Steps to analyze customer behavior bring high efficiency

In today’s business environment, researching and deeply understanding customer behavior plays a crucial role in the success of a business. In the below article, Optimal Agency will guide you on the steps to analyze customer behavior. Follow now!

☑️ Qualitiy account 💯, no worries about getting lock	☑️ Immediate use, unlimited spending
☑️ Best rental price	☑️ Create campaign freely
☑️ Many offers	☑️ Optimized ads campaigns
☑️ Consulting fast approved ads	☑️ Safe, secure, effective and affordable
☑️ Diverse services, accounts	☑️ 24/7 technical support

What is analyzing customer behavior?

Customer behavior describes how customers shop, from how often they purchase to how they respond to your marketing campaigns. Understanding this behavior helps you predict what will happen next and adjust your marketing strategy, from products to marketing and sales, to create the most convenient shopping experience for users. Thereby, increasing the likelihood of boosting sales and maximizing ROI.

Analyzing customer behavior, or this understanding process, can help you gain detailed insights into your customers. Since customers don’t always do what they say, analyzing actual behavior helps you determine what happens when they interact with your brand. To achieve a high level of detail, you can use data generated by customers or brand activity data, such as the number of interactions, frequently asked questions, or product reviews. This activity helps you understand how customers behave in each interaction and what drives their behavior. As a result, you can improve customer experience, enhance retention, and increase business revenue.

What factors affect customer behavior?

The factors that affect customer behavior are:

Social factors

Social class represents the income level of customers and directly affects their consumption behavior. For example, criteria for purchasing products/services, purchase timing, spending frequency, shopping locations and methods, and payment methods,… are all influenced by social class. Family members often influence each other, impacting each member’s perception and shopping decisions. Each customer’s role and social status impact their habits, behaviors, communication, as well as their needs and shopping habits. People with different roles and statuses will have varying needs in food, fashion, vehicles, housing, and other areas.

Cultural factors

Each country or territory has a unique culture with distinct characteristics. The features of each culture, such as customs, practices, or beliefs, influence people’s perceptions of all aspects of life, including product consumption behavior.

Personal factors

• Occupation: Occupation is an important factor affecting customer behavior. People with different occupations will have different choices regarding products and services.
• Personality: Personality is shaped by education and environmental influences such as family, friends, teachers, and celebrities. Different personalities lead to different spending and shopping habits.
• Age: Age is the first factor affecting customers’ shopping behavior. At different stages of growth and aging, people’s consumption needs change, from food, clothing, healthcare communication.

Psychological factors

Perception and comprehension strongly impact how customers react to the company’s marketing messages, as well as their spending and shopping habits. Besides, customers’ beliefs and attitudes about products/services or the company’s image and brand also significantly influence their behavior towards the business.

Steps to analyze customer behavior

To analyze customer behavior, you can follow these steps:

Step 1: Define customer segments

Even if you already have a current customer profile, you should still consider customer segments before analyzing their behavior. Here are some important segments to focus on:

• Demographics: Age, gender, income, geographic location, family status, annual income, education level.
• Personal factors: Interests, behaviors.
• Professional information: Industry, job title, company size.
• Values and goals: Beliefs, personal and professional aspirations.
• Challenges: Personal pain points, worries, needs, problems to be solved.
• Interest in products/services: How your brand is perceived in their lives.
• Identity information: Use of social media, communication preferences.
• Purchase barriers: Factors that may influence their purchasing decisions.

The ideal customers for you to analyze and identify these characteristics are those generating the highest revenue – after all, you hope to gain as many of these customer types as possible when looking for new customers. Consider the following factors:

• Customer satisfaction: Who are the customers you are most satisfied with? What about your product/service makes them happy and meets their needs?
• Customer lifetime value: Which customers or customer segments have the best overall value that you need to retain?

Step 2: Collect all relevant customer behavior data

Once you have identified who your customers are – particularly those generating the main revenue – and completed the segmentation, you can start evaluating their data to find behavior patterns. This information will fall into two categories: quantitative data and qualitative data. Quantitative data describes what is happening when customers take action. It includes information such as:

• Purchase history and product/service popularity.
• Website visits and page views.
• Interactions on social media platforms.
• Conversion reports for marketing/sales activities.
• Customer service requests and their resolution speed.

Qualitative data provides the reasons behind customers’ actions from their perspective. It includes:

• Direct customer feedback collected through surveys.
• Analytical data from conversations, such as their emotions, intentions, and desires.

Step 3: Evaluate and analyze the collected data

Looking at the collected data, you can begin to evaluate the information to understand customer behavior better. Consumer behavior can fall into various types, and there are several theories explaining why customers behave in different ways. Your data can reflect in the following types of buying behavior:

4 types of buying behavior:

• Extended Decision-Making: Customers thoroughly research products/services and invest time before deciding to purchase. This may include consulting family and friends, reading reviews, visiting comparison websites, and gathering information from the brand’s website.
• Limited Decision-Making: Customers may hesitate due to too many options. Do they buy the product because it is the only choice on the market?
• Habitual Buying Behavior: What products do customers frequently purchase? How does this vary between segments?
• Variety-Seeking Buying Behavior: When there are many similar options on the market (e.g., beverages, hand sanitizers, toothpaste, body wash), customers may buy and try various products to compare differences. Do they compare your product with competitors offering similar items?

By categorizing customer buying behavior, you can develop appropriate marketing strategies to meet their needs and optimize their experience.

Consumer approaches to products/services:

• The Economic Man Approach: This theory suggests that customers always choose the lowest-priced product when there are many similar options at different prices. Customers are considered to make “rational” decisions to balance their needs with a limited budget.
• The Cognitive Approach: This theory suggests that consumers act according to a specific process. This process includes recognizing a need, searching for information, evaluating options, making a purchase, and then assessing whether the purchase was satisfying.
• The Psychodynamic Approach: Based on Sigmund Freud’s theory, this suggests that consumers try to reduce conflict between personal desires and what they should do according to social norms. Consumers seek maximum satisfaction while adhering to social standards and suggestions from family, friends, or online reviews.
• The Behaviorist approach: This theory suggests that consumer behavior is shaped by past stimuli and experiences. Negative and positive experiences serve as lessons for consumers to avoid or repeat similar actions.
• The Humanistic Approach: This theory suggests that consumers have subjective reasons for acting. They care about themselves, and their purchase choices often reflect their personality and values.

Identifying common characteristics

During customer segment analysis, you can identify common reasons to better understand their behavior. To make this easier, answer the following questions:

• How do customers approach your brand? Do they come through online product searches, social media posts, marketing emails, or other channels?
• When are they most likely to purchase a product? What times of day, week, month, or season do they typically buy?
• What prevents them from completing a purchase? Is it due to cumbersome payment methods, high prices, or other reasons?
• What motivates them to use the product? Why do they choose to shop on Shopee instead of Lazada? Is it because of the interface, usability, discount codes, or other reasons?
• What features of your website or purchasing platform create problems for customers? Which elements of your website cause them difficulties?
• Which marketing or sales campaigns have impressed them the most? Which of your campaigns have left a deep and positive impression on customers?
• What encourages them to make repeat purchases? What factors drive them to return and buy again?
• What convinces them to purchase in the first place? What persuades them that your product is the right choice?
• Why are they initially motivated to make a purchase? What factors prompt them to decide to buy?
• What is preventing these customers from completing a purchase? What barriers are stopping them from completing the transaction?

Answering these questions will help you better understand customer behavior and develop more effective marketing and sales strategies.

Step 4: Adjust the customer journey to increase customer lifetime value

After analyzing customer behavior, you have the insights needed to create an optimized customer experience. This way, you can start deploying measures to reduce barriers such as cart abandonment, high bounce rates, and difficulties in the payment process, and instead, optimize these into behaviors that you believe will improve the user’s shopping experience. However, this may require adjusting the customer experience and journey to create a better experience.

For example, if customers often buy two products together, combining them into a combo and advertising it as a product bundle can help you increase sales, as you have anticipated the customer’s needs and reduced the hassle of finding each product individually. Or, you can send reminder emails to ensure that new customers who have just downloaded your taxi app add their payment information to their card for convenient use of the app. This is also how to build a customer loyalty program.

By the above article, Optimal Agency hopes it can help you understand the analyzing customer behavior method and successfully conducting target audience analysis.

Maybe you are interested:

• How to collect customer information on the website effective?
• Top 8 Customer Insight Research Tools
• How to retain customers on the website for longer

FAQ