Understanding how customers decide where to shop and which products to buy can provide any business with a real competitive advantage. Buying trends are not consistent, they evolve with consumer behavior and technology. Some changes in buying behavior are pervasive while others transient, but companies need to stay on top of both if they are going to reach the modern consumer.
Point in fact, the old-school purchase decision-making funnel no longer exists in 2017. Consumers today have access to technologies that have substantially changed the way they shop. Take millennials for example.
Millennials as Buyers
There are currently over 55 million people of this generation working and they are expected to account for 44 percent of the US workforce by 2025. Together, it is estimated that millennials in the United States will spend $200 billion in 2017 and as much as $10 trillion in their lifetimes. Their impact is expected to account for 30 percent of retail sales in the United States by 2020 – despite the fact that just 25 percent of people in the US fall into this age category – and this impact (albeit significant) is not confined to retail. A study by Sacunas found that up to 73 percent of all millennials in the workforce today are involved in B2B decision making and some 33 percent are the sole decision maker. These figures are significant because millennials do not make buying decisions the same way that older generations do.
How Millennials Make Buying Decisions
One of the most significant distinctions of millennial shoppers versus other buyers is that most of the decision-making process starts online. The Sacunas study found that 85 percent of millennials research products and services through social media before buying – the number of millennials who perform an Internet search is even higher.
These millennials are looking at product or service reviews as well as information about the companies selling those goods and services. They look at a company’s efforts towards social responsibility. In fact, over half of all millennials actively choose to buy from companies that support causes. They also look at the buying experience as a whole. It matters to this generation whether a company delivers an authentic experience and if it provides some level of personalized care or service. As such, loyalty programs and easy rebates are viewed positively as long as their terms are transparent.
Habits and Impulse Buys
Because so much of the buying experience is conducted through social media and so many millennials spend significant time on social media sites, the opportunities for impulse purchases is very strong. “Millennials are 52 percent more likely than any other generation to report making impulse purchases simply to pamper themselves,” reports Time. Consider that millennials check their phones 45 times per day on average and it’s no wonder that this generation has an inclination towards self-indulgence.
The most successful advertising and promotions take advantage of this fact, offering special deals and convenient payment options. Companies also invest in building their social media channels and cultivating a brand image that appeals to the millennial buyer.
Businesses need to understand how today’s consumers make their buying decisions if they are going to reach those customers in their marketing and sales.
Driver, Abby, “Haven’t Yet Figured Out How Millennials Make Purchase Decisions?” Guided Selling, July 26, 2016. [Accessed: http://www.guided-selling.org/how-millennials-make-purchase-decisions/]
Fullerton, Laurie, “Millennials make 73 per cent of purchasing decisions in B2B, survey notes,” The Drum, June 8, 2016. [Accessed: http://www.thedrum.com/news/2016/06/08/millennials-make-73-cent-purchasing-decisions-b2b-survey-notes]
Gasca, Peter, “8 Shopping Habits of Millennials All Retailers Need to Know About,” Entrepreneur, December 7, 2015. [Accessed: https://www.entrepreneur.com/article/253582]
Murdough, Claire, “How Millennials Make Purchase Decisions Today,” Affirm. [Accessed: https://www.affirm.com/content/how-millennial-shoppers-make-purchasing-decisions/]
Solomon, Micah, “The Year Of The Millennial Customer: Is Your Customer Experience Ready?” Forbes, November 14, 2015. [Accessed: http://www.forbes.com/sites/micahsolomon/2015/11/14/2016-is-the-year-of-the-millennial-customer-heres-how-to-be-ready/#775303ce6e72]
Tuttle, Brad, “Millennials Are Biggest Suckers for Selfish Impulse Buys,” Time, April 27, 2012. [Accessed: http://business.time.com/2012/04/27/millennials-are-biggest-suckers-for-selfish-impulse-buys/]
Virgillito, Dan, “The Real Reason Why Millennials’ Buying Behavior Is Difficult to Influence,” Shopify, November 30, 2015. [Accessed: https://www.shopify.com/enterprise/56860355-the-real-reason-why-millennials-buying-behavior-is-difficult-to-influence]