How Customer Behavior Analytics Can Help Your Business
Every aspect of life was impacted by the COVID-19 pandemic, particularly people's shopping behaviors. As customers moved from browsing in physical stores to purchasing online, customer behavior analytics—understanding how customers act across each channel and interaction point—became more important.
By now, almost everyone has had an experience with behavioral science technology. Take, for example, the personal recommendations on Netflix or Amazon. Those companies use customer data—for example, previous products the customer has viewed or bought—to make predictions of what the customer might like based on past experiences.
By leveraging customer behavior analytics and data based on previous decision-making, businesses can get insights into their customers' preferences and make an educated guess on what they'll buy in the future.
Behavior analytics also allows online or e-commerce businesses to make contact with the customer on each step of their journey, from the awareness stage, to the consideration stage and finally, the decision or purchasing stage.
How companies can use customer behavior analytics
You can use online behavior analytics tools in several ways to grow your business and drive customer acquisition, retention and growth. These include:
- Segmentation and personalized marketing: The ability to provide personalized content and product suggestions based on a customer's past behavior is a powerful marketing tool. Customer behavior analytics data allows you to segment your market into specific subgroups based on demographics such as age, location, family size, household income or metrics such as purchase value and frequency rate. With that knowledge in hand, online businesses can better target their customers with personalized marketing and suggestions. For example, if the customer has made it to the decision stage, such as putting an item in their cart, a behavior analytics tool can make other suggestions based on similar products.
- Demand pricing: Not every online business is in the position where it can adjust a product's price based on analytics that suggests an increase or decrease in demand for a particular item. But if you can, it's one way to leverage behavioral data to build customer satisfaction, particularly in the consideration stage of the customer journey.
- Forecasting: The ability to use customer data to predict sales and revenue is one of the biggest benefits of using consumer behavior analytics. Making evidence-based estimates of sales based on past and current sales reports means more accurate budgeting, reduced costs and improved ROI for an online or e-commerce business.
What do behavioral analytics tools cost?
While knowledge is power, it doesn't come cheap. However, while many customer behavior analytics tools can involve a significant investment upfront, the return on investment may be worth it if your online business can benefit from the technology.
- HubSpot is one of the most popular names in analytics and offers a wealth of reporting options and insights on customer demographics and engagement activity. The company offers a free starter plan to help you get familiar with its product. Its prices start at $45 per month for two users and more limited functionality. For 10 or more users with the most tools available, HubSpot's prices start at $1,200 per month.
- Mixpanel is another popular, all-in-one option that includes marketing automation and CRM capabilities. It also offers a variety of notification features, including email, SMS, push notifications and in-app. After you use a free starter plan, Mixpanel's Pro Plan is $999 per month.
- Hotjar uses heatmaps, surveys and session recordings to illustrate how people interact with your website, uncovering the why behind page traffic and drop-off rates. It's easy to install, just adding a single snippet to your website or app. However, it doesn't have all the event-specific customization found in HubSpot and Mixpanel. While there's a free plan available with limited functionality, its Pro Business Plan ranges from $99 to $589 per month, depending on the volume of daily page views.
Investing in understanding your customers
Depending on your business's needs, the ongoing investment in customer behavior analytics software can drive significant returns. If you're looking for ways to get a competitive edge by more closely targeting your sales strategies to your customers, these tools may be money well spent. Talk to your business banker about the best strategy for investing in one of these solutions and whether this could be a good fit for your company.
Financial insights for your business
This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.