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Consumer Behavior: Why It’s Important for Retailers to Think Like Customers

Customer psychology unlocks the secrets to understanding and adapting to consumer behavior. You can offer a fantastic product with great features and options, but it may not sell in the way you expect. Or maybe your sales are good, but you’re missing out on additional revenue because you’re not entirely connecting with your customers.

Knowing the psychological factors that influence how customers think helps you to look at the product and retail experience from a consumer perspective. You can understand why customers respond to your current offerings in the way they do, and be prepared to adapt in the future to boost your retail sales.

Ways to improve your retail site based on consumer psychology insights

There are several key behavioral factors that all retailers should know to understand their customers.

Show how your product solves their problems

It’s critical to understand your customers’ needs and desires first in order to speak to the features and benefits of your products. And once you do, you need to make it clear how the feature meets that need by solving their problems. When looking at how you present and develop messaging around the product features, draw a line to connect the feature you’re describing and the true benefit that feature provides to the consumer.

For example, imagine a dog owner looking for a new sofa because their dog chewed their old one. This customer has a problem and a need—they need a new sofa, but don’t want the same thing to happen again to their next sofa without recourse.

The customer sees that a protection plan is offered on a sofaproduct add-on strategy. The feature of the plan is that it covers accidental damage. By emphasizing the benefit of the plan—that any future pet damage  is covered, the customer understands how that feature solves their problem.

Remember that timing is key

A product may have features that provide a great benefit and even solve a problem. But if that product or features aren’t presented at the right time, a customer might miss them entirely.

A customer needs to be presented with options at the right point in the transaction to motivate them. If something is presented too early, it might come before the customer has made a decision on the product, and it won’t be relevant. Or if the customer has decided which product they want, but the add-on isn’t presented until too far downstream in the customer journey, it becomes a missed opportunity.

The importance of timing is clear when you develop a product add-on strategy. If a customer is trying to decide which dress to buy, and they’re being offered an option to add a necklace to complement the dress, they’re likely to ignore it while they’re making a dress decision. A better time to make that add-on offer is when the customer has made the dress choice. They’re more likely to appreciate and look at the offer to add a coordinating necklace.

Use the right language

The language that you use on your website and marketing communications is always important. You might have a great feature or benefit with your product, but if it’s not communicated in the right way, customers won’t understand or use it. By crafting your messaging to have clear language, customers will know what to expect at each step during the customer journey.

We constantly conduct research to make sure we’re maximizing conversion rates for our retail partners, and language plays a big role in that. One example that we found through our own testing is the significance of changing the wording on a site button on a product page. When the button read “add protection plan”, customers were hesitant to click because they didn’t know what would happen afterwards.

When we changed the text to read “choose your protection plan”, it clarified to the customer that there would be an additional step for them to take. The customer knew that if they clicked on the button, they would still be able to view and select plan options, rather than one being added automatically. With this simple text change, we saw a 35% increase in clicks, because shoppers weren’t afraid to click on it.

Price add-ons to engage more customers

Pricing is a big part of the psychological consideration for customers, especially when considering add-on options. We use this to work with our retailer partners to create a custom pricing strategy for product protection plans as an add-on. It’s important that protection plan costs work with each retailer's goals, whether they’re focused on increasing conversion rates, providing a positive customer experience, maximizing margins, or adding value to the product.

Choosing the right product pricing strategy that meets your goals is key to engaging customers. As a company, we often lead towards more affordable customer-facing pricing because our clients want more customers to have access to product protection and to have the benefits of it.

We encourage our retailers to be sure that plan prices represent a fair price of the total purchase. If a customer has a $1000 sofa and they purchase a Mulberry protection plan that is $100 for 3 years, the protection plan is just 10% of the product price, which is a reasonable price for accidental damage protection when compared to the cost of the sofa itself. That encourages customers to add a plan.

By contrast, other companies are more interested in building gross margin per plan at the expense of attachment rate. They might offer a 3-year plan on that same sofa for $300. Some customers will still get the plan with the tripled cost and 30% warranty-to-cost ratio, but the cost won’t seem reasonable to most people. With fewer sales on the more expensive plan, fewer customers will engage with your product, and fewer people will get the benefits of having their products covered by accidental damage protection. 

Take advantage of FOMO

FOMO, or fear of missing out, has always existed within retail long before there was a term to describe it. Customers don’t want to miss out on a product, deal, or feature. When they sense that others are using it or that their opportunity is time-limited, customers react with urgency because they don’t want to miss their chance.

There are many ways to create FOMO with simple, fun calls to action. An example is when a retailer offers a limited time deal and displays on the site a clock on when time is running out to take advantage of it. Another tactic is to show that “X number of people already purchased that product today,” or that only X of the item are left in stock.

Find ways to surprise and delight

Surprise and delight has a big impact on creating a positive retail customer experience. Many customers have come to expect poor service while they’re shopping. They see the retail process as something they have to do to get the items they want or need.

It’s well known that it’s much harder for a company to get positive word of mouth than negative word of mouth. Studies have long shown that someone who has a bad experience at a company tells 9-15 people about it, while someone who has a good experience only tells 4-6 people. And with the advent of social media, good or bad experiences can now be relayed to thousands in a matter of minutes. Using surprise and delight is one thing you can do to avoid negative word of mouth and help encourage positive buzz.

Small things can make a big difference. For example, think of a customer at the Target self-checkout. They’re used to seeing a dirty touchscreen and a messy checkout area. But imagine that instead, there’s an employee wiping off the touchscreen and motioning you to their recently sanitized station and thanking them with a smile for coming in. That experience is totally unexpected for the customer, while being low-cost for Target. It’s the little things which most often delight a customer and can make them more likely to come back in the future. 

Use consumer psychology to think like your retail customers

By being aware of the psychology that influences the consumer shopping behavior, you'll better understand why customers act the way they do. Leveraging consumer psychology insights allows you to create the experience that customers want while increasing your retail sales. This is why it's important to actively try to see things through the eyes of your customers whenever considering how you merchandise your store, write copy or handle customer service inquiries. When you do, the sales, profits and strong CSAT will follow.

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Jonathan Fox

About the author

Jonathan is the Ecommerce Manager at Mulberry. He has 30+ years of experience in brick & mortar and online retail merchandising, and was most recently a Sr. Director at eBags.com, one of Mulberry's earliest Product Protection partners.

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