A Beginner's Guide to Customer Behavior Analysis

You probably know your best friends pretty well — their likes, dislikes, where they shop, why they prefer certain brands, and even what they’d buy before walking into a store.

Wouldn’t it be great to know your customers this well, too? While that goal may seem like a reach, conducting a consumer behavior analysis is a great place to start. 

In this piece, we’ll cover:

• What is Consumer Behavior?
• Factors That Affect Consumer Behavior
• Consumer Behaviors That Impact Customer Service
• What Is A Consumer Behavior Analysis?
• How to Conduct a Consumer Behavior Analysis
• 3 Consumer Behavior Analytics Platforms

Customer behavior doesn’t describe who is shopping in your stores but how they’re shopping in your stores. It reviews factors like shopping frequency, product preferences, and how your marketing, sales, and service offers are perceived. Understanding these details helps businesses communicate with customers in a productive and delightful way. 

There are three factors that influence customer behavior: personal, psychological, and social. Let’s dive into each type. 

Factors That Affect Customer Behavior

Personality Traits

A customer's behavior in your store is heavily influenced by their personality, background, and upbringing. Some will be jovial and outgoing, others quiet and collected, and some will fall in between. Understanding where your target audience lies in this category will be vital to understanding customer behavior. 

Psychological Responses

Psychological responses can be challenging to predict, but they play a significant role in customer behavior because someone’s response to a situation is based on perception and attitude, which can change daily. 

For example, say you got a promotion, you’re having a celebratory dinner, and your server accidentally spills a glass of water on your shirt. You might be more forgiving in this instance because you’re in a great mood and having a good day. However, if you were just fired from your job, you might be more frustrated with the situation. 

Customers can be patient and satisfied one day, but the next, they’re pressing your rep on an urgent issue. Understanding that a customer’s psychological response doesn’t represent who they are as a person can help your team defuse stressful situations and prevent potential churn. 

Social Trends

Social trends are external influencers that customers listen to, like peer recommendations, societal norms, or fads. Some of these influences can be temporary, but others can affect customers permanently. 

We’ve just gone over some examples of factors influencing customer behavior; now, let’s discuss some data-backed examples of consumer behaviors that directly impact customer service. 

Consumer Behaviors That Impact Service [New Data]

A great, real-life example of how consumer behaviors impact customer service is the ways that different audience segments prefer to get service from the businesses they purchase from. The HubSpot Blog’s 2022 Consumer Trends Report asked 1,000 consumers about their preferences and the actions they take because of them. Below we’ll discuss some of the findings. 

Gen Z reported that they prefer customer service over the phone, millennials prefer email, and Gen X prefers phone calls. Each generation has a different preference, so, depending on your audience base, you want to tailor your customer service channels to speak to the behavior of each of your audience groups. 

So, for example, if you mainly speak to Gen X, you’d want to ensure that you have more reps available to pick up the phone for troubleshooting than reps monitoring social media and checking DMs. 

Now that we've outlined customer behavior and how it impacts customer service, let's learn how to analyze it in the section below.

What Is a Customer Behavior Analysis?

A customer behavior analysis is a qualitative and quantitative observation of how customers interact with your company. You begin by segmenting customers into buyer personas based on their shared interests. Then, observe each group at their respective stage in the customer journey to see how the different personas interact with your company. 

This analysis gives insight into the variables that influence your audiences and the motives, priorities, and decision-making methods customers consider during their journey. It also helps you understand how customers feel about your company and if that perception aligns with their core values.

Why should you conduct a customer behavior analysis?

Content Personalization

A customer behavior analysis is important because now, more than ever, customers expect highly personalized content. 

In fact, a Salesforce survey of over 6,000 consumers found that 66% of them expected companies to understand their needs and expectations, and a Redpoint Global survey found that 82% of respondents expect businesses to accommodate their preferences and meet their expectations and 70% say they’re highly likely to purchase exclusively from brands that understand them and their needs. So, in brief, you’ll be ensuring you speak to customers' needs and desires, contributing to customer loyalty and retention.

Customer Value

Another key business need is the ability to predict a customer's overall value. A customer behavior analysis improves this process by identifying ideal customer characteristics. By targeting these personas, your business can attract brand-loyal customers before your competitors do.

Content Optimization

The data you get from your customer behavior analysis can be used to optimize your marketing campaigns. Not only can you narrow your focus to your most valuable segment of customers, but you can also engage them on their preferred channels. This analysis can also help you deliver content at the most effective time to make an impact. 

You’ll also get insight into where roadblocks occur for each persona, helping you increase opportunities for upselling and cross-selling.

Customer Retention

While it's important to attract loyal customers, it's just as important to retain them. Accenture reported that 49% of customers expect special recognition when they're a "good customer." Even if they like your company, these people may start to look elsewhere if you don't have a way to acknowledge them. A behavior analysis can help your team reduce this customer churn by identifying good and bad customer traits.

How to Conduct a Customer Behavior Analysis

1. Segment your audience.

The first step to a customer behavior analysis is segmenting your audience. 

Key segmentation models are demographic segmentation (age, gender, etc.), psychographic segmentation (personality, values, etc.), geographic segmentation (country, town, etc.), or other things like behaviors like frequent actions and product use, preferred media channels, and online shopping habits. 

You’ll also want to identify the characteristics of customers that are the most valuable to your business. One way to do this is through an RFM analysis, which outlines how recently a customer has purchased from you and how frequently they purchase from you.

2. Identify the key benefit for each group.

Each customer persona will have a unique reason for choosing your business, and it’s imperative to identify it. Look beyond the product or service and consider the external factors influencing the customer’s buying decision. 

For example, was it a purchase of convenience? Or did they make a conscious decision to seek out your brand? How urgent was the purchase, and how much do they want to spend? Thinking about the context of customers’ needs is a great way to determine areas to improve the customer experience.

3. Allocate quantitative data.

Some resources may be more accessible than others, and it's important to derive information from both internal and external sources to ensure you get a complete picture of both micro and macro consumer trends.

From within, your company can pull stats such as blog subscription data, social media insights, and product usage reports. Secondary outlets can offer things like consumer reviews and competitor analytics. Third-party data isn't specific to one company but provides general statistics across an entire industry. Through the combination of the three, you'll have a broad scope of information to work with when analyzing customer behaviors.

4. Compare your quantitative and qualitative data.

After you've collected your data, the next step is to compare the qualitative data against the quantitative. 

To do this, go through your customer journey map using the data sets as a reference. Look at which persona bought what product, when they bought it, and where. Did they return for another visit? By comparing the two sets of data against the customer experience, you can develop a detailed understanding of your customer's journey.

Comparing data should help you identify recurring trends. Look for common roadblocks that seem to pop up at different lifecycle stages, and note any unique behaviors specific to a customer type. Circle back to your high-value customers, and acknowledge anything that stands out with their buying behaviors.

5. Apply your analysis to a campaign.

As discussed earlier, you can use your findings to optimize your content delivery. Pick the best delivery channel for each persona, and take advantage of opportunities where you can personalize the customer experience. Nurture customers throughout the entire customer journey by responding to roadblocks on time. The insights you've gained from conducting your customer behavior analysis should give you a good idea of where you can make updates to your marketing campaigns.

Before rolling out your new initiatives, use your analysis to determine what your customers will think about these changes. Customers are habitual creatures, and some will push back on change even if it's for the better. These customers tend to be more loyal to your brand, so it's imperative you don't lose them as a result. Consider different ways to introduce change to these customers, and remember to be receptive to their feedback.

6. Analyze the results.

Once you've given ample time for testing, you'll probably want to know if your changes worked. Use metrics like conversion rate, acquisition cost, and customer lifetime value to determine the effect of your updated campaigns. It's important to continuously analyze your results as new tech, politics, and events constantly influence customer needs. Revisiting your analysis frequently ensures you capture new trends in the customer's journey.

Looking for some help with conducting your analysis? Check out these platforms, which are great for analyzing customer behavior.

3 Customer Behavior Analytics Platforms

1. HubSpot

As a former HubSpot support rep, I spent the last year working closely with HubSpot's analytics platform. HubSpot's reports and CRM features provide unique insight on both customer characteristics and engagement activity. You can use its reporting tools to view web traffic for contacts, and build lists based on their engagement history. HubSpot even offers an automatic attribution function that applies characteristics or scoring attributes once a contact completes an action.

Price: Starts free; up to $3,200/mo

Source: HubSpot

2. Trifacta

Trifacta's "Wrangler" features an in-depth analysis of your customer data. The tool creates an automated visual representation to make it easy to identify trends and outliers. It then evaluates the data, and makes predictions and suggestions for where you can improve your customer experience.

Price: Starts free; variable for premium tiers

Source: Trifacta

3. Vertica

Vertica is ideal for processing high-volume data requests coming from a range of resources. The tool takes advantage of underused servers in your data center to create a speedy and cost-effective organization of your data. This lets you upload more data on your customers without sacrificing any time. Vertica can also sync to Google and Microsoft cloud servers to ensure all data is stored in one location.

Price: Starts free; variable for premium tiers as reported by G2 Crowd

Source: Vertica

Qualitative data is crucial to your customer behavior analysis, so read about how you can better segment your customer base using customer profiling.