We’ve all made impulse purchases, buying something on a whim we didn’t intend. According to Annual Survey Commissioned by Slickdeals over 80% of Americans have made an impulse buy in the past year.
Retailers are experts at placing items in appealing displays to tempt us, and unplanned purchases also represent an opportunity for the hospitality industry to capitalize on the impulsive nature of guests and increase revenue.
ATTENTION TO BUSINESS OPPORTUNITIES
One way to benefit from impulse purchases that everyone is aware of is by offering last-minute deals and promotions based on demand and supply. However, there are several other strategies that we will share with you.
8 strategies to create opportunities for guests to spend more:
- It’s all about convenience. Credit cards have changed the way people spend their money and the next trend is just a tap away from any guest purchase. Smartphones, wristbands, watches… you just need the technology available because guests already know how to use it. Learn more here.
- Controlling when and how products are presented to your guests can help determine the likelihood of an impulse purchase being made. How about offering a ‘Happy Hour’ menu that allows guests to extend their enjoyment of your hotel bar while waiting for the traffic to subside?
- Analyse the data about your guests’ consumption rates and compare it with the previous period to understand if there are any useful trends. Maybe there is an ice-cream brand that guests love to have in the winter. Who knows?!
- Customize your promotion based on your guests’ preferences—you’re collecting your guests’ data, correct? If not, read this.
- Use the hotel’s app, website, and social media to promote, enticing consumers who are looking for a spontaneous getaway.
- Leave your best opportunities to the evening when the consumer’s cognitive fatigue is setting in. In the morning people’s thinking is more deliberate.
- Partner with other service providers that add value to your venue and gain your commission revenue. Zip-lining, hot air balloon rides, or guided hikes, hotels and resorts can attract adventurous consumers who are looking for an unforgettable experience.
- Offer exclusive packages and upgrades. A hotel could offer an upgrade to a suite or a complimentary spa treatment for consumers who book a last-minute stay. These exclusive offers appeal to consumers who are looking for a luxurious and unique experience.
By offering these deals, you can increase occupancy rates and revenue while providing a memorable experience for the impulsive traveler.
FOOD FOR THOUGHT
Americans make up to 156 impulse purchases every year which means one ‘non-rational’ buy every 2 to 3 days.
The average spent on those nonessentials is $81.75 per session meaning spending up to $5,400 annually, or $324,000 over their lifetime. According to the Cornerstone Home Landing website, with that amount, you can buy a 600 square foot apartment in Los Angeles. WOW!
If you’re still not impressed, take a look at this data:
- Impulse buying represents $17.78 billion per year in the US
- 1 out of every 3 purchases is based on an irrational decision.
There is opportunity everywhere!
A study by MYJAR for the Independent, with British consumers, estimates that impulse buys account for about 108 purchases a month, equating to an average of £200 a month, or £143,902 over a lifetime.
The leisure industry should recognize the significant influence of impulse shoppers and avoid underestimating their purchasing behavior. A few small short-term details can impact your business’s long-term success.
FOMO (FEAR OF MISSING OUT) STRATEGY
FOMO stems from self-perception and the fear of being excluded. As humans, we’re a species that thrives on connection and inclusion to survive. When we experience FOMO, we’re triggering a stress reaction stemming from pack abandonment.
The restaurant industry found a great way to increase sales by investing in the FOMO Strategy – which can easily be applied to any leisure business – and they are getting great results from that:
- Countdown clock promotion on social media.
- Create the feeling of scarcity. “Only the first 5 people to order will receive a 25% discount” or “there are only a few spots available”.
- Marketing items as “limited availability”. E.g., the new Chicken Big Mac launched from McDonald’s and is available for just 1 month in Canada.
Using these tools in your restaurant’s marketing taps into buyers’ motivations and encourages your guests to make those snap impulse decisions you need to boost your bottom line.
INFLATION WORKS AGAINST ‘NON-ESSENTIALS’
It’s well known that economic crises impact consumption, but when it comes to nonessentials the impact is even bigger. According to Slickdeals, 68% of their research sample stated that inflation has had a “huge impact” on their spending habits.
In 2022, Ipsos conducted a report on the impact of inflation on consumption which revealed that over half of U.S. consumers are reducing their impulse purchases in-store due to increased prices. One-third of the population still says they’ve made an impulse purchase within the past week.
It’s a fact that opportunities in this matter will always exist, but consumption can vary. You must be prepared with more or fewer offerings – or even being creative with your goods and services available – that stimulate your guests’ irrational decision-making processes.
YOUR GUESTS MAY BE IMPULSIVE. YOU AREN’T.
Have a plan. Revise it. Be ready for the unexpected.
In conclusion, impulsive purchases are a common global consumer behavior that the leisure industry can benefit from by offering last-minute deals and promotions, unique experiences and activities, exclusive packages, and upgrades, and by creating a sense of urgency in their marketing strategies.
By taking advantage of the impulsive nature of consumers, hotels and resorts can increase their revenue and provide an unforgettable experience for travelers.
Bear in mind that strategies to build revenue capitalizing on the behavior are proven. However, building long-term relationships that deliver repeat revenue means providing value to customers they appreciate. The tactics which are built on personalized preference and convenience are most likely to support loyalty.
Business needs to acknowledge the moment and adapt offers based on opportunities and risks. Our recommendation is to be ready with your contingency plan and use it when needed.
Finally, if you embrace crises with optimism and create opportunities in the market, your business will be long-term sustainable compared to your competition. Your guests will keep returning!
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