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WHAT SMALL BUSINESSES NEED TO KNOW ABOUT THE NEW CONSUMER MIND

By Kit Yarrow, PhD

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“Consumers want to feel seen and valued in what they perceive to be an increasingly rude and isolating world.”

A decade of swift and stunning change in American society has transformed our psychology, which has in turn had an impact on how and why we shop and buy. For marketers, this means that the past is no longer prologue — what’s worked before won’t work today. They are presented with both the problem of adapting and the opportunity to be better: better than before and better than slower-moving, less insight-driven competitors. Understanding our new psychological drivers, such as the emotional cravings that fuel preferences and the new ways we make decisions, is the foundation of more resonant strategies and swifter execution.

Our new consumer psychology has given small businesses a unique opportunity. Americans are disappointed in the institutions they once took for granted as being there to serve them. Edelman’s 2014 Trust Barometer found that fewer than 20 percent of Americans trust business leaders to be honest and ethical. The percentage of Americans who trust our political leaders is even lower. Gallup has reported similar findings, as well as dwindling trust in organized religion, schools and the media.

What do Americans trust? Small businesses.

Nearly three times as many Americans have confidence in small businesses compared to big businesses. In fact, small businesses top the list of nearly every survey measuring confidence and trust in establishments.

This trust imbalance is a jumbo-size advantage to small businesses, particularly if you understand the emotional underpinnings of today’s trust deficit. Small businesses have the opportunity to provide trust-based emotional benefits that are more difficult for larger businesses to offer. Today’s wary and guarded consumers want to be able to relax their vigilance; they want to trust. They want to feel seen and valued in what they perceive to be an increasingly rude and isolating world. They want reassurance that their decisions are smart ones — that they’re not being taken advantage of or duped. They want to feel more powerful and in control in this faster, less predictable world. These fundamental psychological issues are part of major sociocultural shifts that are profoundly influencing the purchasing decisions of consumers.

Samantha was an avid seller on eBay until a dispute with a customer. “It was truly a nightmare to be maligned by this dishonest buyer and not ever be able to talk to a person or get help from eBay. I spent hours on these forms that I frankly don’t think anyone ever read. I never got a response — just money taken from my account.” Samantha says she sells on TheRealReal.com now. “They made a little mistake in the beginning, and I got an immediate answer and a fixed problem. There are actual people over there, and they’re smaller, so they care — it’s not like dealing with a machine like it was on eBay.”

Samantha, and other consumers I’ve interviewed, have told me that smaller businesses often seem more human, approachable, transparent and honest, enabling the consumers to feel more secure and trusting about their transactions. The emotional benefits of supporting businesses that demonstrate a sense of humanity are accentuated by a societal pull toward superficiality at the expense of authenticity and a sense, on many people’s part, that rudeness is gaining on civility.

Of course, these emotional benefits are weighed against competing needs, such as time and money. I often say that the consumer mind is akin to a committee voicing frequently conflicting needs. Under stress, which is how we often purchase, the most persuasive argument has everything to do with circumstances. This explains why consumers often say they want healthy fast-food options, but in the moment more often choose what feels most comforting or easiest.

To win against competing voices for faster, cheaper or easier solutions, small businesses need to accentuate the emotional benefits they have to offer — the human connection, visibility and trust that consumers crave. In addition to the obvious – cementing relationships by maximizing positive interactions — businesses have a host of relatively new tools at their disposal.

I tell small businesses that there are at least four things they can do to capitalize on this advantage:
1.   Cultivate customers who will champion your products and services through blogs, social media posts, ratings and reviews. Rachel found Westlake Art and Framing through Yelp. “The person who wrote the review was so specific about why she likes — no, loves — that place, I had to give it a try.”
2.   Use crowdsourcing and crowdfunding to generate an even greater sense of involvement and ownership. Pamela had purchased Sarah Oliver handbags before, so when the company sent out a call to crowdfund a wedding line, she participated. Her deepened sense of ownership is obvious when she says, “We did it! We met our goal!”
3.   Showcase your sense of community and encourage the involvement of your customers’ friends through contests, events and co-promotions. Sam hadn’t had much interest in high-end watches until a friend brought him to a cigar-and-whiskey party hosted by a local jeweler. “It was great. I related to that group and saw what I was missing.”
4.   Allow self-expression and foster a sense of control through service and customization options that are too cumbersome for larger organizations to provide. “My bike is perfect for me,” says Joseph. “I could have bought one online, but it wouldn’t have been customized for my body and how I ride.” Joseph says that the bike shop has become a place he visits to socialize with like-minded cyclists.

Consumers have emerged from a decade of sociocultural upheaval with a new psychology: They think differently, relate differently and they have new needs and desires. Understanding how and why consumers shop and buy is the gateway to stronger connections that ultimately leads to stronger businesses, both small and large.

 

About Kit Yarrow, Ph.D.

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Kit Yarrow is a professor of psychology and marketing at Golden Gate University, popular keynote speaker, marketing consultant and author. Yarrow’s unique ability to apply clinical psychology to the field of behavioral economics has won her four endowed research professorships and recognition as the 2012 Outstanding Scholar of Golden Gate University.

Yarrow shares her findings and analyses in her speeches, in articles and blogs for Time and Psychology Today, and in her books, Decoding the New Consumer Mind: How and Why We Shop and Buy (Jossey-Bass/Wiley, 2014) and Gen BuY (Jossey-Bass/Wiley, 2009). As a widely recognized authority on the psychology of consumers, and on Generation Y in particular, Yarrow is regularly quoted in a variety of media, including the New York Times, the Wall Street Journal, NPR and Good Morning America.

 

About Decoding the New Consumer Mind: How and Why We Shop and Buy

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In Decoding the New Consumer Mind, consumer psychologist Kit Yarrow takes marketers on a tip-filled, guided tour of the radically revised minds and hearts of today’s consumers. Yarrow illuminates the impact of three major sociocultural shifts on the psychology of shoppers and describes four strategic adjustments that businesses need to make to succeed and connect with today’s transformed consumer.

Yarrow shares surprising insights, culled from hundreds of ethnographies and interviews, about the motivations and behaviors of today’s shoppers and takes marketers where they need to be today — into the deeply psychological and often unconscious relationships that people have with products, retailers, marketing communications and brands.

The findings in the book are brought to life by the voices of the consumers whom Yarrow interviewed, and her recommendations are enhanced by cases, examples and interviews with experts. In his foreword, Paco Underhill, best-selling author of Why We Buy, says, “Decoding the New Consumer Mind will make waves. This important book explains it all, uncovering where we are going, and showing how individuals and companies can advance their offerings as well as their bottom lines.”

Meet Kit on May 8 or June 23. See calendar (page 4) for details.

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