Understanding Consumer Behavior: Signaling

The way people make purchasing decisions isn’t always logical. Consumer behavior is determined by a great number of factors. One of the challenges of good marketing figuring out the best methods that appeal to how most people think when they’re shopping.

A recent article in the New York Times takes a look at some of the eccentricities in how people choose their favorite brands. The basic argument of the piece suggests that for most consumers, decisions are made via a mix of reasonable research and emotional impulse.

The writer, Davidson, offers the example of his decision to purchase a more expensive baby formula, largely because the company’s been around longer than many of its competitors. This signals to him that they care about their reputation enough to consistently offer a quality product. This is an assumption based on little evidence, yet one many other consumers are likely to understand.

For certain purchases, especially for items that influence the health of your family and more costly purchases, people want to feel confident that they’re choosing an item of the best quality. Whether or not they know that the product’s the best matters less than how they feel.

For many small businesses, it isn’t too complicated to ensure that your company is well represented in the research phase of consumer shopping. Any business that cares about its reputation knows already to only offer quality products and consistently excellent customer service. It’s the more emotional side of consumer behavior that can present a challenge.

Many of the examples the article cites of successful signaling by brands consist of larger companies demonstrating their success by spending lots of money on advertising. If they’re already successful, the thinking goes, clearly they’re already doing something right and consumers should have confidence in their product.

So how can a small business use this knowledge of consumer behavior on a smaller scale?

  • Include customer testimonials on your website, to give people confidence that you’ve provided quality products and services in the past. If one of your customers is known and respected in the community, all the better.
  • Are you a member in a trade organization? Have you earned any awards or received favorable reviews? Show that on your website. It lets visitors know that your business cares about its reputation and as such will strive to offer quality goods and services.
  • Make sure your website looks professional. If it looks sloppy or poorly designed, people are less likely to trust that it’s a legitimate business. It’s worth it to spend a little money on a good graphic designer.
  • Don’t go too low in your pricing. Some people will always take what looks like the better deal (and little by little learn that this often means having to replace the original purchase soon thereafter), but others will choose to look for the higher quality product rather than the cheapest one.
  • Offer a money-back guarantee or warranty. It’s much easier to feel confident in making a purchase if it doesn’t feel like an obligation.

When in doubt, think of your own shopping tendencies and talk to friends and family about their consumer habits. What turns them off to a potential purchase? What helps them decide to go ahead with it? Consumer behavior is varied, but there are enough trends and tendencies to help businesses make effective marketing decisions.

Changing Consumer Behavior: Wish Lists and Movie Queues

Modern consumer patterns are decidedly different than they were just a few years ago, and they are constantly changing as businesses and marketers develop new technology and ideas to apply to the consumer experience. Paying attention to trends in consumer behavior is important for small businesses wanting to stay on top of the best marketing options.

The way people approach watching movies and television has evolved considerably with the advent of Netflix’s mail order DVD service, online streaming and on demand services. Very quickly, the idea of leaving home to travel to a video rental store to access the evening’s entertainment became passe, as evidenced by symbolic recent decline of the former entertainment giant Blockbuster.

In a remarkably similar story, many consumers have ceased their trips to physical bookstores to make their book purchases, and to physical electronics retailers to buy their entertainment and tech items.  While these failures can’t be exclusively attributed to the ease of affordable online shopping from vendors like Amazon, you’d have a hard time making a convincing case that it didn’t play a considerable role.

In addition to the convenience of being able to do your shopping from home and have the items brought directly to you, there are some other clear advantages built into the consumer models of Amazon and Netflix.  Both services allow customers to easily see reviews of products before they buy or view them. They both have a built in recommendation system to encourage more consumption, based on the movies and products they’ve previously tracked each customer’s interest in.

My personal favorite of the innovations they’ve brought to consumer behavior is the wish list option Amazon offers and the queue Netflix allows you to keep.  We live in an age of content overload, where an excess of tantalizing products exist for each consumer. It’s especially easy to learn about an item you want, and then promptly forget about it if you don’t have a good system for keeping track of your interests.

It’s in the interest of a business to make it easier for customers to remember what they want, and the Amazon wish list and Netflix movie queues make this a simple process. If you hear an interview with an author describing a book that sounds compelling, but you’d prefer to wait and buy the paperback, Amazon gives you an easy way to add it to a list for later consideration. When a movie preview gets you excited, but you don’t want to pay the cost of a trip to the theatre, Netflix makes sure you can save it to your queue for future viewing. How many of these movies or future purchases would we be likely to forget about without these options? How often did consumers fail to purchase something they may have wanted before these became available?

So what can a small business do to compete? Pay attention to their model and determine if there’s a way to apply it to your own business.

  • If you haven’t already, consider setting up an online store. Let customers browse your selection and order items from your website.
  • Set up a review section on your website for your inventory. Let the opinions of past customers influence the buying decisions of those currently researching. This has the added benefit of alerting you to items you’re stocking that are of lower quality and replace them with products that are more popular with your customers.
  • Think about the best way to incorporate recommendations into the buying process of your customers. As a small business owner, it’s possible that your knowledge of your industry and products could mean more personal recommendations than the automated methods of the larger retailers.
  • Develop a system that allows regular customers to track items they might want in the future. You could then use this information to offer the right promotions to the right customers to encourage purchases they already know they want, but just need a little nudge to make.

Maintaining Customer Satisfaction

We all have businesses that we’ve had exceptional customer service experiences with, and others that we immediately think of when the subject of bad customer service comes up. Ensuring customer satisfaction is hands down one of the best ways for a small business to keep current customers happy and encourage new ones.

Customer service is actually a fairly crucial aspect of marketing, as it has a strong relationship to maintaining a positive brand and encouraging the kind of word of mouth recommendations that are invaluable to small businesses.  With consumers’ growing reliance on review websites like yelp.com and the ease with which someone can broadcast a bad experience with a company via social media, there is extra pressure on businesses to make sure current customers are happy with the goods and services they provide.

So how does a business encourage positive word of mouth and avoid the kind of experiences that send customers ranting and raving to their friends and online social networks?

  • Keep it personal – Have you ever gotten stuck in phone message loop, seemingly endlessly pressing buttons without ever getting to an actual person?  How often have you tried to send a question or complaint via an generic online form or e-mail address and never gotten a reply?  I’ve never known anyone who was more satisfied with an automated customer service experience than with getting a response from an actual human being.  In the effort to increase efficiency, many businesses have opted for methods that isolate and anger customers.
  • Make providing feedback easy – This is valuable on multiple levels, as it keeps you informed of ways to make your business and products better and lets your customers know you’re interested in listening to their suggestions.  Most of us have at some point had an idea for how to make a product we like better, but it’s rare that people seek out the information to communicate that to the company.  On the other hand, if providing that feedback is easy and takes little time or effort on the user’s part, then there’s no downside to providing it.
  • Don’t oversell – Don’t say or imply that your product does something more or better than it does.  Don’t say a new product or update will be ready by a specific date unless you can make sure it will be.  Sometimes user expectations will exceed your promises in spite of your best efforts and there’s little to be done about that, but you can make sure you’re not actively creating higher expectations than what you can provide.
  • Listen – Don’t just make it easy to provide feedback, pay attention to it and make changes based on it.  Not every customer’s going to feel the same way and sometimes what different people want will be in contradiction, but pay attention to the most common suggestions and ideas and act on them.
  • Try to establish and encourage a community – Whether this be via a forum, a blog with enabled comments, social media or meetings with customers at conferences, if your customers can talk to each other and you and know they’re part of a larger conversation and community, it keeps your company and products top of mind and gives them a greater investment in their relationship with your business.
  • Don’t deny or dodge responsibility for mistakes  – This seems to be largely the purview of particularly large companies that train their customer service representatives to never admit an error or apologize.  When I’ve encountered it from a company, I never go back.  I know to many business owners and marketers, the idea of offering an apology or admitting an error is blasphemy, but for many consumers, it’s meaningful to know a company can acknowledge a problem with sincerity and it lets the customer know you’re going to work to avoid repeating the mistake and improve things moving forward.

It is imperative that small businesses make customer satisfaction a top priority, or all the amazing marketing techniques you may find the means to employ will come to naught once word gets out. Don’t let a bad customer experience ruin your brand.

My Marketing Philosophy

Growing up in an age where advertisements are abundant and unavoidable in many mediums, over time I developed a discerning eye for the types of marketing messages and styles that are most effective. The Austin Copywriter marketing philosophy embraces a few simple but Austin Copywriter Marketing Philosophyimportant marketing tenets:

  • Accuracy is crucial – Sell what you have.  If what you’re selling isn’t something people want, it’s better to improve your product or services than to create unrealistic expectations in your marketing.  If people expect something awesome and get something mediocre or worse, you’ll destroy your brand.
  • Keep it simple – It can be tempting to embrace industry buzz words or impressive sounding copy that doesn’t actually say much, but you risk diluting your message and frustrating potential customers who don’t understand what you’re saying.
  • Listen to your current customers – The best way to know what will impress future customers is by paying attention to the feedback of those you already have.  Few things are more valuable to a small business than those customers that already love you.  Make sure you keep them happy and you can use their genuine praise to convince others.
  • Don’t bombard people – Have you ever signed up for an e-mail newsletter and regretted it almost immediately because of how much it filled up your inbox?  Everybody in every industry gets a lot of mail and e-mail about products that companies think they should be interested in, not to mention daily exposure to television advertisements, billboards, and the list goes on. One of the best ways to lose the goodwill of your potential customers is to be part of this problem. While it’s important to remind people of your business from time to time to stay front of mind,  make sure to keep from contacting your list too often and ensure everything you send is interesting or essential, or you’ll risk being seen as spam and losing their attention altogether.
  • Know your audience – If you’re wasting time and resources marketing to people or companies unlikely to ever be interested in your products or services, this will show in your results.  Make an effort to know what kind of people and businesses value what you’re selling and do your best to ensure that your message gets in front of them.