How Anchoring and Ordering affect conversions

When we understand how Anchoring and Ordering affect perception and decision making, we can use them persuasively when architecting for conversion optimization. This also creates better decision making experience for users and effectively helps achieve sales goals.

ANCHORING

One aspect of the comparison process is anchoring. An anchor is something that serves as a reference point for our comparisons.

Let’s look at this scenario:

John is buying a laptop online and will also need a bag to go with it. Do you think he’s more likely to buy a more expensive bag when it is offered to him during the purchasing process, or when he later realized that he needs a bag and goes back to shop for one?

When John is buying an expensive laptop, the cost of the bag seems minimal in comparison to the laptop. An $80 bag looks a lot cheaper next to a $1000 laptop instead of when the shopper is comparing it to other bags.

In this example, the anchor is the laptops $1000 price tag. Because the laptops price is the reference point, the $80 case seems like a good deal. If the anchor reference point was an $80 bag, the $1000 laptop would look very expensive.

ORDERING

The ordering of items affects what becomes the anchor, or reference point, in people’s minds as they compare items.

Ordering can influence the perception of value – how the items in a choice set are ordered. Together with anchoring, these key aspects of the comparison process. Anchoring and ordering play a significant role in how people determine value. Let’s look at another scenario:

Imagine you’re designing a beer list for a restaurant and the owner wants his customers to primarily purchase the more expensive beers. To achieve this goal, how would you arrange the list?

1. Alphabetically
2. By price, least expensive first
3. By price, most expensive first
4. Randomly

If you answered 3, you are correct. When people read a page from the top down, they encounter the most expensive beers first. This sets the anchor against which people compare all other beers. The beers listed after the most expensive one would appear to be a much better value.

If you reverse the list so the least expensive beers appeared first, those would become the anchor and would be compared all the other beers, and the whole list would seem more expensive. The order in which you list the items ultimately affects the anchor, or reference point as people compare all the items.

Restaurants that have been advised to put even just a single high-priced item on the menu increase the restaurant’s overall revenue. Even though people don’t typically order the most expensive item, they will often order the second most expensive item, which seems like a good deal in comparison to the highest-priced option. [1]

Design Implications

The design implications of anchoring and ordering can greatly affect conversions. Let’s look at a design example of how you can apply these concepts:

If you had a charity organization and could increase the value of incoming donations, how could the design of the donation form help achieve your objective? Let’s look at two possible designs:

Option 1 – Large donation amounts; from high to low

Option 2 – Small donation amounts; from low to high

The differences between these two examples are the ordering and size of the amounts. Both have an impact on the decision outcome. As mentioned earlier, when the numbers are ordered so the largest amount appears first makes each amount thereafter seem like less money. So as a charity you would benefit by starting with the largest amount first.

Each example also uses different amounts. Since people don’t usually know what the right amount to donate is, by listing some potential donation amounts, you set the anchor or reference point.

Keep in mind that the outcome also depends on your audience. You can’t just put huge donation amounts and expect higher valued conversions. The anchor must be realistic for your target audience. For instance, you probably get a very different response when your audience consists of well-off people versus penny pinching college students. Therefore, in order to effectively use anchoring and ordering, you need to know your audience.

References
[1] SARAH KERSHAW. “Using Menu Psychology to Entice Diners” New York Times, December 23, 2009.