Are you losing customers and blaming online sales?
When I visit businesses with slow sales, I hear many excuses as to why they have so few customers this month. They seem willing to blame online sales, local government policies, or even the city council.
Their comments only serve to highlight the fact that they do not understand that current economic factors have more to do with customer behavior than any of those other factors.
No money is wasted if the customer is worried about their future
The most important factor for consumer behavior spending patterns is how secure they feel about their short-term future with regard to savings, employment, and house payments.
The more insecure they feel about the economy, the more they will pay off their debts or save money for rainy days. This “happiness” factor is measured by the Consumer Confidence Index that is reported daily and shows how secure the consumer thinks the future is. When the CCI exceeds 100 points, customers will spend. If the CCI falls below 100, customers stop spending.
How the economy affects consumer behavior
The consumer is bombarded with messages of doom and pessimism from the newspaper and other media that inform them about the problems of the world.
We currently have concerns with;
- Eurozone debt and several countries in recession
- Decline of natural resources and climate alert
- Instability in various governments causing public unrest and gun violence
- More than 20% drop in super and Australian stocks
- Loss of primary industries with large-scale unemployment occurring almost weekly since early 2012
Business owners should pay attention to these economic factors
Mortgage payments are often the biggest expense a customer has and they won’t risk losing their home just to take a chance and buy your products. When there is uncertainty in mortgage rates, sales will decline in most sectors.
Instability in employment in the manufacturing, financial services and construction sectors will cause clients to focus on what would happen if they lost their jobs. So they start saving money for their potential unemployment and spending it on career change prospects, such as training in new skills.
Due to the high costs of caring for the elderly and related retirement expenses, many consumers look to the future by investing in retirement pensions and / or stocks to be financially secure. With the global recession and the collapse of some international organizations believed to be safe from economic wobbles, superfunds have lost millions of net financial consumers.
What the current economy means for your customers
They are not sure if they will be able to keep the family home, pay for their retirement, and even if they will have a job in the next six months.
So the consumer goes into survival mode saving money and stopping all unnecessary spending. As a business owner or manager, you need to pay attention to local economic factors as they will make the difference between meeting your sales goals or not.
