Analyzing Customer Behavior to Enhance Retention Rates

Will it be a successful sales point marketing non-veg items to a vegan? The answer is obviously a BIG BIG NO! Here comes the necessity of knowing your customers before approaching them with marketing plans. 

Analyzing customer behavior lets you track the purchasing habits and preferences of the customers. Here, you are to segment your customers according to different criteria and identify the sales points and channels from where the most sales come. This data leads you to making data-driven decisions and planning marketing strategies that effectively enhance your retention rates. 

Therefore, if you are running an e-commerce platform and want to maximize your ROI potentially, this guide is for you! Let’s jump deep into analyzing customer behavior and learn how to implement them in your business to boost sales-

What is a Customer Behavior Analysis? 

Customer behavior analysis refers to evaluating consumers’ purchasing habits, interests, engagement, and changes in choice/preference. While analyzing customer behavior, you divide customers into different criteria to track your business’s targeted audience. This helps you find out which category of customers purchases the most of your products. 

You can also monitor their buying tendency by increasing/decreasing product prices or offering discounts and coupons. Customer behavior further allows you to gain deep insight into recent trends and social media engagement. Thus, you can make data-driven decisions based on customer behavior and boost your sales. 

Importance Of Analyzing Customer Behavior

Predicting Future Trends 

By analyzing customers, you can identify changes in consumers’ purchase behavior. This lets you know which items are gaining more popularity and will be in high demand in the coming days. Thus, you can emphasize that particular product category more to fulfill customer demand. This will keep you ahead of the competitors and thus maximize sales. 

Win New Customers 

Selling to new customers is always more challenging than approaching old customers. Research says the probability of selling to new customers is only 5-20%, whereas there is a 60-70% selling rate when you reach an old/existing customer. By customer behavior analysis, you can identify what facts encourage old customers to repeat purchases. You can also directly approve loyal customers for feedback. Note down those facts and make them your marketing strategy. And approach new customers, highlighting this strategy to get potential new customers. 

Driving Sales By Offering Personalized Customer Service 

We find in our research that two-thirds of the customers prefer businesses that listen to their feedback. This truly encourages the customer to repeat purchases. About 60% of customers tend to spend more when they are specially treated. To give this service to your customers, you must conduct a customer behavior analysis. This will help you tailor your services based on the customer’s feedback and thus boost sales. 

Retain Customers For Longer

You will be amazed to know that in most businesses, 65% of the sales come from existing customers. But what makes this possible? To retain customers for longer, you must identify their preferences. This is possible by analyzing customer behavior, as it allows you to optimize your business based on their needs. Thus, you can boost your sales and reduce the churn rates. 

How To Do Customer Behavior Analysis?- Stepwise Analysis 

Step 1: Customer Segmentation

Are your marketing strategies working efficiently to reach the targeted audience? Remember, marketing books to a person who never reads brings you no sales. Therefore, Customer segmentation is a must to track potential buyers. 

In doing so, one major mistake most businesses make is categorizing based only on basic factors. This can miss potential customers falling on other minor segments. Therefore, you must go deeper into segmentation. Here are some factors we suggest you to consider: 

• Geographical location of your customers 
• What devices do they use to browse and purchase goods online?
• In which social media platforms customers are active?
• How do the customers find or reach you?
• What is the profession of the customers?
• How much time did they take to make the first purchase after discovering your service? 

Step 2: Track The Sales Point Of Every Segment 

Do deep research on the segmented customers to know what reasons make them purchase from you. Why do they choose your business? List out all the possible sales points and focus on them to generate more sales. However, you will not get all the answers from analytical tools; in some cases, you need to speak directly to the customers to know the reason for choosing your business. Ask them the following questions to know their point of view:

• Was it a random purchase, or did something urgent come up? 
• Did they do competitor research before picking you? If yes, what makes them choose you?
• Are they buying only for discounts or offers? 
• How do they feel about the price?
• How was their experience purchasing from your business?
• Are they willing to continue buying your goods or taking advantage of your services? 

Step 3: Collecting Quantitative Data 

Once you are done with collecting qualitative data, it’s time to go for numbers. Quantitative data gives you the exact picture of your sales performance. Customer behavior analytics apps will help you gather these data. They have pre-set criteria with which you can analyze the customer behavior and their response from different angles. Such as:

• Customer engagement data from website, social media channels, and other platforms
• Data of most purchased product
• Sales data for discounts and offers
• Purchase history-quantity and frequency 
• Repeat purchase data 
• Payment method data 
• Time spent on each page
• Return rates, etc. 

Step 4: Compare Quantitative Data With Qualitative Data 

The next step is to compare the numbers to the qualitative data to understand the customer experience in depth. Go through the customers’ journey, checking the collected data. Note down which group of customers brought what products. When did they make the purchase? After checkout, how often do they revisit your site?

These will help you identify the coming trends. Look for changes in the shopping behavior of the customers. Have they switched to any new brand or tried something new? In what category of products are your existing customers showing more interest? Noting down these answers will help you find the most valuable customers and know their preferences. You can thus serve them accordingly. 

Step 5: Implement The Analysis To Your Campaign 

From the above step, you already have suggestions on where to make changes in your marketing strategy. Now, it’s time to implement them. Directly dive into your marketing plan with your customer behavior analytics. As you already segmented the customers into groups and identified the shopping habits of each group, it’s easy to mark out the loyal customers. These segments of customers share some demographic traits; discounts attract some, some traffic is generated heavily through Instagram, while others come from third-party review sites. Use this information to brand your campaign. 

For example, you can offer discounts to demographic locations that have the best selling points. Or go for coupons for customers that come from third-party review sites. Similarly, invest more in channels that bring the most engagement and sales. For instance, for some niches, Instragam generates the most sales, while in others, Facebook might be the most effective marketing platform. 

Step 6: Result Analysis 

After implementing the customer behavior analysis into your marketing strategy, it’s finally time to check its effectiveness. But how will you know if this even brings any benefits? To track this, you need to go through sales analysis; this will help you identify how your strategy affects the business performance. The parameters to consider for this are as follows: 

• Conversion rate
• Acquisition cost
• Lead conversion rate
• Average profit margin
• Customer lifetime value, etc. 

This will let you track sales growth, engagement rate, customer response and interactions. Thus, you can decide how effectively the customer behavior analysis worked out! 

Customer Behavior on Shopify: Key Insights To Know

Shopify’s user-friendly dashboard has features for customer behavior analysis. You can directly track the customer behavior from the dashboard following the below steps:

1. Go to Shopify admin
2. Select Analytics > Reports
3. Click Categories
4. Select the Behavior option to filter only the behavior reports 

You can analyze the behavior of the customer from the following matrix: 

Top 5 Shopify Apps For Analyzing Customer Behavior 

Though Shopify has built-in features to track customer behavior, you can get more detailed pictures using third-party apps. This will help you make decisions with more assurance. Here we have listed the top 5 Shopify apps that will help you in analyzing customer behavior in-depth: 

1. The Analyzely – Google Analytics 4

The Analyzely – Google Analytics 4 provides you with a comprehensive way to add Google Analytics to your store. It gives you a clear picture of your store’s visitors and their behavior. The app directly opens in your Shopify store, where you can track store data. Above all, it seamlessly integrates with GG4 and requires no coding. So you will have a smooth user experience while analyzing your store’s performance. 

2. Zigpoll Customer Surveys

The Zigpoll Customer Surveys is a fully customizable customer survey app that allows you to interact with your customers anytime. You can create as many surveys as possible and send them to your customers via email or SMS. This app supports multiple local languages to offer maximum flexibility. Besides, Shopify seamlessly integrates with your marketing stack. And the best part is, this app requires no coding; anyone can use it. 

3. Loyal | Customer Segments

Loyal is a customer segmentation app that groups your customers based on recency, frequency, and monetary data. It further analyzes your customer’s lifetime value and retention rate. Automatic tagging is another best feature of this app. It tags the potential customers directly to your Shopify store and thus offers a more personalized experience. It sends the right message to the right customer. Besides, you can sync the customer segments into your email marketing tools like Klaviyo to boost marketing. The Loyal app further sends you a weekly email survey of conversion rates and engagement to check out the effectiveness of customer segmentation.

4. Polar Analytics

Polar Analytics is a 1-click data analysis app. It centralizes all data in one place, reducing the hassle of manual reporting. Besides Shopify, it integrates with Amazon, Google, Meta, TikTok, Klaviyo, and more. Using this app, you can do an in-depth customer analysis by segmentation, real-time tracking, activity tracking, page views, lifetime value (LTV), loyalty analysis, etc. It further has marketing and sales analysis features and reporting through visuals and graphs. 

5. Reportgenix 

Reportgenix is an all-in-one analytical tool built for Shopify. You can use these apps effectively for customer behavior analysis. It helps you track customer integration and purchase in segments. You will get customer info, the most valuable customer data, customer by location, and more. Apart from just analyzing customer behavior, it further tracks the sales and overall performance of your store. Thus, using a single app, you can keep all on track. 

Wrapping Up

Analyzing customer behavior is a must to ensure your investment in marketing is used effectively. And to do so, the foremost thing is customer segmentation. This will allow you to know which group of customers brings the most sales and has higher lifetime value. This way, you can identify loyal customers and personalize their services to build strong connections. It further helps to track down the best selling point to attract new customers. This way, by analyzing customer behavior, you can optimize your business performance. However, manually doing so is not possible. Therefore, look for a compatible e-commerce app integration that helps you analyze customer behavior. 

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