How to understand consumer behaviour

One of the most important aspects of any business is understanding who your customers are. Without this knowledge, it can be difficult to create content, design products or market your business in a way that appeals to them. 

In this post, we will define the idea of consumer behaviour in marketing and discuss some methods for understanding your customers so you can know them on a deeper level. This allows you to create a customer base that is more loyal and likely to return to your business.

What is consumer behaviour?

Before we look at how to understand your consumers, it’s important to first define consumer behaviour. Consumer behaviour in marketing refers to the actions and decisions that people make when they are purchasing or using products.

Consumer behaviour towards a product includes everything from the initial decision to buy it, to how they use it and whether or not they continue to purchase it in the future. There are a number of factors that can influence consumer behaviour, including

• Personal — age, gender, and income
• Social — family and friends
• Cultural — religion and traditions
• Psychological — motivation, perception, learning 

Consumer psychology in particular is an important field of study within marketing as it helps businesses to understand why people make the decisions they do. You can find out more about consumer psychology with Coventry University’s Consumer Behaviour and Psychology course.

Why consumer behaviour is important for businesses

Understanding consumer behaviour is important for businesses because it can help them to make better decisions about their products and services. By understanding why people purchase certain products and how they use them, businesses can adapt their offerings to better suit the needs and wants of their target market. 

This means you can greatly influence your customers’ decision-making process. You can learn more on how to do this with the Behavioural Science: Influencing Behaviour and Designing Decisions ExpertTrack by FutureLearn.

Understanding consumer behaviour can help businesses to create more effective marketing and advertising campaigns that are better at reaching and influencing potential customers. And the good news is, that you can find out a lot about your customers with a few simple methods of gathering customer insight.

What is customer insight?

Customer insight is the process of understanding your customers on a deeper level. This includes understanding their needs, wants, behaviours and motivations.

Customer insight can also help you to understand:

• How your customers interact with your business
• What they think of your products or services
• Why they continue (or don’t continue) to do business with you

The importance of behaviour characteristics cannot be understated as it helps to segment customers, understand their preferences and target them with personalised messages to maximise sales. Using multiple methods will help you form a well-rounded picture of your customers. To find out more, look at our next step Selling Through Customer Insight.

What customer insight can be used for

Below, we discuss some of the top uses of customer insight so you can see why it’s worth learning more about. You’ll find that your business can benefit in a number of ways by implementing customer insight strategies.

Hyper-personalisation

By understanding your customers on a deeper level, you can create a more personalised experience for them. This could include things like tailoring your marketing messages or product recommendations to their specific needs and interests. Gathering data for hyper-personalisation can be done through browser history, purchase history and even social media activity. 

Thanks to AI today, businesses have more opportunities than ever to create truly personalised experiences for their customers. For example, product recommendations can be driven by AI, and retargeted ads based on a customer’s previous interactions are an efficient way of getting them back to your website. This could be the difference between a browser and a customer, or a one-time customer and a lifelong fan.

Customer journeys/touchpoints

By understanding how your customers interact with your business, you can identify pain points and areas for improvement. This could involve anything from simplifying your checkout process to making it easier for customers to find the information they need on your website. This is where user experience (UX) design can be extremely helpful. 

UX is all about understanding how people interact with your website or app, and making sure the experience is as smooth and easy as possible. This can significantly help convert browsers into customers. You can learn more with the User Experience (UX) Design and Research ExpertTrack by the University of Michigan.

Product development

By understanding what your customers want and need, you can develop products that better meet their expectations. This could involve anything from adding new features to an existing product to developing a completely new product. You can also use customer insights to determine the best way to position and market your products. 

For example, if you know that your target market is environmentally-conscious, you could position your product as eco-friendly. On the other hand, if your target market is budget-conscious, you can use this to optimise your pricing strategy.

Advertising and marketing

By understanding your target market, you can create more effective advertising and marketing campaigns that are better able to reach and influence potential customers. This could include things like targeted social media ads or using customer data to create more personalised email campaigns. 

Social and digital marketing is particularly important in today’s landscape, and it’s important to stay up to date with the latest trends. You can learn more about social and digital marketing with the Creative Strategy for Emerging Digital Media ExpertTrack by Ravensbourne University and Moving Brands.

Customer service

Your customer service team will be more able to meet customers’ needs when you understand what your customers are looking for. 

Actions you can take include:

• Training your team on the most common customer queries 
• Making sure your customer service channels are easy to use
• Incentivising employees with customer service bonuses to encourage positive behavioural changes

Learn more about motivating positive behaviour change with FutureLearn’s Behavioural Economics: Employee and Customer Behaviour.

What is a buyer persona?

A buyer persona is a fictionalised representation of your ideal customer. It takes into account things like their demographics, behaviours, interests and needs. Creating a buyer persona can help you to understand what motivates your target market. The knowledge can then be used to make better decisions about marketing and product development.

To create a buyer persona, you need to gather data about your ideal customers. You can do this with several different methods that will prompt consumers to give you their details. 

Methods for creating buyer personas

1. Online surveys. You can use online tools like SurveyMonkey or Google Forms to create a survey that you can then share with your target market.
2. Competitions. Offering a prize in return for customer details is a great way to incentivise people to take part.
3. Social media. Use social media platforms like Twitter and Facebook to run polls and ask questions that will help you to understand your target market better.

Once you have this data, you can start to create a profile of your ideal customer. This should include data such as their age, gender, location, occupation and interests.

This information will allow you to segment your target market to create more effective marketing campaigns. The concept of Behavioural Segmentation is an important part of marketing segmentation.

Buyer persona examples

Here are a few examples of buyer personas for a clothing brand:

Steve, 22

Steve is a busy university student who likes to socialise with friends and go to gigs and festivals. Steve also likes watching Netflix, playing video games and going to the gym or going for runs. He is active on social media and likes to keep up with the latest trends in fashion. He mainly uses Instagram and follows fitness influencers, fashion bloggers and his favourite bands.

Interests: Music, fashion, social media

Needs: Affordable, trendy clothes

Wants: To be able to express his individuality through his clothing

Helen, 35

Helen is a stay-at-home mum who likes to take her kids to the park and go for coffee with friends.  She likes to keep up with the latest trends in home decor, and she loves to read. She is active on social media, especially Facebook, and follows a lot of fashion bloggers and interior design accounts.

Interests: Parenting, home decor, reading

Needs: Comfortable, affordable clothes

Wants: Clothes that are comfortable and easy to care for

Beth, 30

Beth is a busy professional who works long hours.  She likes to relax on the weekends and spend time with her family and friends. She likes to go out for dinner and drinks, and she enjoys going to the theatre and the cinema. She is active on social media, and she follows a lot of celebrities, fashion bloggers, and news accounts.

Interests: Socialising, films, theatre

Needs: Smart, stylish clothes

Wants: Clothes that make her feel confident, professional and stylish

Stewart, 25

Stewart is a responsible consumer who is environmentally conscious and only buys from brands that are sustainable and ethical. He likes to buy quality items that will last, and he is willing to spend more on items that are made ethically. His hobbies include hiking and he loves being in nature. He is active on social media, especially Instagram, and he follows a lot of travel bloggers and accounts that promote sustainable living.

Interests: Sustainability, nature, hiking

Needs: Ethical, sustainable clothes

Wants: To be able to express his values through his clothing

Buyer persona uses

As you can see, each persona has different needs and wants. For example, Steve will respond better to discounts and promotions, while Stewart will respond better to a marketing message around corporate social responsibility (CSR) and social change. You can learn more about marketing and social change with Social Change: How Can Marketing Help? by Griffith University. Looking to create your own personas? You can use this handy buyer persona template.

Once you have created a buyer persona, you can use it to make decisions about your business such as which marketing channels to use or what type of products to develop. Additionally, you can use your buyer persona to create more personalised and effective content including

• Email campaigns. By segmenting your email list according to the needs of each persona, you can send more targeted and relevant messages that are more likely to convert into sales.
• Social media content. By understanding the interests of each persona, you can create social media posts that are more likely to be seen and engaged with by your target market.
• Website copy. By understanding the needs of each persona, you can create website copy that is more likely to convert visitors into customers.

You can find out more about exploring and defining customer personas with ExpertTrack’s Marketing Strategy with Advertising Week and Raja Rajamannar.

Consumer behaviour models

A consumer behaviour model is a tool that businesses use to understand how consumers make decisions. There are a number of different consumer behaviour models that you can use to understand your customers. We’ll go through these models below.

The AIDA model

This is a popular marketing model that stands for Attention, Interest, Desire and Action. This model can be used to understand how consumers make decisions about products and services by looking at the different stages they go through in the decision-making process. Here is a simple example of the 4 steps of the AIDA model:

Attention — The consumer sees an ad for a new product on social media.

Interest — The consumer clicks on the ad and reads more about the product.

Desire — The consumer likes what they see.

Action — The consumer buys the product.

This AIDA model can be used to understand how customers interact with your marketing campaigns. It can also be used to improve your marketing strategy by ensuring that each stage of the customer’s journey is taken into account. 

For example, a potential customer who is at the ‘Desire’ stage is more likely to be interested in special offers and discounts than one who is at the ‘Attention’ stage. You can discover marketing fundamentals to improve your customer journey with Left Bank’s Master Digital Marketing Strategy.

The customer lifecycle

Another consumer behaviour model you can use is the customer lifecycle. This model looks at the different stages that a customer goes through when they are interacting with your business. These stages include things like awareness, consideration, purchase and loyalty. By understanding how customers interact with your business at each stage, you can make sure that you are providing them with the right information and support.

Awareness — The consumer becomes aware of your product or service.

Consideration — The consumer starts to research your product or service.

Purchase — The consumer buys your product or service.

Loyalty — The consumer continues to use your product or service.

In this context, it’s important to understand how digital marketing efforts can influence purchase/customer behaviour, as this will help you to make the most of your marketing campaigns. For example, it’s worth considering how customer loyalty can be improved by using things like online customer reviews and online exclusives for members.

The purchase funnel

This is a model that businesses use to understand how customers make decisions about products and services. This model looks at the different stages that a customer goes through when they are considering a purchase. These stages include things like awareness, interest, evaluation and purchase. 

Awareness — The consumer becomes aware of your product or service.

Interest — The consumer starts to research your product or service.

Evaluation — The consumer compares your product or service to others on the market.

Purchase — The consumer buys your product or service.

As you can see, there are a number of different consumer behaviour models that you can use to understand your customers. By using these models, you can make sure that you are providing your customers with the right information and support at each stage of their journey.

How to develop a customer insight strategy

If you want to really understand your customers, you need to develop a customer insight strategy. This involves using a combination of qualitative and quantitative methods to collect data about your customers. Qualitative methods include things like focus groups and surveys. An example of a quantitative method would be the analysis of customer behaviour data.

Once you have collected this information, you need to analyse it to look for trends and patterns. You can then use this information to improve your marketing strategy. This includes anything from developing new marketing campaigns to improving the customer journey. 

It’s important to consider digitisation and the consumer journey as you develop your customer insight strategy — staying up to date with new technology will ensure that you stay relevant and visible to your target audience over time.

When you develop a customer insight strategy, there are a few things that you need to do:

1. Collect data about your customers. Use qualitative and quantitative methods  like focus groups, surveys and customer behaviour data.
2. Analyse the data to look for trends and patterns. This will help you understand what your customers want and need from your business.
3. Use the information to improve your marketing strategy. You need to make sure you are meeting the needs of your customers. You will see that there are similarities and differences between consumers and e-consumers, which are important to address in your online and offline strategy.
4. Regularly review your strategy. As your business grows and changes, so too will your target market. Make sure to regularly review your customer insight strategy to ensure that it is still relevant and effective.

By following these steps, you can develop a customer insight strategy that will help you to understand your customers and make sure that you are meeting their needs.

Final thoughts

Understanding your customers is essential if you want to be successful in business. There are a number of methods you can use to understand how customers make decisions about products and services. By using these methods, you can make sure that you are providing your customers with the right information and support at each stage of their consumer journey. This will help you to improve your marketing strategy and make sure that you are meeting the needs of your customers, which will in turn improve your bottom line.