A Short Guide to the 5 Factors Influencing Consumer Behaviour

Consumer behavior is fascinating to me. Why people buy isn’t always a straightforward question. The factors influencing consumer behaviour can seem endless and impossible to pin down. In my experience, there are five major driving forces: self-interest, barriers, perception, demographics, and culture.

Self-Interest

Self-interest is one of the most important driving forces of consumer behavior. Everyone wants to know what’s in it for them. What will they get if they purchase a product or service?

Self-interest isn’t selfish. We all see the world from an I-perspective. If you think about your thoughts, I will bet that they are mostly concerned with your problems and challenges. If something happens, we instantly think of what it means to us. Are we affected? Can we help?

Self-interest naturally translates into our buying behavior. Everything we buy has to help us tangibly. This doesn’t mean that it will be a positive experience. We often buy things like personal fitness coaching, which tends to be painful and uncomfortable, but we believe there are positive benefits behind all this working out.

As a company, you need to think about how your product fulfills your customers’ self-interest. It has to be logical and not based on grandiose assumptions. In recent news, Quibi, the video streaming service, shut down. Despite raising over 2 billion dollars and producing Hollywood level content, they couldn’t find a model that worked.

They didn’t want to pivot from their original premise of short content (under 10 mins) to a longer form product. People didn’t care enough, and it didn’t align with their customers’ self-interest. You can’t assume that people will merely buy it because your product or service is the best. They will buy it because there’s something in it for them.

Difficulty or Barriers

Our second factor is difficulties or barriers. We may want something, but if it is too hard to get, then we won’t purchase it or do it. This factor determines the difficulty in following through with the intended behavior.

I’m writing this in the era of COVID-19, and I’m fascinated by how we all handle the restrictions, masks, and plexiglass barriers. As it turns out, wearing a mask and speaking from behind plexiglass makes it challenging to understand each other. This is why you will often see people going around the plexiglass barrier to getting their point across.

This is an example of something that becomes a barrier to our natural behavior. We want or need to communicate with people, such as when we order our morning coffee. The plexiglass and wearing a mask make this challenging, so we unconsciously try to get around it.

If you want to look at a product with almost no barriers, then look towards social media. Apps like Facebook, Instagram, and TikTok have virtually no friction to using them. You access them on your phone, which is always on you, and within a couple of taps, you can be consuming an endless amount of content.

As a company, you want to think about what barriers you’re putting up for your customers. Do they have to call to make an order when online checkout could suffice? Do they have to visit your store in person to buy something instead of reserving online? Think about putting up the correct barriers and avoid unnecessary ones.

Perception

Perception is our third consumer behavior factor. This is how your customers perceive your products and services. Customers may think that a brand offers premium products and premium prices, but the quality of the products themselves may not match this expectation.

Customer loyalty is an excellent example of how the right perception can be created. High loyalty makes it easier for customers to ignore any issues they might face. Perhaps their package was delayed, or they have to wait to buy your products continually. They will accept these barriers (see the second factor) because of their overall positive perception of your company.

Companies that have developed a consistent positive perception, including Starbucks, Apple, and McDonald’s. You may not like the food at McDonald’s, but they offer a consistent experience globally. You know exactly what to expect and what you get from your money.

Demographics

Demographics slots in as the fourth factor of consumer behavior. We can’t ignore who the customer is and how their history will affect their purchase behavior. Demographics include gender, age, income, location, and others.

This is one of the most talked-about factors because it is obvious. We know that teenagers have different preferences than someone who is in their sixties and retired. Women will buy different colors than men. High-income individuals spend their money differently than a low-income customer.

Culture

The fifth and final factor is culture. I define culture as the expectations and pressures from people around me. Latin cultures tend to be more open toward strangers, and there’s an expectation of kissing people when you first meet them and when part ways. The culture of a society shapes these behaviors.

Culture can also happen on a microcosm. If you’re at a party, there will be certain expectations for how you should act and what you should do. Once you leave, those expectations will disappear.

If we look at another example from COVID-19, we can see the role of culture play out in whether we wear masks. Some countries and cities are enforcing them while others are not. Going a step forward, some countries (especially Asian ones) find them completely normal, while others think they are weird.

As a company, you want to be aware of the forces that shaped your customers’ culture. They may want to buy your products, but they may not do it if it goes against the culture.

When trying to understand consumer behavior, focus on the five major factors before going down into the weeds. By designing your products around these ideas, you’re more likely to find customers who not just like them but love them.

One more thing before you go! Do you know how to get more insights out of your data? 

All companies are sitting on a goldmine of data that they haven't fully explored. It's not about technology or capturing more data. The key is to learn how to make the most of your current data and convert it into actionable insights. This is the main idea behind my first book, The Data Miage: Why Companies Fail to Actually Use Their Data

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