How Economic Factors Affect Consumer Behavior

Are you losing customers and blame online sales?

When I visit businesses with slow sales I hear many excuses for why they have so few
customers this month. It seems they are willing to blame online sales, the local government
policies, or even the local council. Their comments only serve to highlight the fact they do
not understand that the current economic factors have more to do with the customers
behaviour than any of those other factors.
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Money is not spent if the customer is worried about their future. The single biggest
factor for consumer behaviour spending patterns is how secure they feel their short-term
future is regarding savings, employment and home payments. The more insecure they feel
about the economy, the more they will pay down debt or keep money for the rainy days. This
‘happiness’ factor is measured by the consumer confidence index which is reported daily
showing how secure the consumer believes the future is. When the CCI goes over 100 points,
customers will spend. If the CCI goes under 100 points the customers stop spending.

How the economy affects the consumer behaviour?

The consumer is bombarded with messages of doom & gloom from the newspaper
and other news media telling them all about the problems in the world. Currently we have
concerns with ;

- Eurozone debt and several countries in recession

- Declining natural resources and climate warning

- Loss of primary industries with large scale unemployment happening almost weekly since
start of 2012

What the current economy means to your customers?

They are unsure if they will be able to keep the family home, pay for their retirement
and even if they will have a job in the next six months. So the consumer goes into survival
mode by saving money and stopping all unnecessary spending. As a business owner or
manager you need to pay attention to the local economic factors as they will mean the
difference between meeting your sales targets or not.