Customer Management

Approaches to analyzing customer behavior and identifying patterns

In marketing, customer management strategies should focus on providing experience quality to the customer (Arcadian et al., 2017). To apply the best customer management strategies, businesses need to analyze the different approaches to customer behavior then identify the best patterns to employ. Customer behavior can be divided into psychodynamic, behaviorist, and cognitive categories.

Cognitive approach

The cognitive approach mainly focuses on understanding the consumer’s ability to process information. A mental approach setup provides customers with plenty of data that needs to be understood, analyzed, and processed. The result of the processed information leads to the customers behaving in a certain way. This describes their consumer behavior. A cognitive approach to consumer behavior acknowledges the impact of both environmental and social theme parks in processing information from the consumers. The introduction of the stimulus organism response model greatly assisted in the development of cognitive psychology. A cognitive approach to analyzing consumer behavior helps to ensure that a product remains relevant. (Eisingerich A. et al., 2016)

For example, in March 2020, when the covid-19 Disease was declared a pandemic, there was an unexpected economic downfall globally. Statistical organizations did the year forecasts and warned both companies on random hard economic times. The research done by this organization and institutions assisted most companies in winning their customers of an expected rise in prices of commodities shortly. Cognitive approach to consumer behavior could be visible in how the customers responded to this news. Most customers worked with a lighter budget and reduced their spending habits to two more affordable ones in expectation of a rough economic time throughout the year until a time when the pandemic would be over. Cognitive consumer behavior can either be analytic or prescriptive

Analytic model

Analytic models identify diverse influencing factors to consumption and link these with the relationships between the elements and consumers' decision-making. These models cover a wide range of factors and approaches and can therefore be referred to as the grand models (Kassarjian 1982)

Prescriptive models

This model provides an outline of the framework that explains how to organize the consumer behavior structure (Moital 2007)

These models provide a step-by-step order in which elements should appear and be followed in any approach. It explains the guidelines that should be followed given factors. The two prescriptive models that have been widely used as the theory of reasoned action (Fischbein Andajzen 1975) and the idea of planned behavior (Ajzen 1985) (Bray J.P 2008)

Psychodynamic approach to consumer behavior

This approach is linked to the ideas and theories of Sigmund Freud (Backhaus et al., 2007). He argued that behavior is not based on environmental stimuli or cognitive processes but rather on fundamental internal forces.

This theory explains humans' functioning based upon the interaction of drives and forces internally within a person, mainly when a person is unconscious and between the different personality structures. The psychodynamic approach views the unconscious mind as the primary source of human behavior.

to affect customer behavior in a psychodynamic approach, companies make marketing schemes such as advertisements robust, convincing, and powerful enough to affect the customers desire to want a product but also meet the need to look acceptable in the society

For example, individuals who are cold to satisfy a need in their Adulthood could not manage to grow up, primarily due to financial constraints. Upon growing up, they may need to consume more of the products and be drawn into more expensive labels.

Behavioral approach

This is an approach that is applied as the consumer purchases a product or service. Whether or not the consumer will purchase the product again is dependent on the outcome of the use of the product or service they are buying. (Javornik et al 2012)

For example, if a supermarket sells a drink on offer and a customer purchases the drink. the decision of the customer on whether to buy the drink or not again or in the future is dependent on the experience of the glass on offer (Mereu 2011)

This approach is particularly beneficial to sales companies as they can anticipate consumers' behavior and habits. Studying this behavior, the companies can make advertisements that influence their target audience (Roach 2003)

Approaches to segmenting customers and identifying target groups

Segmentation of customers begins by identifying the potential consumers of the product. Segmentation allows tell us to narrow down their focus to the most promising groups within a population for the purchase of their products (Moliner-Velázquez, et al 2021). The most effective marketing starts with a focus on segmentation. That is, acknowledging that various groups of clients have distinct demands and, as a result, require a tailored marketing strategy. As a result, segmentation is essential components of every effective marketing plan. There are three approaches to segmentation: firmographic, behavioral, and needs-based.

Customers can be categorized in a variety of ways. Individuals can be classified demographically based on their gender, age, income, where they reside, their views, and potentially even their psychographic profiles. Business clients can also be classified, albeit not always in the same way. Their demographic features may be categorised based on the company's size, industry vertical, number of years in business, geographical location, whether it is a private or public operation, and so on. These firmographic factors are essential since they are clearly identifiable features that are frequently a strong indicator of requirements (Eisingerich A. et al., 2016).

Behavior can also be used to predict requirements. Customers that switch suppliers frequently utilize several providers, or buy infrequently may all have demands that are reflected by these patterns of behavior. Above all, we are attempting to identify client categories with varying demands so that we may adapt our goods and services to better meet their needs. Furthermore, if we can categorize clients based on their requirements, we can engage with them in ways that will connect with them and urge them to buy more from us.

Consumers and potential customers are segmented using a range of questions developed by researchers. Some of these questions are designed to segment consumers while they are choosing a supplier in the first place, while others are designed to demonstrate how they may be segmented in terms of happiness and loyalty once they have become customers (Eisingerich A. et al., 2016).

Market research is not required for segmentation. Some businesses rely segmentation on previous knowledge — that is, categorizing consumers based on internal perceptions of their needs. Segmentation methods are frequently based on a combination of market research and intuition.

Customer retention practices

Customer retention is the act of keeping existing customers engaged with a brand so that they return to do business with the brand again and again.

It’s an important part of a complete customer lifecycle marketing strategy, as it brings customers back into the purchase funnel once they have completed their initial buyer’s journey. Retention marketing includes the tactics and customer retention strategies that brands use to build trust and customer loyalty, stand out from competitors, stay top of mind, and ultimately drive buyers back to their business again. (Weinstein, A. 2002). Brands with high-quality products and services, as well as excellent service and user experiences, do more than merely attract new consumers. They retain their current consumers. Consider these 12 client retention tactics and examples from top businesses to understand how they do it.

The value of client retention cannot be overstated. While many businesses focus on client acquisition, they cannot overlook the importance of retaining existing consumers. In reality, selling to current consumers is simpler and less expensive, and it frequently leads to higher-priced transactions. Brands have a 60% to 70% probability of selling to existing customer vs a 5% to 20% chance of selling to a new client. It might cost up to 5 times as much to recruit a new client as it does to maintain an existing one. Existing customers may spend up to 67 percent more than new customers on goods (Eisingerich A. et al., 2016). Brands may spend less and sell more by marketing smarter, not harder, by using customer retention tactics.

For example, making consumers fall in love with your brand is one method to persuade them to return to your business. When customers connect with your brand, vision, and mission, they are more likely to be loyal. Share your brand's narrative openly and plainly, so customers can learn to know and love you. Secondly, Buffer, a social media marketing provider, is a prime example of this customer retention strategy. Their Inside Buffer blog discusses operations and changes within the organization to make customers feel closer to the brand. Canva’s Design School is a great example of this. The school provides resources, how-to guides, and step-by-step videos that help customers use their product as well as hone their graphic design skills (Myles, M. 2015). When a consumer purchases from your business, you gain insight into their desires and requirements. Put that knowledge to good use to increase client retention. Create a list of suggestions for other goods the client might be interested in based on their previous shopping behavior using the insights. Log in to your Amazon account to see this customer retention example in action. Amazon presents lists of suggested items and suggestions on the welcome page, directing users to the things they are most likely to want, need, and purchase.

Adding value to customers

Adding values to customers refers to delivering a product or service to them that has been designed specifically to their satisfaction or to solve their problems. The delivery is done in a manner that demonstrates that a company understands what the customer values most.

Having items on sale and selling items at a discount is not always a solution to retaining customers or adding value. What matters most is the timing of these discounts and sales. For example, a client or customer would benefit more if a deal was granted to them on their birthday rather than during any random weekday. Businesses need to know when what is most suitable to their customers would be the most appropriate way to add value. Understanding your customer is key to adding value to them. (Myles, M. 2015). Businesses should have a flexible approach two interacting with their customers. The ability to have flexible policies for customers is dependent on a company having relevant data about its customers.

Adding value to customers enables them to buy more from a business because of the overall value proposition that is offered to them. They mostly experience this from the trades when they receive the benefits of a product or service. The ability to add value to our customers is dependent on whether the company or business has a deep understanding of what their customers want, needs, and values most highly so that they can create that value. (Singh S. 2015)

Another example is developing a brand - a reputation for quality, value, and so on that people are willing to pay for. Nike trainers are significantly more expensive than Hi-tec, despite the fact that the production expenses per pair are probably very comparable!

Providing good service — providing high-quality, attentive personal service might be the difference between obtaining a high or a medium fee.

Product features and advantages - for example, more capability in different versions of software might allow a software vendor to charge greater prices; different models of automobiles are designed to accomplish the same result.

Offering convenience - clients are frequently willing to pay a little extra for a product that they can get right away or that saves them time.

Customer-centric organizations

A customer-centric organization's latest premiums on the consumer based on their experiences with the product or services. (J Direct Data Digit Mark Pract 2000) Most of the high-end companies such as Amazon include customer-centricity as a central part of their mission. (Rajagopal 2012)

Examples of a concentration on customer satisfaction include Starbucks, Amazon, Patagonia, and Zappos.

In Starbucks, efficiency is among the highest of served customer satisfaction and retention strategies that are applied. Starbucks has upgraded its marketing department to develop strategies that offer better efficiency and effectiveness in service delivery. The company has ensured efficiency without sacrificing the quality of their services and products through the year Loyalty Program that allows members to have access to discounts and offers in-store pickup services. This approach is beneficial to customers who avoid inconsistent timing due to long queues in the shops. This Loyalty Program at Starbucks attends to the needs of most of their customers who are on the go. The approach has made Starbucks be the most popular app compared to other significant restaurants offering the same products and services. Customers prefer using the Starbucks loyalty app.

When engaging in customer satisfaction and retention activities, Patagonia builds trust via transparency to their customers. Recently Patagonia has gamed up its marketing efforts to show off its environmentalist mission statement. More young adults have developed an interest in sustainability, and the company has used this to their advantage to express their Desire for Environmentally friendly goals for decades. Trust is difficult to earn, especially from the youth in the current age. This has made Patagonia talk about its sustainability efforts and be transparent about its production process to the public. This transparency has the customers whose goals and missions align with Patagonia to be more attracted to the company and purchase their goods and services.

Amazon personalized messages to their customers through the website or app. depend on the search history of a customer, the app can tell what goods and services that the customer needs at a given time and keeps on sending recommendations to them, especially when there is massive success of Amazon sales. Personalized recommendations on Amazon's website give them 35% of their total sales. The suggestions are not only based on the search history but also on the items in the cart customer reviews on the product and the items purchased by other customers who bought a similar outcome. The company uses a complex algorithm to create immense value for Amazon while making a shopping experience for customers more convenient.

Recommendations

One of the companies that need to improve their approach to customers is Walmart. The company has experienced a range of issues with customer delivery services over the years. However, there are various ways in which they can improve their approach to customers, such as, first. Introduction of a new app or improvement of the already existing one which gets out of service most of the time they're by inconveniencing their customers

Secondly, increasing the rates of discounts on products to reduce the very high cost that customers have to pay compared to other service providers including an effective Loyalty Program on sales.

Continue your exploration of Current Research in Mass Communications with our related content.

References

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