Abstract
The classic economic theory describes consumers as rational economic actors that select an alternative only after considering all the relevant information. However, while the logical process is certainly a key factor in considered purchases such as insurance or financial products, it is actually detrimental to the retail-consumer industry, where emotional decision making or the impulse purchase plays a central role. Although we like to think of ourselves as rational creatures, absorbing information, weighing it carefully, and making thoughtful decisions, many of our most crucial choices are made by what we call hunches, gut feelings and a somewhat automatic reaction that is beyond or beneath consciousness. We like to refer to this feeling as intuition (“I have a very good feeling about this house”), but the reality is that this “intuition” is an established part of emotion-based learning. This chapter deals with the significant role of emotions in everyday purchase decisions.
TopIntroduction
...People will forget what you said, people will forget what you did, but people will never forget how you made them feel. - Maya Angelou (2019)
Years ago, when retailers actually knew their individual customers in the physical world, the butcher knew to offer Mrs. Jones the nicer cuts, whereas Mr. Smith preferred whatever was on sale. The florist could subtly direct Mrs. Jones to the flowers nearing the end of their shelf-life, while making sure they matched the color scheme of her living room. Retailers knew that how each customer felt vis-à-vis their establishment could make or break their business.
And there is much more to it. it’s not only about customer’s preferences. Interactions in the physical space enable salespeople to address a variety of needs, some functional and some emotional. “It’s like a sixth sense. When a guy walks into the store, I can tell in, like, five seconds.” The veteran clothing salesperson I’m interviewing warms quickly to my questions about his art. “I watch the way he walks, his eyes. I can tell if he’s happy, sad or stressed. I can tell if he needs to talk, or just wants to get on with finding whatever he’s looking for. I know how to respond to make my commission.”
Today, the e-commerce ecosystem has reached a level of sophistication we could only have dreamed of a decade ago (Monroe & Barrett, 2019). With competition only a click away (Tesseras, 2013), online retailers truly appreciate what small-town retailers understood so well: successful product marketing is all about looking at your products and services from the customer’s point of view.
In the digital arena, there are more customers and prospects than the local butcher or florist ever imagined. And there are endless sources of detailed data about these individuals. The challenge facing online retail today is no longer what we know about each of our millions of customers and prospects. Rather, retailers today need to focus on effectively harnessing this knowledge to treat each individual as an individual.
This chapter would like to take a look at the rational and emotional processes that impact shopper intent, behavior, decision making and content consumption and provide some concrete tips that can help online retailers leverage this practical and theoretical knowledge, to identify and respond to what the author likes to refer to as the customers’ Digital Body Language - the digital signals made by customers and seek our interpretation (Niles-Hofmann & Celentano, 2015; Woods, 2009).
Key Terms in this Chapter
Peripheral Route: Is taken when one is unable or unwilling to execute the cognitive assignment (no matter how much a shopper wishes to dig into the details of a specific product, he is just too mentally exhausted to do so).
Central Route: Is taken when one is motivated to generate thoughts in response to substantive content (a shopper wishes to compare the prices of similar products) and has the ability to do so (is not mentally tired).
Emotion-Based Learning (Intuition): We are born with an automatic mechanism that memorizes our emotional reaction whenever we face a new experience. These emotional reactions, positive or negative, are stored in our memory. When we face a similar situation in the future, those stored memories will be expressed as a “hunch” to guide our decisions. For example, if a child is bitten by a dog, the next time he sees a dog he will “intuitively” know how it feels from a representation of the feelings stored in his memory. Intuition is how one learns to approach or avoid new situations and interactions based on the emotional memory of past events without having to consciously process them again.
Emotional Process (System 1): The emotional process is generally automatic, affective and heuristic-based. It quickly proposes intuitive answers to problems as they arise. This operates below the surface of consciousness, transfers messages through biological channels such as skin conductivity and sweat glands, and automatically makes many of our decisions.
Rational Process (System 2): The rational process is slow, effortful, conscious and rule based. It is the one that generates the logical and rational response.
Classic Economic: A theory that describes consumers as rational economic actors that select an alternative only after considering all the relevant information.
Purchase Decision: The level of dominance of each process at a particular time is the key determinant of purchasing decisions. Visitors are more likely to add a product to their cart when the emotional process takes control, as they are directed by “how it feels” and not “is it worth it.”