When it comes to your customers, knowing the what, when, how and why they buy your products can unlock all kinds of crucial insights. Through customer behaviour analysis, understanding the decisions your customers make lets you identify different trends and patterns. And with these insights on your side, you can then set about increasing sales, optimising customer relations, and growing your business – among other benefits.
Below, we’ll run through a range of other advantages that customer behaviour analysis can offer, as well as how this can positively impact your customer relationship management, sales and marketing in a variety of ways.
What is customer behaviour analysis?
Customer behaviour analysis is like putting your customers’ purchases and decisions under the microscope. By examining how they act and the decisions they make over a certain period, you can use your findings to identify trends and make predictions as to how they’ll behave in the future.
How you go about doing this, and the depth to which you go into, will depend on your budget. You could use anything from analytics to point-of-sale systems or customer relationship management software. Business intelligence software often has the capabilities you need to identify such buying patterns, and can even help with the likes of carrying out a gap analysis.
For instance, you can find out who’s buying what together by analysing complementary products, groups or categories. If a customer isn’t buying a complementary product, then you’d question why this is the case.
It’s also important to record all customer queries and interactions via a CRM system.
The importance of knowing your customers
Customer behaviour analysis can tell you a whole lot about your customers. But why exactly is that important?
Here are the most significant benefits…
Greater customer segmentation
Knowing how long your customers will stick around lets you know who and what you need to focus on going forward. And since customers have different levels of lifetime value (the total revenue to be gained from a customer over the course of their doing business with you), it’s well worth doing.
Through customer behaviour analysis, you can segment your customers based on their lifetime value. You can then tailor marketing campaigns, sales efforts and support by the amount of time they’ve been a customer.
These same segments can also be used to attract and retain people that match the profile of who you’ve identified as your most loyal – and therefore valuable – customers.
Understand the reasons behind their behaviour
If you’re relying on gut instinct and guesswork when it comes to how your customers behave, then you’ll only get half the picture – if that. Customer behaviour analysis, on the other hand, lets you know how your customers are responding to certain things, such as products, questionnaires or specific campaigns.
With these insights to hand, you can then set about offering new products, focusing on popular items, or creating new sales channels to get them to make purchases elsewhere e.g., on online marketplaces such as eBay, Amazon or Mano Mano. It’s also a great way to anticipate and forecast demand, ensuring you don’t get caught short when one of your most popular products is on the verge of selling out.
Identify pain points
If your shopping experience is less than optimal, then customer behaviour analysis can unearth the areas that are letting you down – and potentially losing you customers. Problems with your website’s design, for example, such as frustrating checkout forms or search functions that don’t work, are going to hinder things for your customers. It’s at this point that they may decide to take their business to your competition.
Once you can identify and improve the parts of your business that are weakening the customer experience, you stand a better chance of holding onto them and reducing churn in the process. As we’re sure you’re aware, it’s far more expensive to acquire new customers than it is to retain existing ones.
Understanding customer patterns and preferences
Looking at your customers’ spending habits when conducting behaviour analysis is a great way of making sense of your findings. For the most part, purchases can be categorised as one of three types: complex, habitual and variety-seeking.
With their own set of motivations and buying patterns, it’s a good idea to identify which category your products or services fall into. The three types of buying behaviours are defined as follows:
Complex buying behaviour
The kind of buying usually reserved for expensive and infrequent purchases, such as a new car or even a home. Because of the size of such purchases and the time spent weighing up different options, it’s typically difficult to identify a buying pattern between purchases.
With that said, some customers still demonstrate loyalty in complex buying behaviours. For example, if someone knows that Nissan is a brand they’ve purchased from and trusted in the past, then it’s likely they’ll make their new car a Nissan, even if they aren’t sure which model to go for exactly.
Habitual buying behaviour
Frequent and predictable, habitual buying behaviours apply to routine purchases. As a result, it’s easy to identify buying patterns.
Monthly or weekly food shops would fall into this category. For the most part, people know what’s going to go on their shopping list when it’s time to head to the supermarket.
Your business, too, will have habitual buyers that regularly purchase the same products from you. For instance, merchant businesses will have builders repeatedly buying the same bricks, cement or other building products from them. Likewise, a food distribution business will have restaurants regularly purchasing the same produce and beverages.
Variety-seeking buying behaviour
Sometimes customers switch to a different brand not because of any dissatisfaction, but for the simple reason that they’d prefer a change. It’s their curiosity getting the better of them. As they say, variety is the spice of life, after all.
Brand switching happens often and without any real intention. And with regards to what we were saying about lifetime value before, customers with a short lifetime value are likely to display more variety-seeking behaviours, compared to those with a long lifetime value.
How business management software can support customer behaviour analysis
Utilising business management tools like CRM and business intelligence software can support enhanced customer behaviour analysis in a variety of ways. With a broad range of data-driven insights at your disposal, you can make informed assumptions about your customers’ intentions and future decision-making, which can in turn support other aspects of day-to-day management – including stock control and marketing.
Our own software has this type of business intelligence already built in. Equipped with a variety of industry-driven metrics, you can open all manner of different opportunities quickly and easily.
Looking for future-proof solutions that can help you understand what makes your customers tick? Intact iQ offers flexible ERP capabilities and insight-driven decisions across your entire enterprise. For more information, head to our dedicated page or get in touch with us today.