Why understanding consumer behaviour is essential for retailers

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The customer is king. This is at the heart of any retailer’s mantra. But unless a retailer understands why their customers behave the way they do, how can they achieve a truly customer-centric approach?

The digital age means consumers are able to browse online, form brand relationships online, compare prices and products online, and pay online. The modern consumer is perfectly at home in a multichannel environment – researching a product on a mobile app and comparing prices on various websites, before heading onto the high street to examine products and speak with retail staff in person.

But more than that, today’s consumers expect omnichannel experiences: the combination of a seamless customer journey and a personalised service. These experiences are no longer a nice-to-have – they are taken for granted. So much so that the omnichannel experience is not so much the ‘next big thing’ as the ‘new norm’ for UK shoppers. So how can retailers stay one step ahead?

Smart technology: personalisation in commerce

Technology plays a clear role in how customers are shopping. We’re dealing with consumer 3.0 (a.k.a. the digital consumer), customers who use new technology to seek information, share opinions and experiences, make purchases and communicate with a brand. This technology means that customers have grown used to speedy transaction times and exceptional levels of customer service.

From the retailers’ perspective, this boom in technology means they can get to know their customers better than ever before. However, it is becoming increasingly complex to control and manage this interchangeability of channels used by the omnishopper. Smart analytics and technology are on hand to help, allowing business owners to create more personalisation in their offering and ensure their customers keep coming back.

Smart analytics helps retailers create a truly personalised shopping experience. It does this using consumer data – a technique pioneered by one particular ecommerce company. In an attempt to re-create the ‘Amazon-effect’, retailers are focusing more on the individual customer rather than on the products or services. This emphasis on customer customisation means buyers can choose which products they would like to receive discounts on; browse their favourite brands on their own bespoke homepage; and see personalised results when they search.

Demographics versus behaviour

These smart analytics go beyond simple demographics such as age. They determine patterns of behaviour and attitudes through which to target customers. Research conducted by Forrester identifies five new segments that retailers should consider when marketing their wares. These range from ‘progressive pioneers’ (early tech adopters) to ‘reserved resisters’ (laggards).

Retailers who broadly categorise millennials or baby boomers as liberal or conservative are taking the lazy approach to analytics. Each generation holds a wide range of opinions, attitudes and tastes; retailers need to make sure they are using technology to create the right personas and audience segments to enable them to engage, offer tailor-made content, and build trust.

It’s about going that one step further than the competition: making sure that personas include segmentation and not just getting to know your audience through the Google Analytics behaviour tab, but putting those insights to strategic use.

Why less is more

When it comes to retail, we’re told that choice is everything. Consumers can have what they want, when they want it. But the truth is too much choice can be overwhelming.

Retailers looking to convert sales more quickly should consider the less-is-more approach to selling. This is made possible because retailers know their customers inside out. This means they can limit choice and present a tailored offering that they know their customers are going to love. Punkt is a good example of a company that lets their products do the talking. A small, but perfectly formed collection of stylish products with minimalist design – what more does a consumer need?

The value of proposition

As well as too much choice, another stumbling block for retailers can be price versus proposition. All too often, retailers focus on beating their competitors on price, but they are making a mistake. Sales are based on one thing: building value. As soon as today’s savvy omnishopper perceives the value of a product to be greater than the price, they will make the purchase. It’s up to retailers to present the benefits (ideally more than one) so that an item becomes impossible to resist.

How to measure consumer behaviour

Retailers might not be blessed with a crystal ball, and there are a host of other factors (economic and political, for example) that influence consumer behaviour, but there are a few simple steps any retailer can take to measure consumer behaviour and personalise their service. These include:

Stay strategic: Data might be big these days, but precision is what gets you actionable results. Not all data is equal, so retailers need to be strategic about what they gather and analyse.

Get smart on social: Forget about how many ‘likes’ you get on Facebook, and focus on location – or franchise-based performance. Retailers can use social media to identify which elements of the brand are influencing customer behaviour and map the full journey, from social to sales.

Avoid the noise: Some retailers are tempted to extract every bit of data possible. It’s better to identify a clear business objective – for example, customer service or campaign performance – and focus on the metrics that are going to get you the answers you’re looking for. Doing this makes it easy to avoid the data noise and respond to relevant social interactions.

So much surrounding retail success relies on a business’s ability to adapt and evolve. Retailers need to see an opportunity and grab it. These may be uncertain times, but the only way retailers are going to succeed is by making consumer behaviour a priority.

We offer a range of documentation to help retailers. Find out more here.

Tags consumer behaviour, retail, technology