Business and Operations
The Psychology of Today’s Customers
By Ted Topping
By Ted Topping
Ted Topping offers tips for profiting from what’s in your customers’ minds.
When customers make a purchase, they tend to make their decision based on emotions and justify the decision with logic later on.
This is just one of the many insights to be gained by studying the psychology of customers. But it demonstrates why companies in the baking industry need to “stand on the other side of the counter” and get inside their customers’ heads.
Only by doing that can business owners understand how customers think, feel, decide among alternatives and justify their purchases.
In many parts of the retail world, these things are so important that the study of human behaviour has become almost as crucial as the analysis of profit margins and gross sales. And although bakeries typically produce their own products, customers tend to see and judge them as retail stores rather than as manufacturing facilities.
Customers think about shopping in many different ways, but certain general behaviour patterns do emerge when they head out to the stores. For instance, studies have repeatedly shown that men spend less time in a store than women. This is because men tend to make up their minds ahead of time as to what they want. For them, shopping is a matter of going in, grabbing that item and getting out quickly. Women, in contrast, tend to be much less goal-oriented. They may go shopping simply to enjoy the overall sensory experience or to gather information that they can use later. This basic difference suggests a huge implication for bakeries: if you want to increase your sales to men, you need to make the in-store experience as efficient as possible. Men want product displays that let them easily see the item they’re looking for, clear signs that tell them anything they need to know and a checkout process that speeds them on their way. When men find a store that gives them these things, they tend to respond with loyalty based on the fact that other stores don’t offer the same level of efficiency and therefore comfort – products and prices being approximately equal. For both men and women, buying something touches on several unspoken yet quite specific psychological factors. Yet most people are completely unaware of this aspect of their shopping because they are just “being themselves” as they walk from store to store. When researchers watch closely, however, they learn that quite a lot is happening beneath the surface. Such as the observation that people behave quite differently when buying a utilitarian product that is useful and practical than they do when buying a hedonic product that is self-indulgent and pleasurable.
Utilitarian products such as paper towels or pain relievers tend to be items on which a buyer does not want to lavish a great deal of thought or money. Most people would consider donuts and plain white bread also to be utilitarian products.
Hedonic items such as Godiva chocolates or Bang & Olufsen speakers are goods that appeal to a buyer’s senses and have an emotional pull. Customers are willing to shell out more money for hedonic items because they are seen as a luxury or a treat. Most people would consider a white chocolate éclair or a 12-grain, organic artisan bread also to be hedonic products. In choosing a strategy for growth – or perhaps simply survival – a bakery needs to find the right mixture of utilitarian and hedonic products for its existing and potential customers. Trying to compete in the lowest-price contest is a folly and attempting to sit in the middle of the spectrum is a wasted opportunity to create a point of difference for the business.
Regardless of its specific offering, a bakery will typically enjoy more success by offering better quality at a higher price – especially if this is coupled with superior service. This is because neither advertising nor low prices can turn shoppers into engaged customers. Only a human connection can do that. If customers feel that a store connects with them on a personal level, they are more likely to engage with that store. They will go out of their way to purchase there, maybe even pay a bit more for products than they would pay somewhere else. One easy, yet very impressive, way for a bakery to connect on a personal level is to provide information about the products it sells. Especially if those products reflect the public’s growing demand for food that is at least healthier and perhaps organic. This demand is widespread and well-documented, yet one respondent in five in a recent U.S. survey was unable to name any of the benefits of eating whole grains. In the same study, one in four respondents who prepare food for others admitted that they didn’t know what makes whole grain products different from refined ones. These facts alone suggest that training employees to routinely offer detailed product information with every purchase would help a bakery connect with its customers, building both loyalty and business in a big way.
Stores in every corner of the retail world need to create positive emotional connections if they want to establish ongoing relationships with customers. This is because basic “customer satisfaction” does not translate into higher sales but emotional bonding does. If you think about the shopping experience from the perspective of emotions, it is evident that customer satisfaction is a judgment, while emotional bonding is a feeling. It’s like recalling the smell of the fresh-baked cookies that grandma used to make. People remember emotional moments. The challenge in retail is to make them all positive. Some of the positive emotions that stores can inject into the shopping experience include fun, contentment and the excitement of learning. Think in terms of an after-hours baking class, a coffee break with a freshly baked muffin and an understanding of what really makes a bread “artisan,” and you will be well on the way to providing customers with positive emotions. Because people typically try to recreate experiences that make them feel good, positive emotions act as their own reward. Customers don’t have to think about them. They intuitively know that a particular shopping experience “felt good.” And they want to repeat the feeling.
No business can expect to prosper in today’s competitive retail environment by copying or matching competitors in the same marketplace. Every business needs to be unique and specialized. In some cases, the survival of the business depends on it. One way for a business to stand out is to innovate and constantly create new experiences. And since bakeries produce the products they sell, they have a unique opportunity to “keep things interesting” for customers by juxtaposing traditional products with weekly experiments. A creative shop owner could probably build a fine reputation – and really stand out in the minds of customers – by consciously offering a conventional assortment of the standard products plus an array of downright odd products, often in surprising combinations. The store’s retail strategy would be based on a quest to bring textures and flavours to the market that most shops have forgotten. By adding surprise to the shopping experience, the store would involve customers and get right inside their heads.
Retail consultant and author Ted Topping is president of Creative Insights Inc., Vancouver. His online home is www.tedtopping.com and he will speak at Bakery Showcase 2006 on The Psych-ology of Today’s Customers.