By Anastasia Lloyd-Wallis and Brian Walker
Head of Insights and CEO of Retail Doctor Group

Australia’s retail spend is circa $320bn as of 2019. If you accept that each year, an average of 5% of spending is directly and indirectly (way higher) used in the pursuit of attracting consumers, then that is at least $16bn.

Now if you ascribe to the view of John Wanamaker that 50% of all advertising and marketing spend is invariably wasted, we have at least $8bn per year fundamentally wasted. (I won’t venture into the world of shop design, shop fitting, category messaging, point of sale and product ranging which also add the most considerable costs to this “throwing against the wall and see what sticks” approach).

Has our traditional perspective of demographic studies (gender, age, postcode, spending level etc.) led to the “well-spent 50%” with significant brand outcomes or the other “wasted 50%”?

Can we show a definitive lineage to demographics and therefore brand resonance in anything more than a generalised, largely uncorrelated relationship?

Can store and website design, customer navigation, path to purchase planning, brand and marketing segmentation be all accurately predicted and mapped as a consequence of classic demographics?

Perhaps in an assumptive manner can we hope to predict consumer behaviours with this approach. However there is a far more definitive approach where you try to understand consumer profiling or the customer’s personality type.

Why is traditional demographics not enough?

Growing up we were all told about the rational consumer. Lecture halls are filled with rational students listening to rational lecturers saying that the human being was rational, that all purchases decisions were rational and that demographics ruled the world.

As retailers we produce orderly rational campaigns to attract orderly rational customers whom we believe would make clear decisions in accordance with their age, gender and where they live.

And guess what? We are not rational. We are, in fact, irrational, bounded to varying degrees by our emotional senses.

Did you know that:

  • 95% of new products fail
  • Physical shop retailers only convert an average of 30% (Fashion averages 12%)
  • Online retailers only convert an average of 3%
  • 98% of direct mail gets no response
  • 98% of marketing emails don’t convert
Perhaps another way to understand this is to think of your brand as a human being.

It’s made up of a unique set of values, which create its personality. This personality attracts consumers who resonate with these exact values . Humans connect emotionally to others who share the same set of values. The same applies to a brand. These values are emotional and largely subconscious. Humans build friendships based on trust and the implicit knowledge that shared values are consistent and reliable. The same applies to building friendships with a brand. Thus, classic approaches of demographic profiling simply don’t work because they try to speak to consumers as rational beings – and as we know but there is no such thing as a rational being or consumer.

Humanising your brand requires you to tap into these subconscious and inherent values, and understand the consumers on an intimate and emotional level.

Demographics are out – Personality profiling is in

Despite the growing awareness of the power of the subconscious, most research and subsequent strategies still rely on the rational conscious mind which impacts only 5% of our decision-making power (just the tip of the iceberg).

Consumer neuroscience has discovered that it is actually our subconscious limbic system that determines up to 95% of our decisions. It is the subconscious that answers the question as to “why” customers behave the way they do, and this is far from random or unpredictable. 

Imagine you have a fashion brand, targeting women between 25 and 35 years, with income over $1 million – a classic demographic segmentation. Two women who would fall into this demographic segment are Katy Perry, the Queen of Pop and Kate Middleton, the future Queen of England. However, it goes without saying that there are worlds between two women. Both their life choices as well as their fashion choices can only be addressed by understanding their personality types, which will explain the ‘why’.

Imagine your customer, Brian, you know Brian recently bought a business shirt from your retail store at the airport, you also know that he has done that every 3 months for the past 2 years. You may even know Brian’s preferred store and the style of shirt he likes, but you don’t know “why” he is attracted to your store, to that shirt and at that time.

What subconscious mechanisms contribute to your decision to end up with 8 particular items out of a possible 26,000 SKU’s? The Limbic system in our brain acts as a relevance detector when deciding whether a stimulus, in this case packaging or product design, is noise or is relevant, whether we perceive it at all, and whether we reach out for a product on the shelf.

What will resonate with us – even before we become aware of it – is determined in our Limbic system. So, when it comes to packaging, branding and overall product design, recognising the wishes of your target shoppers’ most dominant emotion system is crucial. Why? Because this system determines whether a product or brand stands out from the crowd, strategically attracts and enables us, as shoppers, to identify that it’s ‘the one’, amongst the sea of sameness.

For years, we have satisfied ourselves with the “how” consumers interact with our brands. The missing link has always been the “why” consumers choose our brands and products over our competitors.

Using Neuroscience to determine customers’ personality profiles

It is by understanding consumers’ personality profiles and their subconscious emotional drivers that we get to understand why they connect with certain brands – and why not. Behind each personality type, there is an amazing set of subconscious drivers which will determine how, why and whether or not consumers will interact with brands; all of which help brands to differentiate.

By understanding our target customers’ personality types, we can:

  • Understand the market on a powerful, subconscious level that enables predictions of what will work with target consumers (This is achieved by scanning and analysing your customer base)
  • Uncover the subconscious, real drivers of consumer behaviour
  • Understand consumers’ real path to purchase
  • Utilise brand cues and codes that maximise impact on the target consumers
  • Create store experiences that will work
  • Design strategic packaging
  • Understand how to attract these identified target segments more effectively, using wording, values, colour schemes for promotions etc. that appeal to them, the right media and retail channels to address their specific expectations.

This is a little radical for someone who prefers the tried and tested manner of understanding the historical transactional spending of patronage and defining this history as “evidence” of the orderly and rational behavior of their target consumers.

After all it’s only a 50 /50 bet they are right.

If you are keen to apply personality profiling to understand your target consumers, read more on how our Insights team can assist you on your journey here or contact Anastasia for any enquiries on retail insights.