How Much Does Price Actually Influence Customer Behavior?
Ever since Amazon started gaining considerable market share in the retail industry, sectors like apparel and consumer goods have scrambled to compete by racing to the bottom on price.
For a while, it appeared as if most businesses were bleeding themselves dry with razor-thin profit margins to offer customers the lowest price options.
There is little doubt that price is a significant influencer on consumer purchasing decisions but it isn’t the definitive deciding factor.
Deep discounting is on the rise and is even serving as the backbone for some big brands like Nordstrom and Macy’s. Amazon can contribute low prices as one of the main reasons for its rapid growth. So it may seem counterintuitive to say that price isn’t the number one reason driving purchase decisions.
However, recent studies revealed that customers don’t always abide by their claim that price is the most influential driver towards purchase. In reality, customers will often choose convenience and the reassurance of positive reviews over low prices.
The influential power of positive reviews and convenience of a frictionless buying journey are two of the most compelling reasons that drive customers away from the lowest price option. More importantly, they can be a part of creating an engaging customer experience that leads to strong customer loyalty.
1. Frictionless Journey
We live in a busy fast paced world and time is a valuable commodity. In fact, according to a study done by GfK, consumers of all income brackets felt time was more valuable than money itself.
So it stands to reason that customers will often overlook a reduced price tag if a higher price will save them time.
There’s a multitude of ways to help your customers save time but often it comes down to connecting the omnichannel experience and personalizing the buyer journey.
Personalizing the buyer journey should make your shoppers feel like you’re offering a personal assistant throughout every stage of the buying journey. It eliminates unnecessary choices and guides customers towards relevant items.
Ultimately, personalization should make the customer feel like they’re walking into a customized boutique store just for them, instead of an overwhelming warehouse of unsorted items. Just because customers want the options of products, they don’t want to spend the time sorting through them.
Connected Customer Behavior Data
In order to save time, customers often turn to the internet to research products before hitting the physical store. But all too often, the customers buying preferences are lost between in-store and online. Customers often lose valuable time when disconnected omnichannel data hinders sales associates from guiding customers to the items they want. This is also true when product selections don’t align across the in-store and online shopping experience.
To show your customers that you value their time, it’s imperative to connect customer behavior data across channels while offering personalization for a frictionless customer experience.
2. Positive Reviews
Before the internet, word of mouth was one of the best ways to spread the value of your company’s offerings. As the internet expanded its reach, word of mouth transformed into online reviews.
Online reviews are now a powerful resource that drives customer traffic and sales to businesses with positive reviews. So powerful, in fact, that they can make customers overlook price.
Despite the 62% of 8,000 surveyed respondents who indicated that price was one of the most important aspects to take into consideration when purchasing a product, the same respondents were more likely to use customer review sites rather than price comparison tools.
The unbiased opinion of reviews provides a use case insight that customers can’t get from product descriptions. And peace of mind about their purchase decision is more valuable to the consumer than most price tags.
However, customer reviews are often influenced by more than just the product or service they paid for. Customers are influenced by the entirety of the buying experience – including personalization and convenience.
It’s no surprise that customer reviews and the convenience of frictionless shopping are valued by consumers. A big part of Amazon’s massive growth can also be contributed to these two customer experience components.
To create a customer experience that incorporates a seamless buying journey and generates positive customer reviews requires real-time customer behavior and product data.
Customer behavior and product data that is cataloged in a unified view, enables your workforce to personalize customer interactions, whether online or in-store.
Offering consumers a personalized and connected customer experience that is powered by data will organically create a frictionless journey that leaves buyers happy.
4-Tell’s Smart Commerce℠ Platform offers a unified view of customer and product data with surfaced actionable insights from our machine learning layer. Our Platform pairs the central view of customer behavior with collaborative tools so your customers don’t have to be in-store to make that human connection.