The Power of Behavioral Psychology for Ecommerce Success | #260 Michael Tutek

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Claus Lauter: Hello and welcome to another episode of the e commerce coffee break podcast. Today, we want to talk about behavioral psychology, personalization and collaboration, and how that can be a key to your e commerce success. With me on the show today, Michael Tutek, Co-Founder and CEO at preezie.com. His mission is to foster enduring connections between retailers and shoppers.

With a background rooted in showroom experience and years in corporate sales, he combines a passion for team leadership and innovative technology to revitalize online shopping. Recognized as a 2022 recipient of a top 50 small business leaders award. His inspiration lies in aiding retailers amidst the challenging landscape of online retail, promoting local ingenuity and fostering sustainability.

So let's welcome Michael to the show. Hi, Michael. How are you today?

Michael Tutek: Good. Thanks, Claus. How are you? I'm very 

Claus Lauter: well. Great to have you on the show. Michael, behavioral psychology is something that not really a lot of merchants have on the list in their daily life, but there is a reason and you have been working in brick and mortar and you see obviously online, there's a huge difference in the customer behavior going to a store, a physical store and buying online.

Maybe let's start with that. Give me an idea where the differences are. 

Michael Tutek: I Initially worked at a retailer selling basically TVs, big boxes, fridges, laptops, all the electronics, and it was really, really easy to see. Why, in store converts so high and why the average order values are so much higher.

So for example, in that example, in my personal example, the store I worked at sold 40 percent was the conversion rate. So 100 people walked into the store and 40 percent of them purchased. And the average order value in the store was about 500 or 600. When we compared this to the same business online, the conversion rate was one and the average order value was around 180, 200.

And when you start digging into this, a lot of it comes down to just the guided selling approach that you get. So most of the time you walk into a store and you speak to Michael or Tanya or Klaus or Jessica and they help guide you through the process. Anything from you looking at a fridge, a TV. Pair of leggings, a shaver, a tent, like it doesn't matter.

It's all about guiding you through a process so they understand they work with you. What do you need the product for? And then from there, they start looking at additional things like what other products do you need? So you're going camping. Do you need an Esky? Hey, we even have generators. Do you need, certain lighting?

Do you need a swag and all of a sudden you can start to see why it builds into an experience where you're not actually shopping for a product, you're shopping for an outcome. And all of this is tied into just the human psychology. If that makes sense. 

Claus Lauter: No, it makes perfect sense. I'm most likely you come with a problem and you want to find a solution.

So you want to find an outcome there. Again, there's no difference between doing that online or in store. Now, I don't think it makes a difference if you buy, I don't know, fashion or camping gear. You have a goal in mind usually, unless you're completely only browsing, but how can you basically put the experience?

That you have in a brick and mortar store. How can you bring that online? What kind of elements are necessary to increase your conversion rate and the average order value? 

Michael Tutek: Between industries, it doesn't really vary that much. Like even if you think about, let's say you're going, let's say you have a wedding you didn't have a suit, you haven't worn a suit for a while.

So you need to go in, you need to get a suit. I did this a couple of years ago. I've got a wedding on, I need a suit. Okay. You know what? I'm going to buy a shirt. I'm going to get a new belt. I lost some weight. I need some shoes. And all of a sudden you're walking out with a 1, 200 or 2, 000 suit and the whole kit, including shoes, belt, socks, the kit and caboodle.

So ultimately bringing that online, it's really not as hard as people would think. It's one of those applications that on face value, it doesn't feel like it's something that is easily doable. But like it really is. So for example, our business and, I initially had this idea to bring it to bring that in store shopping experience online was effectively just to plug a piece of technology into a site that does all the hard work for you.

 It will learn about the person who will understand what they're there for, what they're trying to achieve, everything from what size they are to when is the event, what are they looking to do? And then from there. It's really like pretty straightforward to, show products and build out bundles as well as just help people understand that this is the right, for example, mattress for them, or this is the right local kit for them, if that makes sense.

 No, it makes perfect 

Claus Lauter: sense, personalization, definitely a key and you see it all over the interwebs that companies try to personalize the customer experience as much as possible. Now, when it comes to bundles, that's an interesting topic because no one wants to be sold to, or up, upsold to. So you need to be very smart about that on how to put that together.

 How do they do it online now? Is there a standard bundle or can that be dynamic or what kind of ways 

Michael Tutek: This is the general issue. As you said, no one wants to be sold to. So when you walk into a store and you say to somebody, Hey, I'm looking for a TV. And then you go through and then you find the right TV and then from there, if the sales assistants didn't ask you, do you need a wall bracket?

Do you need a cable? Do you need a cabinet? You would look at that as poor customer experience in the store. If you walked into a store and I just helped you with the TV and there are wall brackets there and there are cables there. And I just said, cool class. Here's your TV. Thank you. Goodbye. You would feel almost rushed.

It would almost, you'd almost look at it like that was a poor experience. So in the store, isn't it funny how doing the upsells. is actually considered a better experience. Now, the issue with these online, everybody tries to do this without asking the questions and building any rapport. So all of a sudden it becomes very annoying, borderline creepy.

So imagine I was looking at a TV in the store and a salesperson saw me and said, Oh, Klaus, you're going to buy that TV. And here is the bracket. And here is the cable. You'd go, no, like that's weird. Like you don't even, I wasn't even looking at buying a TV. I was just browsing all of a sudden that's e commerce.

So what we're doing is we're building that personal experience where you ask the question. So you want, you go on a website and you say, okay, what are you looking for? TV. What's the TV for? Is it for a theater? Is it for the main room? Is it for a bedroom? Is it for children? Is it for adults? Do you have any brand preferences?

Are you using it for streaming, for gaming, whatever it might be, indoor, outdoor? And we go, Hey, here is the right TV for you. There you go. And then you say, okay, on the actual website. By the way, if you need a wall bracket and if you need a cable, here are some options. Now all of a sudden, you're not being sold to, you're being serviced.

And that's what we're doing in store, but that's what you need to bring online. And that will, that's the whole premise of what we've been trying to do. We've been working on this piece of technology that allows you to do that. And then it builds into that same feeling like you go and do that onto a great website that we work with and you go to a competitor and then you will feel like the experience by the competitor is actually really, really poor because you're not being sold to you being serviced.

It's different. 

Claus Lauter: like the comparison between being sold to and serviced huge difference there. Now you're working with hundreds of sellers out there, big companies, Target, Purple, Canon, Dell, and so on and so forth. Obviously, they have a huge budget. Not everyone has that. But give me an idea or maybe a case study.

You don't need to name a brand on how the implementation works. Because we are now on a podcast right now, so maybe like a visual idea of how it works. Yeah. 

Michael Tutek: Yeah. Yeah. We work with, small companies. We work with, midsize companies, most businesses, starting working with us would do, four or 5 million of GMV, obviously all the way to the Dells and the cannons and the purples and targets.

Implementation is pretty easy. This is part of the. To do that, like we're trying to squash and we're trying to get through. These are not bigger than Ben Hur projects. So for example, the way it works is we suck in all your data, and that could be through a Shopify API. It could be through a Magento, BigCommerce data feed.

Like we've even gone as far as using Facebook feeds or directly into a PIM. Once we have all that data, then effectively we go with. What are you trying to achieve? Are you trying to catch it? Capture zero party data because cookies are getting killed next year. So you want emails and profiles or do you want to look at bundling and stacks or do you want to look at just general bringing in store experience online and get conversion rates?

So then we start building out these, we call them journeys. We build out these journeys in our actual platform. So just like you would like a visual merchandise and like a search spring or something like a Nosto. There is an e commerce, we have a platform, where we build out all these journeys, and then you physically copy and paste them onto your website, wherever you see fit.

So you might want it as a pop up before you leave the site, hey, couldn't find the perfect shaver for you, let us help you out. You can plug in like, so for example, I think it's guitar center at the moment, they plug us on their homepage as a gift finder. Once you plug it in, it goes on to the website by JavaScript. So for example, guitar center, use it on their homepage as a gift finder. Find the perfect guitar pedal, keyboard, guitar case for your loved one, for your friend, for your partner.

So implementation is pretty straightforward. Normally we get live within a matter of weeks.

Claus Lauter: Now, with the implementation, obviously you have different platforms, you were talking about Shopify. There might be email platforms and whatsoever. What kind of APIs do you have to connect to other platforms? 

Michael Tutek: With data, it's pretty easy, like a Shopify API or just a normal standard data feed.

With the actual AECOM platforms. You just need JavaScript. So it's just a JavaScript plugin. Into Shopify, you're just plugging into a theme dot liquid or whatnot, it's very simple. So we don't even need a direct connector because they all just run JavaScript. It's the same as when you plug in your chatbot or something like that.

And then with the other platforms. Say for example, email marketing like Clavio. digital, Amarsis, we have APIs directly in there. So for example, let's say you're looking for a pair of leggings and you go onto Lorna Jane and you, and it says, Hey, what are you using the leggings for? High intensity, yoga, general, figures out what you're interested in, understands your sizing, then you put in your email, could be for a discount, could be for a VIP offer, whatever, all that data is then sent to your Clavio instance, your Imarsys instance, your, dot digital instance, and then now with all that, you can start targeting that person and then you can, and that's all directly just through an 

Claus Lauter: I want to take a step back where we started with behavioral psychology. not everyone is a psychologist. Understanding a customer or what they do or what's happening in their mind while they're going to browse your store might be not on your plate. How do you help with that and going from there, I want to look into how does it work with collaboration?

So do you work with that factor as 

Michael Tutek: well? When it comes to the psychology, there's lots of different things that brands actually do that uses psychology. But the difference is when you actually make a conscious effort to understand it, then you can use it in much powerful ways. So, for example, In psychology, there's something called loss aversion, and that's pretty simple.

Loss aversion is just, hey, if I don't buy this now, I'm going to miss out. It's just a timer. You've only got X offers left. This discount is applicable for 12 hours. Another example is social proof., these people bought this, people bought this 24 hours. with us, it's more about the journey experience.

So if you go into one of our journeys and use our quizzes, when you click get results, you'll see a little delay. So let's go, you answer four or five questions about your dress that you're looking for and you go find my dresses. It will actually have a delay and we'll delay it for sometimes three, four, five, six seconds.

And it's thinking, looking for your perfect dress, finding your perfect dress. That's all fake, it's all artificial. So what happens in psychology is, if you show people results too quickly, They're just very unlikely to trust it. They're just more like, think of it like this. This is the psychology of a human being.

I go on my, your website. I give you 10 minutes or 5 minutes or 3 minutes of my precious time. And now I've done this quiz. You've shown me results so quickly. It almost feels like, did you even consider what I told you? Did you even think about it? So in psychology, it's called perceived or heuristic effort.

It's all about, we intentionally delay the results so that the actual shopper understands and feels there's lots of spots going on. So we've considered it. That's just a simple example. Another example we do is in psychology, there's something called mirroring. So you may be familiar, but if you meet someone that's very extroverted and you act extroverted, you build rapport.

If you meet someone very introverted. If you meet someone that's very loud and moves their hands and he's very, very bad, they use a lot of body language and you do the same, you build rapport. So a lot of this is when a shopper goes on your site and does things. Instead of making it or trying to hide it that stuff about people, because that's where trust comes in and they don't trust you, you actually make it obvious.

Hey, I've listened to you, I've heard you, and I've recommended this. So often, for example, if you do a quiz on Prezi, let's go mattresses. At the end, when it gets results, it will go, Hey, based on the fact that you and your partner. are both interested in, say firm or soft beds in a king size that is good for partner disturbance, we recommend below three.

So it's about reiterating and mirroring back what the person is already thinking and saying, because you're more likely to get an outcome, which is , a sale or even an email or a click. Or less bounce or whatever it may be, but all these things is what happens in the real world. And when someone who actually understands psychology looks at it, they go, I know what's happening here in the mind of the person and then you can easily bring that, conversion rate toolkit, if you will.

Online. 

Claus Lauter: Very interesting. I have heard about one of the examples that you gave me before was delaying a result, which increased the results for the online business that was using that massively. So I love that. And that's something that usually don't get when building trust. Normally it's like put a label here and put the trust mark there and whatsoever.

But this is really lift behavioral psychology from a store. Into the online world. Now tell me a little bit about results, KPIs , what kind of differences did you see after implementing the solution? 

Michael Tutek: With the biobehavioral cycle delay for context, we, when we first started the business, we didn't do it.

So our results, they actually create results in like a hundred, 200 milliseconds. So we just let them render as soon as, cause naturally when you first do it, it's like, Hey, straight away, fast is quick. And we found when we put the delay in that we will like doubling all our like engagement rates. So it wasn't a little bit of an increase.

, it was dramatic. Now, generally speaking with Prezi, the goals is conversion rate, building lifetime value, capturing emails and more revenue. What we typically find is for our quizzes and our journey software, when a shopper uses Prezi, they're anywhere from 30 percent to 300 percent more likely to buy over a 30 day period.

So if you get a good percentage of your audience using Breezy or any quiz software, you're going to convert 50 to 300 percent more for that target audience. And then from there capturing emails, it really varies, but we often do see brands doubling their email capture rates when implementing us.

And we often see them doubling their revenue by their email channels. So ultimately. It's just about creating a new way of shopping that is completely personalized to the individual that shows the care that takes into account. Psychology brings that in store experience online. And with that you're going to sell more.

You're going to convert more. You're going to have higher average order values. It's just human nature. Very 

Claus Lauter: true. Walk me through the typical onboarding process for a new user. What steps are involved? How does the timeline look like? 

Michael Tutek: Once you sign up, we have an onboarding team that will literally onboard you, get all your data, get your data for Shopify.

For example, five minute job, we get all your data, Magento feed, five minute job, get all your data from there. We just established what your goals are. I've not, everyone's goals is conversion, right? Some people's goals is, lifetime value because they're more omni channel some of these. Reducing CAC.

Some is capturing emails. We just understand that. And then from there, we start building out the journeys. Normally brands can get live within, a few weeks. Up to a couple of months if you're a big brand. It's not a very hard project. , it's pretty straightforward. Now 

Claus Lauter: talking about project work, next question will be probably a bit difficult to answer, but what's the pricing structure that you work with?

Michael Tutek: So it does vary. It does vary. It's we typically price on utilization and number of domains. If you've got a site in say. The US, Canada, Australia, UK, Singapore. That's obviously price different to just America, and utilization. So does it get used 10, 000 times a month? 100, 000 times a million times we typically do work with more mid markets.

So our packages do start at around 30, 000 us a year and expand up on that. But it all just depends on what you're trying to do and how many times you and how many times it gets used. 

Claus Lauter: Before we come to the end of the coffee break today, is there anything that you want to share with our listeners that we haven't covered yet?

Michael Tutek: A lot of brands are having and struggling with cost of acquisition. One of our new products, one of our new, features was to help that. We've also built a like brand to brand post checkout referral network.

We call it Next Buy, but long story cut short is what it does is you go to say, Lorna Jane sell leggings and post checkout. When you buy, you can actually then cross promote to another brand, like say a hair and beauty brand, and you could basically swap customers post checkout. we've built that to help retailers reduce CAC.

So all I'll say is for the audience is our whole premise is to help retailers just. Are you like sustainable and be alive and moving forward and thrive. So that the two biggest issues in e commerce typically is rising CAC building trust experiences. So Apple's killing tracking Google's killing cookies.

CAC is going through the roof. Like we would have seen, but recently, Google and Yahoo, they're now starting to target things as spam. If it gets 0. 3 percent of spam clicks, if you send over 5, 000 emails a day, which every like reasonable retailer will do so all these things, we get it.

And our whole premise is just to help businesses do that so that we're not just at the mercy of basically Google meta and these large. Companies that dictate like your revenue lines. So I think from that point of view, like any business is happy to talk, just get an understanding and learn about what we do, jump on prezi.

com, fill in a form and just let's see if we can help you out and help you thrive and survive. Very cool. I will put 

Claus Lauter: the links in the show notes. So it will be just one click away and people can reach out to you directly. Michael, thanks so much for giving us an overview. I think there were some really great examples in there, how behavioral psychology can make a difference and can be transferred from the brick and mortar world into the online world.

Thanks so much for your time today. 

Michael Tutek: Nice. Thanks Klaus.