Knowing What Your Customers Want

One of the most reliable methods for retailers to gain an understanding of consumer tastes is tracking the spending habits of customers. This is especially true of online retailers, many of whom are able to directly follow exactly how visitors interact with their sites. They can see when visits took place, what was clicked, what was purchased, how much time and money was spent, and much more. They also record the choices that indicate the particular preferences of each customer, which enables them to make customized product recommendations.

Many times, this information can be provided by an outside party. “We know where the customers live and we can track their behavior back to where they live,” says Ed Jay, SVP of American Express’s Business Insights unit, which takes credit card data on consumer trends and sells the information to clients (American Express has clarified that it doesn’t provide data pertaining to individual consumers.)

Interestingly, this data can sometimes confirm certain regional stereotypes regarding spending habits. For example, Southerners are shown to buy more white, green and pink, according to data from private-sale site Black, white and gray are preferred in Los Angeles. Dallas may have a flashy image and a reputation for big spending, but it’s been found (according to fashion website that the average woman there spends less on fashion than one in Washington, D.C., which has a much frumpier reputation when it comes to fashion trends.

To those who came of age long before the era of social networking, this kind of research may seem like an invasion of privacy, or just plain creepy. But the research provides valuable insight into what people are spending their money on, and what their preferences are. It’s quickly becoming an indispensable part of doing business as a retailer.