Getting to the “Why?” in Customer Behavior
Even the most inexperienced marketing professional knows that collecting and analyzing marketing data is just the start. Without understanding why customers and prospects behave the way they do means missing out on key insights that can inform future decisions. Data that shows how many gift baskets were sold or what sign-up links were clicked is useful to look back on what happened. Understanding what might happen in the future and making decisions based on that understanding requires more than simple data points. It requires understanding not only what happened but also why.
Even with “why” as the north star for most marketers, getting there is easier said than done. Human behavior is complicated. Groups and individuals make decisions and act out in myriad ways and for myriad reasons. Everything from the weather outside to whether or not someone said “hello” on the train affects moods, mindsets, and behaviors. Getting to the “why” is a challenge. However, just because making sense of the human condition is complicated does not mean marketing professionals should give up. In fact, the “why” has never been more important.
This post will define first-level marketing analysis, examine customer segmentation, and detail why getting to that second level is difficult. Further, this post will detail why understanding customer behavior is valuable to marketers and what tools exist to make the journey more straightforward.
First level marketing analysis
First level data is that which identifies what happened. How many widgets were purchased and at what time. This data is important because it sets the first data point for our marketing analysis. However, without any additional information, context or color, data around what happened has limited value to marketers.
First level marketing analysis is invaluable as a foundation upon which to build. Without understanding the “what” it would be impossible to make future marketing decisions. Keep in mind, however, that first-level data sets need additional insights – like “who” and, ultimately, “why” – to help marketers uncover the intelligence necessary to maximize impact in the future.
To take the next step from first level marketing data it is important to understand the makeup of prospects and customers. Customer segmentation takes simple, first level data sets that show “what” happened and starts to provide context and substance from which marketers can begin to draw conclusions.
What is customer segmentation?
Customer segmentation is the process of dividing customers into groups based on traits and characteristics. Segmentation can happen around demographic information like age, gender, income level, and location. Segmentation can also happen around previous behavior like attending a sports event or buying a particular color of socks. These segments are then treated as strategic targets to different marketing campaigns.
Segmentation is a powerful tool because it allows marketers to break down their customer base into manageable chunks. Customers become more identifiable when they are segmented by specific behavior or attributes. Understanding what differentiates these groups is a big benefit. This information can inform targeted marketing campaigns that speak to each segment’s needs. By understanding what makes customers unique-and why they behave the way they do-you will be able to build targeted campaigns that drive sales at a lower cost. At its core, all marketing boils down to two simple questions: Who are our prospects? Why will they buy from us? Segmentation answers the first question in the equation.
Second level marketing analysis
If the first level of marketing data collection and analysis is “what” happened, then the second level is “who” and “why.” And uncovering the “who” is often the first step. For example, if a marketing team runs a promotion hiring Megan Thee Stallion to attract her huge fan bases of Millennials and Xennials to drive them to purchase a new product or innovation, the marketer would want to know that the uptick is driven by those fan bases to understand the true ROI of her endorsement. Having access to demographic and lifestyle data associated with sales data gives marketers the ability to know for sure that their desired result is happening. And having the same data across your category competition, starts to answer even more questions of “why” things are happening – all delivered through the lens of “who”.
Challenges of understanding customer behavior
Second level marketing analysis is often referred to as finding insights about customers and prospect behavior, finding the why in their behavior. This effort faces a number of main challenges:
Data becomes outdated immediately
Marketing data changes and evolves by the minute. An event or action from yesterday may look nothing like an event or action from two days ago. And those actions and events may have nothing in common with something that happened a week, a month, or a year ago. The constant flow of new information makes what used to be current old and what used to be merely old entirely obsolete. Marketers can become stuck with respect to data when the only data source is their own company
If marketers don’t perform proper continuous surveying of customers, and only work with the internal customer database (for instance a DMP), then getting some understanding about why some customers behave in one way or another can be challenging. Not collecting data from outside the company results in an echo chamber where new ideas and improved understanding simply will not exist. Further, only using data that fits a particular hypothesis or idea can lead to disastrous results. Insights do not lead to actions
Focusing too much on details without an understanding of why they occur can give misleading results. Marketers might find themselves believing that they know what their best or most desirable customers are doing – but without knowing why, this information isn’t actionable, meaning it won’t actually help them make decisions and improve future results. Insights do not lead to actions
Marketers might assume that knowing why customers behave in a certain way is enough for them to make decisions about future actions. But if they do not have the right data, or don’t understand how the insight fits into the wider customer journey, then their strategy might be deeply flawed.
Change in mindset
Outcomes such as meeting objectives, reducing churn, and increasing revenue require marketers to take a step back from their markets and map out what motivates consumers throughout their purchase journeys. This means understanding all of the customer’s touchpoints when interacting with your brand. This helps gain an understanding of which messages are received by whom and at what point in time. If your strategy only focuses on one point of communication you are missing out on the opportunity to engage with customers throughout their journeys.
This means marketers need to change their mindset and adopt a more holistic approach: focusing on the customer experience. Marketers should understand what motivates people through each step of the journey, rather than just looking at the initial purchase decision.
The Journey to Second Level Marketing Analysis
Getting to ‘second level’ analysis can be challenging but it is necessary. Marketers need to understand who their customers are and why they behave in a certain way. This will require deep dives into the data and understanding of the customer journey. If marketers don’t know why customers do what they do, they can never truly sell them something valuable or solve real problems.
If you are struggling to get to the “why” of your customer behavior, Affinity Answers can help. Our suite of solutions is focused on making sense of the data so marketers can make great decisions in the future. From enriching demographic information to tracking segment changes over time, it would be our pleasure to help you discover the insights necessary to improve conversions at your organization. Request a demo of Affinity Answers here and our team will quickly be in touch.