How to Bust Through a Business Lull

Can you relate to this scenario? You’ve poured your heart and soul into an online store. The design is sleek, the logo is perfect, and the products are near and dear to your heart, but... the sales just aren’t flowing.

Or perhaps your e-commerce business started strong, but you’ve recently hit a plateau, and you’re not sure why.

You can wrack your brain all you want, but in the cutthroat world of e-commerce, guesswork simply won’t cut it. It takes a rigorous testing strategy, data, and analytics to continue to scale.

The key to unlocking success lies in the science of winning – the science of testing. This article examines the power of A/B testing, behavioral insights, and cutting-edge AI technology to understand your customers on a whole new level and drive your business to new heights.

Don't Fall for the Hindsight Bias Trap

If you’re a business owner or marketer, you may have fallen into the trap of hindsight bias once or twice in your career.

Hindsight bias is our tendency to believe we could have predicted an outcome after the fact.

For example, let's imagine you own a thriving e-commerce store selling handmade jewelry. Sales have been steady, and you feel confident in your approach.

One day, a friend suggests you A/B test your product descriptions. You create new versions of the popular product description, this time focusing on bullet points and key features with a more concise, direct tone.

Much to your surprise, the A/B test results show that the new, more concise version significantly outperforms the original product descriptions.

This is where hindsight bias creeps in. Looking back, you might think, “Of course, a shorter description would work better! Why didn’t I do that sooner!” You might downplay the value of the test, attributing the new description to simple logic rather than acknowledging the insights it provided. It might deter you from future tests because it seems like common sense.

In e-commerce testing, this bias can be detrimental. Business owners or marketers might fall into the trap of assuming what we already know and what works best for our customers, leading us to skip crucial testing phases.

We’re here to warn you not to do that!  Testing is key. In many cases, you may be surprised by the outcomes and versions that win.

For instance, sometimes we can fall victim to being overly confident in our current website layout or product descriptions. This can lead us to neglect tests on alternative versions, which could end up performing better.

Hindsight bias can cause us to ignore negative test results if the results don’t align with our initial assumptions. For example, maybe you thought the clean, sleek, and polished version of the website with lots of animation would “win,” however, your test found that a more basic, static version of the website won. If the results don’t align with what we throughout would work best, we might downplay or dismiss them due to hindsight bias.

Finally, hindsight bias can make us subconsciously seek out information that confirms our existing beliefs and disregard data that contradicts our initial assumptions.

For e-commerce marketers and business owners, it’s important to be mindful of hindsight bias. Taking a data-driven approach is the best way to avoid letting hindsight bias cloud your judgment.

Let’s dive in and explore some ways to gather real customer data, uncover hidden patterns, and optimize your online store through A/B testing and behavioral AI.

Testing and Optimizing Policies Through Behavioral Insights

Imagine you’ve just opened a physical store – perhaps you sell candles, jewelry, and home decor. You assist a customer and can observe their body language, gauge their interest, and tailor your pitch accordingly. However, in the digital realm of e-commerce, these face-to-face interactions are absent. And to be successful, you must find a way to gain insights from prospects to tailor your marketing strategy. This is where the magic of behavioral insights comes in.

Behavioral insights, derived from the field of behavioral economics, help us understand the hidden psychology behind consumer decisions. Take inspiration from the pioneering work of the UK’s Behavioral Insights Team (BIT), established in 2010 as the world’s first “nudge unit.” Fueled by the ideas from Nobel Prize Winner Richard Thaler and legal scholar Cass Sunstein’s influential book Nudge, BIT demonstrated the power of behavioral economics to nudge citizens towards better decision-making.

Their approach focused on “choice architecture” -- changing the context in which a decision is made. A great example of this is the Owen Service NHA organ donation trial. Researchers tested different messaging on donor registration forms to see how it would affect organ donation sign-ups. Some forms emphasized the societal benefit of organ donation, while others focused on the personal act of helping others in need. Through randomized controlled trials (RCTs), BIT compared the effectiveness of these messages in increasing sign-up rates.

The societal benefit version resulted in a lower sign-up rate, while the personal act version of helping others led to a statistically significant increase in sign-up rates.

The Owain Service NHS organ donation trial highlights the power of framing and carefully crafting messages to nudge people in a certain way. The way information is presented can significantly influence our decisions. In this case, focusing on the personal connection and the ability to directly help someone in need proved more effective in encouraging organ donation sign-ups compared to emphasizing the broader societal benefit.

Messaging is just one important piece of the puzzle that requires A/B testing. E-commerce businesses can dive even deeper and explore the impact of various factors on user behavior like:

• Processes: Is your checkout flow streamlined? What happens when you shorten a form for sign-ups? On the other hand, what happens when you lengthen a form for sign-ups? How can you nudge customers to checkout? Identify bottlenecks to optimize the buying journey.
• Engagement Strategies: Experiment with different email marketing campaigns, social media interactions, and loyalty programs to see what resonates with your audience.
• Website Optimizations: Test different versions of landing pages to see which version results in the highest conversions. Perhaps you test different layouts, animated versus static headers, a prominent call-to-action in the middle of the page, or different color call-to-action buttons.

Like the brick-and-mortar example at the top of the page, think of A/B testing like a conversation with prospects. A/B testing will help you gather information on what influences buyer’s behavior. This data-driven approach allows you to optimize every aspect of your online store, from product descriptions to checkout flow, ultimately leading to a smoother, more persuasive customer journey.

Behavioral AI and Prototyping

While A/B testing is powerful and great for optimizing ads and website experiences, what happens when the user behavior you want to measure, or influence is more complex?

 That’s where behavioral AI and prototyping come in.

Behavioral AI utilizes machine learning algorithms to analyze vast amounts of user data, including clicks, scrolls, and mouse movements to track user behavior patterns and predict future actions. It can pinpoint areas of confusion or frustration for customers, so you can work to provide a more seamless user experience.

By leveraging behavioral AI, we can create realistic prototypes of potential product pages, checkout flows, or entirely new app experiences. These prototypes look like low-fidelity mockups or interactive simulations, but the key is to create a realistic environment where users can interact with the prototype as if it were the real thing.

Prototypes can be tested in small groups of individuals before implementing any changes on your live website. This allows you to observe user interactions with the prototype, gather valuable feedback, and iterate on your design before any major investments are made. It’s a great way to gain buy-in from leadership before implementation.

Ethical of Testing and Learning from Other Disciplines

The value of testing in e-commerce is undeniable. It can help you optimize your website and scale your business. But with great power comes great responsibility. Just like any powerful tool, testing needs to come with a focus on ethical considerations.

An important part of testing in e-commerce is transparency. Transparency and informed consent are cornerstones of ethical testing. Be upfront with users about what data you’re collecting during A/B tests and how you’ll use it. You can always offer an opt-out for users who are uncomfortable participating in data collecting or testing.

In addition to being transparent, e-commerce brands should avoid manipulation. While nudges and strategically crafted messages can be helpful, the goal should be to guide users toward informative decisions, not manipulate them. To do this, you can focus your testing efforts on elements that genuinely improve the user experience, like product information or checkout flow.

Remember, you want to provide a great customer experience and build your brand based on trust. It’s always better to

There are valuable lessons we can learn about testing in e-commerce from other disciplines.

Take medical trials, for example. Testing in e-commerce should prioritize user well-being, just like in medical trials. You should avoid tests that could potentially harm or mislead consumers. You can think of it as a user-centric approach, where the user’s experience and well-being take priority.

Another discipline that we can take notes from is testing in education. Educators rigorously test teaching methods to ensure effectiveness without compromising student learning. Like e-commerce businesses, we learn from this approach and test different communication styles and educational content in their product descriptions or marketing materials.

In medical trial and educational testing, both disciplines take an interdisciplinary collaborative approach, which is another key takeaway from e-commerce businesses.

Testing shouldn’t exist in a silo. Experts should come together, collaboratively, to provide feedback and support in their various fields.

For example, psychologists understand human behaviors and decision-making processes. They can design tests that factor in cognitive biases and emotional triggers, while marketers can offer expertise in crafting persuasive messaging, user segmentation, and understand customer journeys. A UX designer can provide feedback and expertise on how a user might interact with a website, while data scientists are crucial for analyzing test results and drawing meaningful conclusions.

So, a marketing team might collaborate with a UX designer to ensure a new product page layout being A/B tested is not only visually appealing but easy to navigate. Or the marketer might tap in a psychologist to craft meaningful marketing messages and break down cognitive barriers.

Collaborative environments are key for testing. By incorporating insights from various fields, e-commerce businesses can create comprehensive tests that address a wider range of factors influencing user behavior. Another benefit of interdisciplinary collaboration in testing is that it helps ensure testing methods are ethical and that all parties involved avoid manipulative tactics.

It’s important to leverage the knowledge from experts in various disciplines when designing an e-commerce test. This way, you can build a testing strategy that is not only ethical but user centric. This will lead to a more successful and sustainable online shopping experience for bother businesses and customers. 

Contact Function Growth to Avoid Hindsight Bias and Embrace A/B Testing

In conclusion, guesswork simply won’t cut it when it comes to building your e-commerce business. By embracing A/B testing, behavioral science, and the power of collaboration, you can unlock a deeper understanding of your audience and create a great customer journey.

Remember, it’s important to keep ethical considerations in mind when developing testing strategies. Avoid manipulating your customers and focus on building a brand that’s transparent and trustworthy.

Ready to unlock the true potential of your e-commerce business? Get in touch with the experts at Function Growth. Our team is skilled at developing strategies based on behavioral science to help businesses grow. Contact us today and let’s transform your online store.

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