Types of Purchases: Understand What Your Customers Are Buying
Guest writers Debbie Frakes and Steve Clegg take a look at customer behavior in this week’s blog post, “Types of Purchases: Understand What Your Customers Are Buying.”
To market your business effectively, it’s important to understand which products and services your customers buy most often and what causes someone to purchase from you. By identifying common buying patterns and the factors that influence purchase decisions, equipment dealers can tailor their strategies to appeal to their target industries and markets. The result is more transactions, improved customer retention, and increased profits.
Why do the types of purchases matter?
By identifying what triggers a purchase for equipment, rentals, service, or parts, and what is bought most often in each category, you’ll determine what is important to your customer base. Armed with that information, you will know which strategies and messaging for offers, pricing, marketing, and advertising will produce the most significant ROI for your business. Excellent customer service with frequent and consistent customer transactions drive customer retention. Revenue and profits are the result, not the driver.
Understanding what customers purchase most often and why allows you to avoid wasting time and resources featuring products and services with nominal engagement and ROI.
Capture more sales opportunities.
The local NAPA, Grainger, and other general supply houses are selling the filters, fluids, and parts to your customers that are required for your equipment. Grainger and Genuine NAPA have an average gross margin above 40%. Most types of equipment require two to six filter changes a year as well as numerous fluid changes. The question is, are you capturing those sales opportunities, or are you allowing someone else to take the order? Recognizing types of purchases will increase transactions, help you engage and retain customers and capitalize on the needs of your customer base.
Know your trigger products.
Triggers are items or situations that drive customers to a store or dealer. For example, grocery store trigger products are milk, eggs, and bread, because these items are the reason someone goes to the store in the first place. However, these products represent less than 10% of the dollars spent. They serve to get people in the door, so they can be sold other products sold in the store.
Examples of equipment dealer triggers for machines, rentals, parts, and service:
- Emergency machine repairs can trigger equipment purchases when the repair cost doesn’t justify the expense versus renting or replacing the machine.
- Machine breakdowns or a specific type of project will trigger renting equipment that is not in the customer’s fleet.
- Breakdowns or equipment crises will trigger repair or maintenance parts.
- Offering a free inspection or a season change can trigger service.
Crises maintenance represents over 25% of a dealer’s customer interactions for parts, service, and rentals. These transactions require same day or next day service and delivery to meet customer expectations. Equipment represents only 1% to 2% of a dealer’s total transactions, whereas parts and services are 88% and rental is 10%. As a result, your parts and service departments create your customer experience and are ultimately responsible for overall customer satisfaction and retention.
Understanding what purchases bring customers through the door tells you where your main focus should be.
Place your resources where they make the most difference.
Every business only has a limited number of sales, marketing, and financial resources they can utilize at any time. The reason why types of purchases is one of the most critical business metrics is that it will show you which products and services to run promos on, which ones to highlight in your emails and on your website, and what to run paid advertising on. In addition, it will determine pricing offers and your inventory requirements.
You need to know what people are buying and what triggers those purchases. Businesses should carefully consider their target audience and tailor their marketing strategies to appeal to triggers that resonate with specific types of customers.
Knowing types of purchases helps you introduce people to additional products.
Armed with the knowledge of which types of purchases are most common, you can familiarize customers with what you offer. They will come to your website or view your email based on the products they typically buy or because of a specific trigger, but then they’ll see other things that you carry. Use your most popular offerings as a hook to get them in the door, where they can see everything that your dealership provides.
Zintoro provides equipment dealers and other businesses with monthly business analytics reporting to recognize, measure, and take advantage of key business metrics like purchases, purchase frequency, customer retention, at-risk customers, and more.
Schedule a Zintoro demo to understand your most common types of purchases and start receiving business analytics reporting today!