5 Ways to Understand Customer Behavior

When you understand customer behavior, you can gain a huge advantage in recruiting and sales. The basis behind all good recruiting and marketing strategies are a combination of knowing your consumer and grasping what avenues to use to get to them. When you comprehend how your customer thinks, you can then use data and smarter tools to your advantage. Below we dig into five ways to understand customer behavior that will help you recognize how and why people act and think the way that they do.

1. Confirmation Bias

Confirmation Bias is arguably the most represented cognitive bias seen at work. It is the propensity to seek out and highlight information or ideas that support your original opinion or belief. 

Example: I believe that all dogs are absolutely amazing and all cats are mean. Accordingly, I will make sure to point out every dog that is loving, while also drawing attention to the cats who ignore you altogether. I will send you spam articles about how dogs show unconditional love and cats hiss at you when you try to pet them. I completely disregard the reality that cats can be cuddly and affectionate as well because that doesn’t support my belief. 

Industry Example: I believe the current market wants an app to notify them each time they have a message. After interviewing numerous users, customer feedback suggests that a significant majority are overwhelmed with notifications and would like one notification each day. Because I had the original opinion that the marketplace wants notifications each time, I will ignore the facts and highlight the few customer interviews that perpetuate my belief.

2. Negativity Bias

People tend to give greater importance to negative memories than positive ones. If a team makes great progress on a project but has a small issue, there tends to be a considerable amount of focus on that small setback. Don’t be confused, it is good to identify mistakes and think through ways to fix or proactively prevent them, but don’t negate all of the really good things that are happening as well. 

Harvard Professor, Teresa Amabile, asked 200 professionals to journal about events that stood out to them during the day for several months. After analyzing over 12,000 entries, Amabile found that the effects of setbacks were three times more powerful than the effects of positive progress. 

Pay attention to those small wins! It will limit disappointment and encourage a positive business culture. 

3. Fundamental Attribution Error

We tend to blame a person’s behavior on internal characteristics such as personality and disposition rather than external factors. Say a co-worker is late to the 8am Monday meeting three times in a row. We could fall into the fundamental attribution error trap and say that the co-worker is lazy and doesn’t value other people’s time OR we could look at external factors that play into the scenario. This co-worker may have kids at home that need help getting to school on Monday mornings. Pushing back the meeting 15 minutes would solve that problem. It’s possible they have had car trouble, forgot to set the alarm, there was traffic, etc. Although we don’t want to believe every excuse, make sure your beliefs about a person’s behavior are formed from both internal characteristics and external factors.  

4. Bandwagon Effect:

The more individuals that believe in or take part in something, the more others will join them. Other common forms of this effect are known as conformity and groupthink. When pitching to large groups or employing a company-wide initiative this should be top of mind in order to understand customer behavior and team performance.

Solomon Asch conducted an experiment where he placed one participant in a room with seven other actors. The participant believed the actors were fellow participants. They were shown two cards. The first card with one line, and the other card with three lines (all different lengths but one of them matching the length of the line on the first card). They were to each, one-by-one, say out loud which of the three lines on the second card matched the length of the line on the first card. They did this process 15 times. Sometimes the actors selected the correct line. However, 11 out of the 15 times the actors identified a line that clearly did not match the length of the first card.

The experiment desired to test the participant’s conformity to the group. Would the participant answer the same as everyone else, even when it was clearly wrong? Or would they stick to the correct answer? Astoundingly, 75% of the participants gave at least one incorrect answer, the one all the actors picked! 

Jumping on the bandwagon can stifle innovation. Here at City Innovation Labs, one of our core values is Throw Bad Ideas At the Wall. Don’t be afraid to stand out among the crowd. Chances are, your idea will spark new ideas and break others out of their bandwagon bondage! 

5. Self Fulfilling Prophecy:

When you believe or expect something will happen, it is more likely to come true and behaviors will align to achieve that belief. 

People’s beliefs guide their actions and greatly affect the outcome. If I believe the team will fail to deliver a project, my thoughts, behaviors, and interactions will display that. Furthermore, if I show this disbelief, the team will also become skeptical and their actions will be affected. This will likely result in an actual failure to deliver the project successfully. However, what is great about the self-fulfilling prophecy is it also works the other way! If you believe the team will deliver the project perfectly and on time, it significantly increases the likelihood of success. 

The placebo effect is a great example of a self-fulfilling prophecy. There is a classic experiment where a group of people is told they will receive a pill for their symptoms. Half will get real medication and half will get a placebo pill. Many of those who were given the placebo pill reported relief from their symptoms, even when there was no actual treatment. Therefore, it is the person’s belief that affects the outcome. 

In Conclusion

To understand customer behavior is to truly know your audience, your team, and your clients. It is important for team-building, customer discovery and in developing sales and marketing initiatives. We all talk about customer personas and who our customer is, but this really clarifies how they think and why people behave the way they do. Socio-psychological behavior is essential for all departments and all companies. Moreover, understanding your team can be one of the best things you can do to help the team succeed.

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