Defining Your Ideal Customer in e-Commerce

Defining Your Ideal Customer in e-Commerce

There is a lot of information on defining your ideal customer, but most of it isn’t written for you. It’s written for software-as-a-service companies, or startups, or both. And while e-commerce can benefit from many of the same best-practices, some of the information written in those articles just doesn’t apply.

This article is written just for you, and it’s all about how to define, find, and attract your ideal e-commerce customer.

First, my definition of an ideal customer:

An ideal customer is someone who has a problem you are uniquely equipped to solve, who is willing, able and happy to pay for that solution, and who is delighted to have found you.

And they shouldn’t drive you nuts (nobody says this, but it’s important – ideal customers are not the ones who take up all of your customer service agents’ time, return more products than they buy, and complain about you on social media). Nobody needs that.

This is why I included the “delighted” clause; people who are delighted to find you genuinely appreciate what you have to offer. They’ll be more inclined to become loyal customers, make repeat purchases, and recommend you to their friends, which are vital elements to any growth strategy.

How do you find these ideal clients?

First, you need to admit a hard truth

Your product isn’t for everyone. I repeat: Your product, unless it is toilet paper, is not for everyone. This is usually the hardest hurdle for business owners to leap, because you want everyone to buy your product (naturally). You think everyone could use it!

But not everyone will want to use it, become addicted to using it, and talk their friends into using it too – that’s the customer you need.
Limiting your scope to an ideal customer isn’t a liability, it’s an opportunity.

Businesses that are able to become leaders in their niches do very, very well.

Then, you need to ask yourself (and your current best customers) some questions

I might begin a conversation about ideal customers with questions about basic demographics (gender, age, education, career, geographic location), role in the company or role in the family, needs, wants, fears, and favorite hobbies – but that’s just a warm-up.

What I really need to know to begin understanding a client’s ideal customer is this:

  • The most important goals this person wants to accomplish (what is really important – in and outside of work?)
  • What is at stake if this person fails to accomplish those goals?
  • What drives them CRAZY on a regular basis (and I mean, pulling-their-hair-out nuts)
  • What are the greatest benefits your ideal customer stands to gain from your product?

These questions lead us into the real meat of the issue: Ideal outcomes, worst fears, greatest pain points, and biggest benefits.

The ideal outcome is what the customer wants most from your product. If I’m buying a sweater, my ideal outcome would to be warm (but not too warm), and feel deliciously cozy – reserve me a place by the fire and bring me a cup of hot cocoa. If you try to sell me a sweater, I may or may not buy it. If you sell me that cozy place by the fire, I’ll buy it every time. You’ve spoken to a deeper desire.

Worst fears are incredibly valuable to know for marketing purposes – they always get a response. What is the worst thing that could happen if your customer doesn’t have your product? What do they stand to lose?

Greatest pain points are key to understanding how much your ideal client really needs your product (and how effective of a solution you’re actually offering – you can use this to develop products as well). The amount of pain is directly proportional to how much time/money/resources your ideal client will spend to fix it.

The benefits question not only tells you what people love about your product, but also gives you deeper insight into your customers’ ideal outcomes – especially the ideal outcomes they’re really achieving. These insights are golden for your marketing and content strategies.

How to get these answers

You’re going to have to do some intensive customer research. A good place to start is by identifying your current favorite customers (or a segment of customers that outperforms all of the others). These are the people you made your products for, who support your business loudly, and who you genuinely enjoy (because they genuinely enjoy you). They also have to be the ones willing to pay full price, unless your ideal customer is a bargain hunter (hey, that could be your demographic, in which case, run with it!).

Then, send them a survey with questions that get at those four essential truths, along with any other pertinent questions you’d like to ask, like how they found you, what they were looking for, what industry they work in (if applicable), and why they ultimately chose to buy from you. You might also want to ask if they have, or would, recommend you (Why? Why not?).

Use this as a launching point to begin fleshing out your ideal customer profile – a list of characteristics common to your ideal customers. Then, use that list to identify potential ideal customers and target them in your marketing.

A targeted Facebook ad, for example, should drive increased traffic to your site. Then you’ll want to observe your conversion rate to see if you are, in fact, hitting your target market accurately.

Shanelle Mullin, Content & Growth at Shanelle Mullin offers a variation on my method for constructing an ideal customer profile.

Looking at your recent, happy customers can give you an idea of who your ideal customer is. There are two ways to go about this: customer surveys and customer interviews.

A lot goes into an ideal customer profile, so you want to use customer surveys to understand four key things:

  1. Who they are.
  2. The problem they came to you to solve.
  3. Their shopping process.
  4. Their buying process.

Note that the answers you’ll receive for questions related to the last two will be skewed by time. They won’t accurately remember the shopping or buying process months later. Only ask those types of questions if you have a large group of recent, happy customers.

Typically, you’ll want to ask 7-8 questions per survey. It’ll give you a good amount of data, but it won’t scare people away.

Make sure every question you ask is actionable. What will you add to your ideal customer profile based on the answer? If your answer is nothing, don’t ask the question.

Also, in this case, you’ll want to avoid yes/no or multiple choice questions. That way, you truly hear from the customer and go beyond quantitative analysis.

Aim to collect 200-250 responses total. If you go through fewer than that, you won’t be able to identify patterns and trends.

For more information on conducting a productive customer interview, check out her in-depth article on the subject.

Be careful of the customer you wish for

Having worked with dozens of marketing, growth-hacking, and conversion companies with their clients, I can attest to this truth: Sometimes, you think you’ve identified your ideal customer, and you change your site and SEO to attract them, and you end up attracting entirely the wrong audience.

I was working with a package tracking company once that was having this trouble. They wanted to rank for the keywords “package tracking,” and succeeded. The problem was, grandmothers who’d sent gifts through Amazon were trying to track their packages through them, when their actual product was an internal package tracking system that would ensure a package got from a corporate basement to its appointed desk, six floors above. The package tracking company wanted people searching for “package tracking” to find them – and that’s what they got.

To fix that problem, they had to adjust their messaging for clarification and refine their SEO strategy.

Refining your ideal client

If, after you’ve identified your ideal client and adjusted your marketing accordingly, website traffic is down, or conversions are the same or down, you may be missing something. The issue could be in your messaging, it could be that your marketing is slightly off-target, or it could be something entirely different – you can begin to form a picture using Google Analytics, but you won’t really know unless you ask.

You might want to try an exit survey – a pop-up survey that appears once someone clicks off your page – that asks what the user expected/hoped to find but didn’t. You might discover that your best efforts only succeeded in attracting Amazon Grannies!

Other perspectives on identifying ideal customers

I asked Tiffany daSilva, Growth Hacker and Digital Marketing Consultant, to weigh in on how she starts off her e-commerce clients in identifying their ideal customers.

With an e-commerce site, we are inclined to believe you can just turn it on and target everyone, and you’ll get rich. But whether you’re selling garden furniture or t-shirts, there’s always an ideal customer that you should be refining your website for.

If the company doesn’t know who this is, they need to do their homework.
They need to look at industry data, even as a starting point just to understand who is looking for their products. The next step is to go to Google Analytics and see who is actually visiting their website.

Hopefully, they should see some synergy. However, sometimes we think that our ideal customer is a particular gender or age, yet the visitors to our site (and those who are the most engaged) are outside of this target. This may mean you need to you need to speak to these people directly and figure out why they are interested in your site, and whether they have an intent to buy, and what you can do on your website to help them.

If they have no intent to buy and your website is clearly targeting the wrong audience, I would then look at the ideal customer profile you have articulated so far, and use that when choosing testers for UX or user testing. This will help you understand what your ideal customers are saying about your website and how best to target them.

This work is what a CRO can provide for you, but it is so much more important to go through the process yourself. Without an ideal customer profile and clear goals, CRO will just be a moving target with little return.

While Tiffany daSilva and I both look at existing customers as our foundation, she looks at all of the existing customers and asks how many of them are “ideal,” whereas I only look at the customers we can already identify as being “ideal.” That difference comes from my background in Lean methodology and customer success – but really, both roads will take you where you need to go: Researching your customers.

What happens when you ID your ideal customer?

As your ideal customers begin to come in, you’ll want track how they find you, who they are, what their lifetime value (LTV) is to your business, and which characteristics correlate with greater or lesser LTV. With advanced tracking in place, you’ll be able to see which customer segments are the most profitable, who are the loudest advocates, and which ones are so engaged with your brand that they become integral parts of your social media communities.

With this information, you can optimize your marketing strategies to catch the attention of even more specific types of customers.

But it all begins with defining your ideal client. Because once you have that clear definition, you’ll be able to find the most effective ways to reach them, and the most effective ways to position your products and brand to attract, retain, and delight them. It’s the key to your marketing strategy, conversion rates and growth.

Defining Your Ideal Customer in e-Commerce

There is a lot of information on defining your “ideal customer,” but most of it isn’t written for you. It’s written for software-as-a-service companies, or startups, or both. And while e-commerce can benefit from many of the same best-practices, some of the information written in those articles just doesn’t apply. This article is written just for you, and it’s all about how to define, find, and attract your ideal e-commerce customer.

Pricing CRO Style: Matching Price to Audience

Pricing CRO Style: Matching Price to Audience

Pricing has so many roles to play in e-commerce. It has to cover product costs, personnel costs, and marketing costs to keep the business running (and profitable!), and it can act as a marketing tool, differentiating you from higher priced competitors. It’s a fine line to walk if you try to do it all – and most companies think they have to do it all.

But when it comes to conversion rate optimization (CRO), the lowest possible price isn’t always the right price – in fact price doesn’t necessarily depend on what the other guys are doing. The price you can charge for optimal conversions is based on a whole other criterion: Your audience.

Playing The Price is Right

Let’s play a game: True or False

If you lower your prices, your conversions will improve.

Well?

False – it depends on your audience and your unique value proposition (why they’re buying from you, rather than anyone else).

It’s counter-intuitive, but people don’t buy based on lowest price. They buy based on:

  • Trust
  • Brand (which is tied to trust)
  • Ease of purchasing
  • How well you communicate your value proposition
  • Proof your product will deliver the buyer’s desired outcome (also tied to trust)
  • Reduction or removal of risk (read: Trust)
  • Immediate action incentives

Basically, your sale depends on building trust, delivering desired outcomes, and tipping the scales of decision by gently prodding your buyer to act. When you have that combo in place, you’re no longer a price-based decision, you’re a value-based decision.

But – if your value proposition is, in fact, that you guarantee the cheapest price around, and that’s working well for you, then you’re already appealing to your target audience of bargain hunters. You don’t necessarily need to attract those who seek value to run a profitable business. Just look at Wal-Mart. You do still have to understand your audience and gain their trust though, because cheap prices won’t overcome those deficiencies. So read on.

Trust Issues

The biggest conversion killers have to do with trust. We want to know that we’re not going to be victims of a scam or unscrupulous business people, so we look for indications that the businesses we purchase from are on the level.

Your buyers, every one of them, will feel better about buying from you when:

1. Your site looks professional and updated

Both of the stores below are reputable, but which one would you prefer to buy from based on web design alone?

Store Visual Appearance
Store Visual Appearance

Or…

Store Visual Appearance
Store Visual Appearance

The funny thing is – the first web page actually has more trust indicators. They show their physical address and telephone number, they have a brick-and-mortar store, they’ve been in business for over 36 years, and below the fold, they have a quality guarantee AND a video of the store owner dancing the Cha Cha.

But the second website has a more updated design, the modern “Need Help?” chat window, and a top bar that is clean and simple with a search feature, “my account” and cart. I feel more comfortable here, and when I take the time to scroll below the fold, I see that they’re the “world’s largest online dancewear store” (clearly many people shop here – and that’s social proof). The only thing that troubles me is that they have this floating quote with zero attribution.

Social Proof
Social Proof

This site would convert much better if they had real, attributed quotes from happy customers, or even better, user reviews on their product pages.

2. You show user reviews

Even if your user reviews aren’t 100% good, just having them on your site has been proven to boost conversions. Think of bad reviews as a chance to publicly show your excellent customer service skills. And good reviews? Those are golden.

  • Consumer reviews are significantly more trusted (nearly 12 times more) than descriptions that come from manufacturers. – eMarketer
  • 88% of consumers trust online reviews as much as personal recommendations and 72% of consumers say positive reviews make them trust businesses more. – BrightLocal
  • 63% of customers are more likely to make a purchase from a site which has user reviews –  iPerceptions

3. More social proof

For B2B e-commerce businesses especially, a great way to show social proof is to display the logos of companies that buy from you. B2C companies can get in on this action too by showing pictures of people who use their products (bonus points if they’re celebrities).

4. Product images are big, professional and varied

The simple act of making your product images larger has been shown to increase sales by 9%. But it’s not only size that counts, you also need good resolution (no grainy photos!) and alternate views of every product. ConversionXL recommends alternate views, detailed close-up shots, and pictures of people using the product.

5. You state your return policy and privacy policy

Buyers want to know what they can expect from you if the product doesn’t work out – and what they can expect from you when they trust you with their personal information.

6. Trust badges are prominently displayed

Trust badges include security seals, Better Business Bureau badges, McAfee, Norton, SiteLock and Google – but perhaps the most trusted badge is Paypal. ConversionXL research showed that Paypal garners more trust than all of the above. It’s also a handy way to pay.

The bottom line is: People will pay a premium to buy from businesses they trust.

Desired Outcomes

This is where understanding your audience really comes into play, because what buyers want most is the outcome. There’s an old saying that nobody who buys a hammer wants a hammer – they want a hole in the wall. What is the end result your buyers hope to achieve when they have your product in-hand? If you prove you can deliver that, they won’t care about the price. Here are a few ways to do just that.

1. Don’t pick desired outcomes out of thin air – do your research

It’s an all-too-common mistake for business owners to think they know what their customers want, without actually having asked them! Just like there’s “no crying in baseball,” there’s no guessing in business. Ground your assumptions in actual, qualitative and quantitative research (ie. words and numbers both).

2. Don’t settle for the easy answers

What people really want most isn’t faster shipping or lower prices, it’s to feel a certain way. As Talia Wolf wrote in Emotional Targeting 101:

When we buy something, we don’t purchase a ‘product’, a special price or features; we purchase an experience and a better version of ourselves.

When analyzing buyer responses to your qualitative data surveys, be on the lookout for hints of what their aspirations are, as well as the practical considerations they appreciate most.

3. Clearly state your value proposition

Your target audience’s desired outcome is closely tied with your value proposition – in fact, your value proposition had better include your audience’s desired outcome, or you haven’t achieved product-market fit.

Joanna Wiebe, Conversion Copywriter and Founder of Copy Hackers defines value propositions like this:

A value prop expresses what your prospect strongly desires 1) that only you offer or 2) that you offer best / most interestingly / most beautifully / most affordably / etc. A quick formula for your value prop is this:

Our customers are loyal to us because they want {highly desired X}, and we offer them that {in Y way}.

4. Show that you’re delivering on your promises with user-generated content

Yes, this trust exercise is also important for proving you can deliver on your audience’s desired outcomes. User-generated content can include product reviews, testimonials, links to third party review sites, and best of all – user photos. Check out Modcloth of outfit photos.

5. Price based on perceived value

“Perceived value” is what consumers think the product is worth to them, rather than a monetary value based on material quality and cost. In the 2010 book Money Makers by David Snider and Dr. Chris Howard assert that “When the benefits outweigh perceived costs, your prospect will take action.” Once you’ve changed your content to sell the desired outcome, the benefits of buying your product will become more apparent, and have a better chance of outweighing the perceived costs in the buyer’s mind.

Essentially, when your customer believes they can get exactly what they want from your product, you can justify charging more for it.

Action Incentives

Even when you’ve targeted the correct desired outcome for your audience and made your website as trustworthy as possible, you can raise your conversion rate even further by providing a little extra incentive. Something that spurs them on to “Buy Now!”

Usually that means putting something on sale, but not always.

1. Show your stock numbers

When stock numbers are low on a certain item, or on certain sizes, show it. Anyone who is on the fence of purchasing or not will move, because of Loss Aversion.

Loss Aversion
Loss Aversion

Loss Aversion is the idea that humans will do more to avoid a negative consequence than to make a positive outcome happen (because negative consequences hurt worse than positive results reward). It’s closely related as Scarcity, one of Cialdini’s 6 Principles of Influence.

Basically, it hurts (and hurts bad!) to lose something you want, even if you don’t want it very much. In fact, when you face the prospect of losing something, you want it even more. It’s why “Now for a Limited Time Only!” and “Only 5 left!” work so well to boost conversions, even when the product is full price.

And, of course, this tactic works really well for limited time sales.

2. Buy Now for [Incentive]!

“Buy Now for free shipping,” or buy more for free shipping – basically, act now to get a lower price or faster delivery, or even a free extra item, like a mystery gift bag. Having an order minimum for Free Shipping is one of the best ways e-commerce stores can increase sales they wouldn’t otherwise get.

In a study conducted by eConsultancy, Free shipping was the most popular motivation for 82% of UK and 80% of US consumers.

What’s easy for you to offer that has value to your customer? Make that your incentive and watch conversions rise! (But your incentive had better be good, because otherwise you’re undermining their trust in you, which will cost you in the long run).

3. Limit options

Sometimes, the sheer number of options you have on your site undermine your conversion rates – people can’t decide. In The Paradox of Choice, author Barry Schwartz says the more choice customers are given, the easier it is for them to choose nothing. If you have lots of products, invest in really good search and filter features so people can narrow down their options based on – yep! – their desired outcomes.

What’s Your Price?

The right price for any item depends more on how well you prove it will deliver the buyer’s desired outcome than any other factor. Your buyer wants to feel secure in their purchase, which is why trust is of paramount importance; your buyer wants to feel good about the purchase (all decisions are emotional); and your buyer might need an additional incentive to make his or her move.

You don’t need to have the lowest price to convert. You just have to give your customers the best set of reasons to convert with you.

 

Pricing CRO Style: Matching Price to Audience

Pricing has so many roles to play in e-commerce. It has to cover product costs, personnel costs, and marketing costs to keep the business running (and profitable!), and it can act as a marketing tool, differentiating you from higher priced competitors. It’s a fine line to walk if you try to do it all – and most companies think they have to do it all.

But when it comes to conversion rate optimization (CRO), the lowest possible price isn’t always the right price – in fact price doesn’t necessarily depend on what the other guys are doing. The price you can charge for optimal conversions is based on a whole other criterion: Your audience.

e-Commerce Differentiation: Stand out, sell more

e-Commerce Differentiation Stand Out Sell More

Differentiation is, literally, what separates you from your competition. It’s why your customers will only buy from you, no matter what the other guys are offering. When you hit just the right differentiator for your target audience, you’ll convince them that they can only get their desired outcome from you.

What is differentiation?

Differentiation is what makes your product unique and valuable for your target audience. It’s what sets you apart. Grabs attention. Says to the world “I’m the only place you’ll find THIS!”

It can take many forms. Price can be a differentiator (“best value!”, “Cheapest rates!”). Quality can be a differentiator. Brand names and social cachet (aka. “perceived value”) can be differentiators. The fact that your product is on Oprah’s “Favorite Things” list is a differentiator. Features can be differentiators, but features can also be easily copied by competitors (which means if people love a feature, it won’t be a differentiator for long). Longevity, even, can be a differentiator (“Dine at London’s oldest restaurant”). It can be your company ethics, your founder, your driving philosophy, even your personality.

Most importantly, the differentiator you choose to highlight in your value proposition and marketing should be something no one can take away from you.

How to differentiate yourself in a crowded market

The first step towards finding your differentiators is to make a list of what sets you apart.

Do not – DO NOT – settle for the lazy answer: “My product really isn’t that different from anyone else’s.”

I’m appalled by the number of times I’ve heard that from entrepreneurs and business owners. It’s never true. So if that’s your gut response, tell your gut to “shush!” It doesn’t know what it’s talking about.

Because even if you’re selling ubiquitous, mass-produced jewelry, you can still be “America’s diamond store since 1924.”

If your shortlist of what sets you apart is a little too short, here are a few ideas on how some of the most successful e-commerce companies are differentiating themselves.

Take a Stand

Take a Stand Patagonia
Take a Stand Patagonia

One of my favorite stores that differentiates itself so powerfully is Patagonia. I don’t own a single Patagonia item – I’m not its target audience. But I love their company and have written about it many, many times because of the way they differentiate themselves by taking a stand on issues I care about. They’re unabashed environmentalists, even nicknaming themselves “The Activist Company.” There are thousands of hiking and outdoor recreation equipment brands that sell backpacks and windbreakers, but this is the only retailer who makes you feel part of something larger when you buy from them.

Pick a Fight with the Big Guys

Pick a Fight with the Big Guys
Pick a Fight with the Big Guys

If you want to stand out from the competition, try comparing yourself against them. Blatantly. In a big way. Think of it this way – if they were doing everything you do better, you wouldn’t be in business. That means you have an edge. It’s time to tell people what it is.

This landing page is particularly clever because it differentiates itself from other app stores, while pointing out what makes those app stores so frustrating. Then it provides a solution.

What are your customers wishing they could “break free” from?

Try this: How would you improve the copy on Lyft’s home page?

Lyft Homepage
Lyft Homepage

What this does well is that it makes a time-bound promise (very effective) and addresses a primary concern of its target audience: Safety. It also adds a dash of “social proof” with “see why 9 out of 10 rides end with five stars,” which tells people that they can reasonably expect to be happy with the service. But I think they could do better, don’t you? Here are a few of my suggestions; see if they match up with yours.

Wouldn’t you be more likely to convert if that page said:

  • Catch a Ride in Less Time than Other Services (we timed it!)
  • We’re the Safest Ride Service Around (see why)
  • Our Drivers are Happier – Our Customers are too (Hear from our drivers about why they love Lyft)

I included that last one because Uber, Lyft’s main competitor, has been having an image problem with how they treat drivers. It’s always fun when you can jab a competitor’s weak point, without naming names of course. Stay classy.

Say Who You’re For

Often, the issue with declaring a differentiator stems from an unwillingness to define your audience. Who is your product for?

“My product is for everyone!”

WRONG! Please, please, unless you are the world’s largest online retailer of toilet paper, never say this. Because it’s almost never true. It might not even be true of toilet paper, now that I think about it.

Googling… ah, there it is. That is some well differentiated toilet paper.

Well Differentiated Toilet Paper
Well Differentiated Toilet Paper

So if toilet paper – a product that really is for everybody – can find a way to differentiate itself in a crowded, established market, you can too.

So what’s stopping you?

It’s probably fear.

Business owners tend to stick to their guns on niche-resistance because they’re afraid that by saying who they’re for, they’ll be reducing the number of people who will buy their product. But the reality is that you’ll attract more people, not less, when you identify your niche and own it. You’re declaring a specialty, and I don’t know about you, but when I have a problem to solve, I’d rather see a specialist in that problem than a general practitioner. Right?

Here’s an outstanding value proposition that clearly states who the product is for and why you want it. Notice its sub-headline: “FreshBooks is the only accounting software…” that. That is their value proposition, right smack dab in the middle of their home page.

Freshbooks Homepage
Freshbooks Homepage

FreshBooks’ new home page tightens up the verbiage a bit. Both are good, but I really love the “designed for you, the non-accountant.”

Freshbooks Updated Homepage
Freshbooks Updated Homepage

My only criticism: I wish “Powerful Features” was more specific, and that “Organized in the Cloud” stated a benefit, like “Secure Access Anywhere.” They should test this.

Own Your Size

Own Your Size
Own Your Size

Small e-commerce businesses have big advantages over their larger competitors. They’re able to offer more personalized service (see next point), but more importantly, they’re uniquely able to create personal connections. Take Stewart & Claire for example – it’s a small company owned by a married couple who began with one goal in mind: To create a better lip balm than they ones they were using. Their small-batch lip balms are made from natural ingredients, like pure essential oils, and come in fun flavors like “Old Fashioned” and “Autumn with Ginger.”

Cocktail-flavored lip balm is a brilliant idea in itself, but what hooked me into signing up for their emails is the whole story behind this super-cute couple, and the ongoing story they share on their super-cute blog. I feel like I know these people. Like we could be friends. Big companies can’t manage that, try though they might.

Being small also means that you become your customer’s one-of-a-kind discovery. If your ideal customer is a connoisseur of the finer things in life, that is exactly what they’re looking for.

Bring Service to a Whole New Level

Everyone says they have great customer service. Many people claim to have “the best.” But don’t be afraid to kick this promise up a notch. What if you had “Fanatical customer service”?

This idea might be found more in software-as-a-service right now, but those trends tend to toddle over to e-commerce.

How is “fanatical” customer service any different than the vanilla kind? I like this definition from the 2006 Forbes article by Wiley Cotton: Get Fanatical About Customer Service.

“Flummoxed but determined, Spada asked himself: How can I get more out of my existing customer base? His answer: fanatical customer service. That meant doing whatever it took to get the job right. The idea is not exactly profound–until you realize all the ways you could be providing great service but you’re not.”

It’s not a new idea, but I believe it was the ancestor of a more recent philosophy of providing an exceptional customer experience: Customer Success. Customer Success is about taking a proactive approach to finding out what your customers need to be successful with your product, and helping them get it.

Notice the call to action at the very top of this home page: “Want to grow your best beard? We’ve developed the ultimate guide.” That is a fantastic example of customer success in e-commerce – after all, you can’t use a beard comb if you don’t have a thick, manly beard to comb through.

Beardbrand Differentiation
Beardbrand Differentiation

Maybe you’ve got your eye on becoming the next Amazon and your products are more varied than, say, beard products. Maybe you sell everything from firewood to popsicles. You can still have a pop-up chat box with live help available to answer questions and help your customers understand how to use your product and what other products they might need to get the best results.

Do Business a Bit Differently

Some e-commerce companies are finding great success by going with a subscription-based model. Yes, e-commerce meets SaaS, for the best of both worlds.

Different Business Model
Different Business Model

Companies like The Dollar Shave Club, Birchbox, and Barkbox all offer collections of related, niche-targeted items that customers subscribe to receive every month. This model must work, or Amazon wouldn’t be getting on the bandwagon (and it is). You don’t have to switch to subscription-only to differentiate yourself; but what if you added a subscription service for frequently bought items bundled together?

Now that you have some ideas – a few more words of advice

Value propositions and differentiators are living, constantly evolving things. Don’t be afraid to switch things up and test variations to find the very best differentiator for you and your audience.

And keep in mind, the best differentiator isn’t a unique product or a new gimmick – it’s the ability to deliver an emotionally compelling experience.

So go wild. Get crazy. Be creative. List out everything you can think of that might make your product and business different from the other guys.

e-Commerce Differentiation Stand Out Sell More

Differentiation is, literally, what separates you from your competition. It’s why your customers will only buy from you, no matter what the other guys are offering. When you hit just the right differentiator for your target audience, you’ll convince them that they can only get their desired outcome from you.

6 Ways to Alter Perceived Value to Improve Your CRO

6 Ways to Alter Perceived Value to Improve your CRO

What is it about that blue box – the iconic Tiffany’s box.

 The Iconic Tiffany’s Box
The Iconic Tiffany’s Box

What’s inside isn’t, typically, very exciting in purely objective terms. A relatively plain diamond engagement ring (okay, the engagement itself is exciting), a charm bracelet, heart necklace or pair of generic earrings the like of which you could easily find at Zales? Half the magic of Tiffany’s is knowing it came from Tiffany’s – the iconic mecca for diamond and Audrey Hepburn fans. There’s romance in that box that is only tangentially related to the jewelry.

There’s also social cachet.

I don’t mean to sound jaded. I wouldn’t turn a down a blue box or its contents. But I do want to point out that its value isn’t intrinsic: it’s perceptual.

Perception is a very individual thing, influenced by life experience, personality, past interactions with your brand and your competitors (and with certain classic movies). Perception is the voice that whispers “Yes, you should buy the Poinsettia Flower Pot Cake for $165 because Oprah said so,” or “Hey, maybe I’ll give AirBnB a chance – Kim looks really comfy.”

Just checked into our NYC penthouse. Thanks @airbnb for the gift of our home away from home.

A photo posted by Kim Kardashian West (@kimkardashian) on

Perception is so subtle, many of us don’t pay it much attention. But marketers do. CROs do. And you should, too.

Even the words you use in your value proposition, marketing, and product pages will mean slightly different things to different people. The words quality, premium, economy, value, guarantee might mean “an intelligent purchase decision” to some buyers, or just mean “cheap” to others.

It’s because perception is so varied, and I would argue malleable, that it can be influenced to generate higher conversions – without increasing your own costs.

And you don’t need Oprah or Kim to do it.

Hey now – this isn’t entirely self-serving. Customers want to feel good about their purchases, that they’ve made the best possible decision on a product that meets their practical and emotional needs. And, when they do feel that way, they tend to be more loyal. Everybody wins.

How Perceived Value Works

“Real” value is very specific and non-negotiable: It’s the relationship between the actual manufacturing cost and the price the product is sold for.

“Perceived” value is what consumers think the product is worth to them.

For example, the 2013 Aston Martin Cygnet was made by Toyota – a near copy of the Scion iQ – but branded Aston Martin, retailed for more than $45,000. The Toyota Scion iQ retailed for just $17,000. This specific switcheroo didn’t fly with consumers (Aston Martin stopped making the Cygnet shortly therafter), but many more do.

It’s common practice in the car industry, called “badge engineering:” taking the same model car, and often the same makers in the same factories, and selling it under a different brand with minor cosmetic changes.

“Rebadged cars are identical in all respects, except perhaps for some tiny cosmetic distinctions such as the placing of the headlamps or the shape of the trunk. They not only come from the same factories but are in many cases made by the same workers on the same production lines. Yet their prices can vary significantly depending on which maker’s badge is on the grill.” – Forbes

Essentially, the cars are priced based on their perceived value (their actual value is about the same). And it works more often than not.

Sound crooked? Well, that depends (once again) on your perspective.

In the TED Talk Life Lessons from an Ad Man, Rory Sutherland builds a case for perceived value being just as satisfying as what we consider “real” value. In fact, many luxury goods are based on perception rather than actual cost to produce, and studies even support the idea that we get more pleasure from higher-priced goods, based on price alone.

Consider:

“Researchers at Stanford GSB and the California Institute of Technology found that if a person is told they are tasting two different wines — one costs $5 and the other $45 (but they’re actually the same wine) — the part of the brain that experiences pleasure will become more active when the drinker thinks they are having the expensive wine.” (Freakonomics radio & ConversionXL)

Clearly, the intangible importance we place on things does have value.

The question becomes, how can you add intangible value to your products when you’re not Tiffany, Aston Martin, or Mouton Rothschild?

Leveraging the Power of Perception

The object of the game is to increase the intangible/perceived value of your product without actually doing anything substantial to the product itself.

The key to winning this game lies in the definition of perceived value itself:

“A customer’s opinion of a product’s value to him or her. It may have little or nothing to do with the product’s market price, and depends on the product’s ability to satisfy his or her needs or requirements.”

It depends on the product’s ability to satisfy his or her needs – and those needs are, quite often, more emotional than practical.

If the Power is in Perception – How do we Alter Perception?

In the 2010 book Money Makers: Inside the New World of Finance and Business by David Snider and Dr. Chris Howard, they simplify the question like this: When the benefits outweigh perceived costs, your prospect will take action. Customers’ perceptions of how much value there is in your value proposition, compared with the costs, will make or break your sale. And, of course, those benefits aren’t just tangible, they’re emotional as well.

Perceived value is linked to costs and benefits. Decrease the costs, increase the perceived benefits, and you’ve got it.

Method 1: Decrease Perceived Costs

When people perceive value to be greater than the price, they tend to buy (who doesn’t love getting a deal?). Which means, you have two options: Lower the price of the product so it’s below your customer’s perceived value, or raise their perception of that value.

Essentially, you can put the product on sale, or you can alter perception. The first is easy; the second requires finesse.

People make assumptions about value. They assume, for example, that higher priced items are of better quality. They assume that larger packages contain greater value. They assume that Oprah Winfrey and Kim Kardashian only promote the very best. You can use these assumptions to present your product in a way that increases its perceived value. Don’t have Oprah and Kim on-hand? You can get some of those “social proof” points by adding customer testimonials to your website and product pages.

Another technique to decrease perceived costs is called “cost re-framing.”

Cost re-framing works like this: When people are told the price in a smaller unit, their routine thought process is disrupted, and the price seems like more of a bargain than it actually is. In the study, the researchers went door to door selling note cards for charity. In the first pitch, they sold it as “$3 for 8 cards.” That worked 40% of the time. Their second pitch was “300 pennies for 8 cards,” which worked 80% of the time.

Another example we’ve all seen runs something like this: “For the cost of just one coffee a day, you can save a child.” That sounds much more doable than asking people to give $1277 a year as a charitable donation (which is the cost of my favorite local latte, if I were to indulge daily).

Car dealerships do this every day with lease deals, “Just $199 per month!” (for the next ten years).

Method 2: Increase Perceived Benefits

Here’s one way to increase perceived benefits:

Ad Demonstrating Increased Perceived Benefits
Ad Demonstrating Increased Perceived Benefits

I don’t think this ad would work on someone in the market to buy a Lamborghini (very different customer profile!), but it would work on someone trying to talk themselves into the dowdier, more practical van.

But what if your challenge is to differentiate your product from a very similar one? You can increase your perceived value by doing something your competitor doesn’t – letting customers “peek behind the curtain” to see how your product is made (and how much care and attention is put into its design and construction). Check out this video Hyundai produced specifically to differentiate its Elantra from the Honda Civic.

Honda Elantra Differentiation VS Civic
Honda Elantra Differentiation VS Civic

Method 1 & 2: Combine Cost Reframing with Perceived Value

In copywriting especially – all of the words in your marketing and website – you can combine the cost re-frame with the perceived-benefits-boost. We see this all the time.

“Expensive” becomes “Exclusive”

“Cheap” becomes “Great Value!”

“Lemons” become “Deconstructed Limoncello: Just Add Vodka”

You get the idea.

Another example of how you could combine a re-frame with added value is the ‘ending-in-9’ phenomena. Ever wonder why every deal offered on television is Something.99? Researchers at MIT and the University of Chicago found that prices ending in 9 increase customer demand for product. People (at least in the West) read from left to right, and are biased towards the first number they see – so by the time they reach the .99, their perception is that the value is closer to the first number which, in a convoluted say, makes them feel like they’re getting a better deal.

Method 3: Introduce scarcity

Did you know that diamonds aren’t really scarce? There’s actually no real reason for their expense – except for the perceived value placed on it by De Beers’ iconic slogan “A diamond is forever.” They made the diamond into a symbol of successful marriage, and who wouldn’t pay for that?

De Beers Diamonds Scarcity
De Beers Diamonds Scarcity

The difference between a reasonably priced rock and 3-month’s salary really is De Beers.

But it wasn’t just great marketing that drove up the price of diamonds – De Beers also carefully restricts the supply of diamonds, artificially creating scarcity. And scarcity deeply affects perceived value.

Scarcity enhances perceptions of expensiveness and desirability, and it’s also one of Cialdini’s 6 Principles of Influence. No matter what the price, people are more likely to purchase the very last available product, or jump on the soon-to-expire deal. Call it “scarcity” or call it FOMO (Fear of Missing Out) – it works.

Method 4: Altruism as Added Value

PeopleTree Altruism Example
PeopleTree Altruism Example

Feeling good about doing good is a core human trait, and that ‘feeling good’ has real monetary value, if you can leverage it. AmazonSmile promises to donate .5% of a shopper’s total purchase towards their designated nonprofit – which is brilliant/diabolical cost re-framing (it’s a whopping $5 out of every $1000, to put it in perspective). And, the non-profit organization needs to accumulate at least $5 worth of donations in a given quarter for a check to be cut – no easy task.

Few people really understand how AmazonSmile works – but it sounds like such a lovely idea. Shop like you would anyway, and your favorite nonprofit benefits! It’s priceless advertising, it’s an added incentive to shop at Amazon, it makes consumers feel good, and you can bet it boosts conversion rates (Amazon has not been forthcoming with its Smile stats).

I would strongly suggest not going the AmazonSmile route of taking advantage of peoples’ better natures. On the world-wide web truth always comes out. But, you can still institute a more conscientious charitable program in your e-commerce store that delivers positive results to everyone involved, and promote it as your new differentiator.

Giving a percentage to charity is the quick-and-easy route to appealing to philanthropic consumers. But an increasing number of companies are reinventing the way they do business to source sustainably and support the communities that make their products. These companies, like People Tree in the UK or Theo Chocolate in Seattle, charge a premium for their products, which people are genuinely happy to pay.

Method 5: “Valued at”

One of the simplest methods of increasing your perceived value is by just saying what it’s “valued at.” Who does this valuing?! Nobody knows. But just by placing the higher number next to your product that you’re selling for less, you’re building a perception in the consumer of getting more for his or her money.

Got a promotional giveaway, like Neil Patel’s Free Course? His is “Valued at $300.”

Method Valued at
Method Valued at

It’s simple, but it’s not necessarily easy. You can’t assume people are stupid – you have to provide real reasons for your self-evaluation (or it won’t ring true). Neil Patel can say his course is valued at $300 because he’s established himself as an expert in his field. Building brand recognition and a reputation for expertise, as well as accumulating testimonials, can all help legitimize your “Valued at” claims.

Method 6: Just Make Your Typeface Smaller

Saving the easiest and laziest for last, this actually works. According to marketing professors at Clark University and the University of Connecticut, consumers perceive a price to be a better value when the numbers are written in a small font.

Or, you know, you could just make your boxes blue.

 

6 Ways to Alter Perceived Value to Improve your CRO

Perception is so subtle, many of us don’t pay it much attention. But marketers do. CROs do. And you should, too.

Even the words you use in your value proposition, marketing, and product pages will mean slightly different things to different people. The words quality, premium, economy, value, guarantee might mean “an intelligent purchase decision” to some buyers, or just mean “cheap” to others.

It’s because perception is so varied, and I would argue malleable, that it can be influenced to generate higher conversions – without increasing your own costs.