Customer behaviour and the psychology of decision making

Each year, businesses globally spend billions of dollars studying customer decision-making. 70% of the buying experiences are based on how the customer feels they are being treated. This is where the intricate dance of decision making begins. It is a journey that takes a potential customer from first hearing about your product, weighing the pros and cons, to finally deciding whether or not to do business with you. [1]

Factors influencing these decisions are multifold:

• past experiences with similar products or brands;
• external stimuli like advertisements;
• word-of-mouth recommendations etc.

For instance, a study shows that 84% of consumers trust recommendations from friends and family above all other forms of advertising. Understanding these elements and how they interact can significantly enhance your ability to win over potential customers. [2]

By understanding the psychological underpinnings of customer decision-making, you can tailor your strategies to resonate with your target audience. Whether it’s crafting compelling product descriptions, designing a user-friendly website, or developing a powerful advertising campaign – knowing what clicks with your customers can make all the difference. We delve deeper into each of these aspects in the following chapters.

Consumer decision making

Understanding the stages of consumer decision making is like reading a map; it guides your brand towards establishing a successful marketing strategy.

• It all starts at the search stage. This is when a consumer identify a need or a desire and seek information to satisfy it.
• Next, they move to the evaluation stage, where they compare different products or services based on factors like price, quality, and reviews.
• Finally, they reach the purchase decision, where they choose the product or service that best fits their needs.
• But it doesn’t stop there. The post-purchase evaluation stage is just as important. This is when they assess their level of satisfaction with the product or service and decide whether or not they’re likely to buy it again in the future.

Companies need to understand the consumer decision-making process to craft effective marketing strategies. By providing quality products and services, they can build positive relationships with customers and increase their chances of becoming loyal customers. This will improve their market position and profitability.

One way companies can enhance their customer experience is by using the Innoship API. This easy-to-integrate system connects with over 80 carriers worldwide, ensuring your packages are shipped efficiently and affordably. By improving the delivery process, you can boost customer satisfaction and loyalty.

The impact of emotions on customer decision making

Emotions play a leading role in decision-making process. Research suggests that as much as 90% of decisions are driven by emotions, not rational thought. This means that our feelings towards a product, service or brand can significantly swing your purchasing decisions. Businesses that understand this emotional aspect and integrate it into their marketing strategies are more likely to succeed in the competitive market. [3]

Positive emotions associated with a product, brand or service can be a game-changer in decision-making process. For instance, a product that evokes positive emotions, whether through its design, marketing, or brand reputation, is more likely to be chosen over alternatives. According to a study, customers who associate positive emotions with a brand are 7.1 times more likely to purchase from that brand. [4]

On the flip side, negative emotions can deter customers from choosing a particular product, service, or brand. Experiences that evoke negative emotions like frustration, anger or disappointment can lead to a loss in future business. A study found that after a bad customer service experience, 51% of customers will never do business with that company again. [5]

To increase sales, you need to create positive emotional connections with your customers. This can be achieved through:

• excellent customer service;
• appealing branding and marketing;
• product design that evokes positive emotions;
• using some unconventional tactics for increasing online store sales. 

Types of ecommerce customers + Ways to target

In the digital shopping world, a diverse range of customers exists, each with unique shopping habits, preferences, and motivations. Let’s delve into who they are, what drives their purchasing decisions and how best to target them.

Casual shoppers

Composing a large portion of online traffic, these shoppers view the act of shopping as a leisure activity rather than a necessity. They may not be frequent or heavy purchasers, but they devote a substantial amount of time to your website, browsing through various products and even adding items to their cart. 

Here are some steps you can take to convert casual shoppers into loyal customers:

• Personalize their shopping experience: use data to understand their browsing pattern and recommend products accordingly.
• Make shopping easy: simplify navigation and checkout process.
• Keep them engaged: use engaging content and attractive visuals.
• Offer incentives: discounts, free shipping, and rewards can motivate them to purchase.

Impulse buyers

Photo source: Shutterstock

Impulse buyers are a goldmine in the world of e-commerce. These customers are emotionally driven. They make split-second decisions based on their feelings at the moment. These feelings can be swayed by a multitude of factors such as:

• the latest trends;
• eye-catching advertisements;
• irresistible special deals.

It’s your job to tap into these emotional triggers, creating a compelling narrative around your products that capitalize on these feelings.

Communication is key when it comes to impulse buyers

With the right messaging, you can help them remember why they fell in love with your product in the first place. This could be via newsletter subscriptions, emails, or even push notifications, keeping them engaged and informed about your time-sensitive deals and promotions. Retargeting is also extremely effective for this group of customers. By reminding them of the products they’ve shown interest in, you can nudge them towards making a purchase.

Purchasing convenience is an integral factor for impulse buyers

They value speed and ease of transaction. These customers are likely to abandon their carts if they find the checkout process lengthy or complicated. Statistics show that about 22% of online shoppers have abandoned their orders due to a too long / complicated checkout process. Therefore, providing a streamlined checkout process that offers multiple delivery options and speedy shipping is essential to keeping these customers from falling off your sales funnel. [6] 

Bargain hunters

These are the customers who will scour multiple stores, both physical and online, in search of the lowest price. They’re not brand loyal, often using browser extensions to compare products across multiple platforms and sniff out the best deals. 

To serve bargain hunters effectively, you need to make a few strategic moves.

• Offer product discounts and markdowns.
• Stay informed about competitor prices.
• Run occasional or seasonal promotional deals on top-selling products.
• Adopt a smooth, ad-free user experience to build trust and prevent customers from abandoning their cart for a competitor’s coupon or promo code.

While the initial focus of bargain hunters is on price, you can capture their attention and convert them into repeat customers by shifting the focus to value. For that, you can use:

• detailed product descriptions and customer reviews;
• customer rewards programs that provide free shipping or discounts.

Research-oriented shoppers

These shoppers are a meticulous breed who spend a significant amount of time researching before making a purchase. They pore over product specifications, compare different brands, and go through customer reviews with a fine-tooth comb. Predominantly found in markets with high price points such as technology, cars, and appliances, they are also making their presence felt in lower ticket categories like beauty products or apparel.

Research-oriented shoppers are determined to avoid purchase mistakes or product returns. Their goal is to make the most informed decision possible, and they achieve this by valuing detailed and accurate product information. 

To serve research-oriented shoppers effectively, you need:

• to ensure that your business provides as much detailed and accurate product information as possible. to include product specifications, comparison charts, FAQs, and customer reviews;
• multiple delivery options;
• real-time customer engagement, such as live chats. By answering any further questions these shoppers may have, you can alleviate any purchasing anxieties and guide them towards making a purchase.

Brand-loyal shoppers

Photo source: Shutterstock

Brand-loyal shoppers are a breed apart. They’re not easily swayed by competitive pricing or other brands. They’ve built a relationship with the brand they trust and they stick with it. Loyal customers tend to buy more, stay longer and are cheaper to serve due to their familiarity with the brand’s processes and products. However, they also require exclusive experiences and high-quality customer service. A single negative experience, like poor customer service or delayed shipping, could affect their loyalty.

So, how do you cater to these brand-loyal shoppers?

Companies can boost customer loyalty by 25-95% by increasing customer retention by just 5%. To do this, you could implement customer loyalty programs that offer tiered rewards and exclusive perks. Another key strategy is to provide a personalized shopping experience. This could range from customized product recommendations to personalized communication. [7]

The importance of brand loyalty cannot be understated. According to a survey, a whopping 91% of shoppers are more likely to purchase from brands that recognize, remember, and provide them with relevant offers. By focusing on personalization and customer appreciation, you can not only retain your loyal customers but also attract new ones. This leads to increased sales conversion rates and ultimately, a healthier bottom line. [8] 

Need-based customers

Their purchasing decisions are driven primarily by a specific need or problem that they want to resolve. They are not frivolous or impulsive buyers, but are methodical and meticulous in their approach, spending ample time researching and comparing products before making a purchase. 

It’s essential to understand that patience is a virtue when dealing with need-based customers. They are not easily swayed by flashy advertisements or promotional offers. Instead, they value detailed information, reliability, and quality over quick purchasing decisions.

How to attract and retain need-based customers

Ensure that need-based customers can easily reach out to your customer support team

They are likely to have numerous questions and concerns, and addressing these promptly can help build trust and confidence. A recent study showed that 92% of customers feel satisfied when they can use live chat for their questions, which further emphasizes the need for accessible customer support. [10]

Design a user journey that provides value and educates them about the products or services

This can be achieved by creating informative content that addresses their needs and concerns, and by providing them with the tools to make informed decisions, such as Net Promoter Score (NPS) which helps measure customer loyalty. According to a report, companies with higher NPS scores tend to outperform their competitors in terms of long-term growth. [9]

Need-based customers are focused on getting the best value for their money. They are likely to be swayed by product specifications, professional visuals, informative webinars, and articles that highlight the benefits and value of the product.

Ready-to-purchase shoppers

When it comes to ready-to-purchase shoppers, time is of the essence. These customers are not interested in endless browsing or exhaustive product comparisons. They’ve done their research, they know what they want, and they’re ready to buy. Their motivation to purchase could be driven by specific needs, current trends, or appealing deals. It’s important to understand that they’re not looking for persuasion tactics or extensive customer nurturing. They are interested in a product that meets their expectations and they want to purchase it efficiently.

To attract and retain these ready-to-buy customers, you need to streamline your shopping process. Ensure a quick and easy checkout process with multiple payment options and clear, transparent shipping information. Real-time updates about any potential shipping delays are appreciated by these customers as it manages expectations and reduces frustration.

Trend-following customers

Trend-following customers are the ones waiting in line for the latest iPhone, sporting the latest fashion trends, and always in the know about the hottest new restaurants. These customers are attracted to novelty and authenticity, often seeking out renowned brands and exclusive products. They are willing to pay a higher price for the privilege of being among the first to own a new product, demonstrating a greater investment in the brand than the price point.

You, as a business, must serve these trend-following shoppers with a dedicated approach:

• Develop close relationships with manufacturers to ensure you’re the first to stock the latest products. Announce release dates in advance on your website and through your marketing channels. This creates anticipation and urgency among these shoppers – it’s the thrill of the new that drives them.
• To capture the attention of trend-following shoppers, you need to create a sense of scarcity and exclusivity. Implement marketing strategies that inject this feeling. Launch online and print campaigns that emphasize the limited availability or unique features of a product.
• Utilize visuals and engaging content to tell your brand story. This reinforces the perceived value and exclusivity of your products.

B2B Customer

Photo source: Shutterstock

You must know that B2B customers have different needs and behaviors compared to B2C customers. They aren’t looking for quick purchases and immediate satisfaction. Instead, they seek long-term relationships and value reliability, efficiency, and expertise. Your ability to understand these unique behaviors is the key to creating a successful strategy that caters effectively to B2B customers.

The importance of documentation in B2B transactions cannot be overstated. These transactions often involve larger sums of money, more complex products and services, and longer-term contracts. Therefore, thorough documentation is crucial in your relationship with your B2B customers. You need to provide:

• detailed product specifications;
• legal contracts;
• service level agreements, and more.

Your credibility is vital

Businesses want partners they can trust and depend on. You can build this trust by providing detailed and accurate documentation, demonstrating deep industry knowledge, and delivering on your promises consistently.

Retaining B2B customers, however, can be a challenging feat due to the high stakes involved in B2B transactions. Strategies for retention should include:

• providing top-tier customer service;
• maintaining regular communication;
• continually demonstrating value through quality products and services;
• pay attention to your customers’ post-purchase experience. You need to keep your customers satisfied even after they’ve bought your product or service. This can be done through regular follow-ups, providing assistance when needed, and ensuring their overall experience with your product or service is a positive one.

What customers generate the most profit?

Photo source: Shutterstock

Brand-loyal customers are those who develop a strong, long-lasting affinity towards your brand. They consistently choose your products or services over your competitors’, regardless of price fluctuations or other market shifts. This loyalty is driven by their trust in your brand, the quality of your offerings, and the emotional connection they’ve forged with your brand.

Why should you pay extra attention to these brand-loyal customers?

The answer lies in their valuable contributions that extend beyond their own purchases. It’s well-known that acquiring a new customer costs five times more than retaining an existing one. Brand-loyal customers not only ensure repeat sales but also become advocates for your brand, spreading positive word-of-mouth advertising that can attract new customers. Moreover, they show less price sensitivity, meaning they’re willing to pay more for the products or services they trust. [11]

The final word

By grouping consumers into distinct categories, you can better understand your customers’ behavior and preferences, allowing you to tailor your approach to meet their unique needs. This method is effective because it ensures that your marketing efforts are relevant and targeted, which can greatly enhance customer satisfaction and loyalty. So, invest in the right ecommerce tools, stay informed about the latest trends, and harness the power of customer segmentation to propel your business forward!

Sources

[1] Staff, IA. “70% of Buying Experiences Are Based on How the Customer Feels They Are Being Treated.” Industry Analysts, Inc., 4 Dec. 2017, www.industryanalysts.com/12417_greatamerica/. Accessed 22 Mar. 2024.
[2] Team, Marketing. “10 Employee Advocacy Statistics That Prove Its Effectiveness.” Sociabble, 28 July 2022, www.sociabble.com/blog/employee-advocacy/employee-advocacy-statistics/. Accessed 22 Mar. 2024.
[3] “Making Conscious the Unconscious for Better Decisions | Nexia Edwards Marshall.” Nexiaem.com.au, 2023, www.nexiaem.com.au/news/making-conscious-the-unconscious-for-better-decisions/ Accessed 22 Mar. 2024.
[4] Patel, Neil. “Expert’s Guide to Powerful Emotional Marketing – Neil Patel.” Neil Patel, 13 Jan. 2023, neilpatel.com/blog/emotions-for-content-marketing/. Accessed 22 Mar. 2024.
[5] Malek, Peter. “We Have All Heard the Saying and Maybe Even Used It Ourselves..” Linkedin.com, 27 Aug. 2018, www.linkedin.com/pulse/power-putting-customer-first-peter-malek. Accessed 22 Mar. 2024.
[6] “49 Cart Abandonment Rate Statistics 2024 – Cart & Checkout – Baymard Institute.” Baymard Institute, 2024, baymard.com/lists/cart-abandonment-rate. Accessed 22 Mar. 2024.
[7] Omar El Bahr. “Council Post: Five Strategies to Improve Customer Retention.” Forbes, 11 Sept. 2023, www.forbes.com/sites/forbescommunicationscouncil/2023/09/06/five-strategies-to-improve-customer-retention/ Accessed 22 Mar. 2024.
[8] contactpoint360. “How Personalized Customer Experience Helps Brands Thrive in a Recession.” ContactPoint 360, ContactPoint 360, 25 May 2023, contactpoint360.com/blog/personalized-customer-experience/. Accessed 22 Mar. 2024.
[9] Dr.Ing. Srinivas JAGARLAPOODI. “In Today’s Highly Competitive Business Landscape, Customer Satisfaction Is Not Just a Buzzword; It’s a Critical Factor That Can Make or Break Your Company’s Success. Understanding How Your Customers Perceive Your Products or Services and Their Likelihood to Recommend Them to Others Is Paramount.” Linkedin.com, 18 Sept. 2023, www.linkedin.com/pulse/unlocking-power-net-promoter-score-nps-business-jagarlapoodi. Accessed 22 Mar. 2024.
[10] Cole, Nicolas. “The Power of Live Chat: 5 Surprising Statistics That Show How Consumers Want Their Questions Answered.” Inc.com, Inc., 25 Apr. 2017, www.inc.com/nicolas-cole/the-power-of-live-chat-5-surprising-statistics-that-show-how-consumers-want-thei.html. Accessed 22 Mar. 2024.
[11] “Customer Acquisition vs. Retention Costs.” Optimove, 14 Mar. 2024, www.optimove.com/resources/learning-center/customer-acquisition-vs-retention-costs Accessed 22 Mar. 2024.