What is customer behaviour? 12 benefits of researching it

Customer behavior plays an important role in every business's marketing strategy. Focusing on research into specific customer behavior helps optimize product advertising campaigns and build brands more effectively. But what exactly is customer behavior? Let's find out in the article below!

Defining customer behavior and customer behavior research

Customer behavior is simply the way customers interact with a business's products, services, and marketing campaigns. This behavior is based on thoughts, feelings, and habits formed through previous purchases and experiences. However, customer behavior can change as customers encounter new information and new stimuli. Customer behavior may involve adopting, using, or discontinuing a product or service.

Customer behavior research is the process of studying how consumers research, select, use, and evaluate products and services, including their emotional, mental, and behavioral responses. This behavior depends on the psychological, social, and economic factors consumers face, and it changes over time and through interaction with the surrounding environment.

Types of customer behavior

Routine response behavior

Brand recognition plays an important role in this type of purchasing behavior. Customers tend to prefer buying products from brands they know and have already experienced. For example, when choosing a drink, consumers readily pick a brand they are familiar with or fond of. This behavior usually requires little thought.

Limited decision making

Mid-range, infrequent consumer purchases typically fall under limited decision-making behavior. In this case, the buyer needs to search, review, and think carefully before making a decision. For example, a customer is considering buying a new car. They engage in limited decision making by researching different models online, setting a budget limit, accepting constraints on features, researching the associated costs, prioritizing savings, and looking for flexible financing options. This helps them make a smart purchase decision based on careful consideration.

See more: How social media influences consumer purchasing behavior

Extended decision making

"Extended decision-making behavior" is the process in which customers consider and decide to buy or use additional products, services, or options after purchasing the original product or service from a particular brand. This usually happens after customers have had a positive experience with the basic product or service and want to expand that experience or gain more value from the brand.

For example: John is a music lover who owns a basic pair of headphones. After feeling dissatisfied with the sound quality, he researches and compares other high-end headphones. John decides to buy new headphones from a reputable brand, then satisfies his passion for music with a better listening experience.

Impulse buying behavior

Impulse purchases do not follow any prior plan. This is a form of shopping driven by the moment and lacking careful consideration. This type of purchase is usually unplanned and happens right then and there. For example, if you are standing in line to buy lunch and see a candy bar within reach in eye-catching packaging, you might quickly grab it and buy it without thinking twice.

12 benefits of researching Customer behavior

Brand Positioning

The race in advertising and communications to claim an important place in the minds of target customers is one of the fiercest battles of our time. In an information-saturated landscape, understanding customers is the single best thing a Business can do to align itself with their point of view. Researching customer behavior helps a Brand pinpoint exactly what consumers care about, makes them feel that the product or Brand is relevant to them, and prompts them to make a purchase decision.

Understanding customers

A key benefit of conducting customer behavior research is that it helps a Business understand its customers more clearly. This makes it possible to tailor products and services, build effective marketing strategies, forge long-term relationships, improve the Customer experience, and anticipate future trends. In short, a clear grasp of customer behavior enables a Business to deliver greater value and create sustainable business opportunities.

Improving product and service quality

Understanding customer behavior brings many benefits, and improving product and service quality is one of the most significant. By understanding customers' needs and expectations, a Business can adjust and optimize its products and services to serve them better. Assessing customer feedback helps the Business build on its strengths and address its weaknesses.

Through customer behavior research, a Business also develops effective Marketing strategies and builds long-term relationships with customers. In short, customer behavior research contributes to delivering high-quality products and services, creating real value, and strengthening the Business's competitive position in the market.

Capitalizing on business opportunities

By studying customers' past consumption behavior, Marketers gain accurate statistical data on sales figures, traffic volume, win and loss rates on deals, and customers' purchasing timelines. Based on this information, customer behavior research gives a Business the opportunity to capture newly emerging customer needs and, from there, develop further business opportunities.

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Setting "SMART" goals

The SMART Goal principle is a method that uses five key criteria to define and build goals that are Specific, Measurable, Achievable, Realistic, and Time-bound. A SMART goal covers all five of these dimensions, helping us stay focused on a specific objective and easily assess progress toward it. This principle is useful not only for individuals but also for Businesses in managing projects and business goals.

Building a suitable business strategy

Researching customer behavior helps marketers better understand how customers' awareness, psychology, and thinking about a product and Brand evolve. Specifically, this research helps answer important questions such as: What do customers care about? How do they rate your product against competitors? Where and how do they look for information? How do they behave on your website? By understanding these aspects, you can propose solutions to improve and adjust your communications and marketing strategy, thereby optimizing the Business's performance.

Increasing customer loyalty

When they clearly understand the characteristics of customer behavior, marketing professionals can develop optimal strategies to satisfy customers' needs and desires regarding a product. This helps build brand loyalty, increase brand affinity, boost sales opportunities and drive word-of-mouth marketing.

Strengthening competitive position

A business that understands customer behavior more deeply can develop optimized business and product strategies. As a result, products become well-matched to customers' needs and desires, and may even exceed their expectations. Moreover, this also helps businesses create unique, differentiated products or services that make them stand out from competitors. Researching customer behavior applies not only to products but also to advertising and communications campaigns, contributing to a brand's success and sustainable growth.

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Forecasting revenue and consumer trends

The next benefit of researching customer behavior is revenue forecasting for the business. By using data on past customer behavior, marketers are able to estimate and predict the company's future sales. Experts generally hold that these figures are typically based on overall market value. Sales forecasting can be carried out in two ways: through quantitative forecasting, which predicts the number of products that will be sold based on customers' previous behavior; and through qualitative forecasting, which draws on expert opinion.

Managing and anticipating risk

The tenth benefit of researching customer behavior is that it helps businesses flag potential risks early. By tracking and analyzing shifts in consumer behavior, businesses are able to identify and assess risks that may arise in the future. This allows businesses to develop risk-prevention strategies and adjust their business plans accordingly. Recognizing changes in customer behavior early also helps businesses reduce the likelihood of potential risks materializing.

Personalizing the user experience for each specific audience

Customers are becoming increasingly demanding when choosing products and services. Personalizing the experience and the content used to reach customers can improve the performance of marketing campaigns and lower acquisition costs. So how do you go about personalizing content? Customer behavior analysis plays a crucial role here, helping businesses better understand their target audience. By grouping customers into segments based on similar behavior, businesses can optimize their products and services and design policies suited to each specific customer group.

Identifying potential customers for the business

The ability to segment and evaluate potential customers is highly valuable for every business. Customer behavior analysis plays an important part in defining potential customer groups. By targeting the right audience with the right characteristics, personality traits and behaviors, businesses can maximize sales opportunities, attract buyers and turn them into loyal customers.

What factors influence customer behavior?

Customer behavior is typically shaped by a wide range of factors. Marketers need a firm grasp of consumer purchasing models as well as an ongoing view of their buying trends. That said, Brands can generally only influence customer behavior through the factors they are able to control. So which factors can actually drive consumer conversion? Below are four types of factors that influence customer behavior:

Value factors

Product or service value: customers will decide to buy or use a product or service if they see it as worth the investment. If the product or service delivers benefits that exceed the money spent, customers are more likely to buy or use it more often.

Quality factors

The quality of a product or service plays a decisive role in a customer's purchasing decision. When a product or service delivers enough quality to meet customers' needs and expectations, they are likely to become loyal customers.

Brand factors

The Brand and reputation of a company or product can have a major impact on a customer's decision. A Brand with a positive, well-respected reputation typically attracts more customers.

Experience factors

When customers have a positive experience with a product or service, they can become loyal customers. Service experience, interactions with staff, and the purchasing process itself can all influence buying behavior.

Personal factors

Every customer has their own distinct needs and expectations. This factor depends on their personal circumstances, finances, and goals — all of which can change an individual customer's purchasing decision.

Factors from the surrounding environment

Family and friends can have a strong influence on a customer's purchasing decision. A recommendation from someone close to them can prompt them to buy or use a product or service.

Marketing factors

Family and friends can have a strong influence on a customer's purchasing decision. A recommendation from someone close to them can prompt them to buy or use a product or service.

Economic conditions

Economic conditions and personal finances can affect a customer's ability and intention to make purchases. When their finances are stable, they are likely to buy more.

Convenience factors

Convenience in purchasing and using a product or service is also an important factor. If the purchase and usage process is easy and hassle-free, customers are likely to keep buying and using it.

Read more >>> What role does Customer Insight play for Businesses?

Approaching and researching customer behavior with Kompa

As one of the pioneers in integrating AI and building a data culture for Businesses, Kompa is fully equipped to deliver data solutions that are both timely and highly practical for Businesses. Kompa's data solutions help Businesses combine, analyze, and evaluate consumer behavior in the most comprehensive way.

By applying data technology (AI, machine learning) on a Big data platform to deliver data analytics solutions and equip Clients with valuable information to optimize their communications and Brand activities

Kompa has partnered with businesses large and small across Vietnam for more than 10 years, including Vingroup, Masterise Homes, Vinamilk, SSI, MB Bank, Tân Hiệp Phát, Shopee, and Vietjet Air.

Conclusion

Through this article, we have seen the importance of consumer behavior and the factors that influence it. Beyond that, the benefits of researching consumer behavior also help businesses increase their success rate in marketing campaigns, thereby ensuring sustainable growth and competitiveness in the market.

See also: Optimize your market data with services from Kompa