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Consumer Behavior Analysis in 7 Steps

Have you ever wondered how great getting inside your customers’ heads would be? 

When it comes to SaaS, everything rests on knowing your customers well and understanding how they use your tool. This ensures that you can build a product that your potential customers want. 

While knowing exactly what your customers are thinking is impossible, you can do the next best thing: consumer behavior analysis. This involves collecting and analyzing incredibly valuable data about how customers interact with you and your product. 

So, what do you need to know to perform a consumer behavior analysis? This guide will explain how a consumer behavior analysis can help to grow your business and give you seven steps to conduct one successfully. Keep reading to find out more!

What is consumer behavior analysis? 

Numerous technological SaaS developments have recently improved how we market and sell our products, from automated sales force solutions to monitoring KPIs to increase revenue. 

A core component of many of these developments has been the use of data. You’d struggle to have a successful business without detailed, wide-ranging, and accurate information about your customers and products. 

Now, take this approach to data and focus on your consumers themselves. 

Consumer behavior analysis tracks and inspects everything related to your consumers’ buying habits. It examines the factors surrounding the entire customer journey, allowing you to better understand your customers and their motivations. 

An analysis looks at the how and why of consumer shopping by gathering data on relevant factors, such as:

  • How often buyers make a purchase and subscribe to your tool
  • How receptive they are to your sales and marketing tactics
  • How they engage with your products and services

You can gather this data from numerous sources, including customer surveys, review sites, social media channels like Facebook and Reddit, purchase history, and website tracking.

Original image created by author

Once you have the data, you analyze it to identify common patterns in behavior, who your most valuable customers are, and what improvements you can make for them. 

What do they like most about your software? What puts them off from getting a paid subscription? Are they sticking around or switching to your competitors?

Let’s say your analysis reveals that more and more customers are signing up for a free trial but not converting into paying customers. PwC research indicates subscriptions are a dying trend, so this is not uncommon. 

Do not fret! Consumer behavior analysis can help to improve your trial conversion rates.

By understanding your customers, you might choose to introduce a Freemium model, adjust your sales and marketing material to encourage conversions, or gather user feedback to improve the product and increase customer retention.

The results of your analysis – which offer actionable insights into the why behind consumer behavior – are essential for making improvements where needed. It eliminates guesswork so you can improve your marketing strategies and boost retention rates and customer satisfaction – as we’ll find out in the next section.

Benefits of consumer behavior analysis

Here are the four biggest benefits of using consumer behavior analysis.

We all want our companies to be up to date regarding sector trends and best practices. If your competitors offer something to consumers you’re unaware of yet, you will be less attractive than them. This can range from pricing strategies to specific software features. 

Fortunately, consumer behavior analysis is a great way to see which trends are gaining traction across the SaaS sector. You’ll be able to examine what drives customers to your company — or what makes them choose someone else — meaning that you can see which trends are genuinely impacting your customers.

Refining personalization 

According to Gartner, 86% of B2B customers expect companies to be well-informed about their personal information during interactions. 

And the more personalized your marketing, the more effective it will be. After all, buyers like to feel special – and a company that goes out of its way to personalize marketing materials to their specific needs and pain points will suddenly become a much more attractive prospect to do business with. This is particularly beneficial for SaaS providers as the nature of digital platforms can feel impersonal to customers.

To effectively create targeted marketing, however, you must know something about consumers! Collecting lots of customer behavior data will make it much easier to recognize the patterns in your customer base. 

This means you can then segment your customers into groups with similar experiences, attributes, or motivations. For SaaS companies, that might mean categorizing customers based on information such as: 

  • Demographics
  • Company size
  • Company financials
  • User role
  • User behavior

Using the data you gather from your consumer behavior analysis, you can fine-tune those groups and target customers as individuals. Your personalization efforts will then become more refined and accurate.

Just look at Bill.com. The SaaS payment platform increases conversions by showing personalized demos to customer segments based on size and business type. 

Screenshot Sourced from bill.com

Personalizing this sales collateral makes all the difference in converting a lead or losing it to the competition.

Boosting customer retention 

The key to a truly successful SaaS company is not attracting many new customers daily (although that certainly helps!). It’s more about retaining customers you have already attracted. The key to a successful customer retention strategy is knowing those customers inside out!

The added benefit here is the ability to improve customer satisfaction and customer retention

Gartner research shows that 60% of software buyers regret purchases made in the past 12-18 months. More worryingly, 24% of those cancel their contracts, and one-third switch to a different provider.

Act on the data from your consumer behavior analysis and you could see customer retention rates rise as a result. 

If your analysis tracks all actions in the customer journey, you’ll be able to see your customers’ experiences with your product. As a result, you might choose to conduct a win-back campaign for at-risk accounts or introduce loyalty programs. 

Screenshot sourced from Gartner.com

This analysis can also extend to customers’ interactions with your business, such as their use of customer services. That’s a key part of the customer experience, and if you find that some consumers have a negative perception of parts of your company, you can work to quickly improve those elements. 

This is crucial when it comes to boosting customer retention, as happy customers are ultimately going to be returning customers. Consumer behavior analysis should, therefore, be a key part of your strategy to improve customer satisfaction.

Adapting to your competition 

When studying consumer behavior, you’ll be able to see if consumers choose to buy from a competitor rather than your company. This will give you a great insight into the motivations for this choice – you might see what pain points in your sales process drove a customer away or what attracted the customer to your competitor.

This can, therefore, help you adapt to your competition. If customers are being attracted by another business’s use of top marketing influencers, for instance, you might decide that this is a technique that you should implement in your own marketing strategy. 

7 steps to perform a consumer behavior analysis

Original image created by author

Let’s be honest – the benefits of using consumer behavior analysis are clear and there’s no reason to not start implementing it in your SaaS business. But how can you start using consumer behavior analysis, in practice? Follow these seven steps that we’ve put together to break down the process in order to know everything you need to know about your customers.

1. Decide your goals 

Before you start doing anything that will require a significant amount of time and resources, you should take a step back and consider what you want to achieve from the process. 

This will depend entirely on your business context. Maybe you have a specific outcome in mind, such as improving how you use discovery questions for sales, or you want to see significant increases in general KPIs, such as customer retention numbers. Regardless, you need to know what the end of the journey looks like to reach the destination. 

You will need to ensure that you have KPIs to measure how effectively you reached your target. A common goal in SaaS consumer behavior analysis is improving personalization, so you might want to choose KPIs such as customer lifetime value or conversion rates. 

2. Begin segmentation of your audience

You can’t analyze your consumers’ behavior if you don’t break them up into manageable segments. These segments should reflect the diversity of your entire customer base — not only will this make your results more accurate, but you can also use this segmentation to improve customer personalization effectively. 

Image Sourced from matomo.org

There’s every chance you’re already segmenting leads and customers as part of sales prospecting and outreach efforts. 

If so, you’re on the right track. Research shows that 80% of companies that use market segmentation report increased sales. 

There are lots of ways to segment an audience. Ultimately, it will depend on your business context, however, here are some metrics that you can use as an example:

  • Geography: This will divide your client base according to where they’re based, whether that’s by country or city.
  • Purchase history: This will ensure that you can track the behavior of customers who have been with your company for a long time versus those who have yet to make a purchase. 
  • Demography: Basic details like age or gender can be crucial when creating personalized marketing materials. 

Once you’ve decided how you want to segment your audience, you can group people according to their similarities. This is a great way to ensure that your analysis considers your customers’ specific needs, which is a crucial marketing strategy in today’s SaaS environment.

3. Focus on the why for each segment

The great thing about segmenting your audience is that you’ll be able to draw out generalizations for your customers. This should initially focus on why each segment should choose to make a purchase with your company — you’ll then be able to recognize the unique selling point for this section of your audience. 

You might want to build customer personas for each segment, which will allow you to step into your customers’ shoes and better consider their motivations. By knowing why your customers are looking to work with you, you’ll have the foundational understanding you can develop with more specific behavior analysis. 

4. Begin collecting data

The core part of consumer behavior analysis is the collection of as much data as possible about your customers, divided into the different segments that you’ve already created. 

One effective way to streamline this data collection process is to automate data entry using advanced software solutions, ensuring accuracy and efficiency in gathering both quantitative and qualitative data.

Many of these platforms can be integrated with other tools you already use, such as your CRM or email service provider. You can also link systems to gather data from prospects who fill out lead capture forms on your website.

They automatically extract data from these various sources, process the raw data, and classify that data into a structured format that you can easily view and use. This way, all customer data from every source you use to capture it will be stored in a central location. 

Image Sourced from formx.ai

You’ll want to collect both qualitative data and quantitative data. Great ways to gather quantitative data include running surveys, collecting reviews, or interviewing customers using focus groups. On the other hand, you can collect quantitative data through the use of web analytic tools, A/B testing, or customer ratings.

Employing the expertise of a marketing analyst to interpret these data sources can further enhance the depth and accuracy of your consumer behavior analysis.

By having as much quantitative and qualitative data as possible, you can be confident that your analysis is accurate and truly informed by the data — so you should try to get a real mixture of the two!

5. Analyze the data

There’d be no point in collecting all that data if you don’t do anything with it, so your next step is to analyze the data thoroughly. Some key questions to guide your analysis include: 

  • Where do customers learn about your platform?
  • What pain points exist in the customer journey?
  • Which benefits do customers value the most? 
Image Sourced from scnsoft.com

You should also have some more specific questions that are dependent on your goals and context, such as:

  • How do customers compare our company and product to a specific competitor? 

How do customers use different parts of our software?

  • How do customers under 30 perceive our brand?

Analyzing the data according to these types of guiding questions will give you what you were looking for at the start of the consumer behavior analysis process: a better understanding of your customer’s journey and motivations.

6. Implement the outcomes 

So, you’ve developed crucial insights from your data analysis – now what? It’s time to put those insights into action and implement your outcomes. 

There are a few different ways that you can do this. You might want to refine your marketing campaigns to address customer behaviors and personas, including strategies such as retargeting customers who have shown interest but haven’t converted yet. 

On the other hand, you might want to create a brand new campaign to respond to an outcome that you hadn’t been aware of before the process. 

Similarly, you can use your knowledge to address pain points in your user onboarding or your customer service offering, helping you to boost customer retention. Ultimately, this will depend on your business’s specific needs and the conclusions that you draw from your data analysis.

One SaaS company that was able to successfully implement changes after acting on the results of its analysis is Chanty. According to MarketingSherpa, the team communication and collaboration platform was able to increase sales by 18% after analyzing data on how customers used their platform and why they switched from competitors. As a result, they shifted their sales and marketing strategy to focus on what customers wanted from their platform and saw sales rise.

7. Integrate consumer behavior analysis into your routines

Consumer behavior analysis isn’t just something you do once, implement the outcomes, and then forget about it. Your customers’ motivations and journeys will change over time, so you must integrate behavior analysis into your regular business routines. 

Just look at Netflix. The B2C SaaS streaming platform constantly uses consumer behavior analytics and data to give viewers what they want. By examining everything from interest data to views, they can determine exactly what they need to give users to reduce churn. 

Over the years, that has resulted in changing tactics like offering a more personalized viewing experience for consumers through a multiple profiles feature and releasing new TV shows in bulk to cater to the binge-watching trend.

Netflix also uses this data to guide their content production strategy and send targeted email campaigns and push notifications to subscribers to increase retention and customer lifetime value.

Screenshot sourced from Netflix customer email

Return to the KPIs and goals you set at the start of this process to find ways to improve your analysis. If you’ve underperformed, you might want to reflect and make changes. Always monitor and readjust your behavior analysis as you continue to use it as a key part of your business operations.

Understanding your customers with consumer behavior analysis

Knowing and understanding your customers is crucial to recognizing how you can improve your business outcomes. That’s why it’s important to use consumer behavior analysis to find out how to boost retention, improve personalization, and elevate the customer journey in your SaaS business.

That’s why you should follow our simple step-by-step guide to performing a consumer behavior analysis, from segmentation to implementation. This will help you refine your broader marketing strategy and make other enhancements. Start understanding your customers today!

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Meet your new marketing automation platform

Customer messaging tools don’t automate workflows outside your product and marketing automation tools are bad at behavior emails. Encharge is the best of both worlds — a marketing automation platform built specifically for B2B SaaS businesses

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Camille Richon
Founder Payfacile
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