Ever wondered what persuades customers to add items to their basket? There will be many factors at play. But getting to grips with why customers shop the way they do and how you as a retailer can influence them could be the difference between a profitable sale and an abandoned basket.
In this article, we look at how understanding consumer psychology can drive sales for retailers.
1. Use social proof to influence your customers
Many of us look to others for inspiration, so retailers can build trust and influence potential customers by showcasing reviews and testimonials from existing ones. Whether you add reviews onto each product page or share case studies on social media, providing social proof is one of the best ways to influence potential customers.
You could also highlight your “most loved” products and bestselling items to encourage customers follow the crowd a little and choose the most popular options.
Don’t forget the power of influencer marketing, too. Partner with individuals who align with your brand values and will create an authentic connection with your target demographic. A customer is far more likely to remember your brand if someone they respect endorses you.
2. Create a sense of urgency
Tap into the ‘fear of missing out’ (FOMO) by promoting limited time offers or exclusive deals. This encourages customers to make faster purchasing decisions, helping you to avoid abandoned carts.
The principle is known as loss aversion – the idea that people choose to avoid losses. So, presenting customers with an opportunity they could miss out on might encourage them to make sure they grab the deal while they can.
Use loss aversion sparingly, though, or customers may lose trust in your brand. If you bombard customers with supposed limited time offers, they’ll soon stop believing there’s any time limit to buy from you. This will not only hinder customers making an instant purchase, but it could also damage your relationship with customers in the long-term too.
For customers who simply don’t have the money there and then to make a big purchase, creating a sense of FOMO may cause frustration too. However, there is a way to help these customers spread the cost of a big purchase – thus making it more manageable. Offering retail finance allows customers to walk away with the items they want or need sooner, allowing them to pay for their products or services over a series of monthly instalments instead.
3. Highlight limited availability
No one wants to miss out. The scarcity principle increases a customer’s desire to purchase before they miss out on an opportunity, so make sure you highlight limited edition items or ‘last chance to buy’ ranges. This also taps into a customer’s sense of FOMO, encouraging them to make a purchase sooner.
Many online retailers show how many products are available once it dips below a certain threshold (i.e. ‘Hurry! Only three left in stock!’) This adds extra urgency and encourages the customer to act quicker.
As with the loss aversion strategy, retailers should only use the scarcity principle when there is a genuine limit to the products or services on offer. Customers will soon suspect it’s just a marketing ploy if products that were ‘available for a limited time only’ months ago are still on sale.
4. Encourage last-minute purchases
Add-ons and impulse purchases can be a powerful earner for retailers. Your customer might have a clear shopping list in mind, whether they’re browsing in-store or online, but there’s always an opportunity to upsell.
Strategically position relevant products or impulse items near the checkout area in-store or as part of the online checkout page. This will encourage customers to review their purchases and potentially add extra items to their basket.
Our retail partners can also take advantage of our maximum loan feature. Once a customer has completed their finance application, we’ll tell you whether the customer is eligible to borrow more money. With extra budget to potentially play with, your sales team can suggest other products or services to enhance your customer’s existing purchase – giving you the ideal upsell opportunity.
5. Harness the power of instant gratification
You’ve heard the phrase ‘I want it all, and I want it now’. Give your customers the opportunity to walk away with the products or services they want now, allowing them to pay for it later down the line.
Point of sale finance makes it simple for retailers to offer more flexible ways to pay. Your customers could choose to start paying in monthly instalments straight away or might not pay a penny for twelve months if they opt for buy now pay later. With greater choice available, customers may be more likely to commit to a purchase without the pressure of buying a big-ticket item upfront.
6. Make the most of delayed gratification
When customers shop online, they simply can’t walk away with their products the same day. Waiting for products to arrive causes delayed gratification – but that isn’t a bad thing. In fact, for many customers, delayed gratification can be even more rewarding.
Retailers can harness the feeling of anticipation and excitement by giving customers regular updates on their order – perhaps via a tracking link. And, of course, there’s the big moment when a customer receives their order. Make sure the packaging is inspiring and fully branded, so your customer is more likely to view the purchasing process as a positive experience.
7. Work to get your foot in the door
The foot-in-the-door technique is a nod to door-to-door sales. The idea is that, if you can get a customer to say yes to a small request (and therefore get your foot in the door), it’s significantly more likely they’ll comply with a more important one.
Some retailers find it effective to start small with their first customer interactions. For example, ask customers to sign up to your newsletter – potentially in return for a discount off their first order. Signing up to a free trial or taking part in a customer survey are also small requests you could try. You can then build up an interaction with customers culminating in a much bigger request: making a purchase.
8. Give a little to get a lot back
The principle of reciprocity works like this: you give your customers a little something, which triggers a sense of them wanting to give you something in return. This increases the likelihood of making a purchase.
Even something as simple as offering free delivery or free samples in-store could help to boost your sales. In fact, research by Statista suggests 73% of consumers are more likely to purchase online items with free shipping.
9. Consider pricing psychology
Psychological pricing can influence a customer’s perception of value, ultimately encouraging them to make a purchase. Different pricing tactics will appeal to different customers so think carefully about which strategy aligns best with your brand.
Some of the most common pricing strategies include:
- Charm pricing: Ensuring a customer sees a lower number when they read from left to right (for example, £9.99 rather than £10 seems more appealing to some customers, even though there’s just a penny difference)
- Odd-even pricing: The belief a price ending in an odd number - usually five or nine - is more appealing to customers
- Bundle pricing: Several products sold together at a cheaper price point than if they were sold separately
- Decoy pricing: Including a less attractive ‘decoy’ option when presenting a selection of three products. This persuades customers to choose the more desirable option
- Anchoring: Setting higher-priced items as the first thing customers see (i.e. pricing ‘from high to low’ on an eCommerce site), making subsequent prices seem more reasonable
- Price appearance: Being conscious of the way the price looks when displayed. Consumers are more likely to think a price that’s shorter in length represents better value, even if the actual price remains the same. For example, £18.00 should be presented as simply £18
10. Enhance the shopping experience
Whether your customers are browsing in-store or shopping online, it’s important to create a welcoming and engaging atmosphere. It’s known that positive experiences drive sales so focus on creating an enjoyable way for customers to shop.
If your business is predominantly visited in-person, consider the physical environment. Pleasant scents, background music and even something as simple as a welcoming smile can help customers to feel more comfortable. Consider the power of product placement too. For example, you may have heard the saying ‘eye level is buy level’, which is essentially placing a product at eye level to improve sales.
You can also take steps to improve your eCommerce site, too. An attractive and user-friendly web design with clear copy not only improves the accessibility of your site but makes the customer experience so much better.
11. Use storytelling to connect with your customers
If you can engage with customers emotionally, you’re more likely to develop a stronger connection with them. This leads to long-term loyalty and, ultimately, consistent sales.
This is where your marketing comes in. Share your brand story, showcase emotive case studies or have a bit of fun with your product copy. Get creative to connect with your customers.
12. Tailor the shopping experience
Everyone likes to be treated as an individual. Leverage data gathered through past purchases or marketing campaigns to employ personalised recommendations and targeted marketing messages, helping to show customers you’re really thinking of them and their preferences.
We understand the power of treating customers like individuals, which is why we’ve developed our unique tailoring option. We reduce the number of declined applications by enabling the customer to change the term, deposit or loan amount without having to reapply. This allows customers to experience a truly personalised application process.
13. Build trust by being transparent
Consumers are more likely to buy from retailers they trust – it’s as simple as that. You can build that trust by being open and transparent about your offering, from fair return policies to flexible pricing options.
Don’t forget the power of outstanding customer service too. Provide friendly, helpful service consistently to keep building that trust. You should also ensure any third-party partners offer the same level of customer support, too, to make sure there’s no inconsistency in the customer journey.
14. Incorporate gamification
Influence a customer’s behaviour by incorporating game-like elements into the shopping experience. Reward systems, loyalty programs or ‘spin the wheel’ discounts attract customers and keep them on-site or in-store.
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