There have been astounding changes to the process of purchasing goods and services in the last 20 years. The norm was taking a stroll to your preferred store to learn more about a specific product or service and choosing to purchase or forfeit it. Today, learning about a product, comparing it to similar products, and finally choosing to purchase can be done from the comfort of your home.
The most significant changes in customer behavior have been due to the internet and the evolution of technology. The changes in customer behavior have mostly offered more opportunities for tech-savvy businesses to grow. However, it also presents new challenges that industries and businesses have to consider to break even.
Businesses are in a rush to learn customer behaviors in the digital age as it is the key to developing your business by increasing sales. With this in mind, it is essential to know your consumer (KYC) and learn how consumer behaviors have changed in your industry. It is one of the most significant metrics in determining what your business can do to compete efficiently in the increasingly digitized markets.
Demographic Dynamics and Consumer Behaviors
There are a couple of demographics that are essential to understanding how the consumer thinks. While consumer behavior cannot be attributed purely to demographic categories, there is always a correlation between demographic forces and consumer preferences. Whether cultural biases or unique needs by location, demographic dynamics have always defined consumer behaviors to a large extent.
Most firms only note their consumers' gender, age, race, location, and ethnicity when trying to understand why they are changing. While these are essential demographics, you should also include culture, health, education, regionalism, and economics as critical elements of the changing demographics.
Here are some of the ways customer interaction has evolved in the last 20 years.
1. A Diversifying Customer Base
No generational cohorts in the history of our country have been nearly as diverse as the millennials. Currently representing approximately 30 percent of the population, millennials comprise nearly 44 percent of racial and ethnic factions. While it is most pronounced in the millennial generation, the increasing diversity is spread across all generations, including baby boomers, with 25 percent belonging to racial and ethnic minorities.
Even as the population continues to expand, the non-Hispanic white population continues to shrink. It is projected to drop by 10% by 2060. This means that our consumer base will only continue to diversify in terms of needs and demands.
2. Geographical Fragmentation
Regional migration continues to fragment the consumer base. Geographic markets are continually shaped by the continued migration of people within the country. Estimates from the census population suggest that the movement of people to the West and Southeast is a trend that continues to thrive.
Nevertheless, viewing internal migration from the age perspective shows glaring differences. Data shows that most baby boomers are migrating into Arizona and Florida, Gen Xers are moving to Texas, and millennials are mostly relocating to Colorado and Florida. This trend means that each generation has its unique set of needs and demands available in the regions they choose to relocate to.
Considering each demographic, you will soon realize that it is increasingly difficult to identify consumer patterns in a generalized way. The ideal way to know your customer is through a blend of factors depending on the products or services you offer. That way, you can have a more insightful impression of the dynamics influencing consumer behavior.
3. The More Educated Consumer
Over the last 20 years, there has been a significant increase in the fraction of people with college degrees and higher. While the rise in education level is not uniform by race and ethnicity, all factions of our population have seen an increase in the percentage of educated people.
As a result, the consumer has shifted toward more frugal spending patterns. A significant factor toward economical spending patterns is the cost of education, which uses up discretionary finances. This pushes the consumer to make changes to their spending in categories such as food, furniture, and attire.
4. Shorter Attention Spans
With the frequent updates in technology, getting the information we need from the internet is a breeze. While this is an advantage to advertisers and salespeople, it has caused consumers’ attention spans to reduce significantly. Since there is more than enough content on the internet, people shift their attention to other websites or blog pages in seconds when they feel the content does not interest them. The trick is getting people emotionally engaged with your brand, but it is easier said than done.
Keeping up with evolving technologies has been one of the best ways to keep consumers engaged. Through collaborations with technological innovators, you can introduce captivating aspects into your design, copy, and user-friendliness that will keep your consumers comfortable with your brand.
Updates in technology and the internet have become a dominant feature in nearly all aspects of our lives. They have changed the way we interact with each other and the way we run our businesses. However, simply considering the advancements in technology when trying to understand the changes in consumer interaction is insufficient. You must truly know your customer. Taking other demographics into perspective and keeping up with updates in technology and data protection is critical to keeping up with evolving markets.