What Is Customer Psychology? How to Understand Your Customers

In today's fierce market you face many competitors, whatever you sell. To impress customers and win market share, analyzing customer psychology is very important. Read the article below from Mona Media to learn customer psychology to learn what it is and how a business can make the most of customer psychology analysis.

What is customer psychology?

Customer psychology is the combination of a customer's needs, wants, emotions, attitudes, behavior and purchase decisions. It affects how they perceive, evaluate and choose a business's products or services.

Why analyzing customer psychology matters

Analyzing customer psychology means studying and understanding customers' psychological factors so you can design and run effective marketing strategies. It helps a business to:

• Identify its target customers and group them by similar psychological traits.
• Create products or services that match customers' needs and wants.
• Set reasonable prices that compete with rivals in the same market segment.
• Choose communication channels and advertising media that fit customers' habits and preferences.
• Strengthen the relationship and bond between the business and its customers.

Customer psychology by age

One important factor that shapes customer psychology is age. Each age group has its own psychological traits, which affect how people spend and decide to buy. Below are some observations about customer psychology in two age groups: teenagers and middle-aged people.

Teenagers: Generation Z, the consumers of the future

Teenagers are Gen Z customers (born between 1995 and 2010), the future consumers of the market. Their psychological traits include:

• Digital natives who use information and communication technology naturally and flexibly.
• Creative, free-spirited, confident and good at managing themselves.
• A strong sense of social responsibility and environmental sustainability.
• A refined sense of aesthetics, with a taste for what is new, unique and personal.
• A smart-spending approach: they compare price and quality before buying.

>> Understanding the shopping behavior of Gen Z today

Psychology of middle-aged customers

Middle-aged customers are Generation X (born 1965 to 1980) and Generation Y (born 1981 to 1994), the main consumers in today's market. They share these psychological traits:

• They have plenty of experience, knowledge and money, and a strong ability to make buying decisions.
• They value a balance between work and life, and care about health, family and education.
• They are aware of brand value and of product and service quality, and are not easily swayed by advertising.
• They stay highly loyal to products and services they have used and been happy with.
• They tend to spend sensibly, save, and play it safe.

The real benefits of understanding customer psychology

In business, understanding customer psychology is a key part of building effective marketing strategies. When you know what your customers want, need, like and believe, you can design products, services and content that fit them. By understanding customer psychology, you can:

• Grow sales by stirring up customers' desire to buy.
• Strengthen customer engagement and loyalty by meeting and exceeding their expectations.
• Raise your company's credibility and brand by building trust with customers.
• Boost your competitiveness and market growth by creating differences and added value for customers.

Many businesses assume customers decide with logic, but in practice emotion plays a big part. A product or service may not be the best on the market, but if the image, brand, website, videos and documents all look polished and professional, customers find it easier to trust and choose.

Not everyone admits that good looks affect buying decisions, though. Some businesses understand this well and invest heavily in their brand image, while others see it as an unnecessary “surface” matter. Experience has shown that an ugly website or an unprofessional design can make customers leave straight away.

So how should a business use psychology in design to attract customers? Why is investing in brand image the right decision? Watch the video below to understand more:

10 customer psychology factors that often appear when people buy

If you are a business owner, marketer or salesperson, you cannot skip understanding customer psychology. But customer psychology is neither simple nor fixed. Here are 10 psychological factors you will commonly meet when customers buy:

The wish to have their own needs satisfied

Customers buy not only to meet basic needs such as food, clothing, housing and transport, but also to satisfy higher needs such as safety, love, self-respect and creativity. You need to understand customers' own needs and offer products, services and content that help them feel those needs are met.

Rushing when there is little time to choose

Customers tend to buy quickly when they have little time to choose or are under outside pressure. You can use this to encourage purchases by:

• Offering deals limited by time or quantity, to create a sense of scarcity and high value for the product or service.
• Writing messages that grab attention and trigger the urge to buy, such as “Buy now before it's gone”, “Only 1 left”, “Big discount today only”.
• Making the buying process simple and convenient so customers can buy quickly and easily.

Saving money

Customers want to save money when they buy. These are useful ways to help them buy:

• Run promotions, discounts, gifts and reward points.
• Offer high-quality, durable products and services.
• Compare prices and benefits so customers see that buying from you is reasonable and saves money.

Personal preferences

Customers often buy according to personal taste. Ways to encourage them to buy include:

• Offer products in a choice of colors, sizes, styles and functions that match customers' wishes and tastes.
• Customize or personalize products to customers' requests.
• Create relevant content to attract customers and keep their interest.

Preference for privacy

Customers usually prefer privacy when shopping. To encourage them to buy, you can:

• Provide safe channels for communication and payment.
• Protect customers' personal information and privacy.
• Offer customers unique products and services.

Hesitating and comparing prices

Customers usually want to buy at the lowest price possible. They will compare your price with similar products from competitors. To overcome this, you need to show customers that your product is worth more than its price. You can do this by highlighting its features, benefits, strengths and exclusive points.

Caution

Customers are often afraid of risk when they buy. They worry the product will not match its description, will be poor quality, or will have no warranty or returns. To overcome this, you need to build trust. You can do this by providing certificates, warranties, return policies, and positive reviews from customers who have already bought.

Customers who do not know what they want

Customers are often unclear about their needs and wishes when they buy. They know they need some kind of product but not which one suits them. To overcome this, you need to advise and guide them. You can do this by asking about their purpose, needs, preferences and budget. Then you can recommend products that match their criteria.

Well-informed customers

These customers have researched the product or service you sell. They know its features, strengths, weaknesses and price well, and can compare it with other products on the market. To attract and keep them, you need to show deep expertise in your product and give full, clear and accurate information about it. Avoid advertising slogans or bending the truth, respect their knowledge, and answer every question professionally.

Preference for full, clear information

This type of customer wants to know every detail of the product or service they are about to buy. They care not only about the main features but also about origin, ingredients, production process, warranty, return policy, technical support and related services. To overcome this, you need to give accurate and transparent information, such as clear, easy-to-understand product descriptions with illustrative images.

An effective process for analyzing customer psychology

Analyzing customer psychology is one of the key steps in building effective marketing and sales strategies. By understanding customers' needs, wishes, attitudes and behavior, you can create products, services and content that fit your target audience. To analyze customer psychology effectively, follow these steps:

Define the target customer

Target customers are people who need and can afford your product or service. To identify them, you need to research the market and your competitors. You also need criteria to tell target customers apart from people who are not. The criteria can include:

• Demographics: age, gender, income, education, occupation, location, etc.
• Psychological traits: interests, values, habits, perceptions, motivations, etc.
• Behavior: how much they use the product or service, how often they buy, information channels, feedback, etc.

Researching customer behavior

Once you have identified your target customers, you need to study their behavior to understand what influences their buying decisions. You can use these methods to research customer behavior:

• Join social media groups, communities and forums: You can follow and join discussions about your product or service on social channels such as Facebook, Instagram and Twitter. This lets you collect customers' opinions, feedback, questions and complaints.
• Analyze customer psychology with a CRM system: CRM stands for Customer Relationship Management. It is a system that helps you manage and analyze data about your customers. You can use a CRM to track transaction history, preferences, behavior and how customers respond to your company's marketing and sales campaigns.
• Run surveys: You can run online or in-person surveys to collect customers' opinions and feedback about your product or service. You can use survey tools such as Google Forms, SurveyMonkey and Typeform. Write survey questions that are clear, easy to understand and have a purpose.

Segmenting customers

After researching customer behavior, you need to split customers into specific groups with similar traits and needs. You can use these segmentation methods:

• Segmenting by customer value: Based on how much each customer contributes to revenue and profit. You can use metrics such as average value per transaction, number of purchases in a period, conversion rate and customer retention cost.
• Segmenting by customer journey: By the stages of the buying process. The main stages are awareness, interest, consideration, decision, action, retention and growth.
• Segmenting by customer profile: Based on demographics, psychology and behavior, using tools such as HubSpot, Xtensio and Userforge.

Planning for the long term

After segmenting customers, you need a long-term plan to keep and grow your relationship with them. Set specific goals, strategies and activities to attract, care for and retain customers. You also need to review and adjust the plan based on results and customer feedback.

Some skills needed to understand customer psychology

Customers decide whether a business succeeds or fails. To sell effectively, you need to understand their psychology and know their wishes, needs and problems. To do this, you need a few skills:

• Communication skills: The ability to listen, ask questions, answer and persuade customers in a natural, friendly way. You also need to use body language, voice and expression to build rapport and trust with customers.
• Observation skills: the ability to read signs of a customer's mood, attitude and behavior. You need to know when a customer is interested, worried, annoyed or ready to buy.
• Analytical skills: The ability to analyze the information you collect from customers and come up with solutions that fit their needs and wishes. You also need to judge each customer's priority, potential and difficulty so you can choose the most effective sales strategy.
• Adaptability: The ability to handle surprises, unwanted reactions and problems that can come up during a sale. You need to deal with difficulties, get past obstacles and resolve customers' complaints flexibly and professionally.

Tips for influencing customer psychology

By applying psychological principles to your marketing strategy, you can attract and keep customers more effectively. Here are some tips to influence customer psychology with ease.

Emphasize what is exclusive to your product

Exclusive points are features, benefits or values that only your product has and no other product can match. By stating these points clearly and convincingly, you make your product different and distinctive, so customers feel more satisfied and more confident.

Example: If you sell tablets, you can emphasize a slim and light design, a multi-touch screen, long battery life, or apps available only on your tablets.

Creating a “crowd effect”

The crowd effect is the tendency to want to use or like a product when we see many other people using or liking it. In psychology this principle is called “social proof”: we tend to trust what other people have already shown to be good.

By showing social proof such as the number of buyers, views, reviews, followers and shares, or opinions from experts, celebrities and real users about your product, you can create a crowd effect and make customers want to buy.

Example: If you sell books online, you can show the number of copies sold, reads and reviews, or articles, videos and podcasts about your books on websites, social media and other channels.

“Fear of missing out” (FOMO)

FOMO is a negative feeling that we are being left behind by others or missing a valuable opportunity. In psychology this principle is called “scarcity”: we tend to see rare or hard-to-get things as more valuable.

By creating scarcity for your product, for example limits on quantity or time, or special privileges, you create urgency so customers want to buy right away and not miss out.

Example: If you sell movie tickets online, you can create scarcity by showing how many tickets are left, how much time is left to buy, or special deals for early buyers only.

Using the influence of the senses

The senses are the channels that connect us to the outside world, and they strongly affect our buying decisions. By appealing to customers' senses with images, sounds, tastes, smells or touch related to your product, you can create positive, memorable experiences.

Example: If you sell ice cream online, you can appeal to customers' senses with appetizing pictures, the sound of ice cream melting in the mouth, a range of flavors, or the cool feel of ice cream.

The “steady drip” tactic

Did you know that customers often do not decide to buy right away, and need to come across your product or brand many times? This is a basic principle of consumer psychology, known as the “mere exposure effect”.

By this principle, the more often we come across something, the more we tend to like and trust it. This is why advertisers repeat the same messages and images across many channels.

How to apply the “steady drip” tactic in business:

• Create plenty of content about your product or brand: On social media, blogs, email, video and podcasts, with content that is engaging, valuable and suited to your customers.
• Use remarketing tools to show ads again to customers who have visited your website or viewed a product: Tailor ads to customers' interests, behavior or stage in the buying process.
• Offer promotions, deals or gifts to loyal or potential customers: Send emails, messages or notifications to let customers know about the offer and encourage them to come back and buy.
• Give customers a chance to try the product or service before buying: Let customers try it free, borrow it or rent it for a set period so they can feel its value, which raises the chance they become real customers.

Customer psychology is a key factor in business and marketing. By understanding customers' needs, wishes, attitudes and behavior, a business can create products, services and strategies that fit its target audience. MONA Media hopes this article has given you the basics of what customer psychology is and how to understand it effectively.

>> See also:

• Customer behavior explained: how to research customer behavior
• Leads explained: how to increase the number of potential customers
• 5 steps to help building a customer persona that works