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Understanding Customer Behaviour

You can see how your customers behave when they buy goods or services from you, but do you know what they’re thinking and feeling? Customer behaviour is the product of emotional and mental triggers that influence purchasing decisions – including deciding not to make a purchase. 

If you can truly understand these triggers, it places you in a position in which you can influence customer behaviour and boost your sales. You can’t get under your customers’ skins to see what their thoughts and emotions are, but you can look at their behaviour, search for patterns, and make inferences. 

What are Customer Insights and What Are They Used For?

Customer insights are an outside-in approach to understanding customer behaviour. Although each of your customers is unique, your business communicates with them through verbal and non-verbal cues, and to gain insight, you can use their responses to these cues to understand them better. You’ll be looking for answers to seemingly obvious questions like “What do my customers need?” Did you think you knew? The real answers might be surprising. 

For example, an insurance company might think that its customers need insurance policies. But what they really need is peace of mind. It’s an important difference that should be used to shape the way they communicate with their customers. If they can communicate using visual and verbal cues that show their understanding of their customers’ needs, and that resonate with them, the chances of selling their products will improve. The same is true of any other type of business. 

To analyse customer behaviour and obtain customer insights, you will need high-quality data, excellent analytics, and a willingness to accept the results of consumer research. And, in acknowledgement of the fact that your customers aren’t all the same, you will need to consider that your market should be segmented into several groups with broadly similar sets of characteristics and motives. 

You’ll use this information to guide your marketing efforts, possibly even crafting different messages to cater to the needs of different market segments. 

How to Create a Customer Insight Strategy

Using customer insights to guide your strategy is a great way to develop your business’s appeal within its target market. As we’ve seen, it takes a research-based approach. 

Start by finding out what your customers really need and why they would want what you offer. Hint: it probably isn’t just the product itself. Using another example, nobody buys potatoes because they want potatoes. They buy them because they want to satisfy their hunger. So, what do your customers really want, and why? Once you know this, you can determine what would influence their buying behaviour. You can use this information to define your value proposition and to develop customer journey maps – you can even use it to develop new products. 

Segmentation research uses customer behaviour analysis to help you to identify the different types of people your business might serve and how their motivations might differ. You can also try to determine which are the most fruitful market segments to target. Pitching to a niche segment will only give you niche sales. Where do most of your potential sales and profits lie? It makes sense to invest in those market segments first. 

Concept research can help you to decide whether you want to pursue new ideas. Would your customers be interested in them? How would they react to your new concepts? What would they want to change? It’s a great way to test the waters before diving in and investing in new areas. 

You can also use quantitative projections fruitfully. For example, your products might include features that raise your price but that customers don’t really want or need. If you did away with those features, could you expect to make more sales based on your ability to reduce prices?

Sometimes, you’ll use the way customers are already behaving to get data through analytics. At others, you might want to approach customers and ask them for their opinions directly. Or, you might use analytics to form an insight, and then see whether it is verifiable by testing it out.

To sum this up, you will constantly be monitoring your customers and their reactions, changing your approach based on your conclusions, and then making further adjustments to refine your offering. By understanding customer behaviour and motivation, you’re better able to cater to their needs, and the more you refine on that, the better your results will be. 

Factors That Influence Customer Behaviour

Customer buying behaviour is influenced by internal and external factors. The most important of these is self-interest. When people buy a product or commission a  service, they are doing so because they think it will benefit them. 

In a related point, customers are influenced by their problems, difficulties, and the barriers to satisfaction which they face. These are often termed “pain points,” and understanding how your business addresses them provides a valuable insight. 

Perceptions can also matter. Why do people buy expensive designer goods when they can get the same amount of utility from less well-known brands? Their perception is that they are becoming part of something bigger and better, even when that means paying more than they really need to. 

The role of demographics in shaping customer behaviour can’t be ignored either. For example, older people are more risk averse than younger ones. For instance, 94 percent of people investing in the crypto market are Gen Z or Millennials. Older consumers were slower to respond to what they saw as being a risky investment. 

Finally, culture can also have a huge influence and that could impact you in unexpected ways. The Rolls Royce Silver Shadow was set to be dubbed “Silver Mist” until executives realised that in German, “mist” means “manure.” It’s an extreme example of how culture might influence consumer decisions, but presents a cautionary tale for those who overlook this factor. 

There are other considerations too. For example, the broader economy and the customer’s financial means, marketing campaigns that persuade them a product is worth trying, influence from friends, family, or colleagues, and outright personal preferences are simple examples of these. 

Consumer Behaviour Models

A great deal of thought has already gone into the broad reasons why people buy products. You can use these broader categories to guide you when narrowing down the areas of customer behaviour you would like to research more closely. Examples of customer behaviour models include:

Complex Behaviour

Think about those big purchases you make throughout life: things like buying a house or a car. You’ll put a lot of thought into it and you’ll be going all-out to make the best possible decision. A person who wants to sell you a home or a car must be able to satisfy you with their answers to your questions – and even if they do, you’ll still comparison-shop. 

Dissonance-Reducing Buying Behaviour

Making an unfamiliar purchase and having trouble distinguishing between competing offerings? You’ll feel uneasy and may undertake a series of actions that you hope will reduce your feelings of dissonance. If you feel reassured that you’re making the right decision, you go ahead and make the purchase.

Habitual Buying Behaviour

You buy it because you always buy it. It’s not a matter of brand loyalty as much as it is a force of habit. The purchase itself is a literal “no-brainer.” You just do it on auto. Hoping to compete in this category? You’ll need to get consumer attention and cater to variety seeking, which is our next model.

Variety-Seeking Buying Behaviour

You bought it because you felt like trying something new for a change. For example, you try out a new brand of washing powder. You weren’t unhappy with the brand you bought last time around, you’re just curious about the new one. 

Gathering Customer Behaviour Data

There are many ways to gather customer behaviour data. Sales figures can help, as can individual customer histories. Website analytics show what customers looked at, what they chose, or whether you are losing them along the way. 

You can run short surveys to gather opinions, or you can test the waters on social media, look at repeat purchase behaviour, or see which of your blog posts gets the most attention. But the best way to get information on customer behaviour is to take a closer look at what customers are saying. 

Your customer service staff and their CRM software will be a rich source of information on customer behaviour, particularly customer uncertainties that may be hindering sales. Besides recording what customers are asking, customer service agents can work to get additional information from customers by encouraging them to share their thoughts. 

To understand customer behaviour, you’ll need advanced software to analyse the results of these interactions, but you’ll also need empathetic service agents that will put customers at their ease and encourage interaction. 

That’s just one of the areas where RSVP, a London-based company offering customer lifecycle management services and back office support, can help you. Our handpicked employees are chosen for their interpersonal skills and their dedication to representing our customers’ brands. Get valuable customer behaviour analytics, boost sales, and project the business image you want customers to experience. There’s no time like the present – contact us today and let’s get started with understanding your customers’ buying behaviour. 

 

Read more about the Customer Lifecycle.

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