CXL Institute Conversion Optimization Minidegree Review (3/12)

This is a third of a twelve-part (3/12) review of conversion optimization mini degree by CXL Institute. In this article, I will cover topics from the foundations' section such as social proof, people, and psychology.

Humans do not make decisions based on logic, they make them based on emotion. A few years ago, neuroscientist Antonio Damasio made a groundbreaking discovery. He studied people with damage in the part of the brain where emotions are generated. He found that they seemed normal, except that they were not able to feel emotions. But they all had something peculiar in common: they couldn’t make decisions.

People think and behave in certain ways we must be aware of…

Cognitive biases are tendencies to think in certain ways. They are often studied in psychology and behavioral economics. Cognitive biases help us understand how we make decisions. Also, if you think you are not affected by any biases or that you are less biased than other people, think again. This kind of bias is called blind spot — it is the cognitive bias of recognizing the impact of biases on the judgment of others while failing to see the impact of biases on one’s own judgment.

Understanding these biases is important because it helps us:

1. Understand how our customers think (influence customer decisions)
2. Avoid common mistakes during conversion rate optimization (CRO) work

7 Most common cognitive biases

1. The IKEA effect — tendency to place a disproportionately high value on items that you have assembled yourself. Studies show that when people were asked to put a dollar value on an IKEA chair that they’d assembled, and on the same chair pre-assembled, they always valued their manually-assembled chair much more. Or people tend to get overly emotionally invested in projects they have been part of.
2. Anchoring bias — humans tend to rely too heavily on the first piece of information we hear or see. When shopping, if we see a high price for one item that will make all other items seem cheaper. Or you might feel limited by the initial piece of data and might never try a radical redesign.
3. Recency bias — this cognitive error tricks you into preferring fresh data over older data, but newer does not always mean better.
4. Confirmation bias — people have a tendency to test things that confirm their beliefs. They have a hypothesis “This form is just too small” so they test making it bigger, and if it’s successful by a small bit, they have their feelings confirmed. However, maybe making the form even smaller would increase conversions. Maybe it wasn’t the form size at all, but a much larger factor was the image above the form or the color of the text. Ask yourself, am I emotionally invested in an idea?
5. The framing effect — the framing effect is when our decisions are influenced by the way information is presented. For example, let’s say you are selling a product and it costs $1,000. You can offer a discount in two ways: percentage-wise or exact savings amount. People prefer to see percentage offers like 20% OFF if the value of the discount is less than $100. Otherwise, it is better to show them that they will save $200 if they make a purchase now. There are also positive and negative value frames.
6. False consensus bias — People tend to assume that other people have the same opinions and preferences they do. ****This can be subtle, and it can be extreme, but it puts all small group feedback into question. It can be very subtle, but in general, you need to take individual feedback very delicately. Everyone is going to look at things with their own individual biases, and not understand that others see things differently.
7. The Dunning-Kruger Effect — occurs when an unskilled individual overestimates their skills or a skilled individual underestimates their skill. It turns out that people who are the least competent at a given task often rate their skills most highly simply because they are too ignorant to understand what it means to have the skill.

Social proof

Social proof is the concept that people will follow the actions of the masses. The idea is that since so many other people behave in a certain way, it must be the correct behavior. It is unbiased proof that is outside of a claim your company would make. You can include it when you want to support claims you make on your website.

• Case studies
• Reviews
• Customer interviews
• Security icons
• Specific data (e.g. over 15,340 happy customers)

Negative social proof and its purpose

Usually, you do not want to include negative social proof on your website, but there are times when it can help. For example, if you have a restaurant and you want to feature your reviews on your website, people are more likely to believe 4,8/5 star reviews than 5/5. Or if you own an eCommerce shop, you want to leave negative results to humanize results, then people will self-select based on their needs.

Common mistakes when showing social proof

1. Choosing customers that are not an ideal customer
2. Displaying in a way that’s not credible (No name, photo, company, etc.)
3. Not using it to support a specific claim

How to keep social proof fresh?

Have a system in a company for collecting social proof.

• Audio & Video (recommended)
• Social proof (have a dedicated page for social proof only on your website and keep it updated)

My thoughts

So far, I have consumed a lot of information and it is starting to be overwhelming. I’ll have to revisit each of these sections in order to memorize it, but the instructors are very knowledgeable and interesting to listen to. It will be very challenging to take all of this knowledge and put it to work.

Thanks for reading! See you in the next review.