Can you predict how many units you’ll sell each day? You might get close but never be exact in your prediction. The same goes for predicting consumer behaviour. You can have many assumptions, but it never means you’ll always be right!
However, what you can do is plan and predict demand over the course of a year. New product developments need to always closely monitor people’s personal preferences from the moment you start developing the product.
Nevertheless, let’s discuss in-depth the seven ways we can predict consumer behavior.
7 Ways how companies can predict consumer behavior
Aim to reduce churn (attrition rate)
Churn or attrition rate is a heavily-discussed topic amongst business owners. A high churn rate means a reduction in repeat purchases, the total amount of purchases, purchase frequency, and much more. When you see a decline in purchases, you know something isn’t going right and that you need to make significant adjustments to your product and services.
You can consider using predictive software to predict consumer behaviors individually. Some predictive software we recommend you use are:
- Qlik Sense
- Board
- Advanced Analytics
- SAP Analytics Cloud
- RapidMiner, etc.
Run a predictive analysis
Data is the key to getting many unanswered questions, but when you combine them with focus groups, in-depth data, panel tests, and much more, it can help you gain additional insights you have never thought of.
In order to be successful in doing this, different types of data sources need to be combined to build and train sophisticated models. Even when you use model assumptions, you need to question them. You can’t just run assumptions that don’t have anything to do with consumer behaviors.
Combining complex data gatherings and building reliable predictive analysis is not that easy. It’s not only gathering data but also knowing what to do with it. In this case, you need experienced people who deal with data daily, not those who have never done so before.
It requires scientific thinking and a set of experiments to see how customers react to specific experiments. Then, when you see their reactions, you can better know what measures you need to undertake based on their behaviors.
Identify your customer value
Have you ever heard about customer value? Different customers will represent different levels of lifetime value (LTV). LTV is the total revenue you gain from customers over the period they use your product and services.
For example, if your LTV customers are using your product and services for a period of more than five years, the lifetime value will be the customer value * the lifespan of the customer. In this case, the lifespan is the number of years they use your product and services, and the value is the amount of financial contribution they had towards your business.
By calculating these numbers, you can identify what kind of value your customers are providing for you. You can better predict their behaviors when you see your loyal customers have a higher value. Consumers who do not contribute too much to your business are harder to predict since you don’t know them either.
Run a sentiment analysis
To avoid further issues and prevent issues from arising, you can try to run a sentiment analysis. A sentiment analysis analyzes the emotions of a consumer text, such as a social media post, a comment, a blog, and anything else. Sentiment analysis helps you discover your brand’s image and how consumers perceive you.
In short, it’s taking a piece of data and analyzing whether it reveals a positive, negative, or neutral attitude towards your product and service. Sentiment analysis is usually conducted through user experience, survey replies, product evaluations, and more. Furthermore, you can consider using AI algorithms as a valuable tool for in-depth research.
To read more about sentiment analysis and how you can effectively conduct in-depth research, you can read Levity’s guide here.
Increase customer retention
Customer retention allows you to measure and understand the customer’s journey and experiences with your brand. You can do this by using customer retention software. This software allows you to combine different types of data and identify which type of customers will stay and which will leave.
The software will give you notice about the customers about to leave and help you resolve the issues to reduce the need for acquiring new customers. Some customer retention software you can consider using are:
- Zendesk CRM
- Open Loyalty
- Qualaroo
- KissMetrics, and more
Optimize your content
Each customer group has different preferences for the content they want to consume. This helps you identify the marketing strategies you can use and optimize your content based on your customer’s behaviors.
For example, you can use surveys or even conduct customer interviews to find out what your customers are after when using your product or service and even when consuming your content. Instead of having assumptions, you are better informed of what you can do.
Improve customer engagement and satisfaction
Knowing your customers are satisfied with your content and brand is a success. This will increase the likelihood of them returning and recommending your brand to others. In addition, if your customer satisfaction level is high, it’ll result in higher customer loyalty. Customers will seek to spend more money on your products and services when they are loyal. In fact, according to a study, loyal customers will pay up to 10 times more than regular customers.
Moreover, in order to fully engage your customers, you can collect experience via surveys, questionnaires, and using other feedback channels. For example, you can try measuring engagement levels using CSAT, customer effort scores (CES), and NPS.
What are the types of customer behavior?
Whenever you analyze customer behavior, the number one thing you want to pay special attention to is their spending behaviors. Analyzing customer behavior means paying great attention to the types of spending patterns customers have. However, each customer is part of one of the three customer behavior groups. Each of these groups has its own spending patterns, and it is important for you to identify which consumer belongs to which group.
- Complex purchases: This is the first group of buying behaviors and is primarily for large purchases that include buying property, a car, an apartment, etc. These purchases aren’t really common since customers will take time to analyze these types of purchases. In addition, these types of purchases may usually include companies instead of individual customers.
- Habitual purchases: These makeup daily purchases that consumers make. These types of transactions don’t require much thinking since they aren’t large compared to the first type of buying behavior. Habitual purchases include everyday shopping, such as buying groceries, clothing, etc.
- Variety-seeking purchases: This includes when a customer is switching their brand from being unsatisfied with their previous brand or even because they want to try something new. This can consist of grocery shopping, such as buying a different milk brand, a different brand of sugar, rice, etc. If you think that your brand falls under this category, it’s time to start thinking of new ways you can attract new customers.
Why is it important to predict your customer’s purchasing behaviors?
There may be issues you haven’t overlooked, and especially if you see an increase in your churn rate or see that customers are turning to competitors, you want to start paying more attention to your customer’s purchase patterns before it’s too late! Predicting how your customers behave during purchases means the following:
- Reduce churn rates
- Encourages customer loyalty
- Increases the quality of your marketing quality
- Meets customer demands
- Personalized and improves the customer’s experience
- Allows products to market quicker and more
With all these advantages, it isn’t a surprise why companies are rushing to analyze customer behaviors and use customer prediction software to evaluate purchasing patterns and experiences.
The final word
That’s about it for this article. These are the top seven ways companies can predict consumer behaviors. With a high amount of competition in the digital age, it’s becoming a must for companies to analyze consumer behaviors. Nevertheless, if you don’t, it’s not in your brand’s favor.
What else can we say? Run a set of surveys and one-on-one or group interviews with your customers to see what they want from you. Monitor if they are sticking to your brand or looking for other alternatives.
If you never wish the best for your brand and don’t deliver what your customers are looking to receive from you, you’re only damaging yourself and the reputation of your brand. After all, customer loyalty is above everything else, so try to find it in the customers you trust most!
