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As a shopper approaches a store and the doors slide open, warm air rushes out and cold air pushes the customer inside. But who is that shopper? Someone who loves the retailer, or someone who tolerates it? And, most importantly, someone who spends money within the store or prioritizes their hard-earned dollars elsewhere?
The idea of brand equity — the measure of a brand’s perceptual strength with consumers — remains popular with retailers and manufacturers. Yet, increasingly, there is a disconnect between how people feel and how they behave, making it difficult to truly identify and understand the high-value buyer.
That link has become more tenuous recently, with a barrage of supply chain disruptions causing an increasing number of out-of-stock situations. Inflationary pressures haven’t helped either, as consumers’ eyes are sometimes bigger than their budgets. Truly, this gap between what consumers believe about brands and their actual purchase behaviors has been widening for years.
To create stronger relationships between what shoppers say and what they do, it’s easier to get inside the consumer’s mind by anchoring on the decisions they’ve already made and then using their attitudes to explain why. Sometimes referred to as behavioral equity, the process begins with a more in-depth understanding of buying choices — both in absolute terms and in terms of share of wallet — then dives more deeply into the root causes of those behaviors.
Behavioral Equity
One way to look at behavioral equity is as a combination of absolute dollars spent and share of wallet. In approaching the concept this way, four quadrants of buyers emerge, each with high-level motivators that drive their decisions.
Delight Me: The most valuable shoppers devote both a higher absolute number of dollars and a higher share of their spending to the brand or retailer being studied. The goal is to nurture shoppers in this quadrant and make them feel special, so they have no reason to look elsewhere. So much buying behavior is habitual, and this group already has the habits you are looking for.
Value Me: Behaviorally loyal shoppers are already giving you as much of their spend as they can, but they don’t have as much money available. Offering them the right value proposition for their budget, whether via periodic sales or special offers tailored just to them, will build their loyalty in the moment. Ideally, it will also maintain their loyalty should their financial situation change and they migrate to the Delight Me segment. This also is a group for which a lower total ring, as opposed to just a better value, may be appealing. Targeting offers that correspond with the amount of money in their bank account (and, by extension, taking into account when they were paid last or will be paid next) may also be beneficial.
Convenience Me: We often say “inconvenience me.” Is “convenience me” even a real phrase? Well, it should be. This segment is spending a relatively higher level of absolute dollars with a given brand or retailer, but it represents a smaller share of wallet. You are most likely not their default selection, but your brand fills a niche. The first goal is to fill that unmet need to the best of your ability, as this group is more likely to be paying a premium. The more you can make your offer easy for them, the better your opportunity to attract a larger share of wallet. This group can be virtually unrepresented for some brands, yet it offers the biggest opportunity for growth for others. It’s also one where building an in-depth shopper persona unpacks how best to deliver this opportunity.
Surprise Me: For this low-spending, low-share-of-wallet segment, the tendency is to try to gain traction via price discounts. While this approach can be effective, the risk is that those offers are not sufficiently targeted and instead cannibalize the spend of the more behaviorally loyal segments. Instead, this is a group for which limited-time offers can attract them to the brand, or more retailer-exclusive offers can unlock additional store visits. Finally, a treasure hunt at a given retailer can spark this group’s sense of exploration without relying strictly on price appeals.
Competing Effectively
Starting with behavioral equity allows a brand to anchor in actual behaviors to identify the high-value buyers, then use more survey-based inputs to personify the segments and better understand their path to purchase. With a behavioral equity model, the goal is to drive trade-up — from Surprise Me to Value Me and from Convenience Me to Delight Me — and minimize trade-down.
And if these groups can be created for your brand, they can also be created for competing brands to understand where you may be sharing customers versus where you may be dealing with a very different shopper base.
Behavioral equity allows brands to create a tighter relationship between what people do and what they say, one of the biggest disconnects in a more traditional approach to equity. For those rooted in legacy approaches, it may feel slightly counterintuitive, but beginning with behaviors makes it easier to cascade the principles of equity consistently throughout the entire organization. Because from marketing plans to the buyer’s desk to the C-suite, actions speak louder than words.
Brad Bane is senior vice president of Survey Practice for IRI.
