As a retailer, you know that your most important task is to acquire new customers. After all, the more new customers you have, the more likely your business is to succeed.
The key to acquiring new customers is to have a good understanding of consumer behavior. The more you understand what makes consumers behave the way they do, the more likely you’ll be able to attract and keep them.
With that in mind, here are four facts about consumers and consumer behavior that you can use to help grow your sales and revenues.
Consumer insight #1: Your prospects aren’t as concerned about price as you think they are.
A study by Accenture found that price is not the main driver for customer satisfaction – good customer service is. That’s great news for retailers who often have more control over customer service than over pricing. The secret is to take that insight and put it into action. After all, it’s one thing to understand your prospects and customers, but it’s another thing to take those insights and use them to your benefit.
Action step for you: Most retailers understand the importance of good training for their staff, but many find it difficult to motivate staff members to provide consistently good customer service. If that sounds familiar, here are two suggestions. First, explain to your staff why good customer service benefits them. (The answer: Because when your store is successful, they’re successful, too.) Second, help them understand that every time a customer walks into your store, they can give that customer a small gift with a smile, a compliment, or a helping hand. Imagine the joy of being able to give out dozens of small gifts each day – for free!
Consumer insight #2: The best way to attract new customers is to keep your existing customers happy.
According to the White House Office of Consumer Affairs, keeping existing customers happy can be your primary source of new customers.
How does that work? Happy customers refer their friends and family to your store. That additional traffic drives incremental revenue to your bottom line. Studies have shown that people trust recommendations from friends much more than they do paid advertising. Given that, you should do everything in your power to keep existing customers happy so that they tell others about your store.
Action step for you: Encourage your happy customers to share their experiences with friends. There are several things you can do to make that happen. Many retailers use referral cards as a way to get customers to encourage their friends to visit a store. For example, a business might offer 20% off the next transaction if a customer refers a friend. Others provide an incentive for sharing a positive experiences via social media. And still others use events and other promotional techniques to create buzz in their community.
Consumer insight #3: Your best new customer might actually be an existing customer.
According to the book Marketing Metrics, your business has a 60% to 70% chance of selling to an existing customer, but only a 5% to 20% chance of selling to new prospects. As important as it is to keep a steady stream of new prospects coming through your door, don’t ignore the fact that existing customers are still your best source of revenue.
Action step for you: Consider using a bounce-back coupon to get your existing customers to come back more frequently. If your average customer visits your store once a month, provide a coupon with an expiration date that’s 2 weeks out. By getting your existing customers to come back in 2 weeks rather than the normal 4 weeks, you can have a nice bump in your overall revenues.
Consumer insight #4: Your prospects buy for emotional reasons and rationalize their purchase with logic.
Humans are funny – we assume our decisions are based mostly on logic, but actually the opposite is true. We actually buy things for emotional reasons, and then use logic to explain the purchase.
The success of Starbucks is a perfect example of this. Starbucks is the world’s leading coffee retailer in part because of the emotional appeal of the Starbucks experience. The friendly staff, the music, the smell of the coffee, the furniture … everything adds up to a positive emotional experience, which has benefited the company greatly over the past several decades.
Action step for you: Over time, we all become a little blind to our own surroundings. Because of that, we sometimes don’t experience our stores the way our prospective customers do.Ask a friend or a trusted advisor to visit the store with a fresh set of eyes. Walk through the store together, keeping an eye out for the emotional components of the experience. Pay particular attention to comments about colors, sounds, smells, feelings, and the overall energy your advisor experiences in your store. Those are the emotional components that can keep existing customers happy and attract new customers to your location.
It takes a lot to keep a retail location running smoothly. With everything you have going on, acquiring new customers can sometimes be lost in the shuffle. But if you keep the consumer insights discussed here front and center, you’ll be much more likely to have a successful run of events moving forward.
For more insight on where the retail industry is headed, see 10 Predictions On The Future Of Retail.
This article was originally published by SAP Digital. It is republished by permission.