We make countless decision daily unknowingly. Something as trivial as this is actually an important data for marketers as this thinking process could be used to boost a business revenue.
What is the meaning of customer behaviour?
It is the research into how people choose, use (consume), and discard goods and services, as well as how they react emotionally, mentally, and behaviourally.
We will look in details at the parts and characteristics of consumer behaviour so we can discuss on the most appropriate approach to customer segmentation.
Why is customer behaviour important?
Understanding customer behaviour is important as it helps marketers in figuring out what makes customer want to buy a product.
By doing this, they can tackle the gap in the market by figuring out what product is needed and what product is outdated.
Aside from that, it also helps marketers to decide how to present their products that can gain the most impact on consumers. Consumer buying behaviour is crucial to reach and interact with your customers to make them what to purchase from you.
A consumer analysis should show:
- Consumer perceptions and feelings about other alternatives (brands, products, etc.);
- What factors affect customers’ decision-making; How consumers behave while researching and shopping;
- How the environment (friends, family, media, etc.) affects how customers behave
There are different factors influencing a customer behaviour. Customer purchase patterns should be studied so marketers can understand buyer trends.
Brands can only influence customer behaviour with variables that they can control.
Let’s dive in to understand factors that makes consumers say yes. The categories that influence customer behaviour are divided into three:
- Personal factors: personal interests and opinions are influenced by demographics (age, gender, culture, etc)
- Psychological factors: their perception and attitude have an impact on how the receive the marketing message
- Social factors: family, friends, education level, social media, income, etc.
Types of customer behaviour
Four types of customer behaviour:
- Complex buying behaviour
This behaviour is exhibited when a buyer buying frequency is low but they buy expensive things. They are important for the research that consumers do before making a big investment. Purchasing a home or a vehicle are examples of complex purchasing behaviour.
- Dissonance-reducing buying behaviour
This type of buyer has a hard time picking between the brands. They are worried that they will regret their choice.
- Habitual buying behaviour
There is little engagement in the product or brand category when consumers make habitual purchases. Take for example buying bread. You don’t have a strong brand loyalty; you just repeat the action that you are used to.
- Variety seeking behaviour
A consumer purchases the same product but from various brands.
To segment customer types, you need to know what type are you attracting to your e-store.
What affects customer behaviour?
Some of the most frequent factors that influence consumers are:
- The marketing campaigns
Marketing campaign has the power to influence customer to change the brand that they use or to go for a more expensive alternatives.
Marketing efforts done through Facebook advertisements for eCommerce can be used as reminders for products or services that are of need but may not be in front of their mind.
- Economic conditions
This factor comes into play when it comes to expensive products like houses and cars. When the economy is good, it makes consumers more confident in their purchases regardless of financial liabilities.
The time taken to reach a decision when buying expensive products can take longer as it is influenced by other personal factors too.
- Personal preferences
Their likes, dislikes, morals and priorities play a role in their buying behaviours. Advertisements can be of influence too but their preference still plays a big role.
- Group influence
Social psychology has an influence over customer behaviour too. This includes whoever is around the consumer. Education and social factors can play a role as well.
- Purchasing power
A product could be great with good marketing but if the consumer has no money, then regardless of how good everything is, they will not buy it.
To determine eligible consumer, you will need to segment consumers based on their buying capacity.
Learn about advanced customer behaviour tactics
Customer behaviour patterns
Buying behaviour patterns are not the same as buying habits. Habits are tendency of doing an action while patterns on the other hand predicts mental design.
Everyone has their own unique buying habits but buying behaviour shows pattern of the collective. This offers the marketers a unique characterization. Behaviour pattern can be separated into:
- Place of purchase
Even if all things are available in the same store, customers often split their purchases among multiple choices. Think of your preferred hypermarket. You can find clothes and footwear there but you will most probably be purchasing those items from real clothing selling places.
Although everything is accessible all in one store, it does not guarantee that they will be loyal to that store. This is of course, unless that store is the only store they have access to. By studying customer behaviour will aid marketers in identifying best places to set up a store.
- Item purchased
Knowing how many of which products were bought can be of help to marketers too. It is common to buy a lot of necessities items, but usually smaller, less regular purchases of luxury products are even more common.
The perishability of each item, the buyer’s purchasing power, the unit of sale, the price, the number of customers for whom the item is meant, etc., all have an impact on how much of each item is purchased.
- Time and frequency of purchase
Customers will shop according to their timing and they also expect service during odd hours, especially now that everything is accessible with only a few clicks thanks to e-commerce.
The shop must meet these demands. To do this, they need to understand purchase pattern and match the service depending to the time and purchase frequency.
Seasonal variations and regional differences must also be taken into account.
- Method of purchase
A customer can walk in and purchase an item or they can do an online order and pay online with a credit card.
Additionally, the purchase method could be an influence for a buyer to spend more money (if the item is purchased online, then shipping fee will be added to the total price).
Method of purchase also shows a lot about what type of customer they may be. Information about customer behaviour pattern will help marketers to find out what to make a customer repurchase with a more frequent frequency and of stuff of higher values.
You can either manually search for insights in your e-analytics store’s or integrate a tool with your eCommerce platform, like Shopify or WooCommerce, to gain automated insights about purchasing trends.
Customer behaviour segmentation
Effective segmentation is ever more important now that personalization and customer experience are part of the factors that shapes a business’ success.
Finding a segmentation method that clarifies things and works for your company is crucial because only 33% of businesses that employ customer segmentation claim that it has a major influence on their operations.
There are six main types of behavioural segmentation used:
- Benefit that they look for
Think of a customer who are buying a toothpaste. They could be looking for four different things, whitening, sensitive teeth, flavour, or price.
When a customer does research on a product or service, it shows the reason for them to make their purchase decision.
When a customer values one or more benefits much more than the others, those are the main motivational reasons that influence their choice to make a buy.
- Occasion or timing-based
This refers to universal and personal occasions.
- Universal occasion applies to the vast majority of the customers. For example, purchases are more likely to be made around the holidays or when there are seasonal events.
- Recurring-personal occasion is a purchase pattern of a customer that is repeated. For example, birthdays and anniversaries.
- Rare-personal occasions is similar to recurring personal occasion but it is more irregular and spontaneous. This pattern is harder to predict. For example, attending a wedding.
- Usage rate
One of the well-known methods of behaviour-based customer segmentation is depending on the number of times which a client interacts or makes purchases of a product or service. This can be a useful indicator of lifetime value and, consequently, loyalty or churn.
- Brand loyalty status
Loyal customers are the values a lot to business as they are cheaper to retain and have the highest lifetime value. Aside form that, they can also become an advocate for the brand.
Customers can be divided into groups based on how loyal they are using behavioural data analysis, which enables marketers to comprehend client needs and ensure that they are being met.
Loyal customers are deserving of special treatments and privileges. Reward programs are to nature and reinforce the customer relationship with the brand. Aside from that, the incentives continue future business.
- User status
The range of possible user status is wide. Some of them are:
- First-time buyers
- Regular users
- Defectors (customers who have switched to a competitor)
- Customer journey stage
Marketers can synchronize the message and personalize experiences in order to increase the conversion rate at all of the stages. This can be done by segmenting the audience based on the criteria of buyer readiness.
Understanding the stages at which the customers are stagnating will be useful to pinpoint the biggest issues and possible room for grown, and in extension for post-purchase habits.
The RFM model is another method of segmentation. It allows businesses to build customer experiences withe the data they have on each customer category.
RFM means Recency, Frequency and Monetary Value. These are what they will show:
- Recency: last time a customer placed an order on the website
- Frequency: amount of times a customer bought something from your website in a given timeline
- Monetary value: the amount spent on your website since the first order
This model can be executed in 2 ways:
- Manually – exporting your database to a spreadsheet and conducting RFM analysis on your consumers;
- Automatically, using specific tools that build RFM dashboards
You can see who is your most loyal and profitable customer through RFM segmentation and analysis. Aside from that, you can also see:
- Which competitors are bringing you down
- Make personalized recommendations for your customers
- Solve some customer experience problems
Observing customer’s behaviour, listening to their input and having a good relationship with them is a recipe to have a loyal clients despite the competitions.
Frequently asked questions
What is the meaning of customer behaviour?
Customer behaviour is the study of how people make decisions about what to buy in order to fulfill their needs, wants, or desires, as well as how those decisions are influenced by their emotions, thoughts, and behaviours. People are using concepts and ideas from many disciplines, including psychology, economics, biology, and chemistry, to examine consumer behaviour.
There are 4 types of customers buying behaviour. What are they?
There are four different forms of customer behaviour: complex buying behaviour, dissonance reduction, variety seeking, and habitual buying behaviour. Customer behaviour has an impact on the product, level of engagement and the variations produced by the companies.
Customer behaviour examples?
Take choosing a city getaway for two as an illustration of customer behaviour. It might require substantial decision-making for someone who is just starting to date, but it might just require limited decision-making for a couple who have been dating for at least five years. Making a reservation at a restaurant is another instance of customer behaviour. Scheduling a reservation for a night out with friends just takes a short amount of time, however making one for an anniversary or a marriage proposal takes more thought.
How to identify customer behaviour?
You can learn more about how your customers choose products and services by doing a customer behaviour analysis. A combination of qualitative and quantitative data from customer surveys, customer interviews, and information gleaned from observation of their activity in-store and online are required to research their behaviour.
Characteristics of customer behaviour? The characteristics of coustomer behaviour are influenced by four variables: personal, psychological, social, and cultural. A customer’s behaviour is greatly influenced by a variety of circumstances, and as a person’s life progresses, so do the qualities that make them who they are.