking up to the
poor or less internet savvy consumers. psychological demands, retailers must
importance of catering specifically for
Wearable technology is likely to continue to refine the way they interface
these digital natives – 90% of merchants
engender different online shopping and engage with their online customers.
say that meeting the demands of
attitudes and behaviours through By focusing on what motivates and drives
millennials is driving investment in new
increased convenience. behaviour, they can carry on dismantling
payment technologiesxxxvii. Fashion is
emerging as a major battleground to win Augmented reality is still in its infancy, but emotional barriers and nudging more
millennial loyalty, with 95% of retailers provides highly personalised potential. For consumers towards a positive sale.
upping their investment in tech to meet example, to visualise what products look
their expectations. like in the buyer’s home; to see the exact
fit of clothes using a personal avatar.
Meanwhile, the internet of things (ioT) has
the potential to remove human choice
Keeping it personal
from the purchase decision altogether –
automatically reordering consumables
As the online environment is further and replacing obsolete items.
integrated into our everyday non-digital
lives, barriers will continue to be removed
and virtual behaviour will become more
fluent and personal.
“90% of merchants say that meeting the
demands of millennials is driving investment
in new payment technologiesxxxvii”
15References
i
Oliver & Shor, 2003; Rajamma, xvi
M. L. Chang & Wu, 2012 xxxi
O’Donnell, Strebel,
Paswan, & Hossain, 2009 & Mortimer, 2016
xvii
Özkan et al., 2010
ii
Sheth, 2013 xxxii
Garbarino & Strahilevitz, 2004
xviii
Ha & Perks, 2005
iii
WorldPay 2016 xxxiii
Lian & Yen, 2014
xix
Rajamma et al., 2009
iv
WorldPay 2016 xxiv
Lian & Yen, 2014
xx
Censuswide, 2017
v
WorldPay 2016 xxxv
Hannah & Lybecker, 2010
xxi
Shen & Khalifa, 2012
vi
Censuswide, 2017 xxxvi
Ovum & Klarna Report:
xxii
Seckler, Opwis, & Tuch, 2015
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vii
Censuswide, 2017 xxiii
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viii
Censuswide, 2017 & Krishnamurthi, 2015 xxxvii
Ovum & Klarna Report:
ix
WorldPay 2016 xxv
Twenga Solutions, 2015 Strategies for Optimizing
Online Commerce, 2017
x
WorldPay 2016 xxvi
Twenga Solutions, 2016;
Censuswide, 2017
xxxviii
Ovum & Klarna Report:
xi
Close & Kukar-Kinney, 2010 Strategies for Optimizing
xxvi
S. Yang, Lu, Gupta, Cao, Online Commerce, 2017
xii
Park & Kim, 2010
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xiii
Hasan, 2016 xxvii
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xiv
Mousavizadeh, Kim, xxviii
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& Chen, 2016
xxix
Meyers-Levy & Loken, 2015
xv
Özkan, Bindusara,
& Hackney, 2010 xxx
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