Looking at some of the most successful direct-to-consumer businesses out there right now - Starbucks, Casper, and Warby Parker, to name a few - it’s no coincidence that they’ve risen up the charts the way they have. There is a plethora of research and analysis out there surrounding consumer psychology, and how to leverage it for increased success. The human mind is complex, and trying to understand it to better serve your customers and attain new ones can be a huge task. As a business owner, you might be wondering…
Why do we feel this need to have certain things and not others?
What is the thought process involved in simply walking into a store or establishment?
What is the thought process involved in actually purchasing?
Although these questions may all seem overwhelming, there are some key secrets that can begin to answer to the consumer mind...
- What Our Friends and Family are Doing
In today’s world, there is nothing more influential for consumers than what they see on social media. Tips to running a successful social media campaign is a big blog-tutorial in itself (and one to definitely look out for on this blog!), but we will touch on the key idea here...
As consumers, we have always been influenced by word of mouth and recommendations - it is the timeless and most effective means of attaining new customers. People trust the ones they know. Sure, a big ad on a billboard might help them with name and brand recognition, but a consumer will take that leap of faith in trying your product when they’ve heard, seen, or read good reviews from their network. Nowadays, the medium for that ‘network’ has shifted from not only including face-to-face word of mouth, but it largely lives in the social media realm. This is why we’ve seen consumer brands, large and small, leveraging what are now known as social media influencers. Everyone is doing it, from Adidas, to Shoppers Drug Mart, to small start-ups. In fact, all of the recent success stories mentioned above - Starbucks, Capser, and Warby Parker - have all heavily utilized this consumer psychology concept to grow. A social media influencer with even just 1000 followers trying, loving, and posting about your product will mean another 1000 eyes and ears, with likely similar taste and style, eager to see what you are offering.
- Choice Overload
KEEP IT SIMPLE!
This has been said time and time again. While there are some companies that find success off of a ‘we offer everything’ type of model (take Walmart or Costco, for example), for most businesses, this model becomes chaotic and confused.
When consumers are faced with too many options, the result is a feeling of being overwhelmed. This directly leads to unrealistic expectations, decision-making paralysis, and unhappiness. Making decisions is something most people have to do almost constantly, every single day. Remember, the goal of consumerism is to relieve stress and invoke a feeling of ‘ah, now I have my solution for ____’.
Looking at Trader Joe’s as a direct comparison to the above-mentioned Walmart and Costco -- they are smaller, with fewer choices all fitting into a certain brand or identity.
- Buy now, pay later
Allowing consumers to delay payment can dramatically increase readiness to buy. People have an easier time spending money on credit cards as opposed to spending physical money or that which lives on a debit card. This can be chalked up to the time value, where future payments are less costly than immediate ones.
This same concept can be applied towards loadable rewards cards for goods and services. A consumer knows they’ve loaded $40 on there for the month, and therefore has less aversion towards spending. Starbucks, for example, saw a spike in revenue of over 30% after launching their prepaid loyalty card and accompanying mobile application in 2014!