An Interaction Design Approach to Choice Modeling
 

An Interaction Design Approach to Choice Modeling

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Conjoint analysis and similar methods are excellent ways to model consumer choice processes and to support scenario planning by answering “what if” questions. Typically, the predictive validity of ...

Conjoint analysis and similar methods are excellent ways to model consumer choice processes and to support scenario planning by answering “what if” questions. Typically, the predictive validity of conjoint analysis study is high and the experimental nature delivers great freedom, turning it into a widely accepted market standard. However, rightful questions are asked about the external validity – the ability to describe actual consumer choice behavior – and the richness of information – does it deliver information the brand can really act upon?

Choice modeling approaches can bear resemblance to online purchase environments, although there are key differences. The way we design the online environment and optimize the customer experience impacts what customers choose and how they make their choices. The premise is that the interaction design of an exercise impacts the way people take the exercise, form their opinions thus the outcome of the exercise; the preferences formed. Interaction design is aimed at impacting the experience of the exercise at hand, evoking a positive emotional response toward the exercise, thereby driving the quality and accuracy of the outcomes of the exercise.

Gerard and Willem took the audience through an overview of interaction design principles in designing choice processes. Translating these fundamentals to conjoint analysis and online sales environments, they shared hypotheses and tested examples of the impact of different visual designs on consumer choices.

Find out more at http://www.skimgroup.com/iiex-na-2014.

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An Interaction Design Approach to Choice Modeling An Interaction Design Approach to Choice Modeling Presentation Transcript

  • This presentation was delivered by Gerard Loosschilder, Chief Innovation Officer and Willem Buijs, Interaction Designer, at the Insight Innovation Exchange conference in the Georgia Tech conference center in Atlanta (GA, USA) on 18 June 2014. The presentation taps into insights extracted from SKIM’s E- Tailor program, which combines insights from choice modeling and interaction design to help drive the conversion and satisfaction rates of online retail. 1
  • Interaction design addresses how a product or service is presented to users and how that presentation makes people feel and act. It is about improving the end-users interactions with the service, shifting from being product-centered to being user-centered. In online retail, interaction design focuses on what shoppers experience and how they feel supported to find what they really want. Interaction designers focus first on the user’s desired experiences, serving as the starting point for the design process to provide a better user experience overall. From there, the challenge is to take the desired experiences and translate them into effective environmental design parameters. 2
  • To explain how we may go about, we present the story of Daniel, the owner of a downtown computer hardware store. Over the years, Daniel has been very successful at selling computers; desktops, laptops and more recently, tablets. The secret to his success was a deep understanding of the customer and her needs, and his ability to adapt the sales conversation to the needs and profile of the customer. 3
  • When a customer enters his store, Daniel quickly categorizes the type against a set of personas in his head, and he quickly confirms the type by asking a few questions. Based on this, Daniel decides a sales strategy, taking the customer to a part of the store where he pegs that the customer would find the product of his or her choice. 4
  • Daniel has laid out his store in a way that it is fully supportive of his sales strategies and tactics. Instead of cramming his store full of computers, Daniel has a selection to capture the variety of personas and needs that he expected to get in his store. Once Daniel has pegged the customer as one of a certain kind, he takes them to the corresponding section of the store and helps the customer make a choice among the options laid out. His focus is to drive customer satisfaction and loyalty, ensuring that customers feel good about their choices and increasing the likelihood that they come back for future purchases. 5
  • Daniel fine-tuned his sales skill over time. This way of working has worked out really well for him. Daniel’s business has grown over the years, he makes good money and he has built a loyal customer base. 6
  • However recently, the tide has turned. For the first time in years, sales are down. His customer base seems not any less loyal in that they keep frequenting his store, but it happens more and more often that they leave the store without a purchase. Upon enquiring, Daniel found out that they would collect his advice but close the purchase online, at a price that he would never be able to beat. 7
  • Daniel found out that his experience was in line with the industry trend of sales shifting from offline to online stores. Daniel’s suspicions were confirmed by his research. Daniel read in an industry report by the US Census Bureau and referred to by Jeff Jordan’s blog that the direct web sales of computers went from 3% to 18% over the last 10 years. If we assume that people have not suddenly started to buy more computers, it was sales lost for stores like Daniel’s. 8
  • The writing was on the wall and it was time to act. Indeed, Daniel found out that others were selling products at prices he was not able to beat, and these stores also offered the opportunity of conveniently delivering the product to the customer’s home. Daniel started to look into the opportunity of opening his own online retail channel. However, he did not like the designs of competitor stores. To do it better, he started working with an interaction designer. 9
  • Based on his experience in his actual store, he knew that effective sales are all about effectively gauging the client’s profile, needs and preferences. He considered it would be perfect if he could translate his knowledge of the sales process in a traditional store to his new web store and give shoppers a better experience than they were able to find in the online stores that he saw today. 10
  • 11 So instead of just dumping zillions of products online and installing a few filters to help customers weed through them …
  • … he attempted to deliver the same kind of experience that customers experienced visiting his downtown store; the focus on understanding who they are, their needs and preferences, and come up with tailored advice that would make his customers happy. 12
  • This is when interaction design comes in handy. We want to understand how we can give customers the same type of support and advice, and the same type of desired experience as they would have in a physical shop, and translate this into a web environment. Daniel started working with an Interaction Designer to get the desired experience. 13
  • Designing the desired experience can be described best by drawing an analogy between online and offline retail. Online retail stores selling computer equipment look most like a Best Buy; an electronics retail chain in the United States. This chain offers a choice from many brands and options within the brand. Sales assistance is focused on helping customers making a selection from the massive amount of products on display. It is not particularly hard to translate this environment into an online web store. Customers flock in by the masses and browse to process as many products as possible, reading the specs and go purchasing their desired product. The online store would look like most web stores these days: a large range of products to choose from a couple of filters and a long list of specifications. 14
  • How different is it in an Apple store. The purchase process is designed to be an experience. The number of options in any Apple product line is limited; Apple has pretty much made all choices for you. Also, the store is about much more than products. It is about an experience, and it also offers other services such as learning about using the product. 15
  • The interaction design of the e-commerce environment we have in mind is modeled more after an Apple store than a Best Buy store. The purpose is to design the online retail environment in such a way that we maximize the customer’s satisfaction with the purchase process as well as the product they end up with, at a minimal cognitive and affective effort. 16
  • This is how we do it from an interaction design point of view. We invented Daniel the Virtual Merchant to represent our interaction design. This is John, our online customer. Daniel wants to understand John and categorize him based on a “persona” – a rudimentary customer segmentation model to deliver a mental picture and inform the sales process. For this purpose, Daniel asks John a few effective questions covering the “when, what and how” of the purchase, such as: “what’s your budget”, “what do you want the product to do for you?” and “how do you me to ask you questions about your needs and preferences”? 17
  • Based on this information, Daniel the Virtual Merchant pegs John to be a tech-savvy person so he is well informed about the possibilities of a computer and in the sales conversation … 18
  • … John would like the information to be specification-based, informing him in a factual way about the specifications of the computer and he can derive the benefits himself. 19
  • To address John’s needs and preference, Daniel will take John to a part of the store where they would find the higher end notebooks with the more premium specifications to support John making the right choice. 20
  • In the way we present information in an online retail environment, we tailor the information presented to John by focusing on specifications and in the process we come up with a computer that has the specifications of John’s choice. 21
  • It works entirely different for Eva, our next customer. Eva does not care about specifications. She is concerned about different things focusing on what the computer would do for her and what the benefits are. 22
  • For example, Eva wants to know if she can use the computer to watch movies sitting on the couch with her boyfriend. 23
  • Or she wants to know if she can use the computer for her work just as much as for her leisure activities, indoors and outdoors. 24
  • For example, she wants to know if she can take her new computer with her to a coffee house to work from there. 25
  • The sales conversation will focus on understanding those needs and adapting the advice to make sure that Eva understands the benefits of the computers of choice, instead of “just” the specifications. 26
  • If Eva is presented with an option, Daniel the Virtual Merchant presents the benefits instead of the specifications. 27
  • So the sales conversation of Daniel the Virtual Merchant focuses first on understanding the customer and segmenting them in order to serve as a basis for a rudimentary classification in personas, taking that as a point of departure in the sales conversation. 28
  • Then we go into the sales conversation itself, in which we can choose to learn more about the customer needs and preferences and have that inform the sales process itself. For example, we can use the answers to previous questions to refine our picture of the customer and have that inform the next questions we ask, and the product we ultimately suggest to the customer. 29
  • In order to see how this works, we created our own playground in which we can we can experiment with ways we take the participant on a journey to the desired product in a more satisfying way. Please note the similarity with A/B testing, nowadays a typical approach to analyzing customer behavior in online stores. The difference is that our playground is entirely experimental and virtual and does not present a risk of losing sales. 30
  • A first building block is a replication of a common online retail environment. We also call it an Elimination-By-Aspects or EBA model. It consists of one big list of all products the customer can chose from, and a set of filters to select and deselect products. 31
  • The filters are actually based on the attribute levels, so if you select them, they will help to reduce the choice set. Once the customer has selected the desired product, he puts it in the shopping cart and confirms the purchase of a single product. 32
  • Elimination-By-Aspects is a choice model. There are alternative choice models that could be equally effective than the EBA model to arrive at the desired product. Choice-based conjoint or CBC is another choice model. In CBC, the customer is exposed to a number of choice tasks in which we systematically vary the attribute levels of the products present. We derive the customer’s tradeoffs from the choices she makes, which helps us identify the “optimal” product or a set of “acceptable” products. We compute the acceptable product on the fly and identify the product in the full set that comes closest. 33
  • The set of modules in our play pen also includes a Build-Your- Own (BYO) exercise. Like in CBC, we ask the respondent to specify the desired product and then identify the closest approximation in the list of available products. This is tricky because to know which product comes closest, we need to know the person’s tradeoffs. This can be measured by means of CBC. Oftentimes, we will need a combination of building blocks to validly gauge a person’s preference. It presents the tradeoff between collecting a valid read of the person’s preferences, and the effort that we expect the person to put into the task. 34
  • Each building block has its layers to avoid information overkill. Beneath the top layer we have lower layers with additional product information. The information can be anything that would normally be available in an online web store, and more, to learn about the effect. We will probably experiment with the information we deliver and the way we deliver it, systematically playing with it to know the impact of, for example, variations in reviews, specifications and benefit descriptions. 35
  • The current version of our playground is to sell notebook computers. We have included various building blocks in our experimental environment. Our playground consists of the building blocks EBA, CBC and BYO which we use to determine which block, or combination of blocks, is most effective to gauge a person’s preferences at an acceptable cognitive and affective effort. 36
  • Within every building block, we systematically play with elements to assess their impact on customer preferences and the preference formation process. 37
  • Here we determine the order in which filters are presented based on the respondent’s profile. If the customer has a traveler’s profile, the order will be different from if the customer has the profile of someone who focuses on graphics editing, or purely on specifications. Assuming that the customer wants to watch movies on a couch, so battery life and screen size are of critical importance and they are placed on top. 38
  • Also based on the respondent’s profile, we present the filters as open or closed, and we label the suggested filter level with an additional benefit description to promote specific levels. The benefit information would normally only be visible by clicking on the filter level. The benefit description will vary based on the interest and profile of the customer set beforehand. 39
  • The section to the right shows all products that the customer can choose from. Each product has a tile with a small description. A tile can be selected to access more detailed information about the product. In this application, we present the customer with rating information, which can either be customer ratings or expert ratings. A label is put over a product to emphasize a benefit. This gives users the impression this product is more suitable for their needs. Which product is or products are labeled, will be based on the respondent’s profile and will be different for a travel customer from the kitchen-table movie-watching customer. 40
  • In a future paper we will share learnings about how customers respond to our manipulations. The e-tailor program helps ecommerce businesses to experiment and to learn how to identify segments and then to tailor the task design and information to the needs of the segments so that they search more effectively and comfortably and are happier with the result. The e-tailor playground provides a cost-effective and risk-free experimental environment that replicates e-commerce reality and helps optimize e-commerce environments. 41
  • This presentation was delivered by Gerard Loosschilder, Chief Innovation Officer and Willem Buijs, Interaction Designer, at the Insight Innovation Exchange conference in the Georgia Tech conference center in Atlanta (GA, USA) on June 18, 2014. The presentation taps into insights extracted from SKIM’s E- Tailor program, which combines insights from choice modeling and interaction design to help drive the conversion and satisfaction rates of online retail. You can reach Gerard at g.loosschilder@skimgroup.com and Willem at wjbuijs@gmail.com. 42