Truly understanding your customers should be a top priority for your brand. That means, not only collecting basic information about who they are but also analyzing what they do and why.
Understanding your customers means getting a clear picture of their needs, desires, wants, preferences—and yes, even their dislikes too. It means shining a light on how customers interact with your product or service, how they behave in your store, how they navigate around your website—and every other touchpoint along the customer journey.
Understanding your customers is a goal that’s often written off as “easier said than done” given the growing number of online interactions taking place every second across various channels. While the sheer volume of customer data may seem tough to wrangle, the payoff is worth it.
The most successful brands use behavioral analytics to help product, marketing, customer service, and operations teams drive incredible ROI for their companies. For example, Amazon’s personalized recommendations account for 35% of sales. Apple relies heavily on consumer behavior marketing to make products consumers revere and covet. And Netflix claims its recommendation engine is worth $1 billion per year thanks to its power to boost customer retention.
Finding out what really drives your audience towards a purchase is essential—and conducting a customer behavioral analysis is one of the best ways to get started.
What is a customer behavioral analysis?
A customer behavior analysis provides a framework for collecting, analyzing, and using data about your customers in a meaningful way. It’s a process that allows you to gain insight into customer behavior, as well as the motives and influences behind them.
A proper behavioral analysis goes far beyond basic metrics like page views or monthly active users. From mapping the buyer journey to understanding what drives consumer purchasing decisions, behavioral analytics tools help teams track, categorize, and uncover insights into what, why, how, and when customers do what they do.
A thorough customer analysis involves a number of steps, which we’ll discuss below. When properly executed, the behavioral analysis provides a wealth of information that can be used across the organization.
Why conduct a customer analysis?
There are multiple benefits to understanding user behavior, especially in an increasingly complex online environment. Collecting and leveraging user insights helps you:
- Identify problem areas and opportunities for improvement
- Personalize your marketing
- Optimize messaging & message timing
- Improve the customer experience
- Decrease customer churn
- Increase conversion rates
- Promote engagement with your product
- Boost customer lifetime value
Ultimately, these initiatives result in higher revenues for your business. As research from Harvard Business Review Analytic Services indicates:
- 58% of enterprises are seeing a significant rise in customer retention and loyalty due to consumer behavior analytics.
- 44% of enterprises are acquiring more new customers and increasing ROI by adopting and integrating customer behavior analytics.
How to conduct a behavioral analysis in 7 steps
It’s important to note that behavioral analysis is an ongoing process. Repeating the steps and revisiting your results on a regular basis allows you to adapt your strategy to ever-changing customer opinions and behaviors.
1. Define your business goals and desired outcomes
Like any strategic process, conducting a behavioral analysis starts with your business goals and objectives. What do you hope to achieve? What (specifically) do you want to understand about your customers, and what are the desired outcomes or behaviors you wish to encourage?
Based on your goals, choose which KPIs will determine the success of your analysis. For example, if your goal is to increase revenue, your KPIs could be:
- Conversion rate from demo to paid customer
- Average cart value
- Customer churn rates
If your goal is to improve customer satisfaction, you might want to track:
- Number of customer support calls
- Retention rates for paying customers
- NPS or other customer experience survey scores
2. Identify key audience segments
What are your enterprise’s most valuable customer segments? Which ones have the most potential to increase their spending habits, become brand ambassadors, or go from monthly to weekly (or daily) customers? Identifying these key segments helps you focus on maximizing ROI.
Remember, behavioral analytics tools with customer intelligence capabilities allow you to dive deeper than traditional demographic traits like location, gender, and income. You can add context by segmenting according to key behaviors including product usage, motivations behind purchase behavior, purchase timing, stage in the buyer’s journey, and more.
3. Map out critical paths along the customer journey
Take time to truly understand the customer journey - both online and off - across devices, platforms, and touchpoints. Determine which paths are the most critical to success as it aligns with your goals. “Critical paths to success” equate to sequences of actions a user takes that lead to a desired goal. These could be key steps in onboarding, conversion, and retention. For example, a critical path to success for an eCommerce customer might look like:
"Online search → Browse and compare products onsite → Add to cart → Checkout → Order confirmation"
Whereas, for the customer of brick and mortar retailers it might be:
"Online search → Visit store → Browse and compare products (try on, read labels, etc.) → Purchase in-store"
Scuba Analytics allows you to easily track multiple event sequences and edit and/or add new ones on-the-fly, meaning no code is required.
4. Determine your data sources
You’re almost ready to start collecting data. But first, you’ll need to determine where your data is coming from. Since the buyer’s journey is spread across multiple platforms (mobile, web, app, in-store, etc.) you’ll need to decide how you want to tie all the data together. If you want a truly unified view of the customer experience, only a cross-platform behavioral analytics tool will meet your needs.
You’ll also want to obtain qualitative and quantitative data (such as employee surveys, and focus groups with customers)—without both, you can only see one side of the story. 360-degree visibility is essential to assess the current state, as well as helping you innovate in the future.
5. Conduct your analysis
Once you've collected your data, it’s time to analyze it. With a full view of your data in your customer intelligence tool, ask yourself:
- What are the most common entry points to product purchase?
- What are the most popular paths to purchase?
- Which product features drive conversions or boost usage rates?
- Which perceived benefits resonate most with your customers?
- How do discounts and incentives impact customer retention?
- Where are we losing customers and why?
Compare qualitative against quantitative. Examine your tracked events and critical paths to success and look for patterns that indicate areas for improvement, friction points, or successes upon which you can build on.
6. Apply your findings
Now that you’re beginning to connect the dots, it’s time to put your insights to the test. Put your findings into action through a new marketing campaign, product update, or change in service delivery. Be clear about what you’re testing and the desired outcome before launching any new venture. For example:
- If you discovered that many people sign up for a demo of your product, but few go on to use its most beneficial features (the ones most likely to lead to a paid subscription), try padding the onboarding experience with helpful “how-to” content covering those features. Measure adoption rates prior to and following the change.
- If you discover that a high percentage of customer complaints occur on weekends, try ramping up your support crew around those times, or surveying those weekend callers to uncover any unforeseen issues.
- Notice that customers churn during a specific timeframe? Offer incentives or discounts to entice them to stay on longer during those key turning points.
7. Measure and iterate
As you roll out new initiatives, use your analysis to hypothesize what customers will think and do in response to the change. Compare their reactions with your predictions, and use the metrics you set out in step 1 to measure the success of the adjustments you made.
If the first iteration doesn’t provide the desired results, don’t give up! Try another variation or tweak your approach and test, test, test! As we mentioned earlier, behavioral analysis is an ongoing process--you’ll continue to learn and improve as you go. The streaming, real-time analysis allows you to make incremental improvements to existing processes and keep a pulse on ever-changing customer needs, market trends, and how outside factors (like a political election) may influence consumer opinions, motivations, and behaviors.
Advanced behavioral analytics tools like Scuba can help you analyze, visualize, and manipulate your data quickly, without the help of data scientists or advanced coding knowledge. You can create new queries on the fly, change or create new customer segments, and adjust existing queries easily.
Want answers to your complex behavioral questions with just a few clicks? See Scuba Analytics in action—request a demo today!
