Editor's note: This is a guest post by Scot Wingo, CEO of Spiffy, Executive Chairman of ChannelAdvisor and host of the podcast the Jason and Scot Show.
For decades, maybe even centuries, people have wanted the most food, housing, furniture, clothing and accessories for every dollar. They’ve wanted to squeeze every penny to ensure they get as much as possible from their hard-earned money.
But seeking value above all, appears to be shifting. It’s certainly not disappearing, but people are now divided along two camps: those that want value and those that want convenience.
The Great Recession of 2008 brought with it this great divide in consumer preferences as people split into two camps. The recession taught about half of Americans to protect their money at all costs. They are devoted to value, seeking deals, discounts and savings at every corner. It taught the other half that life is short and since money can disappear, time is more valuable. As such, they are focused on convenience, spending money in order to save time.
Retailers need to understand both camps, know what they want from a product or service, and create a plan to attract and keep their business.
With the right knowledge and the right approach, it's possible to establish loyal customers from both value-oriented and convenience-oriented consumers.
The value-oriented consumer
This is the group of consumers that will spend lots of time, effort, thought and planning to simply save a dime. They are the classic frugal consumers who value saving for the future and ensuring they have the financial stability to handle any unforeseen emergencies that may occur.
When the recession hit in 2008, the reaction of these consumers was to save money and minimize spending. They became financially conservative and focused on paying off all debt that they possibly could. They minimize overall purchases and when they finally decide to spend their money, each purchase is carefully considered, usually by looking for a substantial financial discount. (In this environment, off-price retailers have thrived as department stores declined.)
How to appeal to value-oriented consumers
While the priorities of consumers may be shifting, people always want good value. Therefore, you have to be ready to deliver in an appropriate manner.
Of course this all starts with the right pricing, as you can’t attract these consumers if the initial prices are not set at a competitive rate. Right price may not mean lowest price, depending on the nature of your business.
Create a strong value proposition by focusing on the benefits of the product or service. Place an emphasis in the marketing with a message that describes everything the consumer will get.
Urgency can also be important when attracting value-oriented customers, as they tend to take their time and may delay a purchase for months. But by adding urgency, you may be able to combat this habit. This strategy only works in certain situations, such as times when you’re trying to unload a lot of product. Urgency can come from a strategically-placed word in marketing or by placing a timeline on certain deals.
The convenience-oriented consumer
When the recession hit, this group came away with an entirely different perspective — they realized life was short and started valuing their time more than their money. The existential crisis of the recession made them feel that spending time doing the things they loved was more important than money-saving chores. Instead of mowing the lawn, they felt it was better to hire a lawn-care professional and spend time with the kids. Instead of cleaning the house, why not hire a cleaning service and use that free time on a hobby?
Convenience-oriented consumers are flocking to Amazon Prime (nearly 100 million of them). For roughly $100, these consumers have two-day shipping that, in their minds, pays for itself. After all, by not taking the time and energy needed for a trip to the mall, convenience-oriented consumers agree they are saving money by saving time.
According to research from the University of British Columbia, people who spend money to save time are actually happier than the opposite group, an effect that remained even after controlling the survey results for income. This study surveyed adults from the U.S., Canada, the Netherlands and Denmark, asking about their spending habits and rating their overall life satisfaction. To verify these results, researchers even conducted a separate field study, giving 60 different people $40 to spend on a time-saving purchase and another $40 to spend on a physical item. The final survey showed that people do indeed feel happier after spending money on time, not things. If these results say anything, it’s that convenience-oriented consumers are here to stay, and once someone discovers the joy of spending money to save time, they will likely continue the practice.
How to appeal to convenience-oriented consumers
Appealing to value-oriented consumers is pretty straightforward: provide a good deal on a quality product and you will eventually find your customers. Convenience-oriented customers, on the other hand, can be more complex.
It's important to focus on customer friction, or rather eliminating customer friction. Today’s consumers expect a smooth, seamless sales process, so any point where they have to give added effort, such as contacting customer support or even waiting in a checkout line, is a point of friction. To attract convenience-oriented consumers, you have to eliminate friction and make it as easy as possible to do business with your company.
There are many strategies to reduce friction and increase convenience such as providing multiple payment options including debit/credit-card processing, PayPal, Apple Pay and even the old relics of cash and checks. If someone can’t use their preferred method to pay, they may go elsewhere.
Twenty four-hour live assistance, clear product pricing, service-focused training and smooth sales processes are all ways to attract and keep convenience-focused customers.
The convenience-oriented consumer does not think like a DIYer. Instead, they prefer DIFM (Do It For Me), allowing them more time for the activities they enjoy. Do more things for your customers, and they will reward you with constant, loyal business.