The amount of money spent at retail stores has begun to drop. Retail buyer behavior and habits have started to change and companies are left wondering how to draw in and keep their consumers.
But the changes in buyer behavior don’t have to spell doom for retail corporations. A new year brings to light new trends and strategies that have emerged to help corporations connect with their customers.
One of the biggest changes in retail has been the customer. Here are some of the facts behind the changes in customers and their habits, as well as some tips on how to pull in their business.
Millennials, or people who were born between 1980 and 2000, have come to make up the majority of consumers in the last few years as they enter the job market and start their lives and careers.
The twenty and thirty year olds spend roughly $200 billion annually and represent roughly a quarter of the population. Millennials are forcing companies to change the way they interact with customers.
Millennials have a “me first” attitude. When they are deciding what to buy, they consider how it can benefit them and how much it will cost.
Product quality is key for millennials. They aren’t afraid to do research before buying something and it’s never been easier to find what others think. Not only that, they’re willing to pay more for a better product.
Over one third of the American workforce is millennials. They are the ones earning, and then spending, much of the money in our society. So if a company wants to be successful, they must focus on drawing in the business of millennials. It can be difficult, especially since the millennial generation is much different from their older counterparts.
Millennials have different buying habits than their predecessors. Companies have to adapt to them if they want their business. There are many factors that influence millennials’ choices when it comes to buying products.
One of the biggest factors is debt. Over 61% of millennials have attended college and those graduates have to pay off student loans. Student loan debt is over $1 trillion and the price of tuition is only going up.
Because of that, millennials are being careful with their money.
Limited resources equals less potential spending. It also means being more calculated about where they end up spending it.
Another factor is the millennials’ upbringing and experiences. Older millennials were just entering the workforce when the recession hit in 2007.
Younger millennials were old enough to realize the impact it had on their families.
People had to learn how to survive on less money. And even though the job market is on the upswing, millennials are wary about how they spend their money.
Which isn’t a bad thing.
Product or Experience
There’s also been a shift in focus when it comes to buying products. Millennials put a greater emphasis on experiences than they do on things.
Generation X would be far more likely to spend their bonus on a new TV or a new car. Unfortunately many decision makers in retail are from generation X and assume their demographic has the same spending patterns as they do.
Today’s consumers are spending more of their money on eating out, homes, and experiences, rather than on products like clothing, furniture, or even technology.
They’d rather go somewhere and have a good time than buy a new product.
And the experience plays a part in their purchases of products as well. In fact, consumers are willing to pay up to 20% more for a product if they feel that the buying experience is better than others.
The technology factor has changed buying habits as well. Products are only a click away, so fewer people are willing to venture out to stores.
Companies place less of a focus on the experience of buying a product, which can drive people away from the physical store locations.
When millennials do make the effort to go out and buy something, 57% will check competing prices in the store to make sure they’re getting the best offer.
They won’t hesitate to go somewhere else for a better deal.
How to Adapt
I don’t want to discourage you with all that information. Even though buyer habits and behaviors are evolving, there are still plenty of ways to use these changes to your advantage.
There’s a growing trend of customer loyalty. Consumers are more likely to return to a company they’ve bought from before if they’re satisfied with or impressed by the product and buying experience.
Here are five ways to make the most of a customer’s experience and win their loyalty in the process.
Millennials are the first generation to grow up with much of the technology we see in use today. They are accustomed to using it in everyday life. 87% of millennials use two or three electronic devices at least once a day.
The answer might not be, as some companies think, to digitize stores. Sure, technology is helpful. But it’s only helpful to the millennial when that technology is being used to form relationships and connections.
A simple answer is in social media.
Millennials use social media for everything. 88% of millennials get their news from Facebook. News spreads quickly along these platforms.
And when it comes to shopping, 84% of millennials say that feedback from other customers influence their spending in some way.
Social media was built for people to share their opinions. Customers can easily find an opinion pertaining to the product they’re looking to purchase. Research takes much less time and opinions hold more weight when coming from a friend.
And it’s not just social media. Company websites draw in business when they use photos, concise text, and offer a community for customers to engage in.
A well-designed website will encourage traffic and sales. Websites, if done correctly, offer customers the experience of the store without the effort of going anywhere.
2. Make a Connection
Returning customers are a big deal.
More and more, customers are basing their buying habits on previous experience. A bad experience will lead the consumer to avoid that company. Sometimes it will lead to a negative review, which will affect other potential buyers.
But a good experience will draw them back time and time again. Sometimes it will lead to a positive review, and, you guessed it, will act as free PR and draw in more buyers.
Making a connection with the customer is key to ensuring their business.
Traditional Advertising’s Out
Unlike the generations before them, millennials aren’t nearly as influenced by advertising.
Traditional advertising is dying a very slow, very public death.
While engaging, telling stories, and listening to your audience is becoming more and more effective.
Instead of buying after they see an advertisement, millennials tend to do research. They look to their peers for advice. People check with online reviews, social media, and their friends before deciding what to purchase.
Unfortunately, most large retailers don’t see this trend and adapt. They still advertise on old networks like television, not realizing their demographic mutes the TV and scrolls through their phone while their 30-second $400,000 national commercial is playing.
Millennials’ attention are on their phones, not TV ads.
And when I say on their phones, I’m not suggesting banner ads. I’m suggesting interacting with your buyers on the platforms they hang out on. Whether that’s Facebook, Instagram, or Snapchat.
Brands have to evolve to be current with their demographic.
Putting out unique content that they would love to share with their friends.
Be less of a company, and more human. The human-ness of your brand is what draws the new generation.
Experience vs. Product
Perhaps the biggest change in buyer behavior is the concept of buying an experience, not a product.
When considering customer experience, think about more than just possible interactions with salespeople. Are products easy to find? Are they well labeled? What’s the atmosphere like in your store? Is the store somewhere they’re comfortable spending time or do the customers want to get in and out as quickly as possible?
All those factors and many more influence the consumer’s experience.
Customers are putting more value on branding. They want to know that they are buying their products from people they can trust. If they trust your brand, they won’t have to put effort into research, which will save them time.
And people are always looking for ways to save time.
60% of millennials are often or always loyal to a specific brand. If you can win their loyalty, you win business for the long run.
How do you win brand loyalty?
Brands have to be more than something that will catch a person’s eye. They have to interact with the consumer, be a part of their identity.
Millennials are proud of their individuality and want to buy brands that represent who they are.
One surprising trend is the fact that customers want companies to make a difference. They want to feel like their purchase is helping someone else.
4. Be Upfront
No one likes surprises and retail is no different.
Shoppers want to know exactly what they’re getting and for what price.
You might be able to get away with sudden changes or surprise charges once, but don’t count on that customer coming back if you do.
It’s easy to be open with your customers when you have open lines of communication. Set up social media accounts and forums for discussion.
Answer questions honestly and encourage feedback. Especially if your brand made a mistake.
Communication is key in any relationship, even between consumers and companies.
5. Make Customers Feel Valued
Successful companies consider the needs of their customers.
Customers want their feedback to be heard. They like to feel like a part of the process, not like the end of the line.
Create places where you can interact with your customers and show that you care about what they have to say. They’ll feel like they matter and they will be more likely to return when they need something.
As we enter a new year, it’s important to keep these things in mind. Happy customers will return and you will earn a profit. Unhappy customers will take their business somewhere else.
And the best way to keep your customers happy?
Interact with them. Value them. Show that you care about what they want.