January 25, 2011

The path to understanding consumer behaviour

4 minute read

I’ve always been fascinated by the story I heard about the way some architects deal with pathways and where to position them in a new building complex. I’d always attributed this to Sweden’s architects; instead of building paths when the building is done they lay down grass. Over time people themselves discover the routes they want to take and naturally create the quickest routes from building to building or building to bus stop. After a while the worn down grass shows where the pathways should be built. I don’t know if it is true or not but it should be! This has always struck me as one of the best ideas ever. How many times have you taken a stroll through a park and there’s a well laid path but what everyone’s decided to do is go the route that suits them best and they’ve worn the grass down. So let the people decide where they naturally want to go, rather than be directed.

It then struck me that this is a perfect parallel for us as marketers using data. We should be looking more closely at our customer behaviour and what it is showing us. We can’t make consumers do things they don’t want to do; we can observe their behaviour and see the path they want to take and encourage them along it.

This is particularly true in the digital age when so much depends on what consumers say about your brand in the digital space and how much they value it. They now create a lot of the content relating to your product or service. So what are the golden rules on how to use the behavioural data you collect to understand the needs of your customers and guide them down the right path.

  • Step 1 – Understand existing behaviour
    What behaviour can you see and understand? Do you have a single customer view? Do you know what each of your customers’ engagement with your brand is? What products do they hold, how much do they spend, have they complained about anything? There are many metrics that drive customer behaviour to investigate. There are still companies who can’t track this and as a result aim their budgets entirely in the wrong places. For example, they keep pumping money into acquisition at vast expense, rather than concentrating on stemming the tide of attrition. It’s cheaper to save customers than get new ones. A well-known charity brand in the UK kept throwing more and more money into acquisition without paying attention to the terrible rising rate of attrition, which is where the real focus of their attention should have been. Much better to find out why those customers lapse and invest in developing those relationships so they don’t.
  • Step 2 – Fill in any gaps
    If you have gaps in your understanding of customer behaviour research it, use qualitative data, do an online survey or find a way of augmenting data. Even desk research can sometimes give you some of the answers you need to address a situation. An online retailer realised that to get people to shop frequently with them they needed to form a habit. Only those getting through the first few shops went on to be loyal customers. Research showed that it was the complexity and time it took to do the first few shops, once you get into the swing of things it gets easier. The solution was therefore to focus on helping the customer form a habit fast and get them through the first few shops easily and with as little hassle as possible.
  • Step 3 – Identify any key triggers
    Do you know if there are any key triggers that cause a certain consumer behaviour, so you can predict it and therefore do something about it before it happens. Propensity modelling demonstrated to a mobile phone network that those people who didn’t use all of their contracted minutes were more likely to leave than those who did use their allocation. The simple solution was to offer those people not using their contracted minutes a more suitable deal.
  • Step 4 – Understand customers’ digital footprint
    By looking at web stats you can often see emerging behaviour that tells you where the weak points or strong points are. It’s surprising how many businesses can’t see all the points where a customer might be dropping out of the sales process, for example. One leading insurer knew there were problems but until they put the right analytics in place couldn’t see the individual customer behaviour it needed to work out where people were dropping out in the customer quote engine. Once they knew the weak points they were able to improve the customer experience and help get customers through the entire sales process.
  • Step 5 – What do good customers look like?
    Think about what customer behaviour you would like to encourage and how you might be able to do that. One retailer simply thanked a segment of really loyal customers and guess what, the value of their sales increased through a simple show of appreciation. By understanding the behaviour of your best customers it is of course possible to identify ones that might look like them but you may not be realising their potential.
  • Step 6 – The networked customer is the future dominant force
    Work out where your customers want to connect with you and with other customers. The ‘networked’ customer is the future dominant force. Brands that understand this are able to harness their customers to become full advocates for them. I love the LegoFactory.com idea. Not only can you design your own Lego model online in the 3D Lego Digital Designer, you can buy all the pieces to build your design and it comes by mail with all the instructions printed out for you, with your own name and model number! But it doesn’t stop there, you can share your design with other users of the site and they can select your model or make their own modifications. 300,000 people globally have used the design tool. Promoting customer behaviour that allows customers to endorse the brand, a powerful marketing tool..

By unlocking customer behaviour it can help you put them on the right path.

Posted by Quant Marketing

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The path to understanding consumer behaviour

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