Consumer psychology is the study of consumers and the factors that influence why, how, and how much they spend. Every retailer wonders why buyers behave the way they do. It’s easy to justify purchasing things like food, water, and other items necessary to meet basic physiological human needs. But what about buying something just for the sake of wanting it? This is where things become more complicated.
What is Consumer Psychology?
Consumer psychology is the study of consumer behavior. The American Psychological Association describes this science as “using a psychological theoretical approach to understand consumers.” Consumer psychology analyzes questions like how shoppers choose companies and products, what motivates consumers to buy one product over another, and how companies can use marketing to reach their ideal customers, as well as what demographic, environmental, and psychological variables influence buying behavior. These types of insights help marketers and business owners understand their customers better so they can communicate with them more effectively.
The Role of Consumer Psychology in Marketing
Since psychology is used to analyze the human mind and its functions, it is natural that understanding consumer behavior at a psychological level can help achieve marketing and sales goals. Consumer psychology can be used in the context of marketing and sales in several ways, such as creating a sense of urgency, influencing branding and visuals, gathering (and leveraging) social proof, and building strong customer service experiences. Consumer psychology is a moving target, as shopper expectations change alongside shifts in technology and culture, making it essential to know how to leverage your customer insights.
How Can Retailers Benefit from Customer Insights?
There are several ways that retailers can benefit from customer insights, including:
1. Improving the In-Store Experience
How do customers feel when they enter your store? Do they feel your brand? What do they feel like when they are in your store? What is the aesthetic of the store? These are questions that can help improve the customer experience in-store. “Use consumer psychology to understand the purchasing motivations behind your product, and then create a space that brings those motivations to life,” says Tracy Wallace, Marketing Director at MarketerHire. “Once consumers start visualizing themselves in the reality you’ve created, the chances of them purchasing those products increase.”
2. Leveraging Social Proof
A report from BrightLocal indicates that shoppers read around 10 reviews before feeling confident in a business. Additionally, about 82% of customers read online customer reviews for local businesses. In other words, social proof—like ratings and feedback—is crucial in the customer’s buying journey. Social proof can be leveraged in various ways, such as through email marketing, on social media, in-store, and of course, on your website.
3. Launching a Loyalty Program
While launching a loyalty program may seem daunting, there’s a good reason many brands have loyalty programs: they work! A loyalty program is a great way to turn new customers into lifelong ones. REI showcases a perfect example of a successful loyalty program. REI is a cooperative—meaning it is owned and managed by those who use its services—and was founded in 1938 with a commitment to the great outdoors and those who love it. For just $20, you gain lifetime access to the REI Co-op community, including a 10% member dividend, special member-only offers, and much more. This business model has proven to be a very effective means of building community and brand loyalty.
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Providing Value Through Additional Channels
While encouraging customers to purchase your products, it is also extremely important to provide additional ways of value. “When you understand why your customers behave the way they do, you are able to market, serve, and sell your products in a more meaningful way that meets their needs, which in turn will help grow your business,” says Adrian Barnes, founder of ANB SaaS Consulting and Content Marketing. The activewear brand Outdoor Voices knows their customers inside and out, and therefore provides additional content that resonates with them through the Outdoor Voices online magazine, The Recreationalist. Through articles, interviews, community forums, and more, Outdoor Voices understands the content that their core audience cares about and has built a brand around those values.
Conclusion
You can learn a lot by observing your customers’ actions. But worry not: you don’t need to be a psychologist to understand consumer behavior. Knowing how your customers think, act, and make decisions is incredibly valuable information, whether you’re creating new products, launching new marketing campaigns, offering new programs, or looking to sell more units.
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