​As our collective shopping experience continues to migrate to a digital ecosystem - further supplanting visits to physical stores - buying behaviors are changing and evolving. Impulse buying – grabbing an unplanned item while on a planned shopping trip – is one of those behaviors. Most of us (80% according to Invesp) engage in some kind of spur-of-the-moment buying; studies show it happens on 3 out of every 5 shopping trips. The thinking, behaviors, and circumstances surrounding these (some say irrational) purchases are rooted in psychology and driven by emotion.
 
In aggregate, capturing revenue from impulse purchases becomes significantly important for some sectors. For many retailers and brands, their marketers labor over getting the right product in the right place at the right time. It has become part science and part art form – and been continuously refined over decades. The front check-out area of grocery, drug, convenience stores show how tempting guilty pleasures and new discoveries to shoppers’ baskets is a big deal. Discretionary packaged goods, beverage, and snack & confectionery companies now rely on these last-minute purchases for upwards of 15% of their revenue. But there is risk of losing these sales opportunities from the growing number of online purchases, which tend to be more pre-planned. 

​How can e-commerce marketers drive impulse purchases in an online setting; what tools and techniques can they use? I recently worked on a consulting project with a CPG company that examined this very question. We studied how to crack the code on what drives impulse buying online, and which marketing and merchandising tactics can evoke those buying behaviors. What key success factors, tools and techniques can best facilitate this outcome? How can we measure the success? Below I highlight 4 approaches to enhancing impulse buying in E-commerce:
 

1. Understand the Mindset

Understand what is driving your customer’s impulse buying in general, and how is it affected by a digital environment. This involves understanding who is doing the shopping, when, why, and their mindset and emotional circumstances surrounding the shopping trip. For example, a shopper who – at the end of a long work day – might be tired and in a vulnerable emotional state where “treating themselves to a snack” might be a deserving add the grocery list. Perhaps the ambitious, aspiring shopper is making a long-desired purchase, and celebrates the moment by giving a fun “gimmick” item a try. Study the shopping behaviors of your customer base, and understand how different items get into their basket - both planned and unplanned.
 

1. Merchandising, Messaging, and Motivation

While retail environments have limited merchandising opportunities to position upsells and impulse buys (i.e. the checkout line), online stores actually have several ways to dynamically put buying ideas and suggestions in front of shoppers – along with specific messaging, offers, and pricing. Examples include cart upsells, real-time offers on product pages, suggestions based on cart contents or bundle ideas based on other purchases. Another way is suggesting add-on items to hit the free shipping threshold. The capability to dynamically present and promote just the right product to match up with a shopper’s profile and particular shopping basket – is actually an advantageous marketing opportunity vs a brick-and-mortar environment, where a limited number of items can be presented at any one time.
 

1. Test, Learn, Repeat

This is where the ability to measure nearly every aspect of a digital shopping journey is really helpful, and having an organized and disciplined testing and data gathering methodology is highly important. E-commerce strategists can drastically speed up and replicate the trial-and-error nature of finding out which tactics work. We can look at the types of products added to the cart before checkout (and in which order), and study attach rates for items added during the checkout process. This can be especially effective with the help of machine learning, which can rapidly run multi-variate tests and optimize product offers in real time. One-to-one marketing strategies, which are heavily dependent on customer data, could also help identify a shopper’s propensity for impulse buys. These approaches can be very effective and allow for some creative and innovative marketing ideas.
 

1. Facilitate Immediate Gratification with Quick and Seamless Order Fulfillment

Or as close to it as possible. Impulse buys are all about the desire for instant gratification, so the delay in getting them into the customer’s hands presents an inherent challenge for e-commerce channels vs. traditional retail. However, the rapid evolution of new logistics and delivery options are helping e-commerce sellers drastically reduce the potential fulfillment and delivery time. Same-day delivery is a growing feature – being led by none other than Amazon. Also, many retailers now feature “buy online, pick-up in store” (BOPIS) as a way for shoppers to quickly get their merchandise. Curbside pickup for groceries is a form of BOPIS that actually creates an opportunity to suggest adding impulse items to a customer’s basket. Geo-fencing technology can play a role in this as well – with mobile push notifications suggesting last-minute impulse items just as the shopper is approaching the store pick-up area. Lockers and drone deliveries are other examples of emerging ways to provide that rapid gratification for shoppers.
 
It’s essential for E-commerce retailers and brands – and their marketing teams – to be actively thinking about how to drive impulse buying online, as it represents a material source of revenue. The many factors surrounding the instance of an impulse buy (shopper psychology, product merchandising & placement, offer management, and speed of gratification) create complex challenges in an e-commerce environment. Developing ideas, strategies, and tactics around these topics I’ve described above will help us better understand how to preserve these valuable opportunities as shopping continues to migrate online.
 
Thoughts, feedback, or ideas? Please share in the comment section below.

I am one of those people who actually reads the alumni magazine from their alma mater schools. I think you can often find interesting nuggets of learning in there. One such publication I recently read - Georgetown Business, from Georgetown University’s McDonough School of Business (where I earned my BBA), featured an article that compelled me to think more deeply about one area of my business expertise – e-commerce marketing – and how it could influence my future practices to maximize my business results.

The “Favor Request Effect”
This article, entitled “Favor Pitch – Georgetown McDonough Researchers Uncover a Surprising Negotiation Tactic,” reviewed a research project led by Georgetown University Marketing Professors Kurt Carlson and Simon Blanchard (along with Penn State University PhD Candidate & teaching assistant Jamie Hyodo); the title of the study, published in the Journal of Consumer Research is The Favor Request Effect: Requesting a Favor from Consumers to Seal the Deal. It describes a way for sellers of certain products to improve the outcome of negotiations with buyers. Their study revealed what they refer to as the “Favor Request Effect” – that under certain conditions sellers can achieve better negotiated results when they accompany a (modest) price concession with a request for a favor from the buyer.

According to Professor Carlson, with whom I spoke for this piece, the study focused in on negotiated transaction scenarios that met certain conditions needed for the effect to work. Such conditions being that the offer and request being made dynamically (or at least appearing so to the buyer), and the buyer and seller communicating one-to-one. If a discount offer and favor request is communicated to everyone, the effect will be diminished. Also, the favor requested has to be appropriate to the situation and not overly onerous; examples can include asking for a recommendation or endorsement, a customer referral, or providing certain customer information.
The article states that “The Favor Request Effect is found across multiple shopping contexts and multiple types of favor requests…”1. However, the study was conducted only in the US, and did not explicitly look at other countries or alternative sales channels such as telesales or e-commerce. (They are working on a new study, however, to see if the same principal applies if the seller refers the buyer to a competitor for a complimentary product).

The study’s (seemingly counter-intuitive) conclusions have received a fair amount of attention – even being covered by the Huffington Post - as it could have a meaningful impact on sales negotiation tactics going forward. 

See the article from Georgetown Business here: Favor Pitch – Georgetown McDonough Researchers Uncover a Surprising Negotiation Tactic 

See a Georgetown University press release regarding the study here:  http://msb.georgetown.edu/newsroom/news/favor-request-effect-requesting-favor-consumers-seal-deal 

Why Does it Work? What Are The Implications?
According to the article (and my conversation with Professor Carlson), the Favor Request Effect hinges on the premise that the asking of a favor drives a normally adversarial relationship between buyer and seller towards alignment by virtue of the requested reciprocity. A sales negotiation is typically a situation where buyers are trying to get the best price & value, but asymmetric information (around pricing, costs, and market factors) gives sellers an (at least perceived) advantage.

Professor Carlson explained that the seller offering a moderate discount, along with requesting a favor, sends a strong signal of value credibility - that the sellers bottom line price has been reached. This signal neutralizes the perceived seller advantage, creating buyer-seller alignment that a “win-win” has been achieved, and a deal can be done.

In other words, Carlson says “it’s an alternative to haggling – when the discussion is somewhat adversarial and each party seeks to only maximize benefit for themselves. The favor request effectively aligns the buyer’s and seller’s interest and creates an environment of reciprocity.” The study’s write-up also describes the effect of the seller’s signaling that the advantage has been neutralized:

“While a consumer may, by default, perceive a seller’s willingness to negotiate on price as a self-interested activity, adding the request for a favor should alter the consumer’s perception of this activity, causing the buyer to see it more as the first step in a reciprocal interaction.”2 

No doubt these observations must provide an encouraging new tactic for salespeople – who can now increase sales close rates and achieve better sales results, all while getting customers to do favors that will benefit the overall business. Seems like a “win-win,” and testing it would be a no-brainer.

The Favor Request Effect and E-commerce
However, it did beg a question: what if we were to apply this approach to an e-commerce context? If the right circumstances are presented to an online consumer, would the same effects occur – i.e. would it increase e-commerce conversion? Can a sense of reciprocity and alignment be created within online merchandising pages, in the cart, or in the check-out funnel? How closely would one need to simulate the conditions of the dynamic person-to-person negotiation?

In answering this, a good place to start would be an examination of what (if any) e-commerce techniques or scenarios are currently in use that simulate the favor request. Do these tactics in an online e-commerce situation improve conversion rates and product sales – by as much as 50% as the study found for live negotiations? If so, the implications for e-commerce marketing and merchandising could be huge.

Below I provide some examples of e-commerce tactics similar to a “favor request” in place today that may shed some light on the dynamic. Let’s examine…

Abandoned Cart Offer Coupled With Request For Social Referrals:
Getting customers to return to abandon online shopping carts and complete their orders is a nagging problem for e-commerce marketers, and seems like it would be conducive to the Favor Request Effect. The conditions seem appropriate: discounts or other incentives can be offered to the buyer on a one-on-one basis (albeit online). Such an incentive, coupled with a favor request, could possibly improve abandon cart conversions. In fact, there is currently an app on the Shopify e-commerce platform - Checkout boost by Beeketer – that seems to put this tactic into play. The Checkout Boost description says that it offers a discount to abandoned carts, coupled with a request for a social referral, to get consumers to complete their cart checkouts. According to the app’s reviews, abandoned cart conversion can increase as much as 50%, coupled with a noticeable increase in social traffic. This is a positive indicator that simulating the favor request can help close more online sales with hesitant customers.

Social Referrals, Social Sharing, and Social Proof:
Social referrals are fairly commonplace, and it has been demonstrated that they have a positive effect on e-commerce sales traction. This marketing and merchandising tactic is fairly well-known by e-commerce professionals, and in use on a number of landing pages and product pages of e-business sites. A favor request of a social referral would offer some of the strongest benefit that can help boost conversion on the immediate sale, as well as others down the line.

Similarly, social proof and social sharing (broadcasting a specific purchase or support of a site on social media) legitimizes the transaction and site in other’s eyes and is considered one of the “six pillars of persuasive marketing.” Requesting social proof has effectively improved conversion rates in studies (see link). Asking customers for social proof is common and not a big imposition, so it’s even possible to ask this favor for everyday low prices, while also reaping the other marketing benefits of social proof.

Requesting a Product Review:
Asking customers to write reviews is straightforward and common practice (as it was in the buyer-seller live negotiations). It’s well known that more customer reviews lend credibility to e-commerce sites and their product.  Reviews are a key determinant in search results on Amazon and Google, for example. Asking customers to write reviews makes sense, and gives customer a familiar and easy way to reciprocate for the discount. It may also prove to be quite an effective conversion boost.

Requesting a Site Registration Or E-mail Newsletter Sign-up:
It’s now commonplace for E-commerce sites to offer customers incentives for becoming “registered” customers or signing up for marketing e-mails. These incentives usually comprise of discounts on future purchases, gift cards, or other “preferred customer” perks. But what if the tactic were reversed and tried the other way? What if a small discount on the current purchase was provided to shoppers, in exchange for signing up to an e-mail newsletter? Would this increase conversion for the immediate transaction (due to the favor request effect), while also boosting e-mail address capture? Worth testing, it seems.

Asking to Accept Slower/Downgraded Shipping:
Asking a “favor” of accepting slower shipping (at the same price – or free) may be a lot to ask consumers, but it could be worth trying. Amazon has tried a form of this idea, with its “no rush” shipping program for Prime members. They have offered larger discounts on books, as well as a $1 discount on instant video service. However, I could not find any indication if this increased the conversion rate of these items. It could be worth testing, when tried in conjunction with a free shipping offer.

Has this ever been A/B tested? It should be…  It’s a low (or no) cost way to increase conversion and revenue, while also deepening customer engagement and potentially generating loyalty. 

Final Thoughts: Implications for E-commerce Marketers
Professors Carlson, Blanchard, and Hyodo’s study on the “Favor Request Effect” indicate that sellers asking for a favor from buyers in live negotiations can result in greater sales success. Even though the study didn’t explore whether the effect can work to positively impact e-commerce sales, it seems to me that the general principal can be applied to e-commerce carts, checkout processes, and merchandising. The examples of in-use favor request tactics I provided above indicate solid evidence that these principals are being successfully applied in e-commerce today, with encouraging results. I believe further testing and optimization of some of these ideas would be a worthwhile endeavor. I for one will vigorously test the favor request to boost conversion and accelerate revenue growth in the e-commerce businesses for which I consult and manage.

Thoughts, comments or questions? Feel free to reach out to me directly here at www.lukegrant.net.

1: Simon Blanchard, Kurt Carlson, Jamie Hyodo: “The Favor Request Effect: Requesting a Favor from Consumers to Seal the Deal” Journal of Consumer Research – Oxford University Press,
2: Bob Woods: “Favor Pitch – Georgetown McDonough Researchers uncover a surprising negotiation tactic,” Georgetown Business, Georgetown University Press, May 2016