Customer Behavior Analysis: How it Works

Customers display a wide variety of behaviors when shopping online, and these habits can provide valuable insights to brands in helping to reshape their buying experience. This process of collecting data is called customer behavior analysis, and it allows brands to better understand their target audience’s needs.

This article will discuss how customer behavior analysis works and how it can benefit your brand in multiple ways.

Why is customer behavior analysis important?

As the e-commerce landscape continues to evolve, consumer habits change regarding how they interact with businesses online. When you keep track of your buyer’s behavior, you unlock a wealth of information that can prove advantageous to your brand. Here are a couple of reasons why customer behavior analysis is important:

1. Enhance the customer experience

One of the biggest reasons to conduct customer behavior analysis is it allows you to tailor your brand’s offerings according to your audience’s preferences. In a world where the e-commerce space is saturated with competition, you want your business to stand out by providing a unique experience to your customers.

With customer behavior analysis, you’re able to identify buyer personas and accommodate their needs to the best of your abilities. You’re also able to pinpoint problems that your customers experience and eliminate their source of frustration. All in all, you get a clear picture of who your ideal buyers are and create a detailed action plan for meeting their needs/expectations.

2. Decrease customer churn

Customer churn happens to all businesses, and while there’s no foolproof way to eliminate it, you can help keep the numbers down through customer behavior analysis. Most businesses view their product as an all-in-one fix, forgetting that different buyers require different solutions.

When you conduct customer behavior analysis, you learn more about the specific problems your buyers face. From there, you can create tailor-made solutions that keep them satisfied for the long term.

3. Personalize your marketing strategies

As people look for meaningful interactions with brands, personalized marketing has become more important than ever. Around 78% of customers report that personalized marketing has a big impact on a brand’s ability to sell them their products, and to achieve this, you need to conduct a customer behavior analysis.

By knowing their exact needs and preferred communication channels, you can deliver personalized messages that resonate more with your target audience. This amplifies the results you obtain with your marketing efforts and allows you to generate high-quality leads for your business.

How do you conduct customer behavior analysis?

Now that you know the importance of customer behavior analysis, let’s discuss how you can do it. There are a couple of steps to this process, and they are:

1. Segment your customers

The first step is to group your customers into different categories. We’ve talked about customer segmentation in our article here so if you’re unfamiliar with how it works, go read that first. Basically, you segment your customers based on similar characteristics like age, gender, location, etc.

Doing so enables you to analyze the behaviors of each group and how they interact with your business. Customer behavior analysis won’t work on a general approach since every buyer won’t have the same needs. So segment your customers first before proceeding to the next step.

2. Gather quantitative and qualitative data from your customers

After segmenting your customers, the next step is to obtain quantitative and qualitative data from your buyers. Let’s talk about quantitative data first. Quantitative data refers to measurable information, and for your customers, this means their customer lifetime value (CLV), purchase frequency, average time spent on websites, and more.

Qualitative data, on the other hand, refers to information that is describable or characterizable. Take the example of info gathered from surveys, polls, and questionnaires where people describe their feelings towards your brand.

You don’t need to be too technical when it comes to gathering quantitative and qualitative data. You just need to gather the right information that you believe should be a top priority for your business.

Customer Behavior Analysis Benefits

3. Conduct an analysis

Armed with the information you need, it’s time to conduct a customer behavior analysis. For example, if you notice a segment of your customers buying products at high frequency, you can encourage them to join your loyalty program. This helps foster customer loyalty and may even lead you to quality referrals.

If, on the other hand, your customers state that your checkout process is too long, you can optimize it by using a one-click checkout solution. It’s all about finding solutions to the buyer’s friction points and improving your products/services to keep them satisfied.

Of course, you want to keep track of your progress to ensure you’re obtaining quality results. To do this, you can perform an A/B test to compare the changes you’ve made.

4. Measure your success

After applying the changes you’ve made, it’s important to measure the results by monitoring key performance indicators. For example, if you’ve implemented a one-click checkout solution, you want to look for your cart abandonment rates to see if there are improvements.

The same thing applies to customer feedback. If your buyers are still facing the same problems, you may want to change your approach to how you handle their pain points. Customer satisfaction ratings can help paint a picture if your new approach is working or not. Remember, if you can’t measure it, you can’t improve it. So look for KPIs that make an impact on your customers’ experience with your brand.

5. Repeat the process

Customer behavior analysis isn’t a one-time process, as consumer habits can change quickly. To ensure you consistently meet their needs/expectations, you want to conduct a customer behavior analysis for each quarter of the year. It may sound time-consuming, but the benefits are more than worth the effort required to study your buyers’ behaviors.

Once you get the hang of it, the process of analyzing data becomes second nature, and you’ll be able to make significant changes to the way customers interact with your brand as a whole.


The e-commerce landscape is ever-changing, and for brands to maintain their position, they’ll need to adapt to shifting consumer behaviors. By conducting a customer behavior analysis, you’ll have a better understanding of who your customers are and how you can serve them more effectively.

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