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How Small Businesses Can Adapt to Changes in Consumer Behavior
by Maxime Croll
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June 13, 2024
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Colleagues analyzing data

The only true certainty about consumer behavior is that it’s always changing. 

Unfortunately for business owners, that’s particularly true over the past several years. We’re still dealing with the fallout from the worst inflation spike in nearly four decades, along with many other repercussions of the COVID-19 pandemic. Meanwhile, unprecedented developments in AI and other tech have and will continue to change how people spend their money. 

Even in the best of times, it’s a tough case to crack. A recent survey shows that over two-thirds of Americans let their day-to-day feelings influence their spending habits, with millennials and Gen Zers being especially susceptible. 

In order to know your market, you have to know what it wants. But it takes immense resources to track this shifting landscape, and while large corporations are able to invest heavily in research and strategy, small businesses are at a clear disadvantage. 

That said, by staying sharp and playing to their strengths, small business owners can adapt to these ever-changing trends. Here are some key principles to keep in mind. 

Identify trends early

One major advantage small businesses have is their flexibility. Entrepreneurs can react quickly and proactively as things shift, making changes in weeks that, for a larger company, might take months or years. 

The trick, of course, is catching these trends before your competitors. Because small businesses make up over 99% of all American companies, it’s likely you’ll also be racing against other fast-moving operations.

It’s not easy to catch a big shift before it happens, but it becomes a lot more doable when you have an ear to the ground. As arduous as it may sound, staying plugged into conversations on social media — from more business-to-business ones on LinkedIn to consumer-focused ones on Instagram, Facebook and even TikTok — is a major part of this process.

You should also seek ways to let your customer base speak directly to you. That could be something as simple as a feedback form on your website or one sent out via email. 

Whatever the means, you should have a process that lets you frequently check in on what your customers are doing — and what’s shaping their behavior.

Lean hard into data 

Regardless of how you keep tabs on these trends, the information is only valuable if it can help you make decisions. That’s why it’s crucial to emphasize a data-minded approach to everything you learn about both your market and your own business goals. 

To get a leg up, consider investing in trend analysis software. There are programs that will help you track sales data, social media conversation, search volume and so much more. There’s no one metric that will tell you everything, but it’s a good start to know what your potential customers are interested in, what they’re worried about, and how they do most of their shopping.

Businesses with more resources may even want to look into hiring an outside consultant who can work on a full-time, part-time, or per-project basis to help you catch trends before they emerge. This person can act as both the researcher and analyst, helping to interpret the data and identifying angles that could give you a leg up. 

Of course, the other step is looking inward. It’s important to perform frequent audits of your own sales data, customer engagement, and more to learn how people are responding to your products. 

This is where the predictive discipline of trends analysis gives way to cold, hard facts. By looking deep into your own numbers, you can tell exactly what’s working — and, even more importantly, what isn’t. 

Build loyalty over time 

The biggest way to overcome the constant pendulum of consumer trends is to rise above it. 

That’s why, among so many other reasons, building customer loyalty is so crucial. It lets you guarantee — at least to a certain degree — that a steady flow of consumers will keep coming back, regardless of how trends shift over time. 

You’ll always need new business in order to grow, but the goal here is to ensure that a sizable portion of your customer base is made of returning, motivated shoppers who don’t need constant convincing.

This can be achieved indirectly through newsletters, social media, and smart branding, but it can also be done directly through customer loyalty programs that give discounts, exclusive products, and free add-ons for people who keep coming back. 

Research shows that being a member of a free loyalty program makes someone 30% more likely to shop from that brand, while paid loyalty programs increase that likelihood by a whopping 60%. Creating an ecosystem for your customers — and then keeping them there — can help you weather the storm while you respond to macro-level trends and changes.

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About the author
Maxime Croll Headshot
Maxime Croll
Maxime Croll is a Sr. Director at ValuePenguin focusing on the insurance industry. Previously she was the Director of Product Marketing at CoverWallet, a commercial insurance startup, and helped launch NerdWallet's personal insurance business. Maxime has contributed insurance insights and analysis to Forbes, USA Today, The Hill, and many other publications.
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