Do You Really Know Your Ideal Retail Customer?
“For us, our most important stakeholder is not our stockholders, it is our customers. We’re in business to serve the needs and desires of our core customer base.”
– John Mackey, CEO, Whole Foods
Identifying your ideal customers is no longer just about segmentation or location. Gathering targeted customer data goes beyond overall demographics and psychographics. In fact, most retailers are finding demographic-based approaches increasingly inadequate because they provide an incomplete picture of the most important and relevant characteristics of a retailer’s most valuable customers.
You should—and can—create a more precise picture of your ideal customer. Understanding their motivations, how they interact with your brand and where they are in terms of their decision-making journey is crucial. Buyer motivation is the set of psychological factors behind a consumer’s decision to make a particular purchase. The purchasing cycle is referred to as the buyer’s journey, and it often follows three stages: awareness, consideration, decision. Some may define this using a different number of stages, but the underlying concepts are the same.
Thanks to technologies that can seamlessly track, collect and analyze detailed data, you can create a picture that reveals your ideal customer’s mindset, everyday habits, and life goals at every stage of the purchase cycle.
Differentiating Your Most Valuable Customers
Top-performing retailers recognize that traits other than standard demographics have become more important in defining today’s competitive and complex retail markets. They are focusing on social media, online reviews, consumer brand sentiment, and consumer behavioral attributes that serve to differentiate their most valuable customers.
The focus is on attributes that matter. Find out where your ideal customer works, shops, eats, and spends their leisure time. Gain real-time insights into their world view, their values, and their emotional hot buttons.
These other factors are as relevant as demographics in helping retail operations and marketing target, engage and attract more of the right sort of customers. But you typically can’t purchase this kind of information from traditional market research firms. This is a powerful incentive for retailers to consider partnering with third-party specialists to conduct research, unencumbered by corporate biases. They can help you build, nurture and enhance targeted customer profiles and capture key characteristics that you can use to take advantage of your most valuable business opportunities.
Assessing Your Buyers’ Motivations
The California consulting firm SRI International developed a psychographic framework with the acronym VALS, that stands for Values, Attitudes, Lifestyles. In the VALS Framework there are three primary motivations that matter for understanding consumer behavior: Ideals, Achievement, and Self-expression. The concept of primary motivation explains consumer attitudes and anticipates behavior. Consumers who are primarily motivated by Ideals are guided by knowledge and principles. Those who are primarily motivated by Achievement look for products and services that demonstrate success to their peers.
Consumers who are primarily motivated by Self-expression desire social or physical activity, variety, and risk. These motivations provide the necessary basis for communicating with the VALS types. When you examine the psychology behind what drives consumers to make a purchase decision, you should also reflect inward to evaluate your own motivations and how you want your brand viewed in the marketplace. By aligning your targeted customers’ motivations with your own you’ve produced a strong sales multiplier.
Benefits of Knowing Your Ideal Customer
Retail operations and marketing departments that implement and constantly refine ideal customer profiles enjoy several signiﬁcant benefits. Briefly, this knowledge can equip you to:
Align retail operations with marketing. The more you know about who is most likely to buy from you, the more targeted decisions can be made by retail operations and marketing. Once the two are working in tandem as relates to timing, tactics, and goals, you can more successfully quantify sales forecasting, maximize marketing spend and effectively execute inbound and outbound marketing campaigns.
Reinforce your brand promise. Your ideal customers embody your brand promise. When you understand who they are, you can speak to them about your brand in a language they understand and appreciate. This opens the door to opportunities to turn casual customers into loyal fans.
Create more personalized marketing content. You may have several ideal customers. Although they may share a preference for your product, their motivations for buying from you may differ. Once you define each ideal customer, you can begin to create messages that speak to them as individuals.
Influence the customer’s journey. After you’ve defined what motivates your ideal customer at each stage of the buyer’s journey, you will be better prepared to be proactive, rather than react, with engagement messages and activities that will resonate.
The overall result? You’ll see a vast improvement in sales and the overall customer experience.
Start by getting key members of your retail operations and marketing teams to brainstorm the common characteristics of your ideal customers in a targeted market. Ensure that the findings can be justified and are validated.
Once you’ve become accustomed to the process, repeat it across your product categories, services and other targeted markets. Use the information to help prioritize and direct your marketing messages and to develop success guidelines going forward.
Consider creating a Behavior Flow report, for both your e-commerce site and your physical location’s traffic patterns, allowing you to see how customers are reacting to and interacting within these spaces. Google Analytics provides a wealth of information about your customers. In-store beacons can measure and map store department traffic. Combining this information with sales performance and site analytics will allow you to uncover valuable insights about your customers. You may encounter geographic and/or personality segments you may have never considered marketing to before.
Successfully engaging with customers at whichever stage they are in their journey, knowing the right psychological factors at play, and responding by correctly positioning your brand in the marketplace completes and connects the other actions steps.
“The more you engage with customers the clearer things become and the easier it is to determine what you should be doing.” – John Russell, President, Harley Davidson
Want to learn more? Stay tuned for our forthcoming new eBook, Agility in Retail is Everything: 12 Action Steps to Accelerate Retail Growth.