What is consumer behaviour?

Now that you know who is a consumer you also must know what is
consumer behaviour and how does it affect the organizations.

Consumer behaviour is a physiological process it is all related to the

emotions of the consumer. In this process the consumer starts with
recognizing the need of the product, and then finds a way or a medium of
solving these needs, makes purchase decisions like planning whether he
should buy or not buy a certain product, and then he confirms the
information, jots down a plan and then implements the plan of making the
purchase.

Consumer behaviour is physiological it is human behaviour it can change

with the slightest change in the market, the atmosphere and the trend.
Studying consumer behaviour is a challenge take look at a few challenges
that is how can you study consumer behaviour.

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How to study consumer behaviour?
1. You need to first understand the physiology of the consumer of a specific
class, standard and of a specific market. You need to understand how does
the customer think, reason, feel, and select between the option of products
and services offered
2. Then understanding the environment of the customer is important. The
environment includes the family of the consumer, their social atmosphere,
their culture, etc.
3. The consumer psychology is different when they shop and make decisions
of spending their money.
4. The knowledge of the consumer about the products, the industry and your
competitors. How can you influence the customer with minimum knowledge
by educating him about your products and services?
5. How can you motivate the consumer buying behaviour, helping him make a
decision in selecting between products, the importance of their product and
how will their decision affect them?
6. How should the company improve their marketing strategy and marketing
campaigns based on their focused consumer behaviour?
7. How does a single consumer decision effects a group of consumers that is
a group of people, this can include their friends, their family, etc.
8. The consumers behaviour also depends on buying a new products and
reusing the old ones. The organizations also need to understand how
reusing products influences a consumer.
9. The consumers also take decisions based on the after sales services and
the service provided by the organization and their distributors. Service
offered to a consumer also matters in influencing their behavior
10. How a single or a group of consumer behavior does affects the
society and the atmosphere and the economy of the nation.
What are the types of consumer behaviour?
Programmed or routine behaviour
Buying of regular and daily goods that involve very less money and also
minimum research work fits under this type of goods buying behaviour. For
example buying goods from the grocery store that are goods used on daily
basis like milk, eggs, bread, etc

Buying products occasionally or limited decision making

When a consumer tries to gain information about unfamiliar brands of
familiar products of not very high value goods this is when a consumer
makes a decision however occasionally. The time required to gather such
information is quite moderate for example buying of goods like clothes and
cosmetics.

Complex and involvement or extensive decision making

 Buying of products such as computers, laptops, property, cars, education,
etc which requires a huge amount of research and economic involvement
comes under this category or type. This decision take time as it needs too
much of research work as the consumer will study almost all the options
available in his economic range, the research is prolonged as the customer
would want to buy the best option available for the price he is paying.

The last type is the impulse buying or the conscious

planning type
The job of the organizations here is to educate the consumers about their
goods and services and motivate them to buy their goods and services.
Predicting single or consumer behaviour of a group is not just difficult
because you never know what factors might influence them and when.
Reason being the consumers today have a huge variety of choice and a
number of factors influence the behaviour of the consumers. Lets take a
look at the notes given below to understand what influences consumer
behaviour.

Important factors that influence consumer behaviour

You for sure might be wondering as to what is it that influences these
consumers, how do we analyzes when is their purchase pattern going to
change. Of course only the influencing factors will confirm what will change
the consumers buying pattern.

We have four main factors that affect consumer behaviour they are;

1. Consumer Behaviour Cultural factors

Culture plays a very vital role in the determining consumer behaviour it is
sub divided in

Culture
 Culture is a very complex belief of human behaviour it includes the human
society, the roles that the society plays, the behaviour of the society, its
values customs and traditions. Culture needs to be examined as it is a very
important factor that influences consumer behaviour.

Sub-Culture
Sub-culture is the group of people who share the same values, customs
and traditions. You can define them as the nation, the religion, racial groups
and also groups of people sharing the same geographic location

Social Class
Society possesses social class; in fact every society possesses one. It is
important to know what social class is being targeted as normally the
buying behaviour of a social class is quite similar. Remember not just the
income but even other factors describe social class of a group of
consumers.

2. Consumer Behaviour Social Factors

Social factors are also subdivided into the following

Reference groups
Under social factors reference groups have a great potential of influencing
consumer behaviour. Of course its impact varies across products and
brands. This group often includes an opinion leader.

Family
The behaviour of a consumer is not only influenced by their motivations and
personalities but also their families and family members who can two or
more people living together either because of blood relationship or
marriage.

Role and status

 People who belong to different organizations, groups or club members,
families play roles and have a status to maintain. These roles and status
that they have to maintain also influences consumer behaviour as they
decide to spend accordingly.

3. Consumer Behaviour Personal factors

A number of personal factors also influence the consumer behaviour. In fact
this is one major factor that influences consumer behaviour. The sub
factors under personal factor are listed below.

Age and life cycle stage

Age of a consumer and his life cycle are two most important sub factors
under personal factors. With the age and the life cycle the consumers
purchase options and the motive of purchase changes, with his decisions of
buying products change. Hence this stage does affect consumer behaviour.

Occupation
Occupation of a consumer is affects the goods and services a consumer
buys. The occupations group has above average interest in buying different
products and services offered by organizations. In fact organizations
produce separate products for different occupational groups.

Financial or economic situations

Everything can be bought and sold with the help of money. If the economic
situation of a consumer is not good or stable it will affect his purchase
power, in fact if the consumers or the economy of a nation is suffering a
loss it defiantly affects the consumers purchase or spending decisions.

Life style
People originating from different cultures, sub cultures, occupations and
even social class have different styles of living. Life style can confirm the
interest, opinions and activities of people. Different life styles affect the
purchase pattern of consumers.
 Self concept and personality
Every individual is different and have different and distinct personalities.
Their distinct personalities and distinct physiology effects their buying
decisions. Hence purchase of products and services defers from person to
person.

4. Consumer Behaviour Psychological factors

4 psychological factors affect consumer behaviour very strongly. Lets look
at them in detail.

Motivation
Motivation is activating the internal needs and requirements of the
consumer. It can also be described as goals and needs of the
consumers. Motivation arouses and directs the consumers towards certain
goals. These needs can be psychological needs, needs of security, social
needs, esteem needs and also self actualizing needs.

Perception
Perception is sensing the world and the situations around and then taking a
decision accordingly. Every individual look as the world and the situations
differently. The judging ability and capacity of every individual is different
and hence the look at the world differently. This is what separates the
decision taking abilities.

Learning and experience

Learning is the research of products and services before the consumer
takes the decision of buying a product. Learning and self educating these
days is done online and also in groups. Experience is taking a lesson from
the past experiences of a product and service. Learning and experience
both again play an important role in influencing the consumers behaviour
as it influences their purchase decision.

Attitude and beliefs

Attitude is a consumers favorable and unfavorable emotional condition or
emotional feeling, also its tendency of reaction to certain actions and
behaviours. Beliefs of people that are the belief that people assume the
products to be as make the specifications of the products.
Hence attitude and beliefs are also important and need to be taken into
consideration while studying human behaviour.

Customer perceived value

Perceived value is the benefit that a customer believes he or she received from a
product after it was purchased.

Perceived value is the worth that a product or service has in the mind of the consumer.
To obtain a higher price for products, producers may pursue marketing strategies to
create a higher perceived value for their products.

It is the difference between the total obtained benefits according to the customer
perception and the cost that he had to pay for that. Customer perceived value is seen
in terms of satisfaction of needs a product or service can offer to a potential customer.
The customer will buy the same product again only if he perceives to be getting some
value out of the product. Hence delivering this value becomes the motto of marketers.

Customer Perceived Value = Total Perceived Benefits Total Perceived Costs

The CPV is kind of an evaluation done by customer on what value a product or a service
would be able to provide if he/she buys it by paying money.
Please note that the benefits and costs also include the emotional benefits and costs.
Example of Customer Perceived Value:
While buying a car, the expected reactions from family and friends also become a part of
benefits or gain. The customer evaluates whether the particular car would be able to
provide whatever he/she is looking for from a car. Whether the car would provide the
comfort and the usability. Also for many customer the perceived value would also
include the mileage a car gives.
 Customer satisfaction

Customer satisfaction is a marketing term that measures how products or services

supplied by a company meet or surpass a customers expectation.

Customer satisfaction is important because it provides marketers and business

owners with a metric that they can use to manage and improve their businesses.

Here are the top six reasons why customer satisfaction is so important:

Its a leading indicator of consumer repurchase intentions and loyalty

Its a point of differentiation
It reduces customer churn
It increases customer lifetime value
It reduces negative word of mouth
Its cheaper to retain customers than acquire new ones

1. Its a leading indicator of consumer

repurchase intentions and loyalty
Customer satisfaction is the best indicator of how likely a customer will make a purchase
in the future. Asking customers to rate their satisfaction on a scale of 1-10 is a good way
to see if they will become repeat customers or even advocates.

Any customers that give you a rating of 7 and above, can be considered satisfied, and
you can safely expect them to come back and make repeat purchases. Customers who
give you a rating of 9 or 10 are your potential customer advocates who you can
leverage to become evangelists for your company.

Scores of 6 and below are warning signs that a customer is unhappy and at risk of
leaving. These customers need to be put on a customer watch list and followed up so
you can determine why their satisfaction is low.

See how satisfaction provides so much insight into your customers?

Thats why its one of the leading metrics businesses use to measure consumer
repurchase and customer loyalty.

2. Its a point of differentiation

In a competitive marketplace where businesses compete for customers; customer
satisfaction is seen as a key differentiator. Businesses who succeed in these cut-throat
environments are the ones that make customer satisfaction a key element of their
business strategy.
Picture two businesses that offer the exact same product. What will make you choose
one over the other?

If you had a recommendation for one business would that sway your opinion? Probably.
So how does that recommendation originally start? More than likely its on the back of a
good customer experience. Companies who offer amazing customer
experiencescreate environments where satisfaction is high and customer advocates are
plenty.

This is an example of where customer satisfaction goes full circle. Not only can customer
satisfaction help you keep a finger on the pulse of your existing customers, it can also
act as a point of differentiation for new customers.

3. It reduces customer churn

An Accenture global customer satisfaction report (2008) found that price is not the main
reason for customer churn; it is actually due to the overall poor quality of customer
service.

Customer satisfaction is the metric you can use to reduce customer churn. By measuring
and tracking customer satisfaction you can put new processes in place to increase the
overall quality of your customer service.

I recommend you put an emphasis on exceeding customer expectations and wowing

customers at every opportunity. Do that for six months, than measure customer
satisfaction again. See whether your new initiatives have had a positive or negative
impact on satisfaction.

Related: 15 tactics to reduce customer churn

4. It increases customer lifetime value

A study by InfoQuest found that a totally satisfied customer contributes 2.6 times
more revenue than a somewhat satisfied customer. Furthermore, a totally satisfied
customer contributes 14 times more revenue than a somewhat dissatisfied customer.

Satisfaction plays a significant role in how much revenue a customer generates for your
business.

Successful businesses understand the importance of customer lifetime value (CLV). If

you increase CLV, you increase the returns on your marketing dollar.

For example, you might have a cost per acquisition of $500 dollars and a CLV of $750.
Thats a 50% ROI from the marketing efforts. Now imagine if CLV was $1,000. Thats a
100% ROI!
Customer lifetime value is a beneficiary of high customer satisfaction and good
customer retention. What are you doing to keep customers coming back and spending
more?

Learn more about customer lifetime value:

Customer Lifetime Value For Beginners (4 Step Guide)

5 Strategies To Increase Customer Lifetime Value

5. It reduces negative word of mouth

McKinsey found that an unhappy customer tells between 9-15 people about their
experience. In fact, 13% of unhappy customers tell over 20 people about their
experience.

Thats a lot of negative word of mouth.

How much will that affect your business and its reputation in your industry?

Customer satisfaction is tightly linked to revenue and repeat purchases. What often gets
forgotten is how customer satisfaction negatively impacts your business. Its one thing to
lose a customer because they were unhappy. Its another thing completely to lose 20
customers because of some bad word of mouth.

To eliminate bad word of mouth you need to measure customer satisfaction on an

ongoing basis. Tracking changes in satisfaction will help you identify if customers are
actually happy with your product or service.

6. Its cheaper to retain customers than

acquire new ones
This is probably the most publicized customer satisfaction statistic out there. It costs six
to seven times more to acquire new customers than it does to retain existing customers.

If that stat does not strike accord with you then theres not much else I can do to
demonstrate why customer satisfaction is important.

Customers cost a lot of money to acquire. You and your marketing team spend
thousands of dollars getting the attention of prospects, nurturing them into leads and
closing them into sales.

Why is it that you then spend little or no money on customer retention?

Imagine if you allocated one sixth of your marketing budget towards customer retention.
How do you think that will help you with improving customer satisfaction and retaining
customers?

Here are some customer retention strategies to get you thinking:

 Use blogs to educate customers
Use email to send special promotions
Use customer satisfaction surveys to listen
Delight customers by offering personalized experiences

Ways of measuring customer satisfaction

Survey customers
Surveying customers is the only probable way of getting customer feedback unless they contact you.
Most people are busy and have no time to pass redress.
You can provide survey through several ways such as emails and use of phone calls.
To get credible feedback you need to allow customers to answer questions on weighted scale.
You can conduct repeated surveys, over time, to measure changing comments from customers.

Understand expectations
Understanding what customers expect from you will provide ground to satisfy their expectations by
giving them enjoyable service.
Making an effort to discover what customers expect from you in terms of service and products is the
way to satisfying their needs.

Find out where you are failing

On situations where you are not fulfilling customer requirements, it is credible to find out where you
are failing.
Incidences where products are less than advertised should not arise.
Find out if employees are making promises that cannot be met.
Take strides and attend seminars that will equip you with better managerial skills.
Know the chain of communication so as to know where communication faults are and foster
amendments.

Pinpoint specifics
Whether a customer is satisfied or not, you need to collect information to help you assess the
situation.
Collect information about what customers purchased, what they liked and they did not like, their actual
purchase expectation and their suggestions for improvement.

Assess the competition

Have the initiative to know why customers consider other brands above yours.
Through the survey, invite customers to come and compare and contrast your services and products
and make judgment on what you are not offering.

Try to measure the emotional aspect

Customer experiences after buying a given product are attributed to quality.
Feedback from customers in relation to quality, reliability and extent satisfaction should be matched.
Comments customers make are a measure of their satisfaction.
Customers showing dissatisfaction prompts change of strategy.
 Loyalty measurement
Customer loyalty is the likelihood of repurchasing products or services.
Customer satisfaction is a major predictor for repurchasing and it is influenced by explicit
performance of the product, value and quality.
Loyalty is basically measured when a customer recommends to a friend, family member about given
product.
Overall satisfaction, repurchasing and likelihood of recommending to a friend are indicators of
customer satisfaction.

A series of attribute satisfaction measurement

This strategy takes into account the affective and cognitive pattern.
Affective behavior is intrigued to liking and disliking owing the benefits the product is attached with.
Customer satisfaction is influenced by perceived quality the product is attached with and it is
regulated by expectations of the product or service.
Customer attitude towards a product are as a result of product information through advertisement and
any experience with the product whether perceived or real.
Cognition is the judgment on whether the product is useful or not useful.
Judgment is always intended use of application and use of occasions for which the product is
purchased.

Intentions to repurchase
Future hypothetical behavior that indicates repurchasing the product is a measure of satisfaction.
Satisfaction can influence other post purchasing trend through use of the word of mouth or social
media platform.

Monitoring
Monitoring can be directed at phone, email and chat communications.
Monitoring includes automated phone interactions designed by companies to help give real world
glimpse.
Feedback cards
Dishing out cards will help gauge customer comments.

Customer Lifetime Value is a way to estimate the monetary value a customer

brings to your business during the life of your relationship with him

Customer Lifetime Value is the single most important metric for understanding your customers. CLV
helps you make important business decisions about sales, marketing, product development, and
customer support. For example:

Marketing: How much should I spend to acquire a customer?

Product: How can I offer products and services tailored for my best customers?
 Customer Support: How much should I spend to service and retain a customer?
Sales: What types of customers should sales reps spend the most time on trying to acquire?

The most straightforward way to calculate CLV is to take the revenue you earn from a customer and
subtract out the money spent on acquiring and serving them.

customer relationship management

(CRM)
Customer relationship management (CRM) is a term that refers to practices,
strategies and technologies that companies use to manage and analyze
customer interactions and data throughout the customer lifecycle, with
the goal of improving business relationships with customers, assisting in
customer retention and driving sales growth. CRM systems are
designed to compile information on customers across different channels
-- or points of contact between the customer and the company -- which
could include the company's website, telephone, live chat, direct mail,
marketing materials and social media.

Building Customer Loyalty With 18 Proven Strategies

1. Let customers know what you are doing

for them
This can be done via a quick informal phone call or a friendly email newsletter either
way, you want to subtlety let your customers know about all the work you have been
doing for them. For example, you may have spent part of your weekend fixing up a few
problems for a customer you can hint about this when you follow up the next week. Its
important to realize you are not being cocky here; you are simple letting them know you
value their business and are willing to go the extra mile for them.
 2. Write a personal letter
For long time clients, get personal. Tell them you value there business. Send them a
letter like this. I was grabbing a coffee the other day and your name popped into my
head. How has business been for you? Are you on track to hit your targets this year?
Be genuinely interested in their business and life, be personal.

3. Remember special occasions

Send regular customers birthday cards and holiday cards. Try not to be boring (like all
the other companies). If you can make these special cards/gifts unique in your own way,
that will go a long way to building customer loyalty. Use your creatively and find a way to
tie the gift ideas into your business, the customers business or his/her personal life.

4. Pass on information
If you read an article, see a new book, or hear about an organization that a customer
might be interested in, drop a note or make a quick call to let them know.

5. Follow up calls with customers are

business development opportunities
When you talk to your customers, theyll probably have referrals to give you. Make sure
you take an open approach to every contact you have with each of your customer, you
never know what new business you can get out of it.

6. Go to where you customers hang out

If you want to create customer evangelists, you need to hang out where they already
are. If theyre on Facebook, or Pinterest jump on there and engage them. If they are
on a wildly popular body building forum, start contributing discussions on there.

7. Strive to empower and educate your

customers
Give a man a fish and he will eat for a day. Teach a man to fish and he will eat for a
lifetime.

Become your customers go to adviser on all things relating to your industry. For
instance, if youre in IT, be their IT Guy. Help them with choosing the best mobile plan,
let them know about upcoming compliance regulations. Go the extra mile.
 8. Invest in a self-service channel
Create a knowledge-base or FAQ section of the common questions and problems that
your customers encounter. Direct customers to specific answers this will save you from
answering the same question 100 times, plus it will give your customer a solid response
to their problem.

9. Make customer retention a priority

This may seem pretty obvious, but Im serious. Make a commitment to put customer
retention at the top of the list. If you spent as much time building customer loyalty and
retaining customers, as you did acquiring new customers, youd have the worlds best
advocates and a 100% retention rate!

10. Owners must lead from the front

Lets face it; everyone loves dealing with the business owner. Theres something about
dealing with the face of a company, the number one man, the boss in charge. As the
business owner or CEO, you should be the one engaging existing customers and
building customer loyalty. Make this your priority and not anyone elses.

11. Understand the true purpose of

marketing
Effective marketing is about building trust and developing relationships. Too many times
people think marketing is just push a bunch of ads and they will come. Well, its not that
easy. Tom Asacker, marketing author, explains the purpose of marketing it to create
and maintain a strong feeling with customers so they are mentally predisposed to
continually choose and recommend you. Building customer loyalty is about building trust
and developing relationships you see how its all interlinked?

12. Tap into what your customers want

By understanding what you customers actually want, you can build relationships that are
memorable and set you apart from the competition. Focus on understanding each of
your customers on an individual level and find out what really makes them tick, and why
they like doing business with you.

13. Focus on integrity, which leads to trust

and loyalty
Integrity involves fundamental behaviors such as keeping your word, being honest,
providing a consistent level of service, and being reliable. Businesses that demonstrate
a high degree of integrity are seen as trustworthy.

Building trust requires businesses to continually put customers interests ahead of their
own. Customers will see this, and you will earn their trust and go a great distance to
building customer loyalty.

14. Never take loyalty for granted

A successful marketing strategy will bring customers through the door, but only a
successful customer loyalty and retention plan will keep them coming back for
more. Never take customer loyalty for granted.

15. Create enlightening experiences

A successful business is about more than just selling stuff. Its about selling experiences.
Chris Zane of Zane Cycles knows this all too well. He focuses on making his customers
feel good, and does this by not charging for every add-on, and now gives away free
drinks at his in-store coffee bar. His customers walk away with an experience, an
experience that will keep them coming back for more, and telling their friends about. This
will go a long way to building customer loyalty.

16. When you do wrong, make it right

Resolving customer complaints is the best way to build customer loyalty. By handling
complaints in a professional manner, you earn the opportunity to fix the problem and
regain customer trust. In doing so, you engage your customer on an emotional level.
Providing you resolve the problem, you customer now has a very unique experience with
you, and you have shown first hand your willingness to recognize the problem and go
out your way to ensure it is fixed and wont happen again. Customers love this.

17. Quantify Customers Love

Talk to your customers, ask for their opinion on your service. It doesnt have to be
extravagant, a simple customer satisfaction survey will do the trick. I talk more how to
measure customer loyalty in this 3 step guide to measuring customer loyalty.
To improve survey response rates, I like to tell my customers that I will make a
small donation for each survey completed. Even better, I recommend Client
Heartbeat this tool can get you up to 65% survey response rates.

18. Build a loyalty program

Whether you want to use old school punch cards or new mobile apps, a loyalty program
can go a long way to keeping your customers coming back. These programs are a great
way to engage your customers, build a relationship and drive repeat business.

There it is 18 strategies and tips you can use to start building customer loyalty. Apply
these today to start retaining more customers and growing your business.

1. Core Product
This is the basic product and the focus is on the purpose for which the
product is intended. For example, a warm coat will protect you from the cold
and the rain.

2. Generic Product
This represents all the qualities of the product.

For a warm coat this is about fit, material, rain repellent ability, high-quality
fasteners, etc.

3. Expected Product
This is about all aspects the consumer expects to get when they purchase a
product.

That coat should be really warm and protect from the weather and the wind
and be comfortable when riding a bicycle.

4. Augmented Product
This refers to all additional factors which sets the product apart from that of
the competition.

And this particularly involves brand identity and image.

Is that warm coat in style, its colour trendy and made by a well-known
fashion brand?
But also factors like service, warranty and good value for money play a
major role in this.

5. Potential Product
This is about augmentations and transformations that the product may
undergo in the future.

For example, a warm coat that is made of a fabric that is as thin as paper
and therefore light as a feather that allows rain to automatically slide down.