Actively seek to understand your customers and their behaviour
Organisations want to know how customers behave to fulfil business objectives – attract, convert, sell, retain etc. Understanding why customers behave in a certain way does not come from NPS scores, customer satisfaction surveys or trouncing data. Following all customer activities and transactions doesn’t explain customer behaviour either. Actively seeking to understand your customer’s behaviour creates opportunities to improve business by zooming in on what matters to customers.
Customer behaviour is out of your control
Customers’ decision making processes are greatly influenced by external factors such as increased digitisation, flexibility in switching and higher service expectations. It’s no longer just about responding to the campaign of a competitor. There are also actors outside your market that are shaping and creating new customer expectations and desires. The customers’ contexts determine behaviour more than the quality or price of a product or service. By recognising this fact, businesses can act and react better to customer movements.
Businesses have direct influence on their customers through the products and services they provide. There are several actors and factors that strongly influence how customers experience a product and service. The resulting behaviour – switching products or providers. This might seem unexpected but makes sense when considering how changes in regulations or an alternative service pushes consumers in a certain direction.
Customer realities conflict with business measurements
Customers that buy your products and say they like them may still summarily switch provider. Collecting and examining piles of data from numerous sources can make organisations blind to how and – more importantly– why, customers behave the way they do. Measuring satisfaction or likelihood of switching does not provide customer context, nor does profitability or effort to serve. Customers have basic dislikes – like waiting, lack of clarity, or perceived low value, but do not necessarily act on them.
A customer’s experience of an issue begins at the moment when he or she is aware of it and starts acting on it. Before the customer actually talks to sales or service agents, he or she might have spent hours or even days researching, trying alternatives and talking to others. The organisation, however, only sees the time this customer has spent queuing at support centres or talking with agents. That explains why some customers get upset “only” after talking with an agent for a couple of minutes.
An organisation’s practices are what customers experience
What an organisation does – or doesn’t – do in practice is what a customer experiences. The reasons why an organisation treats a customer a certain way is completely irrelevant to them. Organisations that look at their practices and behaviour – and don’t accept the “excuses” around their, people, processes and systems – see how customers are “forced” to behave a certain way.
Whilst this may seem like an age-old issue it is more and more relevant as customer choice, expectations and power increase. This is important now that customers are reporting their dissatisfaction on social media, or being tempted by better experiences from competitors or start-ups like never before. Experience is a top and bottom-line issue. Evidence shows that a highly satisfied customer spends more with a business and is more likely to stay loyal.
Behaviour can be observed and has a logic
There are general human expectations around businesses that are familiar – people don’t like to wait, hate uncertainty, don’t want to spend time “learning” something new and they generally appreciate emphatic responses. Following the logic of these principles still requires context:- is this a new customer? is it a familiar product? is there a sense of urgency or social acceptance at play? – in order to correctly interpret customer behaviour.
Over 65% of customers defect because they think a service provider is indifferent to them, versus 15% that leave because they are dissatisfied with the service. Defection has little to do with the quality of the service but the quality of the relationship that is built from the beginning and over time. Investing in customer relationships improves the overall satisfaction, customer retention and loyalty.
Behaviour can be influenced
It’s not necessary to understand all aspects of customers’ behaviour to influence certain outcomes. There are specific points in the customer lifecycle and in specific interactions where customers are sensitive to “nudges” in a certain direction. A series of smaller interventions are needed to move customers in a certain direction. These can be tested and piloted, whereby form and timing of information, engagement and transaction can be tested and outcomes observed.
Customers accept that product or service failures can occur. Perform above expectation by making them feel taken seriously while resolving their issue to their satisfaction and you are performing above expectation. Customers that have experienced a well resolved service failure are more loyal than customers that have never experienced an incident. Using incidents as an opportunity to construct relationships, contributes to customer satisfaction and loyalty.
Observing, understanding and acting helps influence customer behaviour
The key to understanding customers is observing them. This is harder than one might expect because it requires abandoning a lot of preconceptions around what is observed. There are specific points where customers can be queried about why they behaved a certain why – when they leave/defect or make urgent requests for assistance. Customer behaviour is often influenced by the barriers the organisation erected itself. Nudging customers in a certain direction is possible but requires understanding their context as well as your own powers of influence.