Buyer BehaviourDefinitions and Classifications

Learning Outcomes

Know the different types of customers

Difference between Buyer and Consumer

Behavioural pattern of a typical purchase

Consumer buying process

Buyer

◦ A buyer is a customer---he is an individual or business that makes a purchase from a seller. Regardless of the scenario, the buyer is the party that gives or transfers money to the seller to secure a product. A teenager getting a video game from a store at the mall is a buyer as is a distribution company that purchases raw materials from a manufacturer on credit.

Consumer

◦ On the other hand, a consumer is a person who uses a product or service. The consumer is often called an "end user" because he is the last stop and does not usually transfer or sell the item to another party. A buyer can be a consumer, as in the example of a teenager buying and using a video game. At the same time, a consumer is not necessarily the buyer---for instance, if a mother purchases cereal for herself and her family, each family member is a consumer of the product

B2C vs B2B

◦ The difference between a buyer and consumer comes into play when a company is evaluating its overall business plan. A company usually falls into one, or both, of two categories---B2B (business to business) or B2C (business to consumer). As the name "business to business" suggests, this is a scenario where two commercial entities enter into a purchasing agreement. The purchasing business is simply a buyer when it plans to resell the items purchased, but it is a consumer when it uses them (as in the case of buying office supplies). A business to consumer arrangement is between a commercial entity and the end user

Considerations

◦ When marketing a product or service a company has to identify the needs of both the buyer and the consumer. For example, a publisher who sells textbooks must market to both the distributor who will sell the textbooks and the professors who will order them for class. The requirements of a buyer may be different from the consumer, if they are two separate people, but in many cases the buyer's decision is strongly influenced by the consumer's needs

Repeat Customers

“Lifetime value is the total value of a customer’s business over the lifetime of their relationship with your company. The more a customer purchases from you and the longer they stay with your, the more valuable that customer is to your business” – Josh Kauffman

Repeat Customers

That is how you turn a £100 sale into £1200 then £12000 etc at no extra cost! Maximising the lifetime value of each customer.

Every successful business owner will tell you that the secret to business growth is repeat sales to repeat customers. Repeat sales are the single easiest way of increasing your business revenues.

Imagine what your business would look like if you retained all the clients you worked so hard to get?  The less people drop off your radar, the quicker you’ll be able to accelerate your business growth

Repeat Customers

1. Be devoted to your customers

You are in business because you offer a solution to your customer’s problems.  The more committed you are to seeing them solve their problems the more committed they will be to you as their provider of choice.

Repeat Customers

2. Encourage and Reward loyalty and repeat business 

This is an effective way of encouraging repeat business. Let the customers doing repeat business know that you appreciate their custom. It shouldn’t always come in the form of a discount (how long can you keep reducing your prices) but it can come in the form of a gift or something that would be of immerse value to the customer and would generate word of mouth referrals. E.g. How many things have you not heard the story of someone being unexpected upgraded to first class or gotten a free products due to amassed loyal points

Repeat Customers

3. Be positive and encourage positivity

People like being around positive, cheerful and optimistic people. It is less tiring. Even though you may not be in the motivational business, always seek the opportunity to contribute positively to the mental well being of your customers. Learn to offer kind words as you go about your business. Your customers will be grateful for that. A thank you or smile goes a long way

Repeat Customers

4. Create an active community

An active community provides extra support to your customer retention activities. The more interactive and engaging the community is, the better it is for all involved. You could have a mix of free or paid versions  of such communities to suite all budgets and people’s needs. Social media has made this relatively easy to implement. Pick a platform and make it easy for people to join in

Repeat Customers

5. Be accessible

People are short of time.  In the struggle to get more done, they make themselves less available to their customers and all customer facing work is delegate to the most junior and inexperienced member. This is ok for managing resources but if I’m paying you loads of money and have been a customer for a couple of years, then I expect something better. I want to know that I can get a senior person on the phone if I need to. Be the company whose clients know they can reach out to you when things are tough. Your senior support team or even yourself will be there to help

Repeat Customer

6. Follow up

This is something that you’ve probably heard and read a lot on already but there is no substitute for a good follow up strategy. Leaving your clients and prospects cold is not only a bad thing but it will affect your ability to grow your business. Emails are a cheap and free way of following up

Repeat Customers

7. Be transparent and honest

People like to do business with people they like and trust. So when things go wrong,  (which they will from time to time) be honest and own up to your faults. You are less likely to alienate your customers when you are truthful and admit you got it wrong. People can be quite forgiving if they like you

Repeat Customers

8. Create a system and work the system

The key to implementing these ideas is to fine-tune it all into a system that works for you. Make it part of your business’ DNA. You and your staff should seek every opportunity not only to make a sale but also to create and encourage loyalty and devotion to your brand.

What is better in business than  a constant flow of customers who come back time and time again

Loyal Customer

What is Customer Loyalty?

Customer loyalty is all about attracting the right customer, getting them to buy, buy often, buy in higher quantities and bring you even more customers

loyal CUSTOMER

You build loyalty by…

■ keeping in touch with customers using email marketing, thank you cards and more.■ treating your team well so they treat your customers well.■ showing that you care and remembering what they like and don’t like.■ You build it by rewarding them for choosing you over your competitors.■ You build it by truly giving a damn about them and figuring out how to make them more

successful, happy and joyful■ In short, you build customer loyalty by treating people how they want to be treated. Does your

marketing plan include strategies and tactics for customer loyalty & customer retention?

Rational Customer

In economics a rational consumer is defined as the people who act in a rational way and make rational choices, namely spending their money wisely

Rational Customer

In economics a rational consumer is defined as the people who act in a rational way and make rational choices, namely spending their money wisely

One of the underlying reasons as to why human beings are not rational is the fact that some do not live on the margin, thus they have more than enough money to buy everything they need and want

The lack of knowledge that surrounds individuals is evident through the products we buy at a ridiculous price when we could buy them somewhere else at a much cheaper price

Therefore, instead of taking the time to evaluate and compare the different prices of the same product we chose to buy it the first time we see it, thus making it an irrational decision

In order to be a rational consumer people must understand that a need is something that you need to survive, whereas a want isn’t a vital necessity needed to survive

Lapsed Customer

In any direct marketing business, it is a foundational problem when previous buyers stop engaging with the retailer or brand. Sometimes referred to as the “leaky bucket” problem in direct marketing, customer attrition impacts all areas of the business. It impairs the overall value of the “house file” and puts added pressure on new customer acquisition.

Lapsed Customer

1. Define lapsed customers

One mistake marketers often make is to not create rules that define lapsed customers. You don’t just want to let attrition happen without recognizing it and dealing with it quickly. Different businesses will have different definitions. Even within a business, different rules or definitions may apply. For example, email accounts from lead generation programs that generate triggered emails might be considered lapsed with no response or interaction after the initial 30 or 60 day contact stream. At the same time, someone who has been a good customer and purchased for several years, may not be considered a lapsed customer after months of non patronage.

Lapsed Customer

2. Track and report their performance

Once you define lapsed customers, you’ll want to gain as much visibility and measurement of their performance as possible. In addition to tracking and reporting the typical email metrics – delivered email, contacts, opens, click throughs, orders, sales value, etc. – you’ll also want to measure reactivation rates and even lifetime value of a reactivated customer. It will help you not only understand the potential value of these names, but also measure and understand the impact of various strategies and tactics that were deployed

Lapsed Customer

3. Segment the lapsed customer list and target messages appropriately

As described in the previous slide, there are different profiles of lapsed customers. Some had been long-term customers, while others are new prospects that never converted. Some have been lapsed for years, others stopped buying or engaging recently. Each of these groups need to be spoken to differently, with different frequency, through targeted mailings, Calls and special offers.

Summary

Not all buyers are consumers,

Companies thrive on repeat business or Repeat customers

Repetition leads to customer loyalty and the creation of new customers through word of mouth

Most purchases are made irrationally. Rational customers are the ones who spend their money wisely

In every company customers will fall by or become lapsed. Companies must reach out and re-activate them through appropriate communication.