Understanding Consumer Behavior As A Small Business Owner
What is Consumer Behavior?
Consumer behavior is the process by which individuals make choices about what to purchase. According to Harvard professor Gerald Zaltman, most purchasing decisions are subconscious and solely based on how a consumer feels.
By understanding how consumers think, feel, and behave, you can better tailor your marketing efforts to appeal to them. This will also help to develop more effective marketing strategies and create a more efficient marketing funnel.
Ultimately, understanding consumer behavior leads to more sales and a healthier bottom line.
If we want to increase conversions and grow our business, we need to first understand the underlying thought processes of our audience and what’s influencing them.
Understanding What Motivates Consumers To Buy
A consumer’s decision-making process is influenced by a number of psychological factors. These factors include cognitive biases, motivational influences, and social influences.
The most common cognitive bias is the anchoring and adjustment heuristic, which is the tendency to rely too much on initial information when making decisions.
For example, if you are offered a job with a starting salary of $40,000, you might be more likely to accept a job offer that pays $50,000 even if the job actually pays $60,000. This happens because your initial information (the starting salary) has an impact on how much you are willing to pay for the job.
Other cognitive biases include confirmation bias (the tendency to favor information that confirms our beliefs), loss aversion (the tendency to be more reluctant to make decisions that may result in loss), and the sunk cost fallacy (the tendency to continue investing in something even if we know it is not worth it).
Motivational influences can be categorized into three main groups: feelings of autonomy, competence, and relatedness. These feelings are often based on our own perceptions of what we can achieve and how we feel about ourselves in relation to other people.
Social influences are the attitudes and behaviors of others that can influence an individual’s decision-making behavior.
For example, if a friend recommends a product to you, you are more likely to buy it than if you had not heard about the product from anyone. Similarly, if you see an advertisement for a product multiple times in different media outlets, you are more likely to buy the product than if you had only seen the advertisement once.
What Are Common Strategies for Influencing Decision Making?
Understanding consumer psychology is the key to creating effective marketing strategies. A few common strategies used to influence consumer behavior include:
- Offering attractive discounts or free products to entice customers into making a purchase.
- This is often referred to as the foot-in-the-door technique. If someone takes a small action with your business first, they are more likely to take a larger action in the future.
- Creating positive customer experiences, such as providing helpful information or responding quickly to requests for assistance.
- By providing helpful information or responding quickly to requests for assistance, businesses can create a positive customer experience that will encourage repeat visits and lead to more sales. In addition, by providing customers with accurate information and addressing any concerns they may have, businesses can build trust and loyalty among their customers.
- Building a strong relationship with customers by providing them with consistent service.
- One of the most important things a small business can do is provide customers with consistent service. This means providing the same level of quality and care every time a customer interacts with your business. If you can keep customers coming back, it will help build loyalty and ensure that your small business will thrive.
It’s also important to remember that there are a few common motivations behind consumer behavior. Some people want to seek satisfaction or happiness, while others may want to avoid pain or discomfort. Additionally, some people may want to make money.
When it comes to making decisions, people rely on their beliefs, thoughts, and emotions. The most common decision-making processes include cognitive processing (thinking), emotional processing (feelings), and behavioral decision-making (acting on those thoughts and emotions).
Utilizing the Psychology Behind Consumer Behavior to Your Advantage
As you’ve just read, understanding how your consumers behave can be the most powerful tool in your business.
By understanding what motivates consumers, you’re about to create products and services that directly appeal to their needs all while developing marketing campaigns that are effective and persuasive.
Understanding consumer behavior can also help you to identify potential customer segments which is the process of dividing your customer base into small segments based on similarities in their behaviors or needs. Thus, by identifying and targeting your specific customer segments, there is a higher likelihood of increased profits.
Begin collecting customer data through the use of surveys, focus groups, or other research methods. Then you can ensure that your marketing strategies are based on sound information rather than guesswork.
Next Steps
Identify exactly who your business is serving. This person is your ideal customer avatar or ICA. Once you’re clear on who your business is serving, the content you publish, and the products you create need to directly address your ICA’s pain points, desires, frustrations, etc.
