Why consumers behave the way they do

Customer behavior post

When it comes to retail, huge resources are dedicated to understanding what makes the consumer tick. There’s customer profiles, loyalty programs, data analysis and a whole host of tools utilised in a bid to understand why consumers behave the way they do.

But just when you think you’ve nailed your ideal customer and have a fair insight into their interests and habits, they’ll surprise you with an unexpected purchase, a newfound trend or by abandoning that oh so popular item that was totally en vogue just days prior.

Why? Because it turns out we’re a pretty fickle bunch.

Here are four surprising insights into consumer behaviour.

It starts with research

With a mobile phone in every pocket and a laptop on every desk, it stands to reason the buying journey starts out with research.

In fact, a study by Search Engine Land  indicates 73 per cent of potential customers conduct an online search long before they buy, comparing products, seeking availability and generally sourcing information about what they intend to buy.

If you’re looking for a little marketing insight into what happens when they hit a search engine, then the following fascinating statistics apply.

According to Chitika Insights, 32.5% of the audience share goes to the number one search result, 17.6% goes to position two, 11.4% goes to number three, 8.1% to position four, and 6.1% to position five. That figure continues to decrease as the results rank lower, resulting in a statistic that indicates 95% of all web traffic results from Page One of a search engine like Google.

So why does this occur? Well turns out after perusing the first few results people have either found what they’re looking for, don’t want to scroll further, are short on time, or a combination of all three.

Or perhaps it’s because our attention span is rapidly diminishing, with a 2013 Microsoft Study noting it was now down to an all-time low of eight seconds. That’s four seconds less than at the turn of the millennium and less than a Goldfish which can concentrate for nine.

Word of mouth matters

There’s long been a popular frame of thinking that reflects how easily consumers are influenced by others, and it’s perhaps encapsulated best by psychologist Dr Robert Beno Cialdini. In his book Influence: The Psychology of Persuasion, he argues consensus plays a role in how we make decisions, with most people using other’s behaviour to guide what we do.

Proof of this can be found in the statistics regarding online reviews, which indicate 88 per cent of consumers trust online reviews as much as personal recommendations. Meanwhile, Forbes found 81 per cent of consumers’ purchasing decisions are influenced by their friends’ social media posts and HubSpot notes consumers are 71 per cent more likely to make a purchase based on social media referrals.

Overall, McKinsey & Co claim word of mouth is the primary factor behind 20-50 per cent of all purchasing decisions.

Buying is emotional

Ever wondered why you enter a store dead set on buying one thing, but leave with another? Well according to research it’s because we’re an emotional lot.

Psychology Today notes “Consumers are powerfully influenced by their emotions and environmental cues, as well as by how options are presented to them” and will “often act against their own economic best interests when making decisions, due to a variety of biases”.

Based on the theory of behavioural economics, they note consumers can be broadly broken into the two categories of “planners” and “buyers”. Planners carefully weigh the benefits and costs of an intended purchase, while buyers are after swift gratification.

But either can be susceptible to subconscious cues.

“It is estimated that up to 40 per cent of consumers change their minds at the point of purchase because of something they see, learn, or do,” they reflect.

Meanwhile, researchers at the University of Texas in Austin found even when we attempt to rationalise a purchasing decision, chances are it’s a justification that comes after the choice is made.

Named post-hoc rationalisation, the researchers note it is found in every aspect of life, whenever we make decisions.

“We are ruled by our emotions first, and then we build justifications for our response. You can see this happening in hiring decisions, dating, you name it.

“In our society it is generally not considered justifiable to make a decision purely on an emotional response. We want to be considered scientific and rational, so we come up with reasons after the fact to justify our choice.”

Importantly, most people aren’t even aware they do it, with researchers further noting: “What is even more interesting is that people who claim that emotions are not that important, who consider themselves to be really rational, are actually more prone to fall into this trap”.

We’re loyal, yet we’re not

Customer loyalty used to be the holy grail of the retail world, with an expectation that once consumers had committed to a brand, it was hard to lure them away.

Yet recent research has found this loyalty is fading fast, and chances are even “loyal customers” actively shop around.

In 2016, customer loyalty researchers at ICPL found 97 per cent of Australian consumers would cheat on their favourite retailers, with a lengthy list of requirements listed to make them change their tune.

According to CMO the Deeply Devoted study found the majority of Australian consumers are now in less committed relationships with their favourite brands than ever before, with only three per cent feeling devoted towards their preferred retail brands.

The findings further illustrated: “88 per cent of ‘devoted’ customers would recommend a brand they are devoted to; 73 per cent of shoppers stated they would be encouraged to shop more with a brand if it had a loyalty program; while 73 per cent of Australian consumers would buy more if they were better rewarded”.

Meanwhile, “More than half (59 per cent) would buy more if retailers used their data to understand their customers’ individual needs and requirements better; 54 per cent would buy more if retailers treated them with more respect, and 49 per cent would buy more if they trusted brands more”; and “49 per cent would buy more if brands communicated with them better”.

Key takeaways

The waters of consumer behaviour might be muddied, but between the lines the message is clear. If retail is looking to lure the consumer, they need to:

  • Ensure they have an online presence and capture their attention quickly
  • Foster an environment where people are likely to leave reviews or share a great experience
  • Use emotion to connect with their consumer
  • Engender loyalty by understanding their consumer’s needs and rewarding them for their patronage

Vitag has a range of analytic tools that can be used to offer further insight into consumer behaviour. You can learn more about our retail analytics here