If you’ve watched the movie “What Men Want,” you’d know just how easy it is to satisfy someone when you’re in their head and you know their thoughts.

It’s the same when it comes to your customers – predict their needs rightly. 

This customer psychology guide will help you get into your customers’ heads.

As you read along, you’ll learn a lot that’ll help you build better customer relationships and increase your profitability.

Before we begin with the basics, let’s first understand one crucial thing – the concept of customer psychology and why you shouldn’t ignore it.

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What is customer psychology?

In simple words, customer psychology is understanding how your customers think, feel, and behave.

It’s how you build a strong connection with your customers to understand their thought processes when they make buying decisions.

Maslow’s hierarchy of needs shares a quick glimpse at the psychology of human needs. Your customers are humans.

Contrary to popular belief, you’re not learning customer psychology to manipulate your customers.

You’re learning this to:

• Make smart decisions
• Make your customers happy
• Keep them returning

Think about this.

When a business you patronise knows what makes you happy as a customer, they can create more products, services, and experiences you’ll love. They can also figure out how to communicate with you in a way that makes you feel valued.

If they understand that you like quick responses, they’ll work on providing fast customer service. 

Or, if they know that you enjoy being part of a community, they might create online forums or groups to connect with you.

Steve Jobs is an excellent example of a marketer and business owner who understood and used customer psychology.

You’re not alone if you are wholly engulfed while watching that video.

How does customer psychology affect your business?

Here’s how customer psychology affects your business and customers daily:

• Product choices: Customers might choose a brand because it makes them feel good. Their perception of the product influences their decision. 
• Pricing: Noticed how prices are set below a round number like $9.99, not $10? This tactic exploits our tendency to focus on the left digit and consider it a lower price.
• Customer reviews: Before purchasing, customers read reviews to see what other customers say. Positive reviews make people more likely to choose your product.
• Urgency: Phrases like “limited time offer” or “only a few left in stock” create a sense of urgency. This makes us feel like we might miss out if we don’t act quickly.
• Emotional connection: Successful brands connect with their customers emotionally. For example, a hearty ad might connect people to you and make them more likely to choose you.
• Convenience: We’re likelier to choose convenient options because we like them simple and fast. Think about fast-food drive-thrus or the “one-click buy” option in online stores.

What are you observing?

Here’s what a good guess will be. Psychology controls your customers without you or them noticing.

What factors shape customer behaviour?

Your customers come from different backgrounds and have various experiences. When dealing with your business, all these factors will come to bear.

If you understand these factors, you understand how customers do business with you and how to influence the process for your business’ benefit.

1. What goes on in a customer’s mind when making a choice?

Assume you’re thinking of buying something. 

Before you finally make the buy, you go through several steps without even knowing it.

It typically looks like this 👇.

Let’s break down those steps to help you understand how the different factors affect how your customers decide to buy from you.

To make this simpler, let’s assume you’re in the process of buying a phone.

Step 1: Problem recognition

• Psychological factors: You realise you need something, like a new phone.
• Social factors: Your friends talk about their phones, so you want one too.
• Personal factors: Your current phone is old, and you have the budget for a new phone.
• Situational factors: You have time to shop during a sale event.

Step 2: Information search

• Psychological factors: You start looking for phone options based on what you’ve heard.
• Social factors: You ask friends for recommendations and read online reviews.
• Personal factors: Your preference for a specific brand or type of phone influences your search.
• Situational factors: Your search location may be online or at physical stores.

Step 3: Evaluation of alternatives

• Psychological factors: You compare phones based on features like camera quality or battery life.
• Social factors: Recommendations from friends weigh in your decision.
• Personal factors: Your job may require a specific phone type, affecting your choice.
• Situational factors: The store’s pricing and promotions affect your evaluation.

Step 4: Purchase decision

• Psychological factors: Your motivation to have a better phone drives your decision.
• Social factors: You might consider what others will think of your choice.
• Personal factors: Your income and lifestyle impact whether you buy the latest model or a more affordable one.
• Situational factors: The availability and location of the phone influence your decision.

Step 5: Post-purchase evaluation

• Psychological factors: Your emotions, like happiness or disappointment, depend on how satisfied you are with the phone.
• Social factors: You might share your experience and reviews with friends.
• Personal factors: Your long-term satisfaction with the phone depends on how well it fits your needs.
• Situational factors: Any issues with the phone or customer service may affect your evaluation.

Various factors play a role throughout the decision-making process, like what others think, your situation, and the information you gather. As a business, you must understand these factors to meet your customers’ needs and preferences better.

However, emotions are the most significant part of your customer’s decision-making process.

2. How do emotions play a role in customer decision-making?

If your customers feel good about your product, they’ll keep returning. 

It’s as simple as that.

No matter how intellectual a customer may be, how they feel about a product, brand, or experience affects their choices at various stages of purchasing.

Here’s how:

• Attracting attention: Emotionally charged advertisements or product presentations grab customers’ attention. For example, a heartwarming story about a product can make people notice it. All it takes is a relatable emotion.
• Forming preferences: Positive emotions can make customers prefer a brand or product over others. If a customer associates a product with happiness or trust, they’re more likely to choose it.
• Influencing choices: Emotions often guide the final decision. Customers who feel excited about a product are more likely to buy it, even if it’s a bit more expensive than other options.
• Building loyalty: When customers have positive emotional experiences with a brand, they become loyal. They keep coming back because they feel good about their choice. 
• Word of mouth: Emotions can lead customers to recommend a product to others. They’ll tell friends and family if they’re excited or happy.
• Handling problems: Emotions play a role even when things go wrong. If a brand handles a problem with care and empathy, the customer is more likely to forgive and continue their relationship with the brand.

In a nutshell, emotions can be a powerful force in customer decision-making. 

That is why people buy every new iPhone release — even though they may not need it.

Source: indiatoday.in 

3. How do culture and social factors influence what customers buy?

Various cultural and social factors also influence your customers’ choices. 

Here’s how.  

Cultural factors:

• Values and beliefs: Cultures have deeply rooted values and beliefs, influencing what products or services customers find appealing. In some cultures, frugality and practicality may be valued, while status and luxury could be important in others.
• Traditions and customs: Cultural traditions and customs often dictate what people buy. Holidays, festivals, and rituals can increase spending on specific products or services. Certain foods, decorations, or gifts are customary during cultural celebrations.
• Language and communication: A customer’s language can affect their choices. Advertising and product information in a customer’s native language and culture will resonate more with them.  
• Cultural symbols and icons: Symbols and icons hold different meanings in various cultures. A positive symbol in one culture may have a negative connotation in another. Be mindful of using culturally appropriate symbols in your branding and marketing.

Social factors:

• Peer influence: People often get influenced by their social circles. If friends, family, or colleagues have a positive experience with a product or brand, it can lead to a customer choosing the same option. Social approval can be a powerful motivator.
• Social norms: Societies have different norms and expectations for what is acceptable or desirable. Customers may choose based on what is considered ‘normal’ in their social group or norms.
• Reference groups: Customers may belong to reference groups, such as hobby clubs or online communities. These groups can have a significant impact on purchasing decisions. Recommendations and opinions from fellow group members carry weight.
• Family and household: Family dynamics and household structures can influence buying decisions. Parents, for instance, may prioritise purchases that benefit their children, while singles might have different priorities.
• Social media and online influence: Social media plays a substantial role. Customers get exposed to influencers and peer reviews online, which sway their choices. Positive or negative online experiences can have a domino effect on decision-making.

Understanding these cultural and social factors is crucial for your businesses to connect with customers effectively. 

If you want to sell a product or service, you should tailor your marketing to align with these influences.

You can come back to thank us later.

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What happens after a purchase?

After a customer makes a purchase, the journey is far from over. 

Here’s what happens next and how you can make it a positive experience for your customers:

• The post-purchase glow: Customers often feel a sense of satisfaction and excitement right after a purchase. They’re happy they made the choice to buy from your business. This is a great time to reinforce this positive emotion.
• Unboxing and first impressions: If your product is physical, its packaging and presentation make an impact. So, make it memorable. For digital products, ensure the onboarding is smooth and hassle-free.
• Product performance: As customers start using your product or service, they’ll begin to form opinions about its quality and how well it meets their needs. This is where your product should shine and deliver on its promises.
• Customer support and assistance: Sometimes, customers have questions or face issues. Providing them with help and quick solutions shows that you care. It also has a significant impact on customer satisfaction and loyalty.
• Gathering feedback: Encourage your customers to share their thoughts and experiences. You can do this through surveys, reviews, or asking for feedback. This helps you understand what’s working and what needs improvement.
• Building a relationship: Keep in touch with your customers. Send them updates, tips, and relevant information. Show them your interest in their money and help them get the most out of your product or service. You can do this via WhatsApp or SMS.
• Upselling and cross-selling: As your customers grow familiar with your business, they might be interested in related products or services you offer. This is an excellent opportunity to introduce them to these options.
• Handling issues gracefully: Sometimes, things may not go as planned, and customers may complain. To turn a complaining customer into a loyal brand advocate, address these issues promptly and professionally.
• Loyalty programs and rewards: Consider offering loyalty programs or rewards for repeat customers. This not only keeps them coming back but also makes them feel valued.
• Showing appreciation: Never underestimate the power of a simple “thank you.” A small gesture of appreciation can go a long way in making your customers feel special.

Remember, the post-purchase phase is a fantastic opportunity to meet your customers’ needs and build a strong and lasting relationship. 

When creating a customer base, also try to understand who they are. 

Who really are your customers?

By identifying your customers, you understand their needs, preferences, and behaviours. 

Here’s how you can identify your customers effectively:

• Market research: Start with gathering information about your target audience. This includes demographics (age, gender, location), psychographics (values, interests, lifestyle), and behaviour (purchasing habits, online behaviour).
• Analyse existing customers: If you already have customers, analyse their data. Look at who’s buying from you, what they’re buying, and why they chose your product or service. Conduct surveys and collect feedback from them.
• Competitor analysis: Study your competitors and their customers. While you don’t want to outrightly copy them, you can gain insights into the market by understanding their customer base.
• Analyse data: Social media platforms provide valuable insights into your audience. Tools like Google Analytics can provide visitor data such as demographics and online behaviour. Use analytics tools to see who’s engaging with your content and visiting your profiles.
• Customer profiling: Create customer personas or profiles based on your research. These are fictional representations of your ideal customers. You might have personas like “young professionals,” “tech-savvy parents”, or “small business owners.”
• Stay updated: Customer behaviour can change over time. Stay updated with market trends and regularly reassess your customer base to ensure your strategies remain relevant.

Remember that understanding your customer base is ongoing because customer behaviour and preferences can change.

The more you know about your customers, the better you can adjust your products, services, and marketing efforts to meet their needs and expectations.

How do you adjust your products or services to different customer groups?

Do you remember when I mentioned customer segmentation? This is where it comes in.

If you have different categories of customers, trying to sell your product to them using the same tactic may not give you the best results. Each segment should have its own approach. 

Here’s how you can do it:

Step 1 – Segmentation criteria 

Start by identifying the criteria you’ll use to segment your market. 

These criteria can include: 

• Demographics (age, gender, location),
• Psychographics (lifestyle, values, interests), 
• Behaviour (buying habits, product usage), 
• Specific needs or problems your product or service can solve.

Step 2 – Customer personas 

Create customer personas for each segment. These personas should be based on real data and research and represent each group’s typical characteristics and behaviours.

You don’t have to overthink this. Any customer persona is better than no customer persona.

Step 3 – Product customisation 

Tailor your products or services to match each customer segment’s unique preferences and needs. This includes offering different versions or variations of your product, creating exclusive features, or bundling related services.

Step 4 – Pricing strategies 

Consider different pricing strategies for each segment. Some segments may be willing to pay more for premium features, while others may be more price-sensitive. Adjust your pricing accordingly.

Step 5 – Marketing and messaging 

Craft marketing campaigns and messaging that resonate with each segment. Use language, imagery, and communication channels that appeal to your target group.

Step 6 – Distribution channels 

Determine the most effective distribution channels for reaching each segment. Some segments may prefer online purchasing, while others prefer in-store experiences or direct sales.

Step 7 – Customer support 

Provide customer support and assistance that aligns with the needs of each segment. This could include specialised customer support teams or resources tailored to different customer groups. 

For example, developers love documentation and self-help resources. 

Step 8 – Feedback and adaptation 

Continuously gather feedback from each segment. Use this feedback to refine your offerings and strategies. What works for one segment may not work for another, so be prepared to adapt.

Step 9 – Test and measure 

Run tests and experiments to assess the effectiveness of your strategies. Monitor each segment’s key performance indicators (KPIs) to determine if your efforts are paying off.

Step 10 – The balancing act 

While customisation is essential, maintain consistency in your brand identity and product quality across all segments. You want to meet specific needs while still presenting a cohesive brand image.

Step 11 – Ethical considerations 

Ensure that your segmentation and customisation efforts are ethical and do not lead to discrimination or unfair treatment of any customer group.

Step 12 – Scaling 

As your business grows, you may need to expand your efforts to accommodate additional customer segments. This could involve expanding your product line or diversifying your marketing strategies.

Some years ago, you could get away with following a one-size-fits-all route to selling your products. You may not get away with it if you try it today.

Here’s a mistake a lot of people make that you must avoid.

They segment their customer based on just demographics. 

Why is it a mistake?

Simple. While important, demography is just the starting point of understanding your customers. 

What’s the other side of the coin?

Their lifestyle.

Let’s talk about the role of demographics vs lifestyles

Demographics vs lifestyles

Both demographics and lifestyle play significant roles in how your customers interact with your business. However, they can have different levels of impact depending on the context. 

Let’s simplify it.

Demographics 

Demographics help you understand your customer base at a surface level.

These include your customers’ age, gender, location, and income. They provide basic information about your customers. 

For example, knowing that your customers live in a cold region is essential for selling winter clothing.

Lifestyle 

This is more about how your customers live, what they value, and their interests. It goes beyond basic facts and dives into their habits and preferences.

Here’s how lifestyle has a deep influence on customer behaviour. 

For example, knowing your customers’ age, income, and location is not enough to create the perfect real estate listing if you sell real estate. The kind of properties they would love to buy or rent will be based on their lifestyle.

• Do they love luxury
• Are they miserly or spendthrifts
• Are they married with children
• Are they outdoor sports lovers

Earning $100K doesn’t immediately translate to “He’d love a luxury house”.

In summary, demographics give you the “who” of your customers, while lifestyle gives you the “what” and “why.” 

How can you determine the lifestyle of your customers?

Through research and speaking with them. One such very effective research tool is customer feedback. 

Let’s take a look at it.

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Customer feedback

How can gathering customer feedback help you, and what do you do with the information you gather?

Let’s look at each of them.

How can listening to customers help your business?

Listening to your customers is your secret recipe for success.

It’ll help you in the following ways:

• Fresh ideas: Customers tell you where to go. Their feedback points you in the right direction, helping you make decisions that work.
• Tailored solutions: Ever wish you had a crystal ball to know what your customers want? Well, it’s feedback. They’ll tell you what they love and what they don’t. 
• Loyalty boost: Customers stick around when they see you’re tuned in to their needs. It’s like building a friendship. They become your loyal fans.
• Fix problems faster: They’ll let you know if something’s wrong. Listening means you can fix issues pronto before they blow up.
• Stay ahead: You’re a step ahead if you listen better than your competitors. You can adapt faster and win the race.
• Marketing magic: Use their own words in your ads – like speaking their secret language. They’ll feel like you get them.

Review sites like Yelp, Google, etc, are great places to gather customer feedback and any review collecting system you use.

For example, you’d agree with me that Slack can use feedback like this to improve its customer experience.

What do you think Cold Stone can do with customer feedback like this 👇?

What do you do with the feedback you gather?

Once you get the precious feedback in your hands, here’s how to turn it into pure gold:

• Sort the gems: Not all feedback is created equal. Separate the valuable insights from the noise. Look for patterns – if many customers say the same thing, pay extra attention.
• Fix what’s broken: If something’s busted, fix it fast. Customers will love you for it. It’s like doing house repairs before the whole place falls apart.
• Improve and innovate: Use feedback to improve your products or services. If they say, “I wish it could do this,” and it makes sense, make it happen.
• Train your team: Share feedback with your team. It’s like giving them a secret weapon – they know what customers want and can deliver it.
• Set goals: Make goals based on feedback. For example, “We’ll reduce wait times by 20% by next month.” It gives you something to aim for.
• Feedback loop: Keep the convo going. Ask for more feedback later. It’s like staying in touch with an old friend – you build a long-lasting relationship.
• Innovate again: When you’ve made changes based on feedback, tell your customers. It’s like showing them you’re taking their advice seriously.

If you use customer feedback wisely, your customers will begin to trust you more.

Why is trust so crucial in customer relationships?

In business, you’ll often hear that trust is your secret sauce. 

So, let’s break down why trust matters so much in customer relationships:

• Loyalty foundation: Customers are more likely to stick around when they trust you.
• Open communication: Trust creates a safe space. Customers feel comfortable sharing their needs, concerns, and feedback.
• Repeat business: Trust leads to repeat sales. Customers come back because they know you deliver. It’s like your favourite restaurant – you keep returning for that fantastic dish.
• Word-of-mouth magic: Trustworthy businesses get raving reviews. Happy customers become your brand ambassadors – for free.
• Resilience: Your business can weather storms when trust is strong. Customers are more forgiving when things go wrong because they trust you to make it right.
• Competitive edge: Trust sets you apart from the competition. It’s like having a unique superpower that makes customers choose you.

One question arises. How can you build trust? 

The answer lies in a few simple strategies.  

What strategies can you use to build customer trust?

Building trust with your customers is easier than you think. It may take time to grow, but it’s worth it if you nurture it well.

Here’s how:

• Keep promises: Do what you say you’ll do. Do it consistently.
• Transparent communication: Be open about your products, pricing, and policies. No hidden surprises.
• Exceptional service: Go the extra mile to solve problems and make customers happy.
• Feedback matters: Listen to your customers, act on their feedback, and show that you value their opinions.
• Security and privacy: Protect customer data like a treasure. Make them feel safe with you.
• Honesty always: Admit mistakes and fix them pronto. Honesty builds trust faster than cover-ups.
• Meet expectations: Set realistic expectations and meet or exceed them consistently.

When you hear customer trust, which companies come to mind as examples that have built customer loyalty and trust?

Examples of top companies that built trust with their customers

Below are the success stories of four top companies worldwide that successfully built customer trust.

1. Amazon 

Amazon’s commitment to customer satisfaction is legendary. 

They built trust by offering a seamless shopping experience, transparent product reviews, hassle-free returns, and timely deliveries. 

This trust translated into Amazon becoming one of the world’s most valuable companies.

See Jeff Bezos talking about customer service in 1999

2. Apple 

Apple’s focus on product quality and customer service has created a loyal customer base. 

They’ve earned trust by consistently delivering innovative and reliable products, resulting in strong brand loyalty and repeat business of the “Apple Cult”.

Listen to Steve Jobs speak on focusing on the customer.

3. Southwest Airlines

Southwest Airlines built trust by offering fair, transparent pricing and excellent customer service. 

They’ve consistently ranked high in customer satisfaction and have a loyal customer base, even in a competitive airline industry.

After a travel fallout in 2022, Bob Jordan, CEO of Southwest Airlines, issued a personal apology video.

4. Tesla 

Tesla’s focus on innovation, sustainability, and high-quality electric vehicles has earned the trust of environmentally conscious consumers. 

They’ve disrupted the automotive industry by building cars that exceed expectations, leading to a solid and loyal following.

See Elon Musk respond to an unhappy customer.

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Are everything we’ve discussed so far the same online and offline?

Let’s find out.

What’s different about customer behaviour online vs physical shopping?

Depending on whether you run an online or physical store, your customers will behave differently. 

Here are the differences in customer behaviour between online shopping and physical (in-store) shopping:

	Online shopping	Physical shopping
Convenience vs. tangibility	The convenience of online shopping often leads to more frequent purchases, especially for everyday items. However, customers may miss the tangible experience of physically inspecting products.	Tangibility in physical stores allows customers to assess product quality. They may spend more time evaluating products before making a purchase.
Price comparison vs. immediate gratification	Online shoppers have easy access to price comparisons, which can lead to more price-conscious decisions. The delay in gratification due to shipping may lead to less impulse buying.	Immediate gratification is a driver in physical stores. Customers can take their purchases home instantly, making them more likely to buy impulsively.
Reviews and ratings vs. in-store assistance	Customers heavily rely on online reviews and ratings, often making purchase decisions based on the experiences of others. They may not have in-person assistance.	In-store assistance provides a personalised touch. Sales associates can offer recommendations, answer questions, address concerns, and influence customer decisions.
Abandoned carts vs. social experience	Cart abandonment is common in online shopping. Various factors can cause this, such as price comparison, distractions, or indecision.	Physical shopping can be a social activity, with customers enjoying the experience of shopping with friends or family.
Personalisation vs. impulse buys	Online retailers use personalisation algorithms to recommend products based on a customer’s browsing and purchase history. This can lead to increased sales of complementary items.	In-store displays and promotions can trigger impulse purchases, as customers encounter products they hadn’t planned to buy.
Returns	The ease of online returns may encourage more risk-free purchasing, but the return process can be time-consuming.	In-store returns are straightforward, and customers can handle them immediately.
Checkout process	The online checkout process is typically faster. So customers may prefer this.	Checkout queues may be longer, and this can be discouraging.

Let’s spend some time talking about the online buying experience. How does website design influence buyer behaviour?

Does website design influence user behaviour?

To save you time, the answer to that question is a resounding YES!

Let’s see how.

1. First impressions

A well-designed website creates a positive first impression. Therefore increasing user engagement and trust. 

This impression happens within milliseconds and can impact whether users stay or leave.

2. Navigation and usability

An intuitive and user-friendly website design makes it easier for customers to find what they want. 

Straightforward navigation and a logical layout can reduce frustration and encourage longer visits.

3. Visual appeal

Visually appealing websites are more likely to capture and hold your customers’ attention. 

Proper use of colours, images, and fonts can convey your brand personality and influence emotions.

4. Loading speed

Slow-loading websites can lead to high bounce rates. 

Your customers expect fast responses, and a delay of even a few seconds can result in frustration and abandonment.

5. Content presentation

How content is presented on your website matters to attract customers’ attention. 

Headings, bullet points, and concise text can make information more digestible. Eye-catching visuals and multimedia also enhance engagement.

6. Call to action (CTA)

Effective placement and design of CTAs can guide user behaviour. 

A well-designed CTA button with compelling text can prompt users to take desired actions, such as signing up or making a purchase.

7. Trust and credibility

A trustworthy professional design, including clear contact information and security indicators, can boost credibility. 

Users are likelier to share personal information or make online purchases on secure, credible websites.

8. Mobile responsiveness

With the increasing use of mobile devices, responsive design is no longer just something you may have. It’s a must-have. 

Websites that adapt to different screen sizes and orientations ensure a positive user experience.

9. Emotional appeal

Design elements can evoke emotions in users. 

For example, a website selling relaxation products may use calming colours and imagery to create a sense of tranquillity, like a yoga pose or a person sleeping.

10. Social proof

Incorporating social proof elements like reviews and testimonials into the design can influence user trust and decision-making.

11. Loading icons

Incorporating loading icons or animations during page load can reduce perceived waiting time. 

This, as a result, keeps the users engaged.

12. Personalisation

Tailoring content and design based on user preferences or past behaviour can enhance the user experience and encourage repeat visits.

13. A/B testing

Regularly testing different design elements (e.g., colours, layouts, CTAs) allows businesses to optimise user behaviour based on data-driven insights.

What am I telling you in a nutshell? 

Your website design is a powerful tool for shaping and determining how your customers relate and respond to your business.

How does knowing this help you?

By understanding the psychological principles behind design choices, you can create a website that attracts visitors and guides them toward desired actions. Whether it’s making a purchase, signing up, or engaging with your content.

Talking about making a purchase. How do you use pricing as a tool to influence customer behaviour positively?

How do you price for psychological impact?

If you understand customer psychology, you won’t just slap any price on your products. 

Are there pricing strategies that tap into customer psychology?

There are 8 pricing strategies that allow you to make the most profit while making your customers feel good about their purchases.

Here they are. 

1. Anchoring 

Start your price positioning by presenting a higher-priced option first. This makes the other choices seem more reasonable and affordable in comparison.

This works on the principle of contrast, which states that a price is small or big only compared to the initial price you present.

Remember how Amazon strikes off old/actual prices besides the current price? That’s price anchoring in action. 

.

2. Decoy effect 

Include a less attractive option that makes other choices look more appealing. 

For example, if you’re selling small, medium, and large popcorn at the movies, add an extra-large option that’s overpriced. This makes the large popcorn seem like a better deal. 

This principle can also be reversed to make the largest popcorn look most appealing.

Source: smartiac.com

3. Price bundling

Combine related products or services into a package and offer them at a lower price than if purchased individually. 

Customers perceive greater value in the bundle.

In the pricing page above, purchasing the Pro plan twice is more expensive and provides fewer features than purchasing the Premium plan.

4. Loss aversion 

Frame discounts in terms of “savings” rather than “money off.” 

For example, saying “Save $20” instead of “20% off” triggers a sense of not wanting to lose out on a deal.

source: invespcro.com

This works on the psychological principle that humans prefer to avoid pain than gain pleasure.

5. Scarcity and Urgency

Create a sense of scarcity or urgency to encourage quick decisions. 

Phrases like “Limited Time Offer” or “Only 5 Left!” can prompt action. 

You will discover that applying the principle of (possible) scarcity will work more than you expected.

Source: abtasty.com

This is also related to loss aversion because not taking advantage of the opportunity now means losing it.

6. Psychological price points 

Use prices like $99 instead of rounding up to $100. 

Customers perceive $99 as significantly cheaper, even though it’s just one dollar less than $100.

source:agnirudra.com

7. Free trials and samples 

Reduce your customers’ perceived risk by offering free trials or samples of your product or service. 

This works on the principle of reciprocity. When you give out something, the receiver is likelier to yield to your future request just to even the scores with you.

Once your customers experience the value, they’re more likely to purchase.

8. Simplicity 

Keep your pricing structures simple and transparent. 

Customers appreciate straightforward pricing without hidden fees or complex calculations. Doing so makes your customers’ decision-making easier.

If you think these strategies no longer work, just pause and think of the last time you made a purchase. You’ll see that at least one of these pricing strategies influenced your purchase.

Let’s look at how your customers perceive the price of your product to how much they pay.

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What’s “perceived value” all about?

Perceived value is how your customers judge the worth of your product or service based on their own expectations. 

It’s a subjective assessment where your customers compare the benefits they expect to receive for the price they’ll have to pay. 

You can enhance the perceived value of your products by focusing on quality, branding, pricing, and delivering a positive overall customer experience. 

And if your customers perceive that you’re giving them great products and a fantastic experience at a great price, they’ll stay loyal to you.

Now, given all these, would you still need marketing promotions? 

Let’s answer that next.

Can discounts and promotions influence buying decisions?

Yes, discounts and promotions can have a significant impact on buying decisions. 

They tap into customer psychology by creating excitement and the perception of getting a good deal. 

When used properly, discounts and promotions can boost your sales, attract new customers, and encourage repeat business.

However, you only get the results if you use them well.

Why? 

To maintain the perceived value of your products or services and avoid training customers to wait for discounts before purchasing.

Take Apple, for example. 

Apple maintains the perceived value of its products by rarely offering discounts. 

Instead, they focus on consistently delivering high-quality, innovative, and aesthetically pleasing products. 

This way, Apple has cultivated a loyal customer base willing to pay a premium. 

This strategy reinforces the perception of exclusivity and quality, sustaining customer loyalty.

How to keep customers coming back

Keeping your customers interested in your products and services takes a lot of work. But it all boils down to these 7 things:

• Maintaining consistent quality
• Providing exceptional customer service
• Personalising interactions
• Offering loyalty programs
• Encouraging feedback
• Surprising and delighting customers
• Staying innovative and adapting to their needs

Communicating with your customers on WhatsApp and other social channels can result in 10X personalised interactions and experiences.  Get started with TelebuSocial today, or schedule a demo.

We’ve already discussed some of these points, so let’s talk about loyalty programs. 

Loyalty programs can increase customer retention yet many businesses overlook them. 

Why?

They may not know how to create effective customer loyalty programs.

How do you create effective customer loyalty programs?

To create effective customer loyalty programs, follow these steps.

1. Know your customers

Get to know your customers inside out. 

The more you understand them, the better you can tailor your loyalty program to satisfy them. 

We already discussed this in detail in the section on how to know your customers and creating customer personas and segments.

2. Set clear goals

What do you want to achieve with your loyalty program? 

So, make your goals and benefits crystal clear. 

3. Choose the right perks

Give rewards that your customers value. 

Whether it’s the discounts, freebies, or exclusive access, make sure you offer something they’ll love. 

People are more likely to stick around if they’re getting something special.

4. Keep them in the Loop

Tell your customers about your loyalty program through emails, social media, SMS, or app messages. 

Did you know that personalised offers sent via mobile apps have a redemption rate of 10% to 30%? 

It’s like inviting them to a party they don’t want to miss.

5. Go mobile 

In today’s world, everyone’s on their phones. 

Having a mobile app for your loyalty program makes it super convenient. 

Imagine customers earning rewards with a tap on their screens. Mobile loyalty apps have seen a 50% growth in monthly active users.

6. Track and improve

Keep an eye on how your loyalty program is doing. Dive into the data. This helps you tweak and optimise it over time. 

It’s like fine-tuning an engine for peak performance. 

75% of companies using data to personalise customer experiences report higher ROI.

7. Give top-notch service

Exceptional customer service is the glue that holds it all together. 

When your customers know they can count on you, they will stick around. 

It’s about building trust, just like we talked about earlier. 86% of consumers are willing to pay more for a better customer experience.

By following these steps and using insights from your business, you can create a loyalty program that customers will love. And you’ll avoid customer churn.

It’s easy to go rogue trying to get your customers to love you and do business with you. But you must fight the temptation and stay ethical.

Are you ethical in your customer interactions?

You might be doing business in a cutthroat world, but your customers expect you to be ethical.

What does that mean? 

Well, let’s talk about it.

How to treat customers ethically

Here’s what the ethical treatment of your customers looks like:

• Be transparent: Be open and honest about your products or services. Avoid any hidden fees or misleading advertising. Ensure your customers understand what they are getting.
• Respect their privacy: Respect your customers’ privacy. Secure their data and use it for the purposes they’ve agreed to. Clearly explain your data collection and usage policies.
• Price fairly: Price your products or services fairly. Avoid price gouging or taking advantage of customer desperation. Offer value for the price charged.
• Uphold quality assurance: Ensure the quality of your products or services meets or exceeds customer expectations. Address quality issues promptly and honestly.
• Serve customers excellently: Provide excellent customer service. Be responsive to customer inquiries, complaints, and feedback. Solve problems and issues fairly and promptly.
• Honest marketing: Avoid deceptive marketing tactics. Don’t promise things your product or service can’t deliver. Use accurate and truthful marketing materials.
• Remember accessibility: Make your products or services accessible to as many people as possible. Consider accessibility features for individuals with disabilities.
• Get consent: Obtain clear and informed consent before collecting any personal data or starting any marketing campaigns. Allow customers to opt out easily.
• Be compliant: Follow all relevant laws and regulations related to your industry and location. Stay informed about changes and updates in regulations.
• Get feedback and improve: Encourage customer feedback and use it for continuous improvement. Address customer concerns and suggestions.
• Resolve conflict fairly: Have a clear and fair conflict resolution process. Handle disputes with customers respectfully and impartially.
• Source ethically: If you source products or materials, ensure they are produced ethically. Avoid suppliers with unethical practices like child labour or substandard products.
• Embrace sustainability: Consider the environmental impacts of your business. Strive to reduce waste and emissions where possible.
• Engage the community: Be a responsible member of your community. Support local causes and charities when you can.
• Lead ethically: Lead by example. Ensure that your leadership team and employees understand and follow ethical principles.

When you treat your customers ethically, the real beneficiary is not the customer but your business.

Remember, ethical behaviour isn’t just about adhering to laws. 

It’s about doing what’s right for your customers, business, and society. 

By prioritising ethics, you’ll not only attract and retain customers but also build a strong and trustworthy brand.

Let’s flip the coin.

What are some manipulative business practices?

If you want your business to succeed, make sure you steer clear of these practices: 

• Fake reviews: Encouraging or writing fake positive reviews is unethical. Let genuine feedback speak for itself.
• Price gouging: Taking advantage of customers during emergencies or crises by hiking prices unreasonably is exploitative.
• Overpromising results: If your product or service won’t turn lead into gold, don’t say it will. Manage expectations honestly.
• Negative competitor tactics: Don’t badmouth your competitors unfairly or spread false rumours about them. Focus on your strengths.
• Ignoring customer concerns: Brushing off customer complaints or concerns damages your reputation. Listen and address issues promptly.
• Forcing decisions: Pushing customers into quick decisions with high-pressure tactics is manipulative. Give them time to decide.
• Non-disclosure: Failing to disclose important information, like conflicts of interest or affiliations, is deceptive.
• Unfair contracts: Drafting contracts heavily biased in your favour is unethical. Ensure fairness and transparency.
• Exploiting vulnerable audiences: Targeting vulnerable groups with deceptive practices is wrong. Aim for fairness in all your dealings.
• Environmental irresponsibility: Disregarding environmental impact to save costs isn’t just unethical but wrong for the planet.

Customers appreciate honesty and fairness. So, make sure you run your business ethically. 

This certainly doesn’t mean you cannot beat your competitors. Staying current with the latest trends can do wonders for your business. 

What’s ahead in customer psychology?

Trends are constantly changing, and this affects your customers’ expectations.

Understanding how your customers think now will make you more informed and better positioned than your competitors.

Let’s discuss some emerging trends affecting customer behaviour.

Emerging trends and technologies affecting customer behaviour

Here are some emerging trends and technologies affecting customer behaviour:

Artificial intelligence (AI) and chatbots: Customers are used to interacting with chatbots for quick support. AI also personalises recommendations and improves user experiences.

Voice commerce: With the rise of voice-activated devices like smart speakers, voice shopping is becoming a thing. Customers are making purchases just by speaking.

Augmented Reality (AR): AR lets customers try products virtually before buying. Think about trying on clothes or seeing how the furniture fits in your living room through your smartphone.

Sustainability and ethical shopping: Customers are increasingly concerned about the environment. They’re opting for eco-friendly and ethically sourced products.

Subscription services: Everything from streaming to meal kits is moving to subscription models. It’s all about convenience and regularity.

Omnichannel shopping: Consumers are increasingly blurring the lines between online and offline shopping. They want to be able to research products online, purchase them in-store, and return them wherever is most convenient. You need to create a seamless shopping experience that meets the needs of these omnichannel consumers.

Voice of the Customer (VoC) Analytics: Analysing customer feedback in real-time helps businesses adapt quickly to changing preferences and needs.

Privacy concerns: With data breaches and privacy scandals, customers are more cautious about sharing personal information. They expect brands to protect their data.

Contactless payments: In a post-pandemic world, contactless payment methods have become popular. It’s fast and hygienic.

Social commerce: Shopping directly through social media platforms is on the rise. Instagram and Facebook, for instance, are turning into marketplaces.

Remote work and shopping: With more people working from home, online shopping has seen a boost. It’s not just about convenience but safety, too.

Health and wellness: Customers are investing in health-related products and services. From fitness wearables to meditation apps, wellness is a big trend.

Blockchain for transparency: Blockchain technology provides transparent supply chains, especially in the food and luxury goods industries.

Personalisation: Customers expect tailored experiences. Whether it’s product recommendations or content, personalisation is key.

The need for convenience: Consumers are looking for businesses that offer convenient shopping experiences. This includes same-day delivery, curbside pickup, and mobile payments.

All these are just a few of the emerging trends or technologies affecting customer behaviour.  

How are businesses preparing for the future?

Here are some specific examples of how different businesses are using these trends:

• Nike uses AI to personalise its product recommendations. When you visit Nike’s website, the homepage is customised to show you products that are likely of interest to you based on your past purchases and browsing history.
• Amazon uses voice commerce to make it easier for customers to shop. With Amazon’s Alexa voice assistant, you can order products by simply speaking to your device, and they also offer same-day delivery.
• On Apple’s website, customers can experience new devices of their actual size using augmented reality. This makes the choice easier.
• Patagonia is committed to sustainability. Patagonia uses recycled materials in its products and offsets its carbon emissions. The company also donates a portion of its profits to environmental causes.
• Warby Parker offers same-day delivery. Warby Parker customers can order glasses online and receive them the same day in select cities. This makes it easy and convenient for customers to get the glasses.

Remember, these trends aren’t set in stone. 

They’ll keep evolving. And your business must stay adaptable and customer-focused to thrive in this ever-changing landscape.

A quick recap of key takeaways 

We’ve had a long and fruitful discussion about customer psychology. Don’t forget these key points:

• Emotions drive decisions: Emotions are a big deal for customers. Make them feel good about your brand, and they’ll always choose you.
• Playing with prices: Get creative with pricing. Discounts, bundles, and making customers feel like they’re getting great value can boost your sales. Just be careful not to overdo it.
• Trust is a treasure: Loyalty is a two-way street paved by trust. Be honest, deliver on your promises, and your customers will be loyal.
• Listening is gold: Your customers have a lot to say. Listen to their feedback – it’s a treasure trove of ideas to help you improve your products and services.
• Ethical treatment: Treat customers like you’d treat a good friend. Always be fair, honest, and respectful. Avoid sneaky tactics that can hurt your reputation.
• Stay in the know: Keep an eye on what’s new. Trends and new tech can change how customers act. Stay curious, and you’ll be successful.

Remember, all these insights can help you build stronger customer relationships and grow your business. Good luck!

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