Behind Every Purchase: Customer Behavior Analysis

Behind Every Purchase: Customer Behavior Analysis

The Gist

  • Understanding your customers. Consumer behavior shapes buying decisions, influenced by marketing strategies.
  • Buyer types. Customers exhibit diverse behaviors — habitual, novelty-seeking, or research-intensive — impacted by personal and situational factors.
  • Analytical need. In-depth customer behavior analysis aids in personalizing interactions, predicting lifetime value and optimizing marketing strategies.

At its core, consumer behavior is all about understanding how your customers make buying decisions. Because the customer journey is made up of countless behaviors and small decisions that can be influenced by marketing and other factors, understanding them can help you nudge buyers in the direction you want them to go.

The types of customer behavior you will often encounter fall within more or less predictable lines. For example, habitual buying behavior is when your customer is so invested in the brand they buy again and again. Continually staying at the same hotels, consistently flying with the same airline and repeatedly buying the same brand of jeans are all examples of habitual buying behavior. The preferences of these types of buyers are often hard to change.

Someone who is more interested in novelty and has multiple product or service choices available on the market in their price range will choose products or services just to try them out. This type of customer might be easily influenced by a suggestion from a friend or social influencer on YouTube.

Yet another type of buyer is heavily invested in the decision-making process. They love to research and comparison shop before making a decision. Because they fear buyer’s remorse, this type of buyer often has a hard time making a decision and is often swayed by information they feel is credible and accurate.

Factors Affecting Buying Behavior

Of course, none of these personas is fixed in stone and can change depending on circumstances such as budget, urgency and other extenuating factors, according to Ana McFee writing for EHL Insights. Buying behavior is also influenced by things such as personality, politics, psychological, social, job status, health and other situational factors. Sometimes these factors, such as a political disagreement with a brand, may be short-lived or they could trigger long-term changes. These factors often can combine in novel ways that result in entirely new behaviors.

For instance, personal traits, like maintaining thriftiness despite affluence, or demonstrating extravagance in spending irrespective of limited resources, significantly influence individuals’ spending habits. A wealthy eater may prefer chain restaurants because they offer big portions for the money (aka, value), gluten-free meals or senior discounts. On the other end of the spectrum, a buyer who likes upscale restaurants may or may not be wealthy but may find a great deal of enjoyment from spending what money they do have on experiential dining. 

The customers’ perceptions also play a major role in their buying behavior. In terms of brand and value, the adage “perception is reality” holds true. If a customer perceives one brand as providing greater value compared to another, they are likely to select the former.

Social influences today can be very powerful behavior modifiers, as well. Social influencers can make or break a product with a single video. (Power marketers can only dream of this.). And it’s not just online influencers. Friends and family, and acquaintances (the original social influencers) will, as they always have, influence where your customers choose to spend their money. 

Related Article: Psychology and Science Behind Modern Customer Experience

Why Businesses Need Customer Behavior Analysis 

It goes without saying that understanding customer behavior is critical to business success today. Because of ecommerce and the global marketplace, customers, depending on the product or service, have almost unlimited choices. 

While each individual’s buying journey is unique, there exist common patterns that can be analyzed and predicted. This understanding equips businesses with the necessary tools to subtly influence a buyer’s decision toward their brand.

When a customer starts their buying journey, they do so in a predictable way. First, they think, then they feel and then they take action. If you know your customers’ behaviors, each of these steps can be influenced by the creation of better marketing programs and new services and products their customers will crave.

Understanding your customers will help you build loyalty through activities such as hyper-personalization and omnichannel marketing and sales. In competitive markets, personal relationships can mean the difference between making a sale and wasting your marketing budget. According to a recent McKinsey study, 71% of customers not only want but expect companies to deliver personalized interactions. Seventy-six percent said they get frustrated when this doesn’t happen.

Another benefit of uncovering buying behavior is the ability to predict lifetime value by the identification of ideal customer characteristics. Organizations can then use this information to target these personas to optimize marketing campaigns to focus on their most valuable customers while engaging with them via their preferred channels. As an added bonus you will uncover friction points for each persona. Removing them will help with upselling and cross-selling.

Related Article: 3 New(ish) Ways to Think About Customer Loyalty

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