Why are some people more resilient to hardships than others? The psychological answer isn't what you might expect. And many of your customers think the same way.
Duke University professor Dr. Dan Ariely once contracted an illness from a blood transfusion he received to recover from 3rd degree burns. At the time, there were no great treatments. So, he joined a study of 180 people to test a new drug that had severe side effects. He was the only one not to miss a dose. He was also the only one who was cured of the disease.
What gave him the strength to tolerate the drug? Most people would guess it was his desire to live. But Dr. Ariely attributes his success to his desire to watch movies.
That’s right. He understood that people are irrational and that his mind would be more motivated to watch a movie in the present, than save his life in the future. This was the birth of behavioral economics.
Dr. Ariely is the author of Predictably Irrational and many other New York Times Best Sellers. Along with Irrational Economics, I want to talk about behavior change psychology and how it relates to commerce.
Behavior Change Psychology is described as “the process of changing human behaviour.” In essence, your business is a process of behavior change. The question you’re trying to solve is “how many people can I convince to adopt a lifestyle that uses my product or service?”
Your customers typically have a finite amount of money, and your goal is to have them spend their money on your product and service as opposed to someone else’s. Why do customers choose you over others? Dr. Ariely would argue it’s not for any rational reason. They just “feel like it.”
Let’s discuss how the Transtheoretical Model (TMM) developed by Prochaska can be mapped out within Google Analytics.
The Sales Funnel
The sales funnel has been around since the beginning of time. From selling door-to-door encyclopedias, to in-app purchases, to dating, the sales funnel can be considered a law of nature.
In behavior change psychology, the sales funnel is known as the stages of change.The TMM behavior change model is simple, but not easy and consists of 5 main steps:
- Precontemplation (Aware)
- Contemplation (Education)
- Preparation (Interest & Motivation)
- Action (Short term)
- Maintenance (Long Term)
Brian Cugleman, a Digital Behavior Change Psychologist has taken Prochaska’s model and adapted it to language that is relevant to ecommerce.
Let’s look at Brian’s research and compare it to the traditional “sales funnel.” Next, we’ll
show you how to map the psychological steps outlined above within Google Analytics to understand which steps are working and which ones are not.
The typical sales funnel looks something like this:
Image Source via Marketizator
One thing to note about this funnel is that it shrinks as it gets closer to the sale. This is normal. Another interesting point is that the further down the funnel you go, the higher your ROI. Therefore, focusing your efforts on repeat purchases typically pays off more than acquiring new customers. Although both efforts are equally important for building a sustainable business.
Each step of your sales funnel will have a preferred report within Google Analytics, and each one is as important as the next. Let’s walk through each step below and examine the relevant reports. Since sales funnels can be boring, I’ve compared them to dating because your customers’ decision making process is just as irrational.
Step 1. Awareness: The Tinder Swipe
Awareness is the first step of the sales funnel because someone cannot purchase from you if they have never heard of you. So how does your future customer, or spouse, go from being unaware of what you have to sell (or give them), to becoming aware?
In ecommerce you can use PR, Pay Per Click Ads, word of mouth marketing, referrals and the list goes on. I guess these traffic sources could also apply to dating, depending on how motivated you are.
Awareness is sometimes hard to track because it mostly happens off of your website, via ad impressions or 3rd-party article views. For example, awareness would be how many people viewed your facebook ad. In this step the amount of clicks the ad received is irrelevant.
Overview of Your Customer Awareness Report in Google Analytics:
This report outlines the number of new visitors to your site in a given time period.
It is found under Acquisition> All Traffic> Channels and is filtered by the percentage of new visitors (highest to lowest).
It helps you see what source they came from, how long they stay on your site, and how many pages they viewed. From this data, you can determine if you’re getting the right kind of traffic and awareness and also see which sources impact the top of your funnel most. In this case it’s social.
Step 2. Education: The Tinder Profile View
Just like finding someone’s dating profile online, let’s say a customer clicks on an ad and lands on your website. How quick can they tell what you have to offer?
If you run an ad saying “The Best Soap On The Market” and they click through, how long does it take them to understand why your product is the best on the market? And do they care?
The education step relies on the effectiveness of your landing page. In dating, this step is the first impression. It’s what comes after the “Hi, my name is..”.
Reviewing Your Customer Education Google Analytics Report:
This report will tell you which landing pages have the highest bounce rate. It is found under Behaviour>Landing Pages. Bounce rate is the percentage of people who leave your site after landing on it and not interacting with it. Filtering this report from highest to lowest bounce rate will allow you to determine which pages may need to be more enticing and encourage people to browse the site. High bounce rates are often from landing pages that don’t match the expectations of the visitor.
Step 3. Interest: The Tinder Match
In Behavior Change Psychology this is known as preparation. This is where your prospect has expressed interest. Maybe they’ve opted in to your email newsletter, contacted your support team for more information, or downloaded a free guide from your website. In dating, this step is known as flirting. You know what they’re about, and they give you hints that they like you.
Navigating Your Customer Interest Report In Google Analytics:
In this report, you want to look at non-purchase conversions (e.g. an email opt-in, add to cart, add to wish list, bookmarking website). All of this is possible with goals and funnels. We have great documentation on this. In this step, you need to interpret which actions on your website constitute interest from your visitor. In the report above, it’s initiating checkout.
Step 4. Motivation: The First Date
Your user started by reading a blog post about you on a local news publication, they clicked through to your website and browsed your informational pages and then opted in to your newsletter to get free shipping on their first purchase. A week later your newsletter goes out with a new product offering and they click through to the website.
They’re interested, but are they motivated?
Yes because your landing page has images with social proof. It also has great copy that appeals to your user’s irrational emotions. So, they copy the discount code you gave them to their clipboard.
Next, they browse your product page and read a 5-star review saying “this product changed my life.” When they see this review, something clicks and they’ve made up their mind. “I’m buying” they say to themselves.
This is good. You’ve successfully motivated your customer to take action. It’s just like a successful first date where the person you went out with can’t help but text you, saying they want to go out again. At least this is how I would imagine it would go. Not sure If I’ve had a good date before.
What’s in Your Customer Motivation Report in Google Analytics:
Are they getting motivated, then having their rational mind kick-in somehow? Are they having second thoughts? Once you set up goals and funnels you’ll be able to view this report under Conversions>Goals>Goal Flow. This will show you at which step your visitors abandon, therefore helping you understand if your shipping rates are too high, if you need additional payment methods, or if your checkout experience is difficult to navigate.
Step 5. Short-Term Action: The First Kiss
The work has been put in, your visitor knows who you are, they want to buy from you and they’ve started to checkout. How is your user experience? Is it easy to checkout on mobile and desktop? Are the instructions and next steps clear? Does something in checkout, like high shipping rates, scare your user away? Or in other words, do they lean in for a kiss and smell your bad breath and dodge the kiss?
They’re willing. But are they able to commit to this action?
Your Short-Term Action Google Analytics Report:
The term conversion rate is used quite frequently in ecommerce. Some people think it’s the holy grail of ecommerce but I’d like to argue it’s just one step of an important process. The conversion rate does tell you how many people have purchased, but it doesn’t take into account the micro-conversions outlined in earlier steps of this article. This report can be found under Acquisition>All Traffic>Channels and is filtered from highest to lowest ecommerce conversion rate.
Step 6. Long-Term Action: Spouse of The Year Award
Have you reached that pivotal moment in a relationship where your partner (or customer) wants to announce your relationship on Facebook, making your status official? Do they want to post selfies with you and brag about you to their friends?
After 3 months of solid effort, you received your first 1,000 customers. Did they like your product? The unpacking experience? The post-sale support? If so, you made it to that key milestone.
The goal of every business should be to develop first-time customers into raving fans. That means people who love your product and support, your brand and continue to purchase and rave about your business to friends.
Your Long Term Action Google Analytics Report:
Lifetime value, or yearly value of a customer is a great report to look at as it can give you a great idea of how much money you’re willing to spend to acquire a customer. If your average order is $20, but your product is likely to be re-purchased, say 5 times a year, you may be willing to spend more than $20 to acquire a customer. The above report has not been released yet by Google, but I hope it is soon as this is one of the most important pieces of data you can retrieve.
In order to get these numbers at the moment, it is quite complicated a job. You need to use the User Explorer report under Acquisition, filter out all the non-converters and then export this report to divide the revenue by the number of converting users.
Step 7. Abandonment & Relapse: The Ebbs and Flows of Love
The reason the sales funnel is called a “funnel” is because the top is always larger than the bottom.That’s because customers will abandon your site or your product at each step, making the lowest part of the funnel the smallest. In dating, you might match with 10 people on tinder, go on a date with 4, have a great connection with 2 and then get serious with… let’s say just one.
If you’re lucky, or you play your cards right in ecommerce, you will encourage relapse from your abandoners. Relapse efforts include things like remarketing, abandoned checkout emails and post-purchase support. Each report that I’ve outlined in this article will account for abandonment and relapse.
Just like in the game of love, maybe a couple months go by and the one you were serious with didn’t work out. So you contact another match with which you had a great connection. This is the classic story of abandon-relapse. Sleeping with an ex? Yeah we won’t go there today.
Conclusion: Ecommerce and Dating
Sales funnels and behavior change have been around since the beginning of time, but only recently have we had the ability to track each step so accurately. Google Analytics is a great tool when used in the right context.
Data is only numbers unless you can tie it to some sort of bigger picture goal or action. When it comes to commerce, the end action we’re striving for is loyal customers. But we cannot get there unless we start with awareness, move to education, interest, motivation and short-term action.
If you don’t care about ecommerce and are just here for dating advice, that’s okay too.
About The Author
Doug Crowe is a Merchant Success Manager at Shopify Plus where he works with the platforms largest merchants helping them manage and scale their business. He is also the co-founder of Hippy Pits where he puts his ecommerce knowledge into practice.