Understanding customer behavior: Model, examples, and segmentation

The average adult makes 122 informed decisions every day. Businesses can predict many of these choices by accounting for common consumer behaviors.

Once businesses collect the necessary data, they can create customer segments, differentiate their offerings, and refine sales messaging to promote benefits, address concerns, and ultimately close deals.

In this article, we will define consumer behavior, explore common buying behaviors, and discuss how you can leverage behavioral data to connect with prospects and meet revenue goals.

What is consumer behavior?

Businesses can collect consumer behavior data to predict what products, messaging, and promotions would best cater to their ideal audience and increase the likelihood of a sale.

An individual’s personality, psychology, demographics, and environment often inform their behaviors. Deciphering them can help businesses improve their offerings and create a meaningful customer experience (CX).

Consumer behavior theory

Companies desperately want to understand how customers interact with their products, services, and marketing. After all, identifying the what and why of consumer behavior is the secret to selling more consistently, rapidly, and in greater amounts.

Various consumer behavior theories throughout history have combined ideas from disciplines such as anthropology, economics, sociology, psychology, biology, and chemistry. Here are the five main schools of thought that govern consumer behavior theory.

1. Psychoanalysis

   Sigmund Freud’s psychoanalytic theory says that consumers’ unconscious psychological urges influence their purchasing behavior. These urges can include a consumer’s hidden hopes, fears, motivations, or ambitions.

2. Socio-psychology

   Thorstein Veblen’s socio-psychological model posits that a consumer’s cultural and social background are some of the primary factors that influence their purchasing behavior. Rather than fulfilling basic needs, consumers are driven by the need to maintain their social status.

3. Reasoned action

   The theory of reasoned action (TRA) states that consumers assess products or services before making a decision. If they have a positive attitude about an item and believe that people in their social group will also approve, they are more likely to make that purchase.

4. Impulse buying

   Hawkins Stern’s theory of impulse buying considers that instead of a consumer relying on careful thought or consideration, an individual making an impulse buy is likely under the influence of external forces such as discounts, promotions, their peer group, or quality.

5. Maslow’s hierarchy of needs

   Maslow’s hierarchy posits that humans prioritize needs in a particular order: survival, security, love, sense of belonging, self-esteem, and self-actualization. This means that humans will buy items needed to survive before splurging on unnecessary purchases.

These theories address different aspects of buyer behavior, but all strive towards a singular goal—to make sense of how consumers behave. They also share a few basic consumer principles that can apply to any individual.

Why is consumer behavior modeling important?

Understanding consumer buying behavior is critical because it helps businesses understand what factors influence customers. Upon cracking this code, your marketing, sales, service, and product development teams can determine what buyers want and tailor offerings to each customer segment.

Analyzing your consumers’ behavior can provide insight into:

• How customers feel about your company and your competitors

• What problems or events cause consumers to make a purchase

• How consumers research products and arrive at a decision

• What environmental factors influence consumers

• How many touchpoints it takes on average to close a deal

• What social media platforms your ideal customers use

The bottom line is that understanding consumer buying behavior means businesses can achieve success in selling their products and services. Although every buyer is an individual with unique personality traits, emotions, and social makeup, there are trends that marketing teams can track.

How to leverage customer behavior analysis

When you collect customer data, you learn more about what they value and what they want to see before committing to a purchase. You can use consumer behavior findings to:

• Produce new products or offerings to suit various use cases

• Set pricing that makes sense for your audience

• Refine sales and marketing positioning and promotions

• Create knowledge base content and impactful product FAQs

• Customize customer service options to meet customers where they are

Types of consumer buying behavior

The study of consumer behavior requires an understanding of both business and psychology. After all, everything from sleep quality to TikTok’s FYP can influence what and how people purchase.

There are several types of behavior that consumers generally engage in. You can break down buyer behavior into 11 clearly defined types:

1. Complex

2. Dissonance-reducing

3. Habitual

4. Variety seeking

5. Limited decision-making

6. Impulsive

7. Spendthrift

8. Average spending

9. Frugal spending

10. Analytical

11. Expressive

Consumer behavior depends on the primary factor the consumer uses to reach a buying decision.

Customer buying behavior example

Imagine you’re Leah, the founder of a tech startup. You are building your company from the ground up without any outside funding but need office equipment to get started. High-quality gear is a must, yet you must stay within budget.

In this case, Leah would be an analytical and spendthrift shopper. As the person selling to her, you could increase the likelihood of closing the sale by:

• Explaining how your company will support her through the implementation process

• Discussing the quality and specs of the products she’s considering

• Offering comparisons between your and your competitors’ products

• Providing a business discount

Tip: Create buyer personas to better understand your audience and what roadblocks they may experience when trying to buy your products or services.

What factors impact consumer behavior modeling?

No two customers are the same. Each consumer has individual beliefs, values, societal influences, and lifestyles that work together to influence their purchase decisions. Here are some of the top factors that affect buying behavior.

Personal preferences, attitudes, and beliefs

A customer’s buying behavior has a lot to do with their personality.

Consumers respond differently to marketing campaigns depending on their psychological makeup. This includes their general outlook on life, motivations, attitudes, and perceptions. These factors are highly variable, often changing from day to day, so they’re particularly challenging to predict.

Demographics

Personal identifiers can play a large role in customer behavior modeling because they may affect your interests, preferences, behaviors, and values. Common demographic segments you can assess include:

• Age: May have different interests, needs, and research habits
• Gender: May have varying needs and preferences
• Race: May have divergent cultural influences
• Profession: May have different needs or buying power
• Education: May know more about your offerings upfront or prefer to do additional research
• Religion: May have faith-influenced values that inform purchasing decisions

Social factors

Consumers’ social groups also affect how they shop. Peer pressure or group influence from immediate family, friends, classmates, or colleagues can play a significant role in purchase decisions. Social factors extend to a person’s economic class and social media practices. An individual’s presence on various social media platforms can expose them to fads and trends that may influence their buying behavior.

Sales and marketing

Marketing campaigns and sales messaging can also influence purchasing decisions. If done correctly, you can encourage consumers to buy higher quantities of your product or even a more expensive alternative.

Buying power and economic status

The economy always plays a large role in how and what people will purchase. When the economy is thriving, people are more confident about spending money on non-essentials. However, when job insecurity is high and inflation is higher, people are more likely to prioritize frugality over indulging.

7 ways to segment customer behavior

You can segment customers in whatever way makes the most sense for your business. However, these are a few popular ways to do it:

• Purchasing behavior

• Occasion and timing

• Desired benefits

• Customer loyalty

• Customer journey stage

• Engagement

• Customer satisfaction

Once you determine how to segment your customers, you can create buyer personas to represent each group. A buyer persona is a semi-fictional, idealized version of your typical customer. It will help you understand:

• How your products can address consumer needs

• What benefits consumers want to see

• The concerns someone in this demographic might have about your product

• Pain points that other products on the market haven’t addressed

• Objections that come up at different stages of the sales process

With this information readily available, it will be easier to connect with customers, put their concerns to rest, and make a sale.

How to collect consumer behavior data

Gain a deeper understanding of customer behavior by collecting data directly from your ideal buyer or former customers.

You can collect essential data through your website, social media, and surveys. Store the information in your CRM, and leverage it to improve customer conversations, retention, and outreach.

• Send surveys

Use web-based surveys to capture consumer data. Compile several multiple-choice questions and distribute the questionnaire to customers. Some top platforms you can use to conduct your survey for free include:

• Google Forms

• SurveyMonkey

• SurveyPlanet

• TypeForm

• Conduct a focus group

Focus groups are essentially group interviews that allow you to hear opinions from participants in an open forum.

The primary benefit of this data collection method is that participants can discuss among themselves, so you gain insight into how different demographics view your product.

Track customer analytics

Most businesses have a website and social media profiles, meaning you should already have key consumer data at your disposal. You can review website analytics to uncover insights about:

• Bounce rates

• Top pages and posts

• Cart abandonment rates

• Interaction and engagement rates

Aside from your website, you can also gather information from store traffic and CRM analytics.

Ways to implement behavioral findings

Having a firm understanding of consumer behavior and implementing behavioral findings is crucial to creating products, support processes, and marketing campaigns that enhance CX.

• Personalize interactions: Review customer preferences, previous interactions, and sales pipeline data to personalize customer interactions and create meaningful connections that encourage sales.
• ​​Improve customer retention: Discover which behaviors indicate that someone is likely to be a repeat customer by analyzing pipeline data. Remember, it’s more cost-effective to retain customers than to secure first-time buyers.
• Better target prospects: Create multiple buyer personas and develop campaigns that directly target each customer segment to increase your chances of making a sale.

Leverage customer behavior modeling to improve your sales cycle

Getting to know your customers is a continual process and one that is well worth your time. Using behavioral data and well-defined buyer personas, you can forge lasting connections with your customers and increase engagement.

By using the most innovative options in sales technology, you can track buyer trends and model consumer behavior to formulate a better CX and turn your customers into brand advocates. Sign up for your free trial of Zendesk Sell to see this technology in action and provide the top-notch, personalized experience your customers deserve.