The peak-end rule of e-commerce
The peak-end rule: Don’t let negative experiences undermine customer conversion
Human memory is notoriously unreliable. All individuals are prone to bias and can have their appreciation of events skewed by minor details. The Israeli-American psychologist and economist Daniel Kahneman came up with a theory in the 1990s known as “the peak-end rule” to describe one of the most common biases that influences how we perceive our experiences.
The peak-end rule describes the way that individuals are prone to evaluate their experience based on its peak – the most intense moment – and its end, rather than through a holistic appraisal of the experience in its totality. It is, at least in part, an example of recency bias, where the last thing to be experienced has an excessive influence.
This cognitive bias applies to many parts of life – but is particularly relevant to e-commerce delivery. While the majority of the delivery process may progress seamlessly, poor execution during the checkout phase or the last-mile can create an overwhelmingly negative impression for the consumer. For any online retailer, it’s vital that the peaks of the shopping experience are positive ones and the end is remembered for all the right reasons.
Poor execution during the checkout phase or the last-mile can create an overwhelmingly negative impression for the consumer.
Avoiding those negative peaks
Recent research has shown that the peak-end rule has an oversized impact on e-commerce delivery – particularly where negative experiences are concerned.
For example, 30% of e-commerce shoppers will switch to a competitor after just one bad experience. It doesn’t matter if all the other interactions with that particular e-commerce provider were positive. Just as the peak-end rule predicts, one negative peak is all that’s needed to result in lost sales.
These negative experiences can come in many forms. Some of the most common relate to delivery options, cybersecurity, online identity verification, mobile optimization, and payment processing. Too many e-commerce brands think that a sale is guaranteed as soon as a shopper visits their website or uses their app. But conversion isn’t complete until the sale is finalized. In reality, almost seven in 10 online shopping carts are abandoned. This could be because of a confusing checkout experience, unexpected shipping costs, technical errors, or any number of other issues. Whatever the reason, it means the final, abiding memory that the shopper has of your e-commerce platform is one of rejection.
Using the peak-end rule to your advantage
It’s easy to focus on the negatives when discussing how the peak-end rule relates to e-commerce. Most of us will have encountered a disappointing interaction with online retail at some point, whether it’s a lack of payment options or a valuable parcel being left outside in the rain. But the peaks of your e-commerce experience needn’t all be negative.
The peak-end rule works both ways. The negative peaks can be turned upside down, resulting in a positive experience that causes conversion rates to surge. When setting up your webshop, make sure you prioritize logistical flexibility and cost transparency. At the checkout stage of the customer journey, clarity is key to ensuring that conversion goes smoothly.
Also, remember that customer demands around delivery have shifted in recent years. Some markets expect next-day delivery, while others have shown more of a willingness for click-and-collect options. Catering to these differences in customer expectations may not be easy but can make the difference between consumers encountering a negative peak or a positive one. What’s more, a customer’s e-commerce journey isn’t over just because a delivery is in progress. Parcel tracking and flexible return options can also create the kind of positive lasting impression that makes repeat custom much more likely. According to UPS, 55% of online shoppers tell their family and friends when they are dissatisfied with a purchase – meaning the peak-end rule can have implications beyond a single customer. The influence of both negative and positive peaks can spread rapidly.
Conclusion: Leave a lasting impression – for the right reasons
In the world of e-commerce, customer loyalty is particularly hard to maintain. Switching to a different product or service can be achieved with just a few clicks, so it’s vital that online retailers make the most of the opportunities they have with a potential customer.
Make sure that consumers don’t leave your site in frustration or end up abandoning their cart because of a poor sales experience. As the peak-end rule demonstrates, any negative feelings will prove difficult to forget. But the same is true of a positive e-commerce experience. With Paazl’s all-in-one platform, every stage of the e-commerce journey is tended to, from webshop and warehouse to tracking and returns. Plus, our mobile-compatible checkout widget lets brands offer a wide range of delivery options in a user-friendly manner. That way, the final part of the purchase can meet the customer’s every need. How’s that for the perfect peak and end to their e-commerce journey?
Paazl is a leading shipping service provider (SSP) for brands & retailers in e-commerce. Its all-in-one, multi-carrier platform unburdens the delivery process across webshop, warehouse, customer service and returns. Paazl enables logistical flexibility, consumer loyalty, cost transparency and (inter)national growth. Customers include industry leaders such as G-Star Raw, Rituals, VanMoof, Tag Heuer, Leenbakker and Under Armour.