Over the years, our research and customer surveys have consistently revealed one key insight: cost and price considerations are at the top of the list when it comes to buying decisions. In fact, we can almost guarantee that for any business, price is among the top three reasons why potential customers choose not to convert.
This means that even a small misstep in pricing strategy or communicating brand value can turn a potential customer away.
If you thought pricing was a challenge in 2024, brace yourself for 2025. Emerging trends like “low buy” or “no buy” are starting to take centre stage on platforms like TikTok and Instagram. These trends have become so influential that they've even made headlines in Forbes.
While the monetary cost is crucial, modern consumers are savvy—they assess much more than just the price. They look at the overall value a product, cost of ownership or cost of disposal, how much they can resell the product are among other considerations. User experience (UX) research shows that when businesses enhance these aspects, they can justify higher prices and foster stronger customer loyalty even at the time when brand loyalty is in decline.
Turning Longer Purchase Cycles into Personalisation Opportunities
When customers take their time deciding, it indicates a shift in buying behaviour. Rather than making impulse purchases, consumers are carefully weighing their options, scouting for the best prices, and often storing products in their baskets as they deliberate and compare prices to other sites.
Holding on to items in their shopping basket may seem like a challenge for businesses. However, by leveraging conversion rate optimisation (CRO) strategies, you can transform these longer purchase cycles into valuable opportunities.
Every item added to a basket is a signal—a piece of data revealing the customer's price sensitivity, brand loyalty, and product preferences.
This wealth of information can be harnessed to build more personalised and effective marketing strategies. It’s not just about encouraging an immediate purchase; it’s about nurturing a relationship, understanding the consumer's decision process, and ultimately guiding them toward a purchase with the right incentives at the right time.
Using the Basket List as an Affinity Score
Every time a product is added to a basket, it sends a strong message about what matters to that customer. This action can be seen as a valuable indicator of:
Price Elasticity: How sensitive is the customer to price changes?
Brand Affinity: Is the customer loyal to your brand, or are they open to alternatives?
Product Preferences: What type of products are they interested in, and what might complement their choices?
By treating the basket list as an affinity score, you can build a robust algorithm that tailors product recommendations to each customer’s unique shopping profile. However, this approach isn’t without its challenges.
If you overwhelm the customer with too many product options, they may feel that their privacy is violated and the choice is too intense. On the other hand, if you offer too few suggestions, you risk losing their attention altogether. This is where the dual nature of CRO as both science and art comes into play. Rigorous testing and fine-tuning are essential to strike the perfect balance between engaging your customers and not overloading them with options.
Anchoring Through Strategic Product Positioning
Another effective CRO strategy involves using the items in the basket as a baseline to influence purchasing behaviour. For instance, by strategically anchoring other products with higher prices, you can set a context that enhances the perceived value of the items already in the basket. You can do this through:
Value Perception: Highlighting a higher-priced product next to the customer's selection can make the latter seem more affordable and attractive.
Basket Optimisation: By showcasing premium alternatives or complementary products, you guide the customer to see the full spectrum of value your brand offers.
The key is to present these options in a way that enriches the customer’s decision-making process rather than complicating it. Testing different layouts, price comparisons, and product pairings can help you discover what combination maximizes both customer satisfaction and conversion rates.
Price presentation
CRO is also indispensable when it comes to testing price presentation.
Charm Prices vs. Rounded Prices
One popular debate in pricing strategy centres on “charm” prices (like £9.99) versus rounded prices (like £10.00). Research suggests that consumers sometimes appreciate the transparency of rounded prices. Rounded prices are perceived as more honest, whereas charm pricing can be seen as a psychological trick that manipulates the buyer’s perception. However, there’s no one-size-fits-all answer. If your business has been using charm prices for a while, it’s crucial to run controlled tests before making a switch. Testing will help determine which pricing style resonates best with your audience and ultimately improves your conversion rates.
The Impact of Visual Presentation
The way you visually present a price, sale, or discount can significantly affect customer behaviour. For instance, there was a time when using bright red for sale prices or discounts was everywhere. Today, many brands are rethinking this approach and experimenting with where and how red—or any colour—is used. Is it more effective to have the original price crossed out in red? Or should the new discounted price be highlighted instead? Or is it the discount itself?
For example, Amazon display the discount in red so customers know how much they are saving.
Booking.com don't display a percentage of the discount, but instead highlight how the old price is different to the new price.
Determining the right way to display a discount is something you can explore through testing rather than making drastic decisions.
Testing Strategies
Testing is essential to discover the best way to present your pricing. Multivariate testing (MVT) is particularly effective because it allows you to experiment with multiple elements at once. Here are some key variables to consider:
Font Size and Weight: Experiment with increasing the font size of the price or discount to see if it attracts more attention.
Colour Usage: Test different colours for the price, discount, and any crossed-out figures to identify which combination resonates best.
Display Format: Compare the effectiveness of showing a percentage discount versus a monetary value discount. In some cases, explicitly showing how much the user saves can drive conversions.
Visual Hierarchy: Determine if the main price or the discount should be more prominent. Sometimes, highlighting the savings in percentages rather than the amount can be more persuasive.
Continuous Optimisation
Remember, pricing is dynamic. What works today might not work tomorrow as consumer behaviour and market trends evolve. Constantly testing and tweaking your pricing presentation can help ensure that you are always in tune with your audience's preferences. By regularly analysing and adjusting these variables, you can create a pricing strategy that not only attracts attention but also builds long-term customer trust and engagement.
A holistic approach to price presentation—one that combines strategic testing with a keen understanding of consumer psychology—can significantly enhance your brand’s effectiveness. Whether you’re debating between charm and rounded prices or exploring the best way to showcase a discount, let data guide your decisions for optimal results.
In conclusion, while longer purchase cycles and careful deliberation might seem like a hurdle, they provide an invaluable opportunity to understand and influence your customers’ buying journey. By leveraging basket data, applying strategic anchoring, and continuously testing your approaches, you can transform these extended decision-making processes into a pathway for building stronger customer relationships and boosting your bottom line.
