Mind over metrics: the intersection of psychology and data analytics
Data is the lifeblood of the digital world. By observing how people interact with digital platforms, we can see how data shapes and influences behavior. But what does this data reveal about our behavior and our psychology? And most importantly, how can digital marketers worldwide use data to understand better how customers interact with a digital business? This is where digital analytics comes in.
What is digital analytics?
In many ways, digital analytics can be seen as understanding how people make decisions and the psychological impact made on them by the data they encounter. For example, when we scroll through a website, our choices are heavily influenced by the data that appears. We are more likely to click on an article with an interesting headline or a product with a good review. Our psychology drives this behavior, which can be tracked and measured to better understand our decision-making process.
Businesses are on the constant lookout for methods to increase their return on investment and improve customer engagement. One way to achieve these goals is by using digital analytics tools to gain insights into consumer behavior and preferences. With data analytics, businesses can track various metrics, such as user behavior, preferences, and demographics. This type of data can be harnessed to identify patterns and tendencies that can be used to improve marketing strategies.
Data analytics is useful to a business when psychology is applied to the results. Psychology is what gives data meaning, and empowers businesses to achieve their goals. In this article, we will explore the psychology behind analytics and how companies can use the data gained to influence their audience and customers to reach more people and sell more effectively.
Using psychology with data effectively
Certain psychological techniques are more effective for business than others. These can be used to attract, convert, and retain business, as well as improve audience engagement. Marketers use proven methods like these, which blend data analytics with psychology, to make the most out of every opportunity.
Understand your target audience
The first step to crafting an effective online marketing strategy is to get to know your target audience and understand their needs, wants, and values. Tailor your message and content to this data to create more meaningful interactions with customers that they will remember. Try creating user personas (or “avatars”) to exemplify your ideal customer so you have a better idea of how to connect with your target audience.
Leverage social proof
One of the fundamental psychological principles behind consumer behavior is the power of social proof. Some studies have shown that people are more likely to take action if they see others they relate to taking action first: such as buying a product or trying it out. This is why customer reviews and testimonials are so powerful.
By using analytics to identify high-performing products and services, businesses can leverage the power of social proof by highlighting reviews and ratings on websites and social media. According to a survey by BrightLocal, 85% of consumers say that they trust online reviews as much as personal recommendations and 73% of consumers say positive customer reviews make them trust a business more. Incorporating social proof into an e-commerce strategy can increase conversion rates, customer trust, and lead to a higher ROI.
Invest in storytelling
People love stories. This ancient human activity can help businesses engage their audience by getting their message across in a compelling way.
Storytelling is only a way of presenting data in a narrative form: for example, take the About Us page on your business’ website. The data contained in this page might include the company’s history, important facts, and maybe notable achievements. You could present this data in a bullet-point form, or a list. But, if you create a narrative and present it as a story, this information becomes far more compelling. Your customers relate to the story and are more invested in what you have to say as a result.
Telling a story can also help you present data to internal stakeholders. Customer journeys or buying processes in story form can help identify potential issues, such as a lack of clear direction after a user makes a purchase.
Personalization can lead to higher conversion rates and increased customer loyalty. When you collect first and last name data, for example, you can then use it to personalize email messages. By storing buying preferences, you can offer personalized product recommendations. This will make the customer feel like you understand their needs and preferences. A study by Epsilon found that personalized emails had an open rate of 29%, compared to a 5% open rate for non-personalized emails.
This technique can be applied alongside other psychological methods, such as anchoring. The anchoring effect occurs when a customer's perception of a product's value is influenced by the first piece of information presented to them. Personalizing shortly after a first impression is therefore key.
Use FOMO (fear of missing out)
A sense of urgency can encourage customers to act quickly. You can do this by offering discounts or flash sales. This will make customers feel like they must act now, or they may miss out on a good deal.
Fear of missing out can also come in useful on social media, with images of other people enjoying or reviewing your product. If you demonstrate that some people are having meaningful experiences involving your offer, others will be more inclined to want to join in and see what the fuss is about.
Appeal to the audience’s emotions
People are more likely to buy a product or service if they are emotionally connected. You can use this to your advantage by creating content that appeals to the customer's emotions. Stories, images, or videos are more likely to create an emotional charge than simple text, but this isn’t always the case.
By combining emotional methods with storytelling, you can create powerful marketing materials. Demonstrating how a client solved a problem with your product is a particularly good way of emotional marketing, providing the problem was causing them distress to begin with.
Simplicity and accessibility
Making your website simple and easy to navigate will make it a lot easier for customers to find what they want, and therefore a lot more likely that they will buy and enjoy the experience of doing so.
The bare minimum is to make your website mobile-friendly, as more and more people use their mobile phones to access the internet and buy products and services. Many people use screen readers, so social media posts should be properly formatted and all images should use alt text.
Address customer pain points
Using data to find customer pain points is not only useful for updates and bug fixes. By proactively offering solutions, companies can increase audience favor. Sharing problems up front makes you more trustworthy, and honest, and investing in making your product or service as good as possible.
By demonstrating that you understand their problems, people are more likely to think you have the ideal solution.
These are just a few psychology-based strategies you can use to attract and retain customers online. But remember: each process should be tailored to your specific customer base and implemented authentically to your online voice and values. Always measure your results – this data can provide valuable insights in the future.
How to use psychology in e-commerce
When it comes to selling physical products, there are a lot of psychological techniques we can use to increase sales and engage our audience with our brand.
To explore some examples, let’s use a hypothetical e-commerce company that sells sports equipment online. This company aims to increase sales and revenue by using digital analytics to understand its customer's behavior and preferences. By combining their data with the following psychological techniques, they can increase their audience engagement and ROI.
By analyzing customer browsing and purchase history data, the company can create personalized running trainer recommendations and marketing messages based on the customers' chosen sport and training style. A study by Accenture found that 91% of customers are more likely to shop with brands that provide personalized offers and recommendations.
By displaying reviews and ratings prominently on product pages, the company can leverage this social proof, influencing customers to purchase. Additionally, they could partner with local gyms and sports clubs to promote their products, creating more social proof and opportunities for generating social media content. According to a study by BrightLocal, 92% of customers read online reviews before making a purchase.
Fear of missing out
Data shows that the company only has one hundred tennis rackets left in stock online. By highlighting this scarcity on their website, the company can create a sense of urgency with a limited-time offer, encouraging customers to purchase before it's too late. A study by SaleCycle found that using scarcity techniques can increase conversion rates by up to 332%.
By presenting a higher-priced football alongside a lower-priced alternative, the company can create an anchor point that makes the lower-priced ball seem like a good deal. A study by MIT found that presenting a higher-priced option alongside a lower-priced chance can lead to an increase in sales of the lower-priced choice.
The company has data that their children’s sports kits are selling in large numbers. By looking at the data found in reviews, they are able to see that a number of purchasers were able to enjoy more outdoor time with their kids and discovered new hobbies as a result of purchasing the sports kits. By sharing buyers’ emotional stories on social media and including an invitation for others to send in photos, the business connects a product with an emotional experience that will be attractive to new customers.
Using these techniques can significantly impact the business’ bottom line. For example, suppose the company's conversion rate increases from 2% to 3% with these methods.
If the company has 100,000 website visitors per month and an average order value of $100, the increase in conversion rate can result in an additional $100,000 in revenue per month. In a year, this translates to $1.2 million in additional revenue, which can significantly impact the company's bottom line.
How to unleash Adobe Analytics' potential to drive business growth
Psychology and data go hand in hand. Digital analytics tools such as Adobe Analytics have revolutionized how businesses approach marketing and product development by providing insights into user behavior and preferences.
There are more solutions on the market than ever, but only Adobe Analytics offers additional benefits including integration with Adobe Experience Cloud, advanced customization and flexibility, real-time data reporting, advanced machine learning capabilities, and extensive customer support. For businesses seeking data-driven insights for their marketing, Adobe Analytics has everything to offer.
As technology evolves, artificial intelligence and machine learning will allow businesses to gain even deeper insights into user behavior, enabling them to make more informed decisions. Adobe Analytics empowers businesses to stay ahead of the curve while keeping information security a high priority.
When you get in touch with us at Cognizant Netcentric, we can help your organization implement digital solutions and access the full potential of marketing psychology by leveraging the power of data analytics. Get in touch with our team today to learn more.
Sources & Additional Resources
-  Chaffey, D. (2019). Digital Marketing: Strategy, Implementation, and Practice. Pearson.
-  Kahneman, D. (2011). Thinking, Fast and Slow. Farrar, Straus, and Giroux.
-  BrightLocal. (2020). Local Consumer Review Survey. Retrieved from https://www.brightlocal.com/research/local-consumer-review-survey/
-  Epsilon. (2019). Email Marketing and Personalization Statistics. Retrieved from https://www.epsilon.com/en-us/insights/blog/email-marketing-statistics-2019
-  Nielson, J. (2018). Usability Engineering. Morgan Kaufmann.
- Accenture. (2018). Widening gap between consumer expectations and reality https://newsroom.accenture.com/news/widening-gap-between-consumer-expectations-and-reality-in-personalization-signals-warning-for-brands-accenture-interactive-research-finds.html
-  BrightLocal. (2021). The State of Online Reviews. Retrieved from https://www.brightlocal.com/state-of-online-reviews
-  ScienceDirect. (2021). E-commerce Scarcity Strategies Report. Retrieved from https://www.sciencedirect.com/science/article/abs/pii/S1567422321000119
-  Ariely, D. (2008). Predictably Irrational: The Hidden Forces That Shape Our Decisions. HarperCollins.12
-  GDPR EU. (2018). General Data Protection Regulation (GDPR). Retrieved from https://gdpr.eu/
-  SaleCycle. (2023) How Do You Create Urgency in eCommerce Marketing? Retrieved from https://www.salecycle.com/blog/strategies/the-art-of-creating-urgency-within-your-customer-journey/