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What are your customers like?
If you're running a business, it's always important to find out what your customers are like. You should know what they really want, how they make decisions, and what they expect from you.
Hubspot featured an infographic by Bigcommerce, highlighting the top 10 factors that influence purchase decisions. It also provided other useful consumer behavior tidbits that helped us broaden our understanding of the customer mindset.
Here are some stats we felt were worth diving deeper into:
- Free Shipping is the second-highest factor influencing purchasing decisions, right after product quality
- Peer Influence: 81% say posts from their friends directly influenced their purchasing decision
- Peer Influence, again: 30% are most likely to respond to brand offers when they have been reposted by a friend
- Shopper Research: 62% of shoppers research big-ticket items in-store before buying online
- Shopper research, again: 9 out of 10 say they watch videos about the tech products they may buy
- Content marketing works: People are most likely to engage with branded content that contains pictures (44%), status updates (40%), video content (40%)
1. Offer Free Shipping – it appeals to our deep-rooted emotions and makes us feel like we win
"Free Shipping is the 2nd-highest factor influencing purchasing decisions, right after product quality".
The following example from Dan Ariely's Predictably Irrational illustrates this perfectly:
When Amazon launched a "free shipping" promotion with the purchase of a second book, sales shot up in all countries except for France. Why? It turned out that Amazon.fr had modified the program to charge one franc (US$0.20) instead of $0. The sales jumped the moment free shipping was implemented.
As Roger Dooley from Neuromarketing succinctly puts it:
FREE! is more powerful than any rational economic analysis would suggest.
So what is it about free stuff that drives us into a frenzy?
We all like free stuff because it feels like we win.
According to a GetElastic post by Linda Bustos, one reason why free shipping trumps a product discount of the same monetary value is the "I Win" theory.
We know implicitly that shipping has to cost something. So when we discover that we don't have to pay, it feels like a bargain.
It feels far more generous than receiving a price discount of the same (or even greater!) value.
We sense that the retailer is paying for shipping on our behalf, as opposed to merely taking less profit for themselves.
"Hey, don't worry about shipping costs," retailers seem to tell us. "It's on us."
Tip: Knowing, and then providing what customers really want communicates that you really understand and truly want what's best for them.
2. Consumers are hungry for information, so give it to them
- "62% of shoppers research big-ticket items in-store before buying online"
- "9 out of 10 say they watch videos about the tech products they may buy"
- "People are most likely to engage with branded content that contains pictures (44%), status updates (40%), video content (40%)"
According to the infographic, 54% of shoppers own a smartphone. Out of those shoppers, 50% of them check prices, promotions, product reviews, or product information on their smartphones while shopping.
It is evident that customers are now doing more research before buying anything. If you have bad reviews or a shortage of available information about your brand and products, it'll be an uphill battle trying to convince them to buy.
If you've been working hard at making good products in the first place, then the bad reviews would naturally be at a minimum. You'll want to also make sure that your website has all the relevant information about you, and is mobile-optimised. (See: Common Ecommerce Website Mistakes)
People are also more likely to engage with brands that have an engaging, information-rich social media presence. A brand that seems disinterested in engaging fans online might seem like it's also disinterested in providing quality service.
Tip: Provide important and relevant information online so that your potential customers can find out more before they buy. Also, have your brand consistently produce more informative content in the form of pictures, status updates and videos; your audience will appreciate it.
3. Word-of-Mouth is incredibly powerful, so leverage and encourage it
- "81% say posts from their friends directly influenced their purchasing decision"
- "30% are most likely to respond to brand offers when they have been reposted by a friend".
We all know that we're more likely to trust our friends' recommendations than advertisements, but why is that?
According to Jonah Berger, Professor and author of "Contagious: Why Things Catch On", it's because two reasons:
- Trust. Ads are always telling us that product X is great, so we're used to being sceptical. However, we trust our friends to be honest with us, and so we're more likely to trust them.
- Better Targeting. Unlike paid advertising, word of mouth is directed only at people who are interested. You wouldn't recommend baby diapers to your dad, would you? It is much more focused and efficient.
As it turns out, referred friends not only are less likely to leave, but also bring in higher profit margins.
Tip: We all trust our friends more than advertisements; so invest some time and effort in understanding referral marketing.