Understand Customer Behavior to Keep Buyers Happy

If you want to keep customers, you need to make them happy. It's fine to ask people what they want, but to effectively understand your buyers, it's necessary to study customer behavior.

Customer behavior is a vital source of information on how your business can improve.

In the middle market, customer loyalty is critical. Midsized businesses can't afford the cost of constantly replacing unhappy shoppers, and customers who truly embrace your company can become powerful brand advocates. To keep people loyal, you must satisfy them. One of the classic approaches has been market research. Companies survey their customers, asking questions about which products and services interest them and where the company excels or lags.

Unfortunately, there are some problems there. When you ask someone to predict whether they would buy something or how much they would pay for it, you're likely to get inaccurate and untrustworthy results. The problem is that no one really knows until they're in the position of making a purchase decision. To put money down for something means forgoing other uses for that cash and making a choice among many options.

Understanding Customer Behavior

Put things into perspective: Ask yourself exactly what you want for dinner tomorrow night, whether you will dine out and how much you're willing to spend. You know you'll be making a food decision and what resources you'll have available. And yet, you probably don't know what you want, although previously made plans might indicate whether you'll have a banquet at an event or yesterday's leftovers at home.

You'll know what you'll have when you actually order or make it. How you act is more likely to suggest what you will do rather than what you think. Watching customer behavior is important for exactly this reason. The more you see what your customers did yesterday and today, the greater a chance you have of knowing what they might do tomorrow.

Here are some ways you can get a sense of behavior and use it as a clue to the future:

1. Watch customers on your website. People telegraph information and insight through online activities. Every time they search for something, choose one spot on a website or click on links, they leave traces of what interests them. Pay attention to website analytics that let you see information such as:

  • Where on your visitors go.
  • How much time they spend where.
  • The search terms they use to find you.
  • How well your e-commerce does.
  • At what point in the purchase process people abandon their orders.
  • A breakdown of new and recurring traffic.

Such information is a gold mine. It helps you understand what brings in customers and whether those are the same things as what they buy. You can also look for signs of problems in your sales and fulfillment processes.

2. Get other online behavioral information. According to Data and Targeting Insider, behavioral targeting is a way to match marketing messages with broadly identified online behavior. This might mean using commercial services to follow people across the Internet or by presenting messages at vertical sites related to what your company does. Although it might seem like an ability available only to large companies, behavioral targeting is within middle market companies' reach through agencies and consultants who understand how to use it.

3. Create customer personas. One technique for better understanding customer behavior is to identify different customer types. Using interviews, customer feedback, staff interviews and surveys, you can build a view of your average customers and then segment them into groups. Middle market companies will likely need to focus more on personas than larger companies that have mass market appeal. An example is Zipcar (before Avid acquired it), which specifically targeted the millennial urban dweller, notes HubSpot, because members of that market either couldn't afford a car or didn't want to own one. The ability to understand likely behavior informed the company's strategy and marketing.

4. Become a customer yourself. Few things provide as much of an education as becoming your own customer. Employees or outside contractors who won't be easily identified — important in a midmarket company where people might recognize the mystery shopper — can anonymously place orders. This will allow them to see how customers perceive the company's service. Listen to recordings of calls to the customer service center. Follow orders from beginning to end to understand how the ordering and support processes work, and seek out areas where you can improve.

How does your company analyze customer satisfaction? Are there any practices you've found to be effective? Tell us by commenting below.

Erik Sherman is an NCMM contributor and author whose work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, Newsweek, the Financial Times, Chief Executive, Inc. and Fortune. He also blogs for CBS MoneyWatch. Sherman has extensive experience in corporate communications consulting and is the author or co-author of 10 books. Follow him on Twitter and circle him on Google+.


In Collaboration With