Consumer Behavior: understand your customers

In order to understand the potential of analyzing consumer behavior, first, we need to define what it is.

Consumer behavior is the set of actions that influence decision-making when acquiring a product or service. Every buying decision is influenced even though consumers themselves are often not aware. For that reason, understanding how, when and what the consumer wants to buy is essential. Ergo, brands have to design a marketing strategy that motivates them to buy. In addition, they must know what are the factors that will increase the possibility of selling the product. Also, they will possibly increase consumer loyalty and make them precursors of the brand.

Nowadays, the speed, the easy access and the overwhelming exposure to information to which the user is exposed have forged consumers that make them:

  • atheist to the brand
  • non-believers to the advertising impacts received
  • consumers with a wide range of offers
  • consumers with changing tastes and needs

The strategy focused only on the product is no longer enough. It is vital to focus on the strategy of the consumer. Today, we must look for products and services based on our customers and not look for customers to sell our products.

customer experience ebook 2


Why analyze the Consumer Behavior of your customers?

One step ahead of the competition

The goal of knowing consumer behavior is to obtain a competitive advantage for the rest of the market. In this way, more accurate actions can be taken in the following sections.

  • To determine target markets to meet the latent needs and wishes of potential customers and be accurate in the markets in which to act.
  • The marketing objectives to predict some data such as the number of sales.
  • The marketing-mix strategy to influence the consumer behavior of your potential customers:
    The investigation of consumer behavior will allow determining the attributes most valued by the target clients. In this way, they can be integrated into the design.
    Thanks to the analysis of consumer behavior, the price that the potential customer will be willing to pay could be established.
    To determinate the most important channels that the target clients use. It will also define which stimuli are more persuasive.
    It will allow knowing where the target users buy.

Online shopping

Currently, technology and consumption habits change very often. For a long time, consumer behavior has been analyzed and studied in online stores. This is possible thanks to the advance in digital marketing and the possibility of measuring endless KPIs.

Consequently, you can adjust all aspects of the online store to the consumer preferences: product catalog, design and user experience, etc.

The dizzying advance of technology has changed consumer behavior when shopping. Today, one-third of sales are made in virtual stores. Taking into account that competitors are only a few clicks away, competitiveness has grown exponentially. It is increasingly difficult to retain the loyalty of customers. It is also an arduous task to get new clients.

Technology has dramatically changed the online experience for consumers and, along with this, digital platforms continue to change the way consumers interact and relate to each other, as well as online brands. Consequently, loyalty and consumer business have become a bigger challenge for e-commerce brands.


To understand better consumer behavior, the online software company Namogoo conducted a survey of more than 1300 users on their buying habits. These are the results:

  • 44% of users use their smartphones for buying online.
  • Shipping costs influence 77% of purchase decisions.
  • 38% of users finished an abandoned purchase after receiving an email reminding them of this purchase.
  • 78% do not like to see external ads (banners) during the purchase process.

In order to obtain data that will give us insights into our target audience, we need to measure KPIs (key performance indicators). Next, we list the most important KPIs to know better the consumer behavior of your clients.

KPI Analysis

1) NPS: Net Promoter Score

¿Are your clients loyal to your brand?

It is 5 times more expensive to get a new client than to keep those who already are. Consequently, it is important to listen to your customers and understand their consumer behavior. One way to do this is by analyzing their loyalty. For this, the clue is to ask them if they would recommend your brand to their friends and acquaintances. Scores go from 1 to 10, “1” meaning this person would not recommend the brand. However, “10” would be a resounding yes. Statistics show that a score below 7 means that your client is a detractor. This could mean he is ready to stop using your brand. A score of 8 or higher means that your client is a promoter of your brand.

Net Promoter Score = %Promoters – %Detractors

Example, having a total number of clients of 150.

  • 100 clients gave scores between 8 and 10 = 66.66% = 0.666
  • 50 clients gave scores between 0 and 7 = 33.33% = 0.333


Score of Net Promoters = 66.66% – 33.33% = 33.33% = 0.333

(The most positive results will be close to 1).

This KPI is very important. In fact, the statistics say that there is a positive relationship between the NPS and the growth of the company in the next years of the analysis of this KPI.

Mr. Reichheld, the creator of this KPI, declares:

“The enthusiastic loyalty of the clients is undoubtedly one of the factors that most foster growth, although it does not guarantee it, in general, it is not possible to have a profitable growth without this loyalty”.

2) CRR – Customer Retention Rate

This metric measures the ability of the company to retain its customers. How is it calculated?

The number of clients at the end of the year and the number of clients at the beginning are taken into account. This way we will know what the retention rate is.

Customer Retention Rate (%) = Number of clients remaining at the end of the period / Number of clients at the beginning of the period

For example, taking into account that at the beginning of the year a company has 200 customers. Throughout the year it obtains 20 new ones and 40 stop being it. Therefore, at the end of the year, it has 180 clients.

Customer Retention Rate (%) = 180 clients / 200 customers = 90%

Therefore, the retention rate will be 90%

3) CLV – Customer Lifetime Value

This metric measures consumer behavior for the future. It defines the potential purchase over time. In other words, the expense that a user will have throughout their life cycle as a customer.

For example, if we know that a customer purchases 3 times per year spending 20€ every time for3 years, his CLV will be:

CLV = 3 x 20 = 60€ / year. So in 3 years, it will be 180€

This metric will help us to have a better perspective of the capacity we have to invest in customer acquisition, gross margins, etc.

3)1. CAC: Customer Acquisition Cost

This metric measures the costs of acquiring new customers. If we relate this cost to the CLV, we can establish how much money we can invest in attracting customers. If we invest 60€ in CAC and the estimated annual CLV is 60€ as in the previous example, we will know that the first year we will not have profits. In addition, we will need a large economic investment since the CAC is made at the beginning and we will not get back the investment until the end of the year.


customer experience ebook



4) CPS – Customer Profitability Score

On one hand, it is very important to attract new customers. Although equally important to know what profit each type of customer brings to the company and we already know that not all customers spend the same. Consequently, the company will be able to establish specific actions for each type of client, such as:

  • The loyalty expense to make
  • What customers are the best for cross-selling and up-selling
  • What customers will be better to abandon
  • To calculate advertising expenses

CPS = client expenses during a certain period of time – the expenses of maintaining the client during that period of time.

For example, customer A spends 1500 € per year and customer B spends 900 € for the same period. The average yearly maintenance cost of a client is 45€. Thus:

CPS Client A = 1500-45 = 1455€

CPS Client B = 900 -45 = 855€

Millennials consumer behavior trends

A recent survey done by the Research Pew Center determined that millennials spend more than previous generations. Consequently, this demographic group is more indebted despite being aware of the difficulty of finding a job. This demographic group is aware of what is happening around them both, in the social and ecological perspective.


Millennials are constantly testing new brands and products. That is why brands have to evolve the loyalty concept. They have to seduce their consumers and make them reconnect with the brand.

Buyer motivation

Millennials buy things that make them feel good. Both rationally and emotionally. For example, the TOMS espadrilles brand is a clear example with their “buy one, give one” model. For each pair of espadrilles sold, the brand donates another pair to a developing country. Since 2006, more than 50 million have been donated. This type of buying motivation influences the consumer behavior of millennials.


The vast majority of millennials prefer to spend their money on experiences rather than material things. Brands know it and they have already worked on it. It’s called experiential marketing. This way they seek to forge a closer relationship with their consumers. An example of this is the 29rooms and Refinery organization that organizes events where 29 brands create an interactive space for their clients.


Word of mouth

Despite being always open to trying new products, millennials prefer someone close to recommending a product. They do not believe in the content generated by brands. However, they are governed by the opinions of influencers in social media.

Sharing is caring

Millennials often share in their social networks the products and services in which they are interested in. They like showing their personality and sharing their experiences in an aesthetic framework never before seen. For this reason, brands have to offer their products in an attractive and easy way to share.


The ads that millennials receive must be relevant to their tastes and preferences. This way, they will have greater acceptance when connecting with their target audience. Therefore, brands must do research to offer advertising that interests them.

The attention to all these parameters will allow brands to learn more about this demographic cohort. Do you want to know more techniques on how to increase sales? Then we suggest you read this post

Read post