Users’ willingness to pay a premium price for a service depends on their perception of the value of that service. In this A/B test we learned that a strong message that reinforces the value of a product or service can drive users’ willingness to pay extra. We introduced a tooltip that explained to users that they could receive a significantly higher quality of service by setting their price 20% higher than the default. The result – an 8% uplift in ARPU.
Kabanchik.ua is a two-sided marketplace that bridges users looking to have a specific one-off job completed and contractors who offer their services based on professional proficiency. So a user posts a job and a contractor bids to win the job.
Our task was to increase the revenue per user (ARPU) metric by working with the conversion rate (CR) and average order value (AOV).
Kabanchik.ua has default prices for each job that users post on the marketplace, and users have the option to change these prices. The quantitative data revealed that some users post a price that is over 20% higher than the price given by Kabanchik for that job. This drew us to the conclusion that some users deliberately pay more. We now needed to learn why.
To find out why this happens, we conducted user tests and user interviews. We found that some users set a 20-30% higher price to receive bids from more proficient and higher quality contractors. So the key driver of setting a higher price was to attract more bids from contractors with “Top Contractor” badges, which contractors get for completing a significant number of jobs successfully and receiving positive client feedback.
We reasoned that we could motivate users to increase the price for a job by communicating that a higher price would draw more “Top Contractors”.
We decided to test this hypothesis by introducing a tooltip in the job creation form. The tooltip had the following copy: “Increase the price of this job by 20% (to XXX hryvnas) to attract more Top Contractors”. The trick was to have this tooltip open by default on the form and have the tooltip partially blocking the form, so that the user has to close the tooltip in order to navigate the form. This ensured that most users on the form paid attention to the tooltip.
To validate this hypothesis, we conducted an experiment that measured the impact of the new UX of inputting the price for the job on the CR, AOV and ultimately ARPU. The experiment had the following characteristics:
Experiment type: A/B test
Traffic split: 50/50
Primary metric: ARPU
Secondary metrics metrics: AOV and CR
Number of users who took part in the experiment: 16,566 users
Number of conversions recorded during the experiment: 4,352 conversions.
The alternative variation with a tooltip that encouraged users to increase the price by 20% produced an 8% uplift in ARPU and a 17.3% uplift in AOV. This was one of our most interesting experiments we conducted because the change to the UI was minimal but the uplift in key metrics was significant. It demonstrated that knowing users’ triggers and communicating your message effectively can yield significant results. In our case, a simple tooltip did an amazing job. The takeaway here once again is that high quality research of user behavior and user struggles makes all the difference in CRO.