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Understanding more about consumer behaviour and how to conduct consumer behaviour analysis for your business.
When it comes to running a company, it is vital that you have a great understanding of your consumer. By being aware of consumer behavior and buying habits, you can ensure that your business satisfies the customer and releases desired products. It might give you valuable insight into what makes your business successful and what does not work.
What is Consumer Behaviour?
Consumer (or customer) behaviour refers to an individual's buying habits, including patterns of frequency, social trends, and various background factors that can influence their decision to make a purchase. Businesses study this consumer behavior to gain insight into their target audience and create more enticing products and offers. It is not as straightforward as describing who is shopping, but instead, it looks at how they shop.
This means assessing various factors such as which products are preferred, customer service offers, sales, and how consumers perceive your marketing. Having a good comprehension of these aspects can assist businesses in communicating with customers in a useful and productive manner.
For example, suppose you ran a CBD manufacturer, and a new flavor of CBD coffee wasn't selling well. In that case, you could conduct consumer analysis to determine why this might be, such as the packaging, flavor, price, or marketing campaign. Then, you can use this analysis to improve your minimum valuable product and avoid making the same mistake again with your products going forward.
The Four Factors That Influence Consumer Behaviour
Our buying behavior depends on many different things such as social trends, psychological, personal, and economic factors.
Many companies tend to collect data in order to make decisions on how to most effectively reach their target audience. While some influences might be temporary and others may be long-lasting, these factors can affect whether a person makes a purchase, buys additional products, or decides not to buy anything at all. Let's explore these factors in more detail.
A social trend is defined as an external influence that a consumer elects to listen to. This includes recommendations from their peers, societal norms, or cultural fads. All of these can influence a customer's decision, and so it is important to consider.
The Personality of Your Customer
How a consumer behaves while shopping is heavily influenced by their personality traits. This typically shapes who they are as individuals and determines how they act in various environments. For example, some consumers may be outgoing and cheerful, while others might be quieter and more reserved. Understanding where your demographic lies on this spectrum is crucially important to understanding consumer behavior.
People with different income levels tend to buy different types of goods, shop in very different ways and look for products of varying quality. So it is only natural that economic factors also have a significant impact on the purchasing power of an individual. These factors include the following ones: country economic situation, personal and family income, savings, consumer credit, liquid assets, and income expectations.
This final factor plays a significant part in consumer behavior, but it can often be hard to predict, as you might imagine. Individual response to a situation revolves around attitude and perception, which can vary regularly. For example, a customer might be patient and satisfied one day, but the next day could be in a totally different mood. Understanding that a consumer's psychological response doesn't represent who they are can assist in diffusing stressful or potentially conflicting situations.
Why Should You Conduct Consumer Behaviour Analysis?
Consumer analysis is both a qualitative and quantitative observation depicting how customers interact with your business. It provides insights into various factors influencing an audience, such as priorities, motives, and decision-making methods. This can help you to understand how customers feel toward your company.
However, it is true that businesses, especially small ones, can't afford to spend money on expensive research — and fortunately, they don't have to. Existing customer surveys and small focus groups can be effective and inexpensive. At the same time, you can always consider business funding to stay afloat.
Here are several reasons why you should take the time to analyze your customer base:
- Content personalisation: There is an increasing need for personalised content that is different for every customer. You cannot do this efficiently (if at all) without a complete understanding of your customer and their tendencies and preferences;
- Retaining your customer: It is just as important to keep your existing customers as it is to look for new ones. If you don't find a way to acknowledge them, they may start looking elsewhere. Undertaking consumer analysis and understanding customer traits can help you work out how to retain your existing consumers;
- Predict the value of a customer: Businesses need to predict a customer's overall value. Behaviour analysis can help identify ideal customer characteristics and consequently help you to attract brand-loyal customers;
- Optimise your content: It can help you to optimise your marketing campaigns. You can narrow down your focus to the most valuable segment of your customers. You can also ensure content is delivered at the most optimum timing. This can help opportunities for upselling and cross-selling as well. In the meantime, make sure to also get a heads up when competitors publish new content so that you're always in the know of what's happening in your industry
How To Conduct Consumer Behaviour Analysis
Several steps must be taken to conduct your analysis:
STEP ONE: Segment your audience. This step essentially involves categorizing your customer base. Using a wide range of characteristics is recommended, such as gender, location, and age. However, don't also forget to include tendencies such as preferred media channels, online shopping habits, and activity on the internet. You are looking to identify traits of consumers who are the most invaluable to your business.
To do this, you can perform a Recency, Frequency, Monetary Value (RFM) analysis, which is a marketing tool used to discover your best clients based on the nature of their spending habits. This step presents you with information on how much impact loyal customers currently have on your business.
STEP TWO: Identify the key benefit for each group. Each customer type will have its reason for choosing your business, and it is invaluable that you identify it. It is important to consider any external factors that could influence their purchasing choices, such as whether the purchase was made for convenience, how much the customer wants to spend and whether they consciously sought out your brand. Understanding the context of a customer's needs can assist you in working to improve the customer experience.
STEP THREE: Obtain quantifiable information about consumers. To do this, you must get information from both internal and external sources, giving you a complete picture. Internally from your business, you can find stats such as product usage reports and blog subscription data. Secondary outlets can offer competitor analytics as well as consumer reviews.
Third-party data provides information across an entire industry. By using internal data, secondary outlets, and third-party data, you will find you have a broad scope of information to help you analyze your consumer base.
STEP FOUR: Compare your qualitative and quantitative data. Consider which persona purchased which product, when, and where. Did they come back again? A detailed understanding of your customer's journey is developed by comparing your data against the customer experience. This way, you should be able to notice some recurring trends. Make sure you note any eccentric behaviors affiliated with a specific customer type. Also, take special note of your high-value customers and see if anything stands out regarding their buying behaviors.
STEP FIVE: Apply your analysis to a campaign. It is crucial to utilize the information you have collected. Select the best delivery channel for each persona type and do what you can to personalize the customer experience. Be mindful of nurturing your consumers through their customer experience and use your collected information to smooth out any potential obstacles in a concise manner. The insights you have collected from your behavior analysis should help you work out where to make updates to your marketing campaigns to be more effective and successful.
However, before you make updates, use your analysis to determine what customers will feel about your planned changes. Don't forget that we are creatures of habit and don't often respond well to change. You do not want to lose your customers, so ensure you are receptive to their feedback and utilize different ways to bring forth change.
STEP SIX: Analyse the results. Once you've conducted thorough testing, it is important to consider the results. Remember to analyze results continuously as politics, new tech, and events may influence your consumer's needs. It is also sensible to regularly revisit your analysis as it can allow you to capitalize on new trends affecting your customer.
Undertaking consumer behavior analysis is vital for you to have a true understanding of your customer. By taking the time to conduct analysis, you can learn more about your customers, determine how to make your business more appealing to your customer demographic, and make your company more successful.
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