silhouette in front of a sale sign
Editorial

This Is Your Brain 'On Sale'

5 minute read
Liraz Margalit avatar
The end of year consumer is far more impulsive a buyer than the consumer at other times of the year.

Online retailers essentially live and die by the sales season between the Thanksgiving and Christmas holidays. According to a report from Salesforce, overall online sales are expected to grow this year by 13% to $136 billion. That report is based on a survey of more than 10,000 consumers and major ecommerce sites. So what characterizes the holiday season and end-of-year consumer? And how does their online behavior differ from the rest of the calendar year?

From a behavioral psychology perspective, my analyses of customers’ behaviors over the years revealed a designated behavioral pattern that is characterized by what we can call the typical “end of year” consumer.

The “end of year” consumer is far more impulsive as a buyer than at other times of the year. They apply emotional judgment rather than logical judgement to their purchase decisions. So for example, they do not compare prices as much as normal and don’t read deeply into the product information or specs. In addition, the percentage of new visitors that convert on sales period is significantly higher than regular times. I also saw that during the holiday season, a typical consumer purchases an average of 3.5 items on a single visit to a website. At any other time of the year a purchase of only 1.2 items takes an average of three site visits.

The Psychology Behind Impulse Purchases

The reason for this significant difference in purchasing behavior is down to the various marketing manipulations or “dark patterns” that a group of scholars from Princeton found to be very popular on ecommerce sites. “Dark patterns are user interface design choices that benefit an online service by coercing, steering, or deceiving users into making unintended and potentially harmful decisions.”

These well-designed manipulations performed by websites during this period aim to directly affect the cognitive decision making process, leading to impulsive, emotional-based purchasing.

Here are some of the common tactics I identified while looking at the data from a web-psychology point of view:

Related Article: The Psychology of Personalization

1. Reinforcing Group Thinking

The end of year sales: vast campaigns and media buzz are designed to create a “herd effect” that captures and carries the consumer along with everyone else.
This is a form of cognitive manipulation playing on two levels:

  • First, it communicates to our basic physiological need to belong to the group or the herd.
  • Second, in cases of uncertainty it allow us to learn from the experience of others — if everyone else is in a shopping frenzy, they must have a good reason for it!

2. Destroying the Rational Process

While looking at attention heatmaps, I saw much less attention to details or product information. On the other hand, there was increased attention on the featured items, images and catchy headers.

Consumers usually seek some form of logical justification to qualify their purchase decision. The “herd effect” generates the feeling that shopping must be a smart, rational, common-sense thing to do at the end of the year. And “if everyone else thinks so — it must be right.” So people are automatically conditioned to believe that purchasing during the end-of-year season is cost-effective and will save them money. And so, the more they will purchase — the more money they will save!

Learning Opportunities

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3. Creating a Sense of Urgency

The popular time limitation used during sales season (“today only” “available for the next 24 hours”) motivates customers to take action quickly. Urgency is the feeling that taking an action in the current situation is so crucial that it overrides their natural tendency to put off making a decision. And as a result, people feel they have to buy from you now, today, this second.

4. Triggering a Sense of Loss

Using loss aversion as a motivator is like telling someone he is about to lose a great opportunity. Loss aversion refers to people's tendency to prefer avoiding losses to acquiring equivalent gains. When something begins to run low, people’s desire tends to rise. For example, the weekend of Black Friday. This time limitation creates a sense of urgency in consumers’ minds which leads to an immediate purchasing action.

Another excellent way to get the attention of consumers and make them act is to tie a messages to a specific time frame or deadline. This effect eliminates our tendency to stop and consider the purchasing process and to try to determine whether you really want or need the item that badly. Retailers commonly spark consumers’ interest by highlighting limited stocks available for a limited time only, which raises the perceived value of these goods — after all, rarity and value are deeply intertwined. Once our logical process is put aside, we remain only with our emotional process. And so, more than ever, we rely upon “how the product makes us feel” instead of a cold, calculated cost benefit analysis.

Related Article: Experience as a Metric: Changing the Convert-Sation

5. Creating Collective Experience

The intense marketing efforts and slick advertisements that we see towards the end of year have another effect: They make people believe that they participate in a collective experience. Or in other words, if you’re not a part of it, then you don’t belong. Therefore, holiday season purchasing is seen much like a ceremony, where every year, people get ready for the sales, setting aside their time and discussing it with friends, colleagues and family.

The combination of these factors leads the “end of year” consumer neatly into a purchasing trap. It’s true that ecommerce sites try to use similar principles throughout the year, but despite other small purchasing peaks over the year, there’s nothing quite as strong as the “finality” associated with the end of an old year and the beginning of a new one. So strong, in fact, that holiday purchasing figures are one of the main indicators used to determine an economy’s overall state of health.

About the author

Liraz Margalit

Liraz Margalit, PhD, is a digital psychologist, customer & user behavior specialist, and an international keynote speaker. She integrates cognitive psychology and behavioral economics perspectives to analyzes consumer behavior and deliver actionable insights for business stakeholders.