For a lot of value-conscious shoppers, certainty in what they’re buying is more important than getting a deal on an unfamiliar product that may not work or that they may not like.
Of course, that’s only true to a point. Many decisions that consumers make are based on habit. However, that habit is cross-referenced against a kind of internal “risk-and-reward” assessment. If the potential benefits of an unfamiliar, untested product really seem like that much of an improvement, customers will make a change.
Customer loyalty is never guaranteed. You want to do whatever you can to ensure that your customers get an optimal experience. Otherwise, they may begin shopping for a better option.
Deal-Chasers: A Growing — but Fickle — Segment
Understanding the diverse preferences of consumers is crucial for driving sales and growth. According to a recent PYMNTS report, 46% of adult Americans shoppers say they “chase deals.” In other words, these consumers are willing to trade loyalty for the best deals, regardless of the brand or store.
Interestingly, baby boomers and millennials, as well as high and low-income earners, all exhibit this behavior. However, chasing these customers may not guarantee long-term loyalty or profitability.
It’s true that more than half of US customers emphasize that price and quality are the most critical factors in making a purchase. According to Analytic Steps, 52% admit that convenience influences at least half of their decisions. The world is fast-paced, and shoppers don’t have the luxury of spending an entire day browsing for clothes or hours collecting their groceries.
The surge in popularity of delivery services like Amazon Prime showcases that customers are more willing than ever to pay for the convenience factor. The same Analytic Steps study found that 66% of customers subscribe to a delivery service, and 25% even pay for multiple services. This trend highlights the potential financial advantage for merchants who prioritize and promote convenience.
Regardless of all those facts, though, relying on a loyal, returning customer base is much more stable ground for growth.
The Persuadables: A Potentially Profitable Subset of Consumers
Remember: while the share of consumers identifying as deal-chasers has increased steadily over the last six months, the survey data suggests that 54% of respondents aren’t chasing deals. So, what motivates them?
Some of these shoppers are sticking to what they know, so long as the brands they know continue to provide the experiences they expect. Others are so-called “persuadables.”
Persuadables lie between deal-chasers and loyal shoppers. They’re predominantly middle-class that are financially stable, value certainty, and are less inclined to sacrifice quality. Persuadables mostly comprise individuals earning between $50,000 and $100,000 per year, with more women than men in this segment and slightly fewer of them holding college degrees. They shop as much online as they do in physical stores, and their loyalty to specific products and brands makes them an ideal target audience for many retailers.
This group presents an attractive and potentially profitable customer segment for retailers. Persuadables can be swayed by a good deal or a better payment method, provided it’s easy and convenient.
The Importance of Digital Features and Payment Options
As consumers face more choices, decisions are often based on habits or risk-and-reward assessments. Digital features and payment options have become crucial in attracting and retaining customers. Traditional and alternative payment methods, such as digital wallets and buy now, pay later (BNPL) options, are now considered essential.
The digital features offered by merchants, and the ease with which consumers can find and use them, are what attract and retain customers. Consumers across every market have indicated for three consecutive years that payment choices matter most. In the U.S., digital wallets, BNPL, and contactless payments in stores are now considered table stakes.
Additionally, retailers need to focus on removing friction from the shopping experience. Offers and deals that are embedded in the payment flow can enhance the experience for loyal or persuadable consumers. It can also eliminate the hassle associated with chasing deals or abandoning sales due to a lengthy process. Retailers that offer seamless and frictionless experiences can turn persuadable consumers into loyal shoppers, and at the same time, keep existing customers from straying.
Inflation Also Plays a Role
Of course, these forecasts may also be in flux, due to a combination of historically high inflation and the ongoing digital shift. These factors have likely impacted consumer loyalty. Retailers must adapt to these changes and provide the certainty and predictability that consumers desire in their shopping and payment experiences.
There’s a widening gap between what merchants offer and what consumers say drives their preferences. This highlights the need for retailers to make digital features easily accessible. A less friction-filled experience emphasizes preference and customer satisfaction, which in turn, drives spending.
Innovators continuously create new ways for consumers to achieve better, more certain outcomes with less friction. Retailers need to adapt to these solutions or risk being left behind as more consumers become digitally savvy and inflation-pressured in 2023.
Payments Could Connect Deals and Experience
Payments can be a viable bridge between consumers who value the best deals and those who prioritize the best experience.
Retailers can attract deal-chasers by offering a business model that supports a continuous flow of deals while also ensuring a smooth shopping experience. For persuadable and loyal customers, offering a frictionless payment experience can play a crucial role in retaining them.
By incorporating innovative payment methods and streamlining the checkout process, retailers can create a more enjoyable shopping experience for customers who value convenience and predictability. I believe this approach will deliver the best balance of customer retention and new buyers.
