What is consumer behavior?

Customer behavior data encompasses all customer interactions with your product from the beginning of the customer journey till they continue to use your product.

These interactions can include activities like engaging with the onboarding checklist, clicking on different elements, hovering over specific features, and even canceling a subscription.

Product teams gather and analyze this data to gain insights into customers’ behavioral patterns. These insights enable them to take appropriate actions and make informed decisions.

What is a customer behavior analysis?

Customer behavior analysis involves collecting customer data to obtain valuable insights into how users engage with your product.

By conducting customer behavior analysis, you can understand different customer segments’ preferences and develop well-informed marketing strategies to personalize their customer experience accordingly.

Moreover, by enhancing user experiences based on these insights, you can boost customer retention rates, ultimately increasing the customer lifetime value.

Why is understanding customer behavior important?

Conducting customer behavior analysis provides invaluable insights into your target audience’s preferences, needs, and motivations. Here are four reasons why it’s important to conduct customer behavior analysis in your business.

Identify trends to make predictions for future behavior

One of the key reasons for conducting a customer behavior analysis is to identify trends and patterns to predict future customers’ wants and needs. Discover valuable insights into key drivers for your customers and find out what satisfies them and what doesn’t.

You can then forecast customer behavior, recognizing which users are more likely to bring greater revenue over time so you can implement strategies to better retain them.

Improve customer satisfaction and customer loyalty

Customer behavior analysis can help you understand what customers enjoy and dislike about your product so you can make improvements.

You can use your customer data to analyze the key drivers of satisfaction through real-time customer engagement analytics.

Once you know what satisfies customers and what doesn’t, you can make the relevant changes to improve the customer experience, increasing customer satisfaction and loyalty.

Deliver personalized experiences and increase the customer lifetime value

Behavior analysis can help you discover valuable customer information such as customer preferences, hidden needs, and pain points. You can use this information to create customer segments based on certain attributes or negative experiences.

In each segment, you can create a personalized experience addressing or complimenting what was discovered in customer behavior analysis. It could be implementing a tooltip to highlight a feature that could help a customer with one of their jobs to be done.

The more you can use the insights you discover, the better experience you can create for your customers, making them continue to pay for your product, leading to increased customer lifetime value.

Increase customer retention

You can use the insights from analyzing customer behavior to identify high-risk customers and discover the root cause of customer dissatisfaction. You must rectify those product issues to improve the overall customer experience, increasing your retention rate.

How to perform a consumer behavior analysis in 6 steps

Performing consumer behavior analysis can sound daunting, but here’s how to perform it in six quick steps.

1. Identify your segments

First, you need to identify your customer segments. Here are some common ways to segment users:

• User properties such as demographics, interests, jobs to be done, goals, or pain points
• Company properties such as industry or company size
• Usage patterns such as number of logins or most frequently used features

But the most important segment is always your ideal customer profile. These are users that get the most value out of your product and are the main drivers of revenue. They have the highest level of customer satisfaction and customer lifetime value.

Product growth is possible when you’re able to grow this segment and send more people down similar paths to higher customer satisfaction.

The second most important segment is high-risk users. This is business you’re very close to losing. It’s essential to understand what might be leading them to abandonment and what can you do to make them stay.

2. Identify how each segment benefits from your product

With your segments created, you can start analyzing consumer behavior to understand how important segments behave. This will help you flag features or experiences that lead to increased user satisfaction.

Customer analytics reports such as trend reports help you filter the view for your segments so you’re able to identify popular features and events for each user type. These can be integral for driving habitual buying behavior.

3. Collect qualitative and quantitative data to identify patterns

Access deeper insights with feedback from quantitative and qualitative data to answer the following questions:

• What do customers value most about your product?
• How do power users interact with different product features?
• Do they require additional training in your product or other forms of support?
• Which additional features do customers want, and are there areas of friction?

These will enable you to further boost product adoption and customer retention.

How to collect quantitative data

Use reports such as heatmaps and funnel analysis to collect quantitative data.

Heatmaps visually show high and low user engagement areas on your product via color-coded values. They are a helpful tool to present visual data, revealing the features that attract the most attention to tagged elements from visitors.

A funnel analytics report shows you how users progress through a customer journey and where they drop off. These drop-off points indicate friction that can be further investigated and improved.

How to collect qualitative data

You can collect qualitative data through surveys and by talking to your support team.

Depending on your goals, collect user feedback from one or many in-app surveys such as welcome surveys, NPS and CSAT surveys, and churn surveys. Trigger them contextually during the customer journey so they aren’t disruptive towards the user experience.

Additionally, your customer support team can offer insights into consumer behavior as they frequently speak to your users. They’re usually aware of trending user preferences and external factors influencing buying behavior. These are often insights that a survey can’t reveal.

4. Use your customer behavior insights to boost new sign-ups

The first thing we recommend is to target the low-hanging fruit. Identify what’s working for high-value customers and use these insights to encourage new sign-ups.

Here are a few examples of the improvements you could make to grow your user base:

• Share personalized marketing campaigns for your segments to offer the relevant benefits and solutions.
• Promote features used by high-value customers in your marketing campaigns.
• Personalize interactive walkthroughs to showcase features of relevance for each new user.

5. Improve your customer journey map with newly found insights

Next, identify what can be improved in the existing process to increase retention. The behavioral data can highlight how customers interact with your product and showcase the improvements needed to optimize your customer journey.

For instance, if you spot friction at a point in the user journey, try adding a tooltip at the specific touchpoint to guide users.

6. Analyze the results and repeat

Customer behavior analysis isn’t something that you do once and forget about it. It’s an ongoing process as your product and customer preferences evolve over time. Rinse and repeat periodically so your product stays aligned with changing user needs.

3 customer behavior analytics tools to track consumer behavior

There are a range of analytics tools that can assist you in conducting customer behavior analysis. Here are three industry leaders you can explore.

1. Userpilot

Userpilot is a product growth platform that offers powerful user behavior analytics, feedback widgets, and in-app experiences that collectively help elevate the customer experience.

• Funnel analysis: Monitor funnel progression for all your user journeys to understand how users move through a funnel and where they drop off.
• Trend analysis: Track changing user behavior and preferences to make sure your in-app experience aligns with user needs.
• Path analysis: Identify all the paths users take to complete an action within your app and find the shortest route to success.

• Cohort analysis: Understand which events or retention strategies are contributing towards a high retention rate so you’re able to boost loyalty.

• Heatmap analysis: Find user hotspots in your UI to understand where they navigate the most and what areas they might be ignoring.
• A/B tests: Test variations of in-app experiences with A/B testing and find the UX variation your users prefer the most.

• Feature and events tracking: Track feature usage and custom events with the feature and events dashboard. Find popular features for various segments and understand what’s driving product stickiness.

• User/company profiles: View user/company information and activity data for individual users/companies from their dedicated profile pages.
• User segmentation: All the customer data you’re collecting gives you the power of segmentation. Combine different user attributes, company properties, and in-app events to build a series of user segments which you can use to provide personalized user experiences.
• In-app surveys: Seamlessly collect quantitative and qualitative data from user feedback by creating custom surveys with a range of question types. Userpilot also offers survey templates to help you get started right away.

• Survey analytics: Track your NPS scores to gauge overall customer satisfaction and identify gaps in the user experience from your survey answers.

2. Hotjar

Hotjar is a comprehensive web analytics and user feedback tool designed to assist website owners and digital marketers in better understanding user interactions on their websites.

One of Hotjar’s key features is heatmaps, which analyze and record user activity on selected web pages, recording interactions such as mouse movements, hovers, taps, and scrolls. These help identify areas of high and low popularity.

Hotjar also provides session recordings, allowing you to watch real-time replays of individual user sessions. You’re also able to collect customer feedback with user feedback surveys.

3. Mixpanel

Mixpanel is a product analytics platform that enables businesses to analyze user behavior and make data-driven decisions. It offers insights into user engagement and tracks product events, such as button clicks and form submissions.

Mixpanel can also help with the following:

• Funnel analysis: Identify where users drop off and optimize user flows for better conversion rates.
• User segmentation: Analyze different user groups based on attributes and behaviors.
• A/B testing: Optimize user experiences by experimenting with different product versions.
• Retention analysis: Measure user loyalty over time with data visualization and reporting tools.

Conclusion

You need more than just talking to your users to understand customer behavior. Product teams need to capture and analyze their behavior patterns in order to improve the customer experience and increase retention.

Want to get started with customer behavior analysis? Get a Userpilot demo and see how you can collect the data you need and analyze it easily.

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