Customer behavior analysis: What it is and how to conduct one

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71% of consumers expect personalized interactions from the companies they engage with. If you’re operating in a competitive industry, the value of your service will make or break your business. 

If you tailor your product or service to each individual customer, you’ll have more success converting them and keeping their business long-term. But if your customer interactions miss the mark, it could have the opposite effect. 

To provide fully bespoke products and services, you’ll need to use customer behavior analytics to understand what makes your clients tick. 

Below, we’ll explain what a customer behavior analysis is and how it will benefit your agency. 

What is customer behavior analysis?

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Customer behavior analysis is a comprehensive evaluation of how customers are interacting with your business. Generally speaking, the goal of consumer behavior analysis is to:

  • Track the customer journey to uncover how your target audience is finding your agency. 

  • Learn your clients’ true thoughts about your product or service.

  • Segment your lookalike audiences into focused groups to deliver personalized experiences.

  • Improve conversions, sales, and customer retention.

We can explain customer behavior analysis better with an example. Let’s say that your agency is running a paid advertising campaign to drive more website traffic and conversions. The ad campaign is bringing people to your website, and many of them are booking sales calls to speak with your team. 

You know that each prospect has different motivations, demographics, budgets, backgrounds, and pain points. Sure, they all may have an interest in your product. However, they’re all much different from one other beneath the surface. 

Through customer behavior analysis, you can leverage data and insights to learn about your audience’s behavior patterns and craft experiences that meet their expectations.

Generally, there are two types of data marketers use in customer behavior analysis:

  1. Quantitative data: This kind of information can be measured and is usually presented in a numerical format. Think of metrics and analytics you can find in Google Analytics. 

  2. Qualitative data: This data describes characteristics, qualities, or simply non-numerical information. Examples include customer surveys and online reviews. 

Marketers use both types of data to understand their audiences better and break them down into targeted lookalike groups. 

Why customer behavior analysis is important

Customer behavior analysis isn’t an optional digital marketing endeavor. Here’s why you should deploy this strategy for your current marketing campaigns.

Enhancing product and service offerings

Improving conversions and customer lifetime value comes down to fully understanding your audience’s preferences, likes, and dislikes. In doing so, you can tailor your products and services to better meet their needs. 

Refining marketing strategies

Performing customer behavior analysis is essential to achieving growth and marketing ROI through your campaign management. Conducting customer behavior analysis unlocks the possibility of crafting personalized marketing campaigns for all customer segments.

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Improving personalization

Customers in B2B and B2C audiences are constantly bombarded with marketing messages, but the ones that truly hit home are those that speak directly to their unique needs and desires. Understanding customer behavior allows businesses to offer tailored recommendations, content, and offers, enhancing engagement and loyalty.

Predicting future trends

Customer behavior analysis doesn’t just help marketers inspect past and current trends in customer behavior. Marketers can also highlight emerging patterns to help them stay ahead of the competition. 

Many customer behavior analysis tools leverage artificial intelligence (AI) and machine learning to find patterns in customer datasets. You can convert this data into business intelligence to fuel and optimize your project management and marketing campaigns. 

Increasing sales and conversion rates

The final benefit of customer behavior analysis is its impact on your bottom line. When you fully personalize your marketing efforts, you can deliver more valuable customer experiences. 

Ultimately, understanding the buying behavior of customers can help in creating targeted sales strategies, leading to increased conversions and revenue. By personalizing your marketing approach, you can also reduce customer churn and improve customer satisfaction. 

Types of customer behavior

To take advantage of the benefits of customer behavior analysis, it’s important to first understand how this process works. Below are some of the most common types of customer behavior you’ll likely encounter.

Complex buying behavior

Complex buying behavior is often seen when a person is buying an expensive or important product. Because the product is “complex,” the consumer will likely conduct in-depth research to understand:

  • The price of the product and how to get the best deal 

  • How the product will affect their life and standard of living

  • Product features, benefits, and alternatives

Think of buying a car. This is a purchase that nearly always involves complex buying behavior because it’s a complicated, expensive purchase that needs to meet several specific needs, both short- and long-term.

Dissonance-reducing buying behavior

This buying behavior is defined by a lack of available options for a product or service. When this happens, a consumer will simply choose a convenient product that works for them. Dissonance-reducing buying behavior is also present in markets with little difference between available products. 

For example, if you’re buying a special part for a kitchen sink, there are likely only a few options available that are all more or less identical. So, you’ll likely just settle for a cost-effective option with suitable features and positive online reviews. 

Habitual buying behavior

Habitual buying behavior happens when a buyer has little involvement in a purchasing decision. They don’t perceive many differences between available products and will just buy one they’re familiar with. 

These purchases are usually inexpensive. For example, a coffee drinker just stops by Starbucks rather than researching every other coffee shop in town because that’s where they usually get their morning coffee. This is how habitual buying behavior works, and the average person displays these buying habits every day. 

Variety-seeking buying behavior

The definition of this buying behavior is in the name. Customers displaying variety-seeking buying behavior aren’t too involved in the buying process and will change brands or rotate through several brands on a whim.

Think shopping for groceries. Customers might have a few brands or flavors that they’re committed to, but for the most part, they buy whatever brand is on sale or whichever flavor sounds good that day. They have no ties to a product in particular and prioritize variety over customer loyalty. 

Steps for conducting a customer behavior analysis

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Ready to implement customer behavior analysis for your agency? Here are the steps you’ll need to take to turn your strategic vision into reality.

1. Define objectives and segment your audience

Customer behavior analysis means nothing if you don’t establish clear objectives for what you want to accomplish. 

Do you want to learn how often customers are engaging your brand before they buy? Do you want to understand if your customers are interacting with other brands before giving you a call? Are you interested in figuring out the unique backgrounds of everyone in your customer base?

Once you’ve defined clear goals for your campaign and selected the right analytics tools, you can segment your audience based on your objectives. For example, if you want to understand your audience’s backgrounds, you can segment them based on their profession and education. 

2. Collect and aggregate data

Once you have your goals set in place, it’s time to collect and aggregate data that’ll answer your most burning questions. Fortunately, insightful data about your audience exists in virtually every marketing touchpoint. 

For example, you can find quantitative data in transaction histories and website analytics. You can gather qualitative data, such as customer reviews and feedback, from things like digital platforms and CRM systems.

3. Analyze digital interactions and purchase patterns

In this step, you’re working to make sense of the data you’ve collected by analyzing all the interactions customers have with your brand. 

Your goal is to determine:

  • What each customer has in common

  • How each customer is different in their buying approach

  • Your customers’ main buying preferences — do they prefer to read and research on their own before buying, or do they want to jump on a call to learn more?

Finding the answers to these questions and more will enable you to create precise audiences and achieve better marketing results. 

4. Survey and monitor feedback

Customer surveys allow agencies to collect meaningful insights about their target audiences. After all, what’s more valuable than a prospect’s own opinion about your business? 

You can begin by designing targeted surveys for specific insights and continuously monitoring feedback, reviews, and social media interactions for direct insights into customer sentiments.

5. Interpret findings and implement changes

Once you gather all your behavior data and make data-driven interpretations, the next step is adapting your marketing campaign. 

What are the areas in your marketing campaign that don't add up to the experience your new customers expect? Are you sending broad and over-generalized marketing messages, or are you sending tailored messages to the wrong audience?

Use your customer data to find out where you’re going wrong and adjust your marketing campaign accordingly. 

6. Review and iterate

Customer data is simply a snapshot of who a person was at a point in time. It’s always going to change. To avoid using inaccurate data over the long term, revisit your analysis periodically to stay updated and adjust your strategies based on fresh insights.

Unlock smoother workflows with

Performing customer behavior analysis can be an extensive, time-consuming process, but it’s well worth the time and effort when it comes to boosting your agency’s marketing ROI. And a top-notch project management solution can simplify the process and help you harness the power of your customer insights. empowers agencies to conduct better customer behavior analysis through automated workflows, streamlined collaboration, and efficient project management. 

Sign up today for the project management platform designed by agency owners for agency owners.

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