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How to Use Behavior Analysis to Create Lifetime Customers

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Is it better to have 100 customers buy from you once and never come back, or 20 customers you know will purchase from you multiple times?

While having more single-time customers seems like the better option, investing in customer loyalty has better long-term returns. Research reported in Harvard Business Review states that increasing customer retention by just 5% increases profits by 25% to 95% (depending on what you sell).

Behavior analysis will make it easier to predict and understand why and how your customers buy from you - and how to keep them coming back.

Below I’ll explain how to use customer data to turn one-time customers into lifetime customers. I’ll give you five steps to understand your customer behaviors, and give you five concrete steps to retain those customers for life.

Why is customer behavior data key to a successful business?

In a study conducted by Teradata, only 39% of businesses and organizations were reaping the benefits of analyzing customer data. But those 39% produced higher conversion rates, improved ROI, and the highest levels of customer loyalty.

Related: How to Create (and Target) Custom Buyer Personas

Understanding your customer is the gateway to working with them long-term. When you can predict their behavior, you can then predict their needs and tailor your products and services to them. That knowledge is invaluable.

5 Steps to Using Behavior Analysis to Understand Your Customers

1. Use customer behavior to improve customer acquisition.

There are times you’ll lose customers because their needs have shifted or their interests have changed. Other times, you could lose - or miss out on - a customer because of issues as small as bad website design.

There are three major website metrics you should pay attention to:

  • Conversion rate (percentage of viewers who buy)
  • Page load time (how long it takes your site to load)
  • Customer acquisition cost (how much it costs to get a new customer)

It isn't enough to get customers to buy from you. You have to make sure you’re doing it efficiently, and the easiest way to do that is to look at your (Google) Analytics. How much time are viewers spending on a page? How many pages are they viewing in a session?

Make sure that your website provides the best shopping experience, so that you can move on to focusing on growth.

2. Analyze post-purchase behavior (buying frequency).

Do your customers come back? When they come back, do they buy more or less of what they bought before? How often do they come back?

Analyzing what your customers do after they buy from you (e.g. if they buy from you again, visit your blog repeatedly, etc.) can provide insight on why or what they liked or disliked about your product.

How to Collect Customer Feedback

Some of this you can get from your website analytics, but a great way to get this information is to collect customer feedback. There are many ways to do this, including:

  • Surveys
  • Contact forms
  • Personal outreach, and more

From there, you can address customers’ concerns and build upon their positive experiences.

3. Deep dive into the channels your customers use.

If you’re running your business on multiple devices (e.g. desktop and mobile) or platforms (e.g. Facebook, your website, Instagram), comparing how customers interact with each can provide a lot of actionable information.

Related: 17 Mobile Engagement Tips Essential for Small Business Success

For example, mobile portals may be performing poorly because the app or mobile website is difficult to use or buggy. On the other hand, social media profiles might be reaching more people than your dedicated website, because your audience is more active on social media.

You won’t know which is most effective - or builds company loyalty - until you look.

4. Home in on your bounce rate and exit rate.

Bounce rate is the percentage website visitors that leave your website after viewing only one page. On the other hand, the exit rate is the percentage of viewers who click on a link that takes them away from your site.

Bounce Rate Benchmarks

PC: ConversionXL

Understanding how these numbers work will help you see why your visitors are leaving and how you can fix it. Here’s a quick breakdown from Omnikick:

  • Low Bounce & Low Exit Rates: Your page is great; visitors arrive and convert to customers
  • Low Bounce & High Exit Rates: Your page is okay; it’s interesting but not enough to convert visitors
  • High Bounce & Low Exit Rates: Something might be wrong with your site or who you’re targeting, but when it works, it converts visitors to customers
  • High Bounce & High Exit Rates: Something is probably wrong with your site, and even on its best days does not convert visitors into customers

5. Figure out your lifetime customer value (LTV).

The lifetime value of a customer is how much a customer spends with you over their customer lifetime. If a customer only purchases from you once, the value of that one purchase is their LTV. If a customer purchases from you once per month for 10 years, their LTV is the sum of all those purchases.

Knowing the lifetime value of your customers can help you plan by estimating when and how much you can spend, and what kind of ROI you’ll get.

You can also use this information to focus on improvements for retaining customers, such as working on advertising and marketing, product development, and improving customer experience.

5 Steps to Create Loyal, Lifetime Customers

When your customers like your brand and enjoy working with you, they’re more likely to keep purchasing from your business (and to refer others). Here’s how you make that happen.

1. Touch base with your customers regularly.

It’s easy to lose friendships because you don’t stay in touch, and the same applies to customer relationships, too. It’s important to remind them every once in a while about who you are and what you can offer them. One of the easiest ways to do this is through an email subscription.

Related: 15 Unique Conversation Starters to Drive Customer Communications

Occasional emails and text messages are easy to send, whether it’s to one person or thousands. You can share newsletters or new blog posts, you can simply touch base, or you can them about a new deal or event.

When you reach out, always give your customers a reason to respond or to engage with your website. You can do that by asking an open-ended question:

Hey! How are you enjoying the service?

Or by giving them a next step to take:

Good morning, Jerry! It’s that time of year again - Check out our new line of [products] at www.ourbusiness.com!

2. Keep the relationship fresh and relevant.

Even if your customers are regularly reminded about you and your products, they might not always need them. Or maybe your content doesn’t match their current interests.

It’s important that you stay fresh, which you can do by regularly asking What are my customers looking for right now?

One way to do this is through remarketing. While some businesses blast their customers with the same ads over and over again, remarketing specifically targets customers based on the specific content and products they've already viewed. This makes your ads relevant.

How Remarketing Works

PC: WordStream

3. Listen to and collaborate with your customers.

If you give customers the chance to provide feedback, you’ll be surprised at how often they’re willing to give their honest opinions about your products or services.

A great way to engage your customers and keep them for life is to simply talk to them. Actively listen to what they have to say, bounce ideas off of them, and collaborate with them to improve your customer experience and product.

You can do this via surveys or interviews, and there are tools like User Testing that can help (specifically with your website).

4. Get active on social media so your customers can reach you anywhere.

Social media has made it easier for customers to reach out to businesses. Because of this, businesses have to step up their game to differentiate themselves from all the other social media accounts out there.

There’s a lot you can (and should) do to keep up your relationships on social media, so please refer to the Related guide below.

Related: 8 Steps to Drive Traffic to Your Website Through Social Media

5. Show your appreciation and reward your customers.

Many large business employ loyalty programs - and for good reason. Loyalty programs are a surefire way to retain customers by rewarding them for staying with you. You’re actively giving them an incentive to keep working with you.

According to Entrepreneur, one of the best ways you can increase customer loyalty is to establish personal relationships with individual customers. Use customer data analysis to help you do this.

Target loyal and highly engaged customers with promotions relevant to items they’ve bought before, or offer discounts during periods they’ve previously made large purchases.

Final Tip for Using Behavior Analysis to Increase Customer Loyalty

A lifetime customer is a customer you only need to chase once. Using customer behavior analysis, you can better understand your market, turn your customers into loyal customers, and substantially increase revenue.

Related: How to Write Professional Text Messages Your Customers Will Love