How To Conduct a Customer Behavior Analysis

Customer behavior analysis helps you understand how customers act when interacting with your business. By identifying and acting on customer behavior trends, you can create a better customer experience. 

Before switching over to Shopify and gaining access to built-in analytics, Island Creek Oysters had no idea they had a high cart abandonment rate. 

On an episode of Shopify Masters, CEO Chris Sherman says the data challenged his team’s initial assumption that customers willing to spend on premium oysters wouldn’t care too much about shipping costs. 

“But people get to the cart and they see the shipping is pretty significant as a percentage of the cost,” Chris says.

After Island Creek Oysters changed their pricing model and added shipping into the cost of the product, cart abandonments all but disappeared, and revenue tripled. 

In this article, learn how customer behavior analysis can benefit your brand and how to perform your own evaluation.

What is customer behavior analysis?

Customer behavior analysis, or consumer behavior analysis, is the examination of how customers interact with your brand throughout the entire customer journey, from initial discovery to post-purchase. 

Analyzing customer behavior involves studying both quantitative data (such as purchase history and average order value) and qualitative data (like customer feedback, reviews, and social media sentiment). Some other categories of customer data businesses use include:

• Demographic data
• Psychographic data
• Behavioral data
• Transactional data
• Engagement data

Customer data lets you identify patterns, predict future behavior, and adjust your offerings and marketing strategies to improve the customer experience. 

Benefits of customer behavior analysis

Customer behavior analysis matters because it helps you understand the actions consumers take as they shop for, purchase, and use your products or services. Here are a few ways customer behavior analysis can benefit your business:

It helps you align products with customer needs

Customer behavior analysis can help you create better products that align with your audience’s needs and wants. 

When produce subscription service Odd Bunch launched, customers could create their own boxes of imperfect groceries, and the items were individually priced. When sales stagnated and customers stopped subscribing, the company analyzed customer behavior and feedback and realized that having to individually select and pay for produce felt overwhelming to shoppers.

“The consumers were communicating that they’re not very happy with the product,” says founder Divy Ojha on an episode of the Shopify Masters podcast. “They have to go in and choose exactly what they want each week. It feels almost like a chore. That was mind-blowing to me, because my hypothesis was exactly the opposite.”

The company pivoted, letting customers choose between a few size and combination options. Customer satisfaction improved and sales picked up. 

It allows you to create more resonant messages

Customer behavior analysis can tell you what messages your audiences find most appealing. 

Since Rocco’s mini fridges are expensive, purchasing requires careful consideration. This longer pre-purchase window gave the brand time to test many different messages over a long period and see what their customers preferred. 

Rocco tested several ads and looked at the conversion rate, hook rate (the percentage of people who watch at least three seconds of a video), and click-through rate to land on the most effective messaging. Their analysis showed them that messages about the features of the refrigerator did not appeal to their customers as much. 

“Leading with messages that are a little bit more lifestyle-centric, emotive, or [focusing on] our solution to certain problems you might experience in your home are the things that work best, versus dialing in on exactly what the product is, what it stores, how it works,” says cofounder Alyse Borkan on Shopify Masters. 

Working with this information, Rocco created ad and website copy that highlights how the fridge fits into people’s lives. For example, their homepage spotlights that the fridge will change the way you host, with copy that reads: “The life upgrade you didn’t know you needed, but won’t be able to host without.” 

It helps you implement better processes 

You can use behavioral data to build better processes, as was the case for dumpling and noodle brand MìLà. 

As the brand was learning how to ship frozen items to customers, they worked with a third-party logistics (3PL) company. Soon, they started receiving customer complaints about receiving the wrong products and their food arriving melted. 

In response, MìLà proactively reached out to customers whose deliveries took more than three days to arrive to find out whether the products arrived frozen. This information allowed them to recalibrate how much dry ice they needed for further deliveries, and to revamp their warehousing and shipping processes. 

MìLà also opted to address their shipping strategy on their FAQ page, explaining that they use “temperature-stabilizing dry ice” and wrap it in an insulated liner. If shipment delays affect quality, the products will be reshipped. 

How to conduct a customer behavior analysis

1. Segment your audience
2. Collect data
3. Look for behavior patterns
4. Brainstorm and implement improvements

Here’s how to perform customer behavior analysis to better understand your customers, then use that knowledge to improve your marketing strategies:

1. Segment your audience

One way to start your customer behavior analysis is to segment your audience. This step can show you if an issue affects your entire audience base or just a particular group.

Segmentation can also help you prioritize which issues to tackle first. For example, if you are dealing with several problems for different segments, you can start by addressing what affects high-value customers because they are your biggest spenders and a negative experience for them will have the largest effect on your revenue. 

When you access Segments in your Shopify admin, you can group customers by their purchasing behavior, such as customers who are no longer active, have a high return rate, or who have purchased more than once. 

To make this step more effective, you can reach out to these customers and ask them questions so you can understand their behavior. Create an inline form (which doesn’t appear as a pop-up) on a specific landing page on Shopify Forms and send it to different segments via email. Since Forms connects to your Segments, you’ll be able to create more focused groups based on their responses. 

Segmentation may be most useful to bigger businesses who have a lot of data to filter. Smaller brands might be able to skip this step if they don’t have a lot of variety in their customers’ behaviors. 

2. Collect data

Customer behavior analysis is stronger when you can collect different data points about how customers interact with your brand. 

Include quantitative metrics (such as purchase history, cart abandonment rates, average order value, and click-through rates on emails and ads) and qualitative insights (such as customer feedback, support ticket themes, and social media comments). 

Here are a few sources to start with:

• Website analytics: Website analytics tools like Shopify’s analytics and Google Analytics can track browsing patterns and help you map the customer journey toward a purchase. With Shopify’s analytics, there are different acquisition reports, behavior reports, and custom reports that can give you specific data on your customers. 
• Customer relationship management (CRM): CRM systems document customer interactions and purchase and support history so you can build customer profiles. If you have a Shopify store, you can use the Customers section of your Shopify admin to track similar data.
• Post-purchase surveys: Send a link to a survey in a post-purchase email to gather direct feedback from customers when your brand is top of mind. There are several survey apps on the Shopify App Store you can use. 
• Ads: Digital and social media advertising metrics tell you what types of messaging are most effective. If you use Shopify, you can download the TikTok app to add the TikTok pixel or the Facebook and Instagram app to add Meta Pixel; this lets you analyze the performance of your social media ads. 
• Social media:Social listening tools can give you a better idea of customer sentiment and how your brand comes across on social media platforms. 
• Customer service: Customer service data helps you identify pain points with your products, accepted payment methods, shipping options, and more. 

3. Look for behavior patterns

This is where segmentation could come in handy. By separating your audience into different segments, you can identify customer preferences among different groups. 

However, segmentation isn’t the only way to look for patterns. You can also use Sidekick, an AI assistant built into your Shopify admin. Sidekick has full access to Shopify's analytics and customers and can help you parse through data and find patterns based on plain-language requests. 

You can access Sidekick from any page of your Shopify admin. Click on “Sidekick conversation” at the bottom left-hand side of your screen to start a conversation. 

Some brands use AI predictive analytics, which leverage machine learning models, to look at current data (like buying history) and predict customer behavior in the future. AI predictive analytics can then translate raw data into actionable insights. 

4. Brainstorm and implement improvements

Once you understand your customer behavior data, you can brainstorm solutions, then implement and test those solutions.

For example:

• If you have a high cart abandonment rate, you might try offering free shipping, like Island Creek Oysters did.
• If you receive a high volume of customer support tickets related to shipping, you can change the way you ship your products, like MìLà did.
• If you lose subscribers, you can experiment with different product bundling options, as Odd Bunch did.
• If ad performance isn’t where you’d like it to be, you can try ad copy that is more lifestyle-focused rather than product-focused, like Rocco did.

An AI tool like Sidekick can also help you brainstorm solutions for your particular store.