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In early 2020, our company Next Vacay was experiencing great success. Global tourism was continuing to rise; according to The Guardian, the World Tourism Organization recorded 1.4 billion international arrivals in 2018, a record at the time. Business was booming, and millions of people were traveling to parts of the world they only imagined visiting in their wildest dreams.
Then a little something called Covid-19 rolled in, and like many businesses in the hospitality sector, we found ourselves flipped completely upside down. New customer acquisition immediately plummeted by 90%. Our core value proposition — traveling to new destinations around the world on a budget — was suddenly and enormously hindered.
Navigating the pandemic as the CEO of a travel company forced me to be relentless with both innovation and optimization. Not only did we survive, but we actually grew, and May of 2021 was our second-highest month in company history.
The adjustments we made can apply to business leaders and entrepreneurs alike in many different sectors of business. Here are three things we learned about buyer psychology along the way as we navigated the dip.
Customers don’t buy a service, they buy a feeling
In a nutshell, my company helps people find both domestic and international flight deals for a $25/year subscription. Obviously, people weren’t itching to fly in 2020. Although our acquisition did drop dramatically, we still had new customers signing up every day, and many of our existing customers renewed for another year. Why was this?
In our research, new customers said the feeling of hope to one day travel again was the main reason they purchased. Even though they didn’t plan to fly anytime soon, they wanted new flight deals in their inboxes every day to remember what vacation even felt like and to dream about going to new places while being cooped up at home for months on end. For a travel junkie, keeping the feeling of wanderlust alive was tangible enough to have monetary value.
Harvard professor Gerald Zaltman’s book How Customers Think: Essential Insights into the Mind of the Market notes that 95% of consumer decisions about brands are actually unconscious. Customers don’t just buy products and software; they also buy on gut instinct or because of a feeling. In our case, customers bought hope and wanted to familiarize themselves with a service that they could take advantage of at a later date.
Examine every detail of the conversion process
These customer insights warmed our hearts, but the fact of the matter was still that business was way down. The enormous loss of new customers forced us to go over our user journey with a fine-toothed comb. Did every single word of copy speak to our prospective customers’ hopes and dreams? Was the onboarding experience smooth as silk? Did every facet of the brand make our audience feel inspired, held and supported?
These 1% improvements were small at first, but when consumers began to fly again earlier this year, our efforts paid off, and business roared back stronger than ever before. By getting incredibly specific with our positioning, value proposition and newly discovered insights, we were able to level up during the drip and prepare ourselves to capitalize on the eventual surge of inbound interest.
There’s a saying in online business: The fastest way to double your revenue isn’t to double your traffic, but rather to double your conversion. As an added bonus, when you dial in conversion and work out the kinks, you’ll be better positioned for efficiency and profitability when your industry is on the upswing.
Make your prospects feel safe and secure
As Zaltman notes, the reasons for purchasing decisions are often unconscious. Luckily, there are a few things you can do as an entrepreneur to elicit feelings of safety, security and comfort during the selling process.
Free trials: It’s increasingly common for SaaS companies to give a free trial period in which a prospective customer can fully experience your product and decide whether it’s right for them. Brainstorm ways to give people a free sample of what you are and what you do so that the decision to either cancel or continue is simple and friction-free. We give our customers a free 30-day trial of our actual service so they can decide whether or not they want to pay to keep the momentum going for another year.
Money-back guarantees: A guarantee is a tried-and-true way to offset buyer’s remorse or skepticism. We offer a six-month money-back guarantee, and companies are increasingly using longer-term guarantees to make customers feel comfortable. In the online mattress industry, for example, Saatva offers a 120-day guarantee, Nectar offers a 365-day guarantee and Haven offers an 18-month guarantee.
Guarantees help customers feel taken care of. If you’re concerned that everyone will want a refund, look at either your mindset or your product quality. If you truly believe in your product and the impact it can make for people, stand by it with confidence.
Social proof: Yes, our customers get great flight deals. But what did going on that trip give them in their lives? Freedom? Perspective? Inspiration? As you harvest social proof and testimonials for your business, remember to capture not only the results people have gotten, but also what those results have enabled for these customers in their lives. The latter drives up emotion, and emotion is how people connect with your company on a deeper level.
Hopefully you won’t have to go through a temporary 90% drop in customer acquisition like I did to double down on these tweaks. Consider implementing one or all of these tips now, and you’ll both delight your customers and increase your impact along the way.