Consumer behaviour isn’t always entirely rational. Economists may say that consumers are always looking to maximise their utility (or benefit) each time they make a purchase, but all builders’ merchants and other traders know that there are many situations where consumers act irrationally.
This is where psychology comes in. The study of consumer behaviour draws significantly on this science, and smart retailers and traders can take advantage of consumer psychology to increase sales and customer loyalty. Today we look at some examples of consumer psychology in action: would any of these changes work in your stores?
Pricing and discounts
We all know that ending a price with .99p or .49p makes consumers feel they are paying significantly less than if you’d have added another penny to the price. This tactic works because we read from the left to the right – our brains process the first digit to begin with, then the remainder of the number seems less important. Additionally, selling smaller packages in multipacks may make a consumer spend more per gram or millilitre of product – simply because we assume buying in bulk nets us a better deal.
We’ve explained the knack to effective discounts in previous Integrity Trader blog posts, but here we’ll touch on another way to make your sales successful: by using the rule of 100. It’s simple: when making discounts on items worth under £100, use percentage discounts. For more expensive items, use absolute discounts. For example, a 25% saving on a £20 item sounds like a better deal than a £5 saving at first glance.
A major problem with discounts and sales are that a consumer’s perception of the value of an item may shift downwards (they’ll wait for another sale before purchasing the product again). To avoid this, give reasons for a sale – “clearance” is usually sufficient for customers to think they’re getting a one-off deal.
Obligation to buy
Psychology also tells us there are certain ways to make customers feel more obligated to purchase products on their visit to your shop or website:
· Provide free gifts in-store. You’ll immediately give customers a reason to be loyal to your brand.
· Use per customer limits on some products to imply scarcity – customers will be more likely to buy them if they feel they might miss out on a popular product.
· Gain loyalty through marketing emails. Once a customer has subscribed to your emails they’ll gradually feel an affinity to your brand, making them more likely to purchase from you again.
Experience, connections and authority
Studies have shown that we’re more likely to value or purchase a product if we consider it in terms of the experiences we’ll have using or consuming it rather than the monetary saving we’ll make by purchasing it. We tend to value time (and experiences) more than money. Consider this when marketing new products. Additionally, feelings of nostalgia tend to increase our willingness to pay for a product. Do any products you stock fit this bill?
Consumers will also pay more if they feel they relate to a brand. Here’s where in-store customer service comes in. Tell stories, show an interest in your customers and find areas of common ground. A customer will be much more willing to give money to an acquaintance or ‘friend’ instead of just a staff member.
We also like to feel we’re making a decision based on the advice and recommendations of experts. As a local builders’ merchant, you’re ideally placed to use your expertise in this manner. You could even ‘curate’ selections of products and brands you’d recommend to customers.
Making adjustments to your stores and pricing strategy to boost your revenue won’t achieve much if you don’t have the foundations of your business in place. Sound stock control strategies and an efficient point of sale experience will give your business the stability and resilience to thrive into the future. Find out more of the many features of Integrity Trader and don’t hesitate to get in touch if you’d like to learn more.
Trader is an easy to use electronic point of sale system designed for the unique requirements of building, plumbing and timber merchants, hardware and DIY stores in the UK and Ireland.
Our team are ready to help with any queries or arrange a demo for you.