Monetization Strategy: Path to Purchase Flashcards
Path to Purchase
The path to purchase is the sequence of steps taken by the buyer towards the purchase decision.
The path to purchase is not just about the path towards their first purchase. It is also about the path taken by existing customers to upgrade or increase their spend in some way.
It can consist of both in-product and off-product experiences, across both physical and digital worlds.
It can be spread across several sessions, possibly days.
Importance of the Path to Purchase
A path that is hard to navigate …
Converts fewer buyers, which makes the cost of acquisition more expensive.
Charges emotional and cognitive overhead to the buyer, which makes for a sub-optimal customer experience, which in turn makes the customer less willing to spend
Dilutes value and compels lowering the premium price for an otherwise premium value.
Path Friction
Path Friction is any step in the path to purchase that delays purchase conversion or increases the likelihood of the buyer leaving without making a purchase.
3 Types of Path Friction
Functionality gaps
Usability obstacles
Cognitive overhead
Functionality Gaps
Lack of features or an incomplete solution can prevent the buyer from finishing the purchase. This is especially true for products that have an alternative solution or a competing product in the market.
Usability Obstacles
A non-intuitive or inefficient design delays purchase conversion and increases the likelihood of the buyer leaving without making a purchase. The scope of design referenced here is not just limited to that of the digital experience, but extends to the experience of the services delivered in the physical world, especially for companies whose products straddle both physical and digital worlds.
Indicators of Usability Obstacles
Users are not starting the purchase journey.
Users are not completing the purchase journey.
Users are taking longer than the expected time or expected number of steps to complete the purchase journey.
Users are going back to cancel after completing the purchase journey.
Cognitive Overhead
cognitive overhead means
”the number of logical connections or jumps your brain has to make in order to complete a goal or to understand the things that you are looking at.”
Getting distracted by unnecessary information at the point of conversion is likely to delay it and increase the likelihood of the buyer leaving without making a purchase.
2 ways to reduce Cognitive Overhead
Remove distractions, and promote recognition over recall
Good Friction
a strategic design choice that can benefit the path to purchase, for example:
- design that selects for strong purchase intent
- desing that get the customer to accrue value
- design that sells the value proposition better
- Earn the trust of a niche customer
- . Win back an at-risk customer who is about to churn
Select for strong purchase intent
Freemium: Users start out using a limited version of the product without paying anything. As they grow their usage, they desire more capabilities at which point they are asked to pay in order to continue using. If they do not pay, they continue using it with the limited capabilities they started out with.
Free trial without credit card: Users start out with a limited trial of the product. The limits are usually defined in terms of time duration but could also be based on a different metric - for example, number of users. Once the trial limits are reached, they must pay in order to continue using the product. If they do not pay, then they usually cannot continue using the product. An important detail in this model is that credit card details are not required to start the trial. This reduces path friction and increases trial conversions.
Free trial with credit card: Users start out with a limited trial of the product and must provide credit card details in order to proceed with the trial. The trial is still free and the credit card is not charged but is necessary to start the trial. Asking for credit card details adds both cognitive overhead and a usability obstacle and it can potentially lower the trial conversion rate, the number of buyers, the revenue from them, or all of the above. However, the users that do sign up have a stronger purchase intent compared to users that signed up for free or without sharing credit card details.
According to Totango, signup conversion with credit card is 2% compared to 10% without credit cards. However, the free trial to paid subscriber conversion is 50% with credit card vs 15% without credit card.
Get the customer to accrue value
signups that have multiple steps which builds or increases the user’s perception of the products value
Sell the value proposition better
Certain product design choices are all about explaining the benefits of the product better to the customer. Consider for example aspiring Lyft drivers that sign up to be drivers with the ridesharing service. A lot of steps added to their onboarding flow are not essential to start driving but connect them with mentors who train them better on how to find passengers, complete rides, and earn more money.
Niche persona
persona with:
- intricate needs
- needs complex solutions
- High domain knowledge
- high bar for trust
. Win back an at-risk customer who is about to churn
When paid customers are about to cancel their subscription, reminding them of the value they are going to leave on the table may add more steps to the flow but may even prevent the cancellation altogether and win back the customer.
