Understanding customer behavior and anticipating customers' wants and needs using customer, purchase, and product data is integral to retailers. Sure each customer is an individual and, therefore, has their own set of needs, but what if there were some underlying, subconscious needs and desires that play a larger part in buying behavior, regardless of an individual's consumer behavior? Here's the good news, there are certain things that you, as a retailer, can do to turn your one-time customers into repeat customers. This article explores the psychology behind consumer behavior during the initial purchase and post purchase follow up phase of the customer journey.
Initial Purchase: Website Design Matters
Yes, making sure your website design, is clean, interesting, and aesthetically pleasing to the eye is important, but strong category links are key to increasing the number of purchases from customers. In a study by User Interface Engineer1, "87% of dollars spent on impulse purchases resulted from users navigating the site by category links. Users spent the remaining 13% of money after navigating the site's search engine." This study also found that, "Users who surfed the website using category links were around 3x more likely to make an impulse purchase than those who found the items through search engines." The reason behind this is fairly simple: category links expose customers to a larger selection of products on the site. Sure your customer was looking for a brand new pair of jeans, but since they used the category link "pants", they also added a pair of dress pants and a new belt (found in recommended products) to their cart as well.
So how do you get your customers to use category links instead of the site search engine? Make sure your links are relevant and descriptive. "Shoppers seem to use the search engine primarily when category links fail them," so it's imperative that your categories make sense to both repeat and potential customers. If you have the resources, do a test of your website with people who have never navigated it before. Give each person a specific item they need to put in their cart with the stipulation that they are not allowed to use the site's search engine option. Did your test group succeed? Was it easy? Did they get frustrated? If your test group has trouble locating the specified products, you may need to rethink your category link names.
Post Purchase: Personalization, Discounts, and More
Once a customer makes their first purchase (guided by your awesome category links), the next step is an automatic post purchase thank you series to build the relationship with your customer and ensure sure they have a personalized experience with your company. This may sound crazy, but we can learn a lot about personalization from the service industry. A study, published in the Journal of Applied Social Psychology2, looked at ways to increase tips for waiters in a restaurant. What researchers found was that bringing out mints with the check increased the tips incrementally; however, the way in which the mints were given increased tips up to 23%. This study had four groups:
Researchers found that Group 4 saw a 21% increase in tips when compared to the control group. So what was different? Group 4 personalized the experience for their tables. The waiter made a point of bringing out more mints and calling attention to them letting customers know they had brought more mints, in case they wanted another one. Customers perceived this act as the waiter going above and beyond the expected level of service, and bumped their tip to show their appreciation. This study shows that small gestures and personalization are important; it also makes the case that you don't necessarily need to offer a monetary discount to keep your customers happy.
Offering something that has a perceived value to customers is all it may take. Like the mints that were offered and pointed out by the waiter, TeeTurtle is a shining example of creating additional value in their post purchase email series. Their first post purchase thank you email includes a non-monetary offer for computer or phone wallpaper that was designed by TeeTurtle founder, Ramy Badie. This email has seen click rates of 30%, which speaks to TeeTurtle's ability to recognize what their customers want. Not only is TeeTurtle creating value for their customers without a discount, they are strengthening their relationship with these new customers by turning them into brand ambassadors.
This is not to say that discounts don't play a large part in enticing customers to come back. Customers love discounts, but it's important to make sure you don't train your customers to always expect one. You know your business and your customer base - you're the expert on how and when customers should receive special offers and discounts. The goal with discounts and limited time offers it to create a sense of urgency, but why does that work? According to the theory of psychological reactance3, developed by Jack Brehm, people feel, at any given time, that they have the ability to engage in many different behaviors, also called "free behaviors". When a free behavior is threatened or eliminated, this causes an individual to react in someway to regain access to the free behavior which they feel has been lost. As marketers, we can utilize this information to push customers towards the next purchase. When you tell a customer an offer is good for a limited time only, you are threatening to take away a free behavior - their ability to purchase a wanted item at a lower price. When a customer receives an email alerting them to the fact there are only 3 of the item they kept looking at in stock, their ability to buy the item is threatened, which drives the customer to make a purchase, therefore allowing them to regain a perceived free behavior.
Customers can sometimes be unpredictable in their buying behavior, one day they may be your best customer and the next they've dropped off the face of the planet. Product, purchase, and customer data is necessary to create timely, relevant, and helpful email campaigns. Pair this data with knowledge of the subconscious nature of customer buying behavior and you can create an irresistible marketing strategy.
1User Interface Engineering. "What Causes Customers to Buy on Impulse?" Web. 18 Nov. 2014.
2Strohmetz, David B., Bruce Rind, Reed Fisher, and Michael Lynn. "Sweetening the Till: The Use of Candy to Increase Restaurant Tipping." Journal of Applied Social Psychology 32.2 (2002): http://onlinelibrary.wiley.com/doi/10.1111.1559-1816.2002.tb00216.xlabstract.Web.17 Nov. 2014.
3 Burke, W. Wanrer, Dale G. Lake, and Jill Waymire Paine. "A Theory of Psychological Reactance." Organization Change: A Comprehensive Reader. San Francsico: Jossey-Bass, 2009. 377-83. Print.