The consumer has become the central axis of any business. Knowing their tastes, concerns and interests is essential to ‘capture their attention’ and, as a result, increase sales.
Throughout this article we will take a detailed look at what the online consumer is like, what types of customers we can come across in relation to consumer behavior in the digital market, how the buying process works over the internet… and much more! Shall we get started?
Understanding Online Consumer Behavior
More and more consumers are shopping online, and they also base their purchase decisions on information they look up themselves on the web, especially on social media.
These findings are confirmed in the latest report by the ONTSI (Spain’s National Observatory of Telecommunications and the Information Society), which also reveals that Spain ranks third in the world ranking of active social media users, with 29% of users connecting to them daily, and doing so more and more through mobile internet.
What does this mean? The consumer who chooses to shop online is an active social media user who communicates with other users (and with the brands themselves) through those networks to share information about their shopping experience.
Brands can easily get to know users’ consumption habits and preferences, and use this information to start or strengthen the relationship between company and user.
Factors That Influence Consumer Behavior
Among the variables that influence consumer behavior, we can find the following:
- Motivation
- Emotions
- Learning
- Information processing
- Culture
- Social patterns
Why Study Consumer Behavior?
Wanting to understand consumer behavior is nothing new.
For several decades, a great many studies related to buying and selling have been carried out, and at first these reports were based on analyzing the characteristics of products and services.
Over time, identifying the factors that influence the consumer in the buying process has taken center stage.
Today there are various methods that help with this kind of study, notably disciplines such as marketing, neuroscience, psychology, ethnography or Big Data.
The purpose of using any of these methods is to reach the consumer more effectively, offering them products that suit their needs and tastes.
But why is researching consumer behavior so important? Here are a few arguments:
1. It Influences Decisions
Behavior plays a part in many of the decisions that are made, and in this way helps determine how a product or service is marketed.
2. Seeking to Satisfy the Consumer’s Wants
You should seek to satisfy consumers’ wants and needs, a key aspect when setting a company’s objectives.
3. Making Use of Unmet Needs
To fill unexplored market niches.
4. Consumer Education
It is important to understand consumer behavior in order to make decisions, and at the same time there is the possibility of educating consumers according to our business interests.
5. A loyal customer is the best way to get ‘free advertising’ for your company
Since they promote recommendations and sales among their acquaintances, friends and family. For these reasons, retaining as many customers as possible should be the goal of entrepreneurs who want to grow their company in the market.
Online Consumer Behavior
Although everyone is different and has different tastes and interests, we can say that consumers who decide to shop online are characterized by:
- Being an increasingly demanding person with clearer ideas. They research and study the product or service they plan to buy beforehand, letting themselves be influenced by other people’s opinions or experiences. According to Cisco’s “Customer Experience in 2020” report, 70% of purchase decisions will be based on the consumer’s experience.
- They arrive at the moment of purchase feeling completely at ease. With the prior analysis they have done of all the information they have gathered, they are sure the product they have chosen is the best option.
- They move easily between online and offline channels. They use one or the other as suits them, looking for whatever is most convenient, cheapest or gives them a better shopping experience. They are a multichannel consumer.
From these main characteristics that ‘shape’ online consumer behavior, we can classify three types of behavior:
- The Research Online and Purchase Offline (ROPO) behavior. Linked to the previous point, we find a type of consumer who first looks for information online and then goes to the physical store to buy the product or service.
- The showrooming research behavior. In contrast to ROPO, there are consumers who begin their buying process by going to the physical store to see the product in person and get information about it, and then buy online.
- The online-to-online behavior. This is the behavior model we could call the ‘pure digital consumer’. It is the consumer who gets information on the internet about a product or service they want to buy and then completes the buying process.
The ROPO and ‘online to online’ behaviors are the two models that are most firmly established among digital consumers.
Study on Consumer Behavior
According to IAB’s latest ecommerce study, the first of them is represented by 69% of internet users who buy online, while the ROPO model is practiced by 22% of consumers.
Barely 9% of today’s consumers first go to the physical store to get information about the product and then buy it online.
Types of Target Customers Related to Consumer Behavior
There are several ways to delimit a market in order to ‘locate’ the customers who fit our business interests.
To do this work effectively, we can group a series of criteria into the following categories:
Individual or Professional?
Selling to individuals is not the same as selling to companies and professionals: their needs and priorities are usually very different.
Demographic Criteria
Age, gender, family situation, income level, education, ethnicity, religion and many more criteria of this kind largely define which type of customer we are going to target and which strategy will be most suitable.
What we offer, and how, is essential to differentiate yourself in each segment.
Geographic Criteria
Although some businesses have no geographic limitations (like an online store), most of them do have to think carefully about where their target customers are, to make sure they can access the service and the product as conveniently as possible.
Criteria That Are Harder to Measure
Imagine we have two 40-year-old men who are neighbors, with a similar income level, the same level of education, etc. Do they buy the same things?
No.
Because there are many other criteria that come into play and are harder to assess, such as whether someone is more or less consumerist, innovative, careful with their budget, interested in a particular topic, etc.
This kind of data can usually only be obtained through surveys, and it is relatively expensive, but even if you do not have exact data, it is important to define the type of customer using these criteria.
Digital Consumer Behavior
In general terms, “the largest share of users who buy online are men and women in equal numbers (50% each) between 31 and 44 years old with a medium and medium-high socioeconomic level, and 65% of them have a university education.
They live in urban areas of more than 100,000 inhabitants”, according to Pew Research Center’s Internet. In addition, 74% of these shoppers say they buy online around 2.4 times a month, with an average spend of €74.
The “Generational Marketing” report makes the following classification regarding the various types of consumers based on generational grouping.
This way we can group together a series of consumers who, because of their age, tend to share common traits in their use of the internet and, consequently, in making online purchases.
► Silent Generation
People born before 1945. They are mainly characterized by being extremely traditional and making practically no use of the internet.
In other words, online stores should not focus their sales on the Silent Generation, since this type of consumer will not shop online.
► Baby Boomers
Those born between 1946 and 1964. A study by Statista states that this generation accounts for more than 60% of the people who use the internet, with YouTube and Facebook standing out as the most used platforms.
As for online purchases, Baby Boomers buy little online, since they still prefer to shop in physical stores.
To communicate with this generation, companies will need to carry out a multichannel strategy.
► Generation X
Born between 1965 and 1978. Although this generation was not born into a digital environment, it has gradually become used to it. Today Generation X is so used to the internet that 73% of them use it every day.
They tend to make a large number of purchases online, but more cautiously and with greater awareness of what they buy. They prefer lower-priced products.
► Millennials or Generation Y
Young people born between 1979 and 1994. The millennial generation stands out for its heavy consumption of online content, its use of social media, and its social and environmental commitment.
70% of Generation Y shop on their mobile phones, driven above all by discounts and the speed of the buying process, as stated by Cetelem’s Observatory in its report “Spanish Consumer Habits”.
Since this generation brings together young people from 25 to 40 years old, we can clearly distinguish three different segments:
- Under 25: low purchasing power, since most of them are students. They act as influencers for consumer products on various social networks, especially Facebook, Instagram and YouTube.
- Up to 30: they begin to make more buying decisions, as their purchasing power grows over the years.
- Between 30 and 40: the oldest millennials often already have children, so they begin to take on the roles of the generation before them: Generation X.
Within the Millennial Generation we find the Xennials: people who belong to Generation Y but do not identify with it, and therefore do not consider themselves millennials because of their lifestyle and consumption habits.
► Generation Z or Centennials
By Centennials we mean the whole generation born from 1995 onward. Without a doubt, we could say these young people were ‘born with a phone in their hand’ and that digital is in their DNA.
Although their purchasing power is low because of their young age, their consumption habits are influenced by social media and advertising, as Myriam Younes (Business Development at Expedia) explains in an interview given for the Vodafone Business Observatory.
Importance of the Millennial Generation in Consumer Behavior
Millennials have become one of the most important generations when it comes to the consumption of goods and services.
As we mentioned above, these young people are used to their day-to-day life being centered on the use of the internet and their mobile phones. Therefore, it is one of the generations that most brands are trying to ‘woo’.
Below are some statistics revealed by the consulting firm Genesys, where you will see why millennials are one of the most influential generations in online consumption.
- 38% of millennials feel comfortable sharing their location in order to receive a more personalized experience.
- 34% of consumers do not see it as a threat to give their credit card information on different platforms.
- 88% of consumers quite frequently use voice or video as their first options, followed by chat or email.
- 70% of millennials show a strong preference for mobile marketing.
- 50% of consumers use messaging apps to contact a company’s “Customer Service” department.
- More than 80% of the millennial generation use Facebook Messenger over other similar platforms.
Consumer Behavior Trends
To finish this article, we thought it would be interesting to look at the top trends related to consumer behavior that will shape the coming year. Take note!
► Customer Experience
The opinion and experience of the consumer are becoming increasingly important, no longer only in the buying phase but also in after-sales. And using this last phase to keep the flame alive.
► E-sports
E-sports are electronic sports based on video game competitions that have become a real ‘boom’ today thanks to the rise of new technologies.
This business will continue to develop over the coming year and promises to be an even more revolutionary phenomenon.
E-sports have become a great business opportunity that helps connect different brands with their target audience (especially among the youngest), combining the use of social media with streaming.
► The Streaming War
Consumers are becoming more demanding every day about the content they want to receive. They are willing to make changes to get a more personalized service tailored to their tastes, looking for quality over quantity.
► The Hybrid Consumer
We are facing a consumer who asserts their individual identity through the consumption of products and services that offer originality. This trend is due to the effects of globalization and the homogenization of cultures.
► The Reign of Voice
Voice recognition has begun to change the way consumers relate to their environment. Voice is becoming not a product, but an experience.
Amazon announced that it intends to sell 113 million Echo devices in the coming years and, although it currently leads this sector, competition in the device market is expected to be fierce.
Siri, Alexa and Google Assistant are just some of the best-known voice recognition software. However, this trend is permeating and little by little will dominate our day-to-day lives, at work, at home and in the way we relate to each other.
► New Adults
The well-known “Millennials” are the so-called “New Adults”. Their consumption patterns affect their daily lives, and companies are aware of this, offering products or services that make their day-to-day easier.
► Eternal Beginners
The “Consumer Trends” report reveals that 30% of participants acknowledged that the speed at which technology is developing makes it impossible for them to keep their capabilities and skills up to date.
The effort to learn and relearn is increasingly becoming an endless race. Brands must keep up with data and trends or they will miss important business opportunities.
► Rethink Social
We currently live surrounded by devices and technology that influence everything we do, to a degree that is perhaps somewhat alarming. However, part of the blame lies with brands, which also do not hesitate to make use of this by creating integrated buying and selling processes.
The ‘Consumer Trends 2019’ report states that “by 2030, it is estimated that 80% of all customer contacts will be handled through artificial intelligence, which tells us a lot about how technology is going to influence us.
The future is open and we still have time to rethink the new social molds, together with brands that, although they crave greater engagement, must help consumers invest in this era of (dis)connections.”
► Open-Source Sustainability
Consumers increasingly tend to prefer brands that are able to go beyond their sustainability platforms.
Brands are transcending their own limits, looking to add value and freely share their knowledge and technologies in order to offer effective solutions to many of today’s world problems.
► Changemaker Brands
Brands are characterized by having a clear purpose to improve the world in a way that is relevant to their business, and by being committed to beliefs and ideologies.
Many of these companies have active internal operating policies and social responsibility initiatives in order to achieve their purposes.
Conclusions on Consumer Behavior
Digital consumers are influenced by many stimuli that impact them, move in a dynamic environment and expect to meet their needs quickly and effectively, so getting to know the customer, their habits and preferences is a guarantee of success when offering a product or service.
As related content, here is an article with some email templates used by the best-known startups.
Understanding these patterns helps you better profile your ideal customer and apply hyper-personalization in every message you send them.