WHY CUSTOMER BEHAVIOR ANALYSIS MATTERS: A PRACTICAL GUIDE (2024)

 

Customers remain one of the driving forces of any business, and they are one of the determining factors in whether it thrives or not. 

Whether or not a business will succeed or fail will depend on the attention that business pays to its customers. Since it's true, understanding how they behave towards a product or service is as important as the products themselves. 

This is why customer behavior analysis matters and why this article is here. The goal of this article is to establish a clear understanding of what customer behavior analysis is, show businesses why it matters to them, and explain the different methods of analysis they can use. 

It will also cover a step-by-step process that businesses can follow to conduct the analysis and some analytics tools they can make use of. At the end, you, as a business owner or someone in management, should have the right tools in hand to make the right decision for your business to thrive the way you want it.

What is customer behavior analysis?

Imagine looking at a map that shows how people act when they come in contact with a product they want to buy. Whatever their actions may be, they will definitely vary from one customer to another. 

This is what customer behavior analysis (CBA) is about. It involves analyzing what customers like and don't like, their buying patterns, and what influences their decision-making processes. 

With this information, businesses are able to gain valuable insights from customers that they can use to provide better offerings for them while improving their overall customer experience.

Why does Customer Behavior Analysis Matter in Business?

While analyzing customer behavior is something that every business should consider, one question that should be asked is "why?" Why does it matter? This section will explain some of the reasons why you should take customer behavior analysis (CBA) seriously. Some of the many reasons include:

1. Customizing your products or services

Your business exists because it is satisfying needs. Since this is true, knowing what your customers like or dislike should be one of your core missions because it can help you offer products or services that they'll need.

For instance, if you run a restaurant and you offer certain kinds of dishes and you discover that the majority of your customers are making demands on certain dishes you don't serve or would prefer a certain way to be served their meals, then, as a good business owner or manager, you'll have to meet those needs.

Customizing what you offer to meet the needs of your customers shows your commitment to them.

2. Coordinating effective marketing strategies

Another reason for customer behavior analysis is that the information you get from the analysis will help you coordinate marketing strategies that can produce results. 

In a business, when you advertise products or services, it should yield results, but when it doesn't, there must be a reconsideration and implementation of marketing strategies that work. 

By understanding the behavior of your customers, marketing to them becomes effective.

3. Improving customer experience

Reed Hastings, co-founder and CEO of Netflix, said, "The customer's experience is the most important metric." 

This quote goes a long way toward showing that customer experience is a very important factor in a business's pursuit, especially for those that intend to thrive. 

It was Shiv Singh who said that "the purpose of a business is to create a customer who creates customers." 

It's all about giving one customer a satisfactory experience who goes on to tell others how much he or she loved your services. The better your customer experience is, the more customers you'll get, period!

Read also: Customer experience specialist

4. Making strategic decisions

In business, decision-making is one of the most rigorous activities to engage in because it forms the basis upon which every outcome of a business lies.

Having the analysis of customers' responses to your products and services at your disposal makes it easy to make very strategic decisions like scaling, product development, market positioning, allocation of resources, etc., which contribute to the long-term success of your business.

5. Securing competitive advantage

It's no longer news that in your business, there are many others who offer similar products or services as you do. 

Hence, securing a competitive advantage over them will rely on how much information you have about your customers, which will allow you to not just meet their immediate needs but also stay trendy so that you can offer them what they may not even know is available.

To stay competitive, you must think outside the box as well as stay ahead of the competition.

Methods of Customer Behavior Analysis

There are several methods of analyzing customer behavior, but they all fall into two main categories:

1. Quantitative methods

Quantitative methods of analyzing customer behavior deal with the collection and analysis of numerical data from customers to understand their patterns and how they relate statistically. 

It has to do with any variable that can be measured. If the analysis can be given a figure, then it is quantitative. 

An example of a quantitative question is: On a scale of 1 to 10, how satisfied are you with our product? With statistical analysis tools, you can determine the average satisfaction score, which can help you understand the trends in their responses. 

Some of the techniques of customer behavior analysis under this category include:

Use of surveys and questionnaires

Using surveys and questionnaires to gather numerical data that can provide statistical insights into customer preferences and behaviors.

Analytics tools

The use of tools to analyze large sets of data, like websites and apps. These tools can help you identify patterns and trends in customer behavior that provide statistical information that helps you make data-driven decisions.

A/B testing

This involves comparing two versions of a particular product or a webpage to see which one performs better from your customers' perspectives. The numerical data you gather can help you make improvements to the products or services that you offer.

2. Qualitative methods

Qualitative methods of analyzing customer behavior cover every other piece of information you can gather from a customer that does not involve numbers. 

In fact, it gives a better understanding of the context of the numerical data that you have. It gives you insight into the motivations, attitudes, and behaviors of customers, which gives meaning to the actions they take. 

An example of a qualitative question is: Can you tell me about your experience using our product? By analyzing different responses, you can identify the pattern in their narratives. 

This is what qualitative analysis is about. Some of the techniques for qualitative methods of customer behavior analysis include:

User Interviews

This involves speaking with your customers directly to understand their thoughts, how they feel, and their experiences with your products. 

Doing this will provide the necessary information about what motivates them towards your products or services and what you can do to improve.

Using cohort groups

Bringing a small focus group of customers together to discuss their thoughts and experiences with your products can provide you with shared opinions and a deeper level of their perception. 

This gives you insight into the quality of the experience they have with what you offer.

Mapping customer journey

It is a detailed mapping of the steps a customer takes from first contact with your product until they make a purchase. 

This explains the whole journey of a customer experience. By analyzing this information, you can improve on specific areas that make your customer experience delightful.

How to Conduct Customer Behavior Analysis Effectively

Let's consider how you can successfully conduct a customer behavior analysis (CBA). Before we begin, it's important that you get clear on why you want to conduct the analysis in the first place. This will guide you as you go through the process:

1. Map out the customer journey

You need to map out in detail the whole journey your customers take, from when they discover your business to after they've purchased a product. 

The journey could include a visit to your website or social media interactions, product research, and when they make a purchase. Understanding these touch points in the journey will lead to the next step: customer segmentation.

2. Break your customers into segments

At this point, it will be wise to break your customers into segments based on demographic analytics. 

Where are you users visiting from? How old are they? What professions are they in? What media do they consume? What social media space are they in? Where else do they buy stuff? How did they find you? What is the time frame from discovery to purchase? 

When you've grouped your customers into these segments, the next step is crucial.

3. Identify selling points for each segment

After you've identified your consumer segments, you need to know why they're making purchases. Understand the motivations behind the actions they take concerning your products. 

This information can be obtained using qualitative methods of analysis. Going deep into the details will provide you with the selling points of each segment you have identified.

Read also: Predictive sales analytics

4. Gather sufficient data

When you've identified the selling points of each segment, you need to consider the numbers. How much information can you get from your customers? In fact, you need to gather sufficient data from anywhere. 

Don't just restrict yourself to information you obtain from Google web analytics. Go beyond there. Search for and gather every piece of useful data you will need to help you understand your customers behavior.

5. Compare the numbers with qualitative data

With all the quantitative data you need at your disposal, it's time for you to compare the numbers you're seeing with the qualitative data you have obtained through user interviews, cohort groups, and observations. 

Do they tally? If they don't, you'll need to ask further questions or redo the process all over. Comparing these sets of data will provide you with insight into the areas that are worth focusing on.

6. Make adjustments and keep it ongoing

With the result of the analysis you've conducted, there are areas you'll need to make adjustments to. The next step is to make those adjustments in the areas that you've identified. 

If, for instance, you identify that you need to make adjustments to customers' interactions and access to your products, then you'll have to focus on making sure they're optimized for better access. 

Also, keep in mind that customer behavior analysis is not a one-time thing; hence, you must keep it ongoing.

Customer Behavior Analysis Tools

There are different tools used in analyzing customer behavior, and they range from analytics platforms to tools for obtaining customer feedback. Here is a list of some of the tools you could try:

1. Google Analytics tools for tracking website and app analytics, user behavior, traffic to websites, and conversion metrics.

2. Hotjar is an analytics tool that shows survey and session recordings. It also visualizes interactions with your website, providing information on numbers of clicks, scrolls, and user behavior.

3. Mixpanel is designed for product analytics with a focus on user action.

4. Others include Hubspot, Salesforce, Zendesk, UserTesting, etc.

Ensure you utilize the proper analytics tools that meet your set objectives.

Conclusion

This article has been about understanding the importance of customer behavior analysis in the business world. The methods for analysis, how to conduct it, and the tools that can be used have been clearly discussed in practical terms. 

Stopping at this point of knowledge without application may not be the best when your business is concerned. It's time you made a change in your business this year by taking the bull by the horn.