Understanding customer behavior: Model, examples, and segmentation
Consumer behavior is an offshoot of behavioral science that businesses use to understand and influence buyers. Here’s what you need to know.
Last updated January 11, 2023
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?
Consumer behavior is the study of individuals and groups to better understand the process they follow before making a purchase. This process generally consists of a series of actions a buyer takes based on their needs, logic, beliefs, values, and societal factors.
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.
- 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.
- 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.
- 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.
- 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.
- 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
Customer behavior analyses can be leveraged company-wide, especially in sales, marketing, and support departments.
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:
- Complex
- Dissonance-reducing
- Habitual
- Variety seeking
- Limited decision-making
- Impulsive
- Spendthrift
- Average spending
- Frugal spending
- Analytical
- Expressive
Consumer behavior depends on the primary factor the consumer uses to reach a buying decision.
Prepare for the future of CX
Understanding consumer behavior is key to providing personalized experiences and building long-term customer relationships. Discover how personalized messaging is expected to revolutionize the customer experience in upcoming years.
1. Complex
Complex buying behavior often occurs with high-stakes purchases like a new home, car, or computer. If the buyer is going to spend a significant amount of money and is choosing between brands with notable differences—Ford or Tesla, Apple or Android—they will likely feel the need to conduct in-depth research and, therefore, will be highly involved in the process.
2. Dissonance-reducing
Dissonance-reducing buying behavior occurs when a buyer is highly engaged in the research and purchasing process while not having many options available.
These purchases are generally less frequent and more expensive, such as purchasing a music stand, coffee maker, or snowblower. A buyer is likely to worry if they’re making the right choice—hence the dissonance.
3. Habitual
When a buyer notices a few differences between brands and aren’t particularly engaged in the purchasing decision process, they engage in habitual buying behavior.
Typically, these purchases are for everyday items. A buyer doesn’t put a lot of thought into which sea salt or green tea is going into their shopping cart. They may choose based on convenience, availability, brand loyalty, or lowest price—but whatever their influence, they’re not spending much time researching their purchase.
4. Variety-seeking
Customers will engage in variety-seeking buying behavior, looking into all of their options, but it’s not necessarily because they are dissatisfied with a product—it’s often due to boredom.
Understanding how consumers lock into these variables will enable you to be in step with them through their customer journey. Meanwhile, your sales team can respond effectively to the type of behavior your buyers engage in.
5. Limited decision-making
Sometimes, customers will purchase a product due to a lack of options. For example, someone who wears extended sizes may find limited clothing options in-store, forcing them to buy something in a style or color they don’t particularly like.
6. Impulsive
An impulsive purchase occurs when a consumer decides to purchase without spending much—if any—time planning and researching. People generally make these snap decisions based on:
- Celebrity and influencer endorsements
- Social media trends
- Catchy slogans and advertisements
- Brand loyalty
- Popularity among their social groups
7. Spendthrift
These consumers may consider the cost of a product, but it’s nowhere near as important to them as the quality. You can sway these consumers with emotional marketing, social selling, and positive customer experiences.
Spendthrift buyers are also more likely to research the features and benefits of a product before buying and want to shop with companies that share their values. To win them over, you will need to offer more than just a great product.
8. Average spending
Average spenders generally want to save money, but they still value high-quality products. Most will have a monthly budget or at least a price in mind for any big-ticket item they’re planning to buy.
They will likely do a lot of research before buying an expensive product to ensure they get the best bang for their buck. These consumers are known to shop around for the best deal.
9. Frugal spending
This consumer looks for the most cost-effective product, even if it means sacrificing quality. They typically stick to a budget, whether that’s by choice or necessity. Although the price point is generally the deciding factor, these consumers may also care about product features and benefits.
You can appeal to frugal spenders through competitive pricing and detailing the return on investment.
10. Analytical
These consumers lead with logic and generally assess product specs, data, and reviews before purchasing. They will conduct extensive research to land the best product on the market. You can win over these consumers by showcasing your value through case studies, surveys, white papers, testimonials, and data-driven reports.
11. Expressive
These consumers care deeply about their relationship with a brand and what they experience during the sales process. If you provide a top-notch CX, they’re more likely to become repeat customers and reach out for support, giving your company more opportunities to help them and build your relationship with them.
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
Customer segmentation is the process of dividing customers into groups based on shared behaviors, values, and characteristics.
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.
1. Purchasing behavior
Identify trends and common actions consumers make in the research and purchasing process. You can use past purchasing behavior to determine the likelihood of a consumer buying from you.
Segmenting customers this way can help you understand:
- How consumers come to their decision
- The average length of the sales process
- Questions and concerns consumers generally have
- Predictive behaviors that indicate a consumer will make a purchase
2. Occasion and timing
Identify special occasions on a universal, national, or personal scale to determine when people will buy certain products, quantities, and how much they’ll be willing to spend.
For example, when gift-giving holidays like Christmas roll around, people will be more likely to splurge—especially on children’s toys. Or when the NFL season starts in early September, you can generally expect fans to stock up on beer and buy merch.
There are multiple occasions throughout the year that correlate with an increase or decrease in sales for a specific product. However, these occasions can vary based on your ideal client and industry. You can determine what holidays and events are important to your clientele through consumer research.
Some popular occasions you can use to your advantage include:
- Mother’s Day
- Labor Day
- Father’s Day
- Halloween
- Black Friday
- Cyber Monday
- Memorial Day
- Independence Day
- Thanksgiving
- Christmas
3. Desired benefits
Understanding why someone is looking for a product, what features matter to them, and how they intend to use it can tell you a lot. The benefits sought can help you identify which type of consumer they are. Some popular benefits include:
- Affordability
- Customer support
- Quality
- Appearance
- ROI
4. Customer loyalty
Habitual customers get their own segment because it’s a given that they will purchase from you multiple times, either because they’re in constant need of your offerings or they’re a fan of your brand. This is a critical segmentation because loyal customers often generate the majority of business revenue.
This segmentation can yield invaluable answers, such as:
- Key behaviors prospects show during the buyer journey that boost loyalty
- Behaviors and attitudes that increase the likelihood of someone advocating for your brand
- Ways you can reward loyal customers
5. Customer journey stage
Behavioral segmentation allows businesses to personalize experiences throughout the sales process to increase conversions at every stage. You can also identify prospects that aren’t progressing as expected.
Try organizing prospects within these customer journey phases:
- Awareness
- Consideration
- Decision
- Retention
- Advocacy
6. Engagement
Customers may engage with your brand online as an extension of their community, a support system, or a knowledge base. How they interact with your business should inform how you talk to them and whether or not they’re ready for a sales pitch.
Group customers by the type of interactions they have with your business, whether that’s:
- Website visits
- Social media mentions
- Email click rates
- Conversations with agents
7. Customer satisfaction
Group customers by their level of satisfaction with your business, products, and services. When you identify satisfied customers, you can cross-sell and upsell to them, offer them loyalty benefits, and re-engage them.
When you group dissatisfied customers, you can personalize outreach to resolve issues, send promotions, and request feedback about what caused the churn.
You can measure customer satisfaction through omnichannel customer service software, surveys, and reviews. You can also evaluate satisfaction by monitoring mentions of your company on social media.
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.
Prepare for the future of CX
Understanding consumer behavior is key to providing personalized experiences and building long-term customer relationships. Discover how personalized messaging is expected to revolutionize the customer experience in upcoming years.
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