Estimating and minimizing consumer worry

The process of selling in general, and web commerce in particular, is often described or charted as a funnel. Prospective customers are poured in at one end, and a fewer number of paying customers come out at the other. The other prospects spill out through other holes or over the side of the funnel and don't bring you any revenue. The fraction of customers left, converted from prospects to customers, is called the conversion rate. As prospects proceed from initial interest to final sale, from initial entry page to clicking the final "I Agree" button, more and more of them become discouraged by various worries which beset the consumer. They drop out. The remaining prospects, those who have not dropped off, have been converted into customers or into an audience for your advertisers.

There are a variety of factors that cause drop-off, which vary from business to business. A common cause is forms.  Simplifying forms often greatly increases conversion rates.  For example, in one study cutting the number of lines on a form in half increase conversions by a third. As one web designer put it: "[i]s every field you're asking the visitor to submit absolutely necessary?  Can you trim the fat and make the process simpler?"

Besides the sheer tediousness and time consumed in filling out forms, rational consumers also worry about the potentials for privacy violation and identity theft from the information most e-commerce sites currently require them to divulge: physical and e-mail addresses, phone numbers used for cross-site behavioral tracking, insecure credit card numbers, and more.

The tinfoil-wallet crowd is now mainstream

Instances of regret that one has filled out a form, only to have one's trust violated -- or pride among the sophisticated that they refused to fill out such a form -- are on the rise.

The worst worry culprit is usually the step you most want your customers to complete -- paying you. "[T]he credit card form likely has the highest abandonment rate of any other part of the sign-up process." [Source].

If you don't require payments, you are probably funding your service through advertisements. Those also cause worries. Ads typically distract and delay from the content users are after, provide a low quality of entertainment or information, and are too often offensive. And sophisticated users are worried about the tracking that tends to go with ads. Ad blocking grew nearly tenfold between 2009 and 2014.

Replacing ads and identity-based payments with payments that don't require identity, such as bitcoin, can greatly reduce these worries, lowering the barriers and hesitations that currently prevent consumers from paying for your service.

But there remains a big worry that no payment system can reduce.  Consumers worry about whether they are getting their money's worth -- the mental transaction cost problem (see also this paper). If e-commerce were as worry-free as some of it could be, your customers would neither have to fill out forms, nor be bothered by ads, nor have to worry about repeated charges for content or services of variable value. They would be able to just insert a few digital coins into your online vending machine and then not have to worry about losing your service for another year. Eliminate forms and eliminate repeated payments -- both are key to worry-minimized e-commerce.

Many bitcoin startups are making the grave mistake of replacing one set of worries with another. The ability of cryptocurrency systems to facilitate small payments tempts many companies to nickel-and-dime their customers with pay-per-click micropayments and other such excruciating schemes. Don't follow the many lemmings who have already jumped off that cliff. Stick to long-term subscriptions for content (or other services of variable value) and pay-per-unit for fungible units of consistent value (as in phone minutes).  That way customers aren't saddled with having to constantly re-evaluate the amount and worthiness of recurring charges. The costs to your customers of having to finance a years' worth of low-cost subscription to a reputable brand is almost always far less than the mental transaction costs of recurring charges for content or services of variable value. The ideal worry-free commerce is to "stick the coin into the machine" once, and then never have to pay again for an entire year. A vending machine for subscriptions. Reduce your customers' worries across the board: eliminate forms and eliminate recurring charges.

Ideal worry-minimization can only be closely approached in some purely online forms of commerce, such as video streaming, remote storage, privacy services, and the like. The more physical and offline contract performances are -- a common example being physical delivery -- the more location, various kinds of identity (legal, social network, etc.) may need to come into play, adding, often greatly and necessarily, to the worry overhead, the mental transaction costs, of your relationship with your consumers.

I have previously called this worry-minimized commerce by a narrower label, "form-minimized commerce."  The complexity of the forms you make your users fill is indicative of the worries you are causing them, and thus the barriers you are putting up between your prospects and their decisions to purchase your services.

When you are a consumer, the tediousness of the forms you are filling out is not only a direct cost of your time, and your ability to enjoy that time, it is on top of that a decent proxy measure of the odds of your identity being stolen and of your privacy otherwise being violated. The fewer forms you fill out, the more the tediousness, worries, and risks in your life caused by interacting with the world's institutions will drop in proportion.

While such a proxy measure does not account in particular for the wide variety of information that can be disclosed, nor that some kinds of information (social security numbers) are more risky to divulge than others (throw-away email addresses), nor for the wide variety of risks in identity theft and privacy violation that are consequent, nevertheless consumers necessarily must bring to bear such sweeping rules-of-thumb in order to satisfactorily navigate the bizarre complexities of the digital world.  And when your users are using, whether consciously or implicitly, such estimates, you the service provider and the product designer must use them too.

Add to the forms your customers must fill out the repeated charges you make your customers make, and we get a rough proxy measure of the worry that you are causing your consumers:

Index of worry = number of lines of forms +  number of repeated charges for content or services of variable value

If you are funded through ads rather than consumer payments, you can substitute for the repeated charges the proportion of screen space covered by your ads, or any other reasonable estimate of the delay and distraction the ads on your pages cause.

The index of worry allows you to estimate and minimize the worries you are causing your users, and as a result to minimize the drop-off in your sales funnel and maximize the number of users coming back for more -- and willing to view your ads or pay for the privilege.