Consumer behaviour is always changing, and SMES need to change with it. By predicting consumer behaviour and keeping up with small business trends, you can see better ROI from your marketing spend, increase customer retention, develop more successful products or services, and get the most out of your SME’s resources.
But how can you know exactly what your customer wants? And how can you know what they’ll want tomorrow?
Consumer behaviour refers to the decision-making processes and actions that drive consumers to make a purchase. Understanding why a consumer decides to buy can help your business personalise engagement, as well as develop relevant products or services.
Every consumer has different thought processes and attitudes that drive their purchasing decisions, but there are 4 types of consumer behaviour:
Dissonance-reducing buyer behaviour. Dissonance can occur when a consumer has a difficult time differentiating between similar products or services. These customers will often seek post-purchase affirmation that they made the right choice. By offering a differentiator, such as price or unique features, you can reduce dissonance at the point of sale. And by offering effective post-sales engagement, you can convince these customers to become repeat buyers.
Complex buying behaviour. If a customer is making a large financial investment, such as when purchasing a car or booking a family holiday, they tend to exhibit complex buying behaviour. This means that they’re likely to do more research, spend a longer time on the buying process, and turn to resources they normally wouldn’t when making simpler everyday purchases.
Habitual buying behaviour. Habitual buying behaviour is characterised by a general indifference to brands when making a purchase. With habitual buying, consumers are purchasing something out of habit or because it’s familiar, rather than because of any brand loyalty. Always purchasing the same brand of milk or rubbish bags simply because it’s a known quantity would be an example of habitual buying behaviour.
Variety-seeking buyer behaviour. Consumers who exhibit variety-seeking buying behaviour frequently try out different brands, usually out of a sense of curiosity. With variety-seeking behaviour, there’s a large difference between brands, as well as many different options available. Because there’s little to no cost to switch brands, consumers will opt for new products without thinking much about it.
Some of the most impactful benefits of behavioural analytics include:
Better customer retention so you can turn customer loyalty into a differentiator. This is especially important as it’s been estimated that acquiring a new customer can be 5x as expensive as retaining an old one.
More successful launches of products and services.
Customer differentiation, so that you can tailor offerings to different audiences.
Insights into competitors and why consumers may be choosing to purchase from them.
Insights into how different customers use different channels. This enables you to optimise the customer journey and provide better experiences.
Improved customer service.
Market relevance and an increased ability to predict and stay ahead of market trends.
Ability to tailor your small business loyalty programme to deliver more impactful experiences.
Consumer choices are plentiful. Knowing what influences consumers can help your product or service stand out.
Here are five factors that can affect consumer behaviour:
Knowing why consumers make certain choices can be helpful, but you’ll still need to create a strategy for impacting those choices. Here are some tips to get started.
Use data to identify emerging trends and launch new products. Some businesses respond to trends by repositioning their offerings. Others start trends by creating new products or services, and then guiding their customers to them. Use your data to decide what your business can do best.
Adjust messaging to align with new consumer behaviour. As consumers’ priorities and values change, so should your messaging. Make sure you adjust your messaging to address the concerns of the current climate.
Highlight your USP to cut through dissonance. When a consumer has nearly identical choices, they’ll have trouble making decisions. By highlighting your differentiator, you can stand out in a crowd.
Nurture a community of advocates that create positive social proof. User reviews, UGC (user generated content) and recommendations help guide purchasing decisions. By creating a community of ‘promoters’, or customers who have a positive opinion of your brand, you can nurture a positive online image.
Offer incentives. It’s surprising how much of an impact offering small incentives can have. Things like discounts, gift cards and loyalty points can separate you from your competitors. Offering incentives for reviews and UGC can also give your customers a reason to become advocates.
Gather feedback through surveys. If you want to know what the customer wants, just ask. Gathering feedback can help you match your offerings to the customer’s needs. You can check out our worksheet in the Customer Experience eBook to see more about gathering feedback.
You likely have quite a bit of information about customer behaviour patterns already available. Look at times of purchase. Total spend. Channels used. Discounts applied. Add-on items. Demographics. How did they find you? How do they use social media? These things can all offer valuable insights into emerging trends and patterns.
Now combine this quantitative data with your qualitative research from surveys and observations. This should provide a good starting point for analysing customer behaviour.
You may want to then leverage a CRM platform to engage more meaningfully with your customers. You can also optimise your business’s ecosystem to be more customer-centric.
To see more about how consumer behaviour is changing, download the Small and Medium Business Trends Report. And to see how you can create exceptional experiences build long-term loyalty, check out ‘Thriving in the Experience Economy: How Exceptional Customer Journeys Drive Engagement’.