What are the 4 main reasons a customer buys a new product and what can we learn to become better marketers?
BerryCart research found that the most common reason users purchased a new product was because they received a rebate, coupon, or other deal. In fact, 65% of users indicated that this was their most common reason for buying a new product.
Why deals work
- Make decisions easier. Our brains are designed to conserve energy. Choosing “the product with the deal” is an easy and efficient calculation for our brain to process.
- Identity. To many people, frugality is not a behavior but an identity. Using a rebate is just responsible shopping.
- The buzz. In some cases, the deal itself is reward enough. A study done by marketing professor Peter Darke of York University in Toronto showed that students who were give $10 to spend were happier when they were offered a deal but had to give the extra change back to the professor than students who didn’t get a deal but could keep the change.
- Positive Brand Association. A study by Dr. Paul J. Zak, professor of Neuroeconomics at Claremont Graduate University, showed that shoppers’ happiness hormone Oxytocin increases and their stress levels go down when they use a coupon when making a purchase. This positive feeling can then be associated with your brand.
- Lowers Barrier to Try. A deal makes purchasing a product for the first time less risky.
Which customers respond to deals?
Customer Segments Definitions
Super Healthy – My friends think I go overboard on monitoring my omega 3’s, juicing, and passion for buying organic.
Pretty Healthy – I eat healthier than most others.
Somewhat Unhealthy – I am the one who suggests fast food, or stocking my pantry with processed cereal.
BerryCart’s research found that deals were most effective on the mainstream customers segments who identified themselves as Pretty Healthy or Somewhat Unhealthy eaters. 72% of the Somewhat Unhealthy eaters, for example, tried new products because of a deal compared to 52% who were Super Healthy eaters.
Even though offering a rebate or coupon can be the quickest way to get new customers, there are several risks for marketers to consider.
- Building Coupons Habits: If the same customer gets used to getting a coupon, they may wait to buy again until they get a deal.
- Devalue your Brand. If you overdo deals, people can start to associate your brand as cheap.
- Cost: Depending on how you design, print, distribute, promote, and redeem, the costs can get expensive.
- Repeat Usage/Cannibalization: Depending on how deals are redeemed, it is possible that a customer uses the same coupon multiple times. One way brands mitigate this is by limiting the timeframe an offer is valid. This, however, limits the visibility of the offer. Another approach is to use mobile rebates whose usage can be controlled for each unique individual.
How to use deals
- Target new Customers: Try to target new users v.s. loyal customers who will buy anyway.
- Limit Repeat Usage: Use mobile rebate or digital coupon providers who can limit usage for each individual.
- Gain Insights: Rebates and coupons can be a great way learn about your customers. What data are your partners able to share with you? Can you get a profile of which customers redeemed the offer, by-store breakdowns, and customer spending habits?
- Get feedback: Use the offer as a way to collect feedback from the customer. BerryCart users, for example, write reviews about every product they redeem a rebate on. Can you get customers to answer a survey question in return for a deal?
2. Shelf Appeal
21% of BerryCart users indicated that they typically try new products randomly, for no obvious reason. As marketers, however, we know that there are various subconscious factors at play. In fact, countless books have been written about creating the right product/market fit, packaging, shelf placement, and price. When done right, this “shelf appeal” is enough to get many customers to try your product.
Which customers respond to shelf appeal?
BerryCart’s research found that two factors impacted a person’s responsiveness to shelf appeal:.
- Eating Habits. People who identified themselves as Super Healthy eaters, were twice as likely to randomly try a new product than Pretty Healthy eaters and 3 times more likely than Somewhat Unhealthy eaters. Super Healthy eaters are eager to hunt down something new.
- Income. People with a household income over $100k were twice as likely to randomly buy a product than those making between $25-50k and $50-100k. Higher levels of disposable income enable shoppers to more easily explore new foods beyond routine purchases.
How to leverage shelf appeal
In Geoffrey Moore’s famous marketing book, Crossing the Chasm, he identified a group of Early Adopters who influenced the larger Early Majority group to buy. One takeaway was that Early Adopters buy a new product because of the value tha new product offers. Early Majority customers, on the other hand, buy because an Early Adopter or other Early Majority customer told them about it. In context of food, the Super Healthy eaters (16% of BerryCart’s users) are the early adopters who spread the word to the larger Pretty Healthy segment (71% or BerryCart users).
7% of BerryCart users tried a new product because a friend told them about it. This is the 3rd most popular reasons users tried a new product. The best part about referrals – they’re free!
Why referrals work
Simply put, people trust the advice of others they trust more than an advertisement.
Which customers respond best to referrals?
BerryCart research found that Somewhat Unhealthy eaters are two times more likely to try a new product because of a friend’s suggestion than the Super Healthy segment who are the food explorers.
How to leverage referrals
Find ways to connect with the Super Healthy group of customers who will influence the other larger customers segments. Make it fun and easy for them to spread the word by giving customers a great story to tell. Natural product brands have especially great stories. Does your product have a noteworthy ingredient? Is it Organic? Is it a family-owned business? Highlight these stories in advertisements and product packaging.
6% of BerryCart users said that they buy new products primarily after trying a sample. Regardless of being #4 on the list, sampling can be a great tool in your arsenal to attract new customers. The company Sam’s Club hires to manage it’s samples, Shopper Events, reported that grocery sales double on days the business has sampling stations. Sampling can take many forms ranging from handouts in stores (e.g. Cosco), to subscription boxes or special events.
Why samples work
- FREE: It is much easier to get someone to try something when they don’t have to open their wallet.
- Try before you buy: Samples let shoppers know whether they will like a product before buying it.
- Reciprocity: One of the real secrets when sampling is done right, is that it creates a subconscious urge in sampler’s mind to return the favor of the free sample with a purchase.
Which customers respond to samples?
BerryCart’s research found that samples work best for mainstream customers. BerryCart users who ate Somewhat Unhealthy or Pretty Healthy were 3x more likely to be influenced by a sample, than Super Healthy eaters.
Surprisingly, even though samples are effective, twice as many new products are bought by customers randomly than because of a sample. This re enforces that the promotion of a product doesn’t alleviate the need to have a great product, eye-catching packaging, and intelligent pricing.
How to leverage samples
- Train well. If you can’t do it yourself, make sure the company that hands out your samples it reputable and well-trained. If they can’t explain the merits of your product, then you are wasting money.
- One at a time. When possible, hand out samples one at a time v.s. on a big tray. This increases the personal connection and reciprocity effect.
- Space out a sampling schedule. Because sampling can get expensive, space it out to get the most bank for your buck.
Learn more about BerryCart’s Intelligent Rebates