The role of Visual Content in the buying journey – Alec Minnema

Introducing Alec

Alec obtained his Ph.D. from the University of Groningen, focusing on researching product information’s effects on conversion and eCommerce returns. He previously worked as a Lead Data Scientist at CoolBlue. He was the Principal Expert Data Science at Ordina before assuming his current role as Director of Loyalty at Prime Retail and Trade Solutions. Additionally, he is a lecturer at the University of Groningen and a highly sought-after speaker worldwide.

In this article we explore the role of Visual Content in the buying journey with one of the leading Visual Content experts in the world, Alec Minnema.

Why is visual content so crucial to the customer journey?

Alec: “When customers visit a website, they encounter different types of information, including text, images, and sometimes videos. This information significantly influences their expectations. Expectations can vary in high or low, and customers may have different levels of certainty regarding the quality and fit of the product. In the context of fashion, for example, fit can refer to size but can also extend to other factors like for example physical dimensions for furniture. Fit determines whether the product meets its intended purpose. Customer expectations directly impact conversion rates, where higher expectations and lower uncertainty increase the likelihood of a purchase. Furthermore, customer satisfaction depends on product quality and whether the product meets their expectations.”

So, satisfaction depends on the product’s quality and alignment with customer expectations. Can you provide an example to illustrate this?

Alec:  “Of course. Let’s take the example of a hotel with a 3-star rating, indicating a certain quality standard. If customers’ expectations align with the 3-star quality, they are generally satisfied with their stay. However, if someone paid for a 5-star hotel but received a similar experience to a 3-star hotel, dissatisfaction arises because their expectations need to be met. Satisfaction is not solely about quality; it’s about meeting or exceeding expectations. Ultimately, satisfaction directly impacts whether a customer keeps or returns a product. If dissatisfaction arises, the customer will likely initiate a return.”

The link between product expectations and returns is evident. Can you shed some light on the costs associated with returns and how retailers can influence customer expectations?

Alec: Absolutely. Returns are expensive for retailers. For instance, the CEO of a big Dutch online retailer highlighted in a recent article that they process 50,000 returned items daily, requiring 150 employees to handle them. However, they only need 28 employees for their 11 million shipments yearly. This showcases the significant costs associated with returns, including handling and shipping expenses. As a retailer, you can influence customer expectations through various means, such as product descriptions, pricing, augmented reality, customer reviews, and visual product content. All these elements on your website directly impact customer expectations, conversion rates, and returns.

How important is the image gallery, and how does it impact customer purchase decisions?

Alec: “Several studies, including recent research, have indicated that a more extensive gallery with more images generally increases the likelihood of purchasing. In addition, when customers have access to a comprehensive gallery, they can better understand the product and gain valuable context. For example, multiple images showcase the product in isolation, on a model, or within a living room setting, allowing customers to visualize its appearance and potential.

“Let’s take the example of a T-shirt,” Alec continues. “When a T-shirt is shown in a single isolated image, its features have limited visibility, particularly the backside. However, when a model wears the T-shirt, customers can better understand how it looks and fits. Viewing the product from different angles, such as the side view, further enhances understanding.

Another example is a sofa from a well-known Dutch furniture shop, where their website’s large gallery showcases the sofa’s dimensions, various angles, and how it appears in a living room setting. In contrast, another sofa only has two images and a fabric sample, providing less context. However, the first sofa’s extensive gallery gives customers a better understanding and visual appreciation of a pink sofa’s beauty.”

What role does video play in all this?

 Alec: “Videos are valuable in showcasing how a product fits and looks from different angles. For instance, one of the largest and oldest US fashion brands added videos for all their dresses, allowing customers to understand the product’s appearance comprehensively. However, it’s essential to note that increased contextualization, such as videos and professional models, can raise expectations to a level where the product may not look as perfect on the customer as on the model. While factual information reduces the chances of returns, studies have shown that elevated contextualization can boost conversions while potentially increasing return rates.”

Balancing expectations is crucial to managing returns effectively. Detailed photography and the number of images in the gallery also impact that, right?

Alec: “Adding detailed photography, such as images showcasing the inside of a jacket or bag, may not significantly affect the likelihood of a purchase. However, increasing the number of pictures in the gallery has been shown to boost conversion rates. In addition, tests conducted across various categories on mobile and tablet devices have demonstrated that more images lead to higher conversions. Interestingly, while adding zoom functionality doesn’t significantly impact purchase chances, viewing product details and zoom in helps customers better understand the product, reducing the chances of returns.”

“Tests conducted across various categories on mobile and tablet devices have demonstrated that more images lead to higher conversions.”

 

360-degree and 3D product views are growing in popularity. What role do they play in the overall buyer experience?

Alec: 360-degree and 3D product views provide customers with an interactive experience. For example, the Bose headphones featured on Bright River’s 3D product page are a clear example of the option to view the product from different angles. Customers can explore the product, see button placements, and understand its functionality. Customers can view it by providing the ability to rotate the product.”

Not all measures lead to higher conversions, but they may impact returns.

Alec: “Certainly. Studies suggest these elements may not significantly boost conversions when adding specific content details, such as zoom functionality or showcasing wood texture or fabric appearance. Instead, they help reduce returns. On the other hand, a more extensive set of images has been shown to increase conversion rates, especially when it comes to demonstrating how specific features, like cushions on a lounge set, work and appear. These visual cues help customers have better expectations, increasing their likelihood of keeping the product.”

“Numerous studies have analyzed the impact of AR, and it has been shown to have a significant effect, especially for new items like sofas or TVs.”

How can augmented reality (AR) technology be utilized to reduce returns and improve the customer experience

Alec: “AR provides a unique opportunity for customers to experience a product before purchasing. It helps reduce uncertainty and lets customers better understand what they will get. This is particularly useful when customers are unsure about a product they have yet to purchase. Numerous studies have analyzed the impact of AR, and it has been shown to have a significant effect, especially for new items like sofas or TVs. While AR may be less impactful for basic T-shirts that customers have already purchased, it proves to be highly valuable in the case of larger purchases.

For instance, a big European consumer electronics company encountered a significant issue with returned TVs, mainly because customers struggled to determine the size of their living spaces. For example, choosing between a 55 or 65-inch TV can be challenging, as a giant TV might not fit the intended space or look out of place. In response, an app allows customers to visualize the TV in their living room. This helped them assess if the size would fit their space.

The app’s primary goal was not necessarily to boost conversion rates but to reduce returns. The costs of returning large TVs, such as needing a two-person team and a van for pick-up, can be significant. Thus, even if the investment in augmented reality doesn’t directly impact sales, it can be worthwhile if it effectively reduces returns. Ultimately, the aim is to assist customers by decreasing uncertainty regarding fit.

Measuring the exact effect of AR on returns can be challenging, but the fact that one of the leading electronics retailers continues to offer it suggests that it has proven helpful. In addition, all the necessary content is provided on product detail and overview pages to help customers make informed choices. One of the most challenging aspects of buying a TV is determining the appropriate size, as many people are instinctively drawn to the biggest and best option, even if it might not be suitable for their home.

What is the first step for implementing these strategies?

Alec: The most straightforward answer is to prioritize testing. Continuously test different visual content strategies to optimize your online store and improve the customer experience. Netflix is an excellent example of a company that constantly aims to increase conversion rates through visual content. They conduct tests to determine which images to display to encourage users to click on a series and start watching. Different visual content strategies may appeal to viewers of action series compared to romantic series or children’s shows. Netflix creates multiple artworks for each series and continuously tests them. Traditional split-testing may allocate 50% of the traffic to one image and 50% to another, but Netflix never stops trying, always seeking the best possible option.

The multi-armed bandit approach and its suitability for maximizing revenue is a popular topic. What does it mean?

Alec: The multi-armed bandit approach is efficient when maximizing revenue, such as selecting the best hero shot for individual products on platforms like hotels.com. This approach dynamically adjusts traffic allocation based on performance. It directs more traffic to the better-performing options while occasionally offering other options to continuously evaluate if the image remains the best choice. This adaptive method allows for efficient revenue optimization by favoring proven, more effective alternatives.

Seeing how testing methodologies can be tailored to specific goals and contexts is intriguing. How can businesses analyze return rates within different product categories?

Alec: Analyzing return rates within product categories is crucial for understanding and optimizing business strategies. For instance, research conducted with one of the largest financial technology companies best known for its buy now, pay later service revealed that the fashion and sports categories in the Netherlands had an average return rate of 40%, while consumer goods had a 7% return rate. However, even within the fashion category, there can be significant variations, with dresses having a 40% return rate and hoodies having a 12% return rate.

Examining the distribution of return percentages per product is essential to analyze return rates within a specific category. By understanding the normal range of return rates for each product category, businesses can identify abnormal patterns and make informed decisions accordingly.

For example, if a 40% return rate is typical for dresses, anything between 30% and 50% could be considered normal. Similarly, if hoodies typically have a 10% return rate, anything between 5% and 15% would fall within the normal range. This approach provides a valuable benchmark for assessing return rates and optimizing business strategies based on category-specific insights.

What strategies do you suggest for reducing returns and addressing the root causes of high return rates?

Alec: Reducing returns requires a multi-faceted approach, as no solution works for all cases. Identifying the root causes of high return rates within specific product categories is essential. By analyzing products with the highest return rates, businesses can gain insights into the underlying causes. For instance, if customers frequently return dresses due to color discrepancies, steps can be taken, such as removing the product from the assortment or working with suppliers to address the issue.

Testing different strategies can also be effective. For example, if dresses have high return rates, businesses can experiment with adding videos or 360-degree views to give customers a better understanding of the product. Tracking and monitoring the impact of these strategies is crucial, making them an integral part of key performance indicators (KPIs). This allows businesses to assess the effectiveness of their efforts in reducing returns and optimizing the customer experience.

Testing and tracking the impact of different approaches can help businesses make informed decisions. How important is this do you feel?

Alec: “I emphasize the importance of continuously monitoring and tracking key performance indicators related to returns. Businesses can gain valuable insights and make data-driven decisions by closely monitoring return rates and analyzing the impact of various strategies. It’s an ongoing process of learning, experimenting, and optimizing. Additionally, collaboration with suppliers and actively addressing the causes of returns can lead to significant improvements. Ultimately, the goal is to create a seamless customer experience and reduce returns through targeted efforts.”

Regarding tracking product performance, what key metrics should businesses focus on?

Alec: Businesses should track a standardized set of key performance indicators (KPIs) to make informed choices. These metrics may include factors such as who buys the product, price fluctuations, the percentage of promotions, and the number of stores that carry it. By monitoring these metrics, businesses can assess the product’s rotation, return rates, profitability, and customer relevance. In addition, it’s crucial to have a standardized set of KPIs to compare and score products within their respective categories.

Besides profitability, what other factors should businesses consider when measuring customer value?

Alec: Alongside profitability, businesses should pay close attention to customer value, often called Customer Lifetime Value (CLV). CLV considers not only what customers buy and how much revenue is generated but also factors in the costs incurred due to returns and marketing expenses. By understanding the overall cost of acquiring and retaining customers, businesses can gain insights into the long-term value that each customer brings to the company.

Can you give an example of companies dealing with high return rates and customer costs?

Alec: A great example of a company handling that well is one of the largest Dutch online retailers. The company took measures to address excessive return rates. They openly communicated with customers with high return frequencies, informing them that they could no longer pay afterward. This approach highlights the importance of looking at individual products and considering the customers themselves. Some customers may consistently incur costs for the business rather than generating profits.

Another example is a Dutch-based fashion & shoes retailer, which assesses ordering and payment options based on a customer’s return history over the past two years. By adjusting the ordering and payment options offered to customers, they aim to mitigate the impact of returns and associated costs.

How can businesses optimize conversions and reduce returns?

Alec: It’s essential to manage customer expectations through the information provided on the website. Testing different strategies and conducting experiments can optimize conversion rates. For return reduction, businesses should focus on identifying the underlying causes, which may involve adding visual content, improving product descriptions, or removing poorly performing products from the assortment. Monitoring and tracking key metrics such as product conversion rates and return percentages is crucial. By continuously analyzing and evaluating these metrics, businesses can gain insights into their customers’ behavior and make data-driven decisions to optimize their operations.

For return reduction, businesses should focus on identifying the underlying causes, which may involve adding visual content, improving product descriptions, or removing poorly performing products from the assortment.

Product images play a big part when it comes to conversion. Is there an optimal number of product photos for a webshop, or does it depend on the complexity of the product?

Alec: The number of product photos needed on a webshop varies depending on the complexity of the product. For example, a large house listed on the number one real estate website may require 70 to 100 photos to showcase all the rooms, details, garden, and garage. However, three or four images might be sufficient for a basic T-shirt. There is no fixed rule for the optimal number of images. The goal is to provide enough visual information to ensure customers understand what they buy.

While it’s true that having a sufficient number of photos is essential, there is indeed an optimum to consider. The optimal number of images can vary depending on the complexity of the product. For example, if you have a product that might be visually distracting or has unique features, you may need additional photos to showcase it accurately. On the other hand, three or four images might be adequate for products with more specific attributes, such as a basic t-shirt. It’s essential to consider your target audience and their expectations when determining the number of photos needed. In the B2B market, where bulk purchases are standard, the purpose of the images might shift to simply recognizing the product rather than providing extensive visual details.

As AI advances, how do you envision its role in relation to these topics?

Alec: AI holds great potential for personalization and content generation. Personalizing websites can be challenging, especially for businesses with limited data on individual customers. While it’s relatively straightforward for a supermarket to personalize recommendations based on frequent purchases, it becomes more complex for companies with infrequent customer interactions. Extracting data from other environments becomes crucial in understanding customer preferences. Content generation through generative AI in imaging is also evolving rapidly. We may witness a shift towards more digital photography models, where human models are photographed, and AI generates unique faces, addressing issues such as portrait rights, costs, and usage duration. This could lead to unusual and diverse product-detail pages that cater to individual preferences.

Do you predict that every product page will eventually look the same due to AI-generated content?

Alec: I don’t believe every product page will look the same. With generative AI in imaging,
the aim is to create unique faces based on fictional individuals. While this approach may provide diversity and uniqueness, it ensures that no two faces are identical. This addresses practical issues such as costs and usage duration while allowing personalized, distinct product-detail pages.

The potential of generative AI in creating standardized images raises exciting questions about maintaining uniqueness as a retailer. How do you see this evolving?

Alec: It’s an intriguing aspect to consider. If design software can create photorealistic content for presenting products on a product detail page (PDP), it could lead to standardized images being used across different retailers. The question arises for retailers: Do they become commodity sellers, all presenting the same ideas for a product? Or do they embrace their unique proposition and create distinct images? This is an exciting direction to explore. The speed and accuracy of generative AI in creating such images will play a significant role in determining the outcome.

Ensuring product expectations regarding fit and quality is essential. How can retailers address these aspects through visual content?

Alec: Regarding product quality, retailers may have little control, but they can provide visual cues to assure customers that the product will meet their expectations. For example, if a backpack should have specific features like a laptop compartment and the ability to attach it to a suitcase, showcasing detailed photos of these aspects can help alleviate quality uncertainty. On the other hand, when it comes to fit, especially for items like backpacks where size matters, displaying the product on models or using augmented reality can provide customers with a better understanding of the proportions and how it will fit their body shape.

It’s important to note that these statements are not absolute truths but hypotheses that can be tested through A/B experiments. For example, a Dutch fashion retailer conducted tests comparing invisible mannequin shots (no model, just a product shot ) to images of regular-sized models and plus-sized models. Surprisingly, the regular-sized model had similar or slightly lower conversion rates, while the plus-sized model showed a significant lift of around 14%. Of course, each product-market combination may have nuances, and it’s crucial to run experiments to identify the most effective visual content strategies for each context.

Conducting A/B tests becomes crucial to determine the most significant improvements. How can retailers approach these tests and prioritize their experiments?

Alec: Retailers should approach A/B testing with their product market in mind. It’s essential to identify hypotheses that make sense for the specific context and run experiments accordingly. The testing order and expected impact can vary based on the product-market dynamics. Prioritization should be based on what experiments are expected to yield the most significant improvements. By systematically testing different visual content strategies and analyzing the results, retailers can effectively refine their approach and optimize their visual content to meet customer expectations.