Unfortunately, you can’t read your customers’ minds—but you can measure what they do. What customers say will often contrast with their behaviors. Customer surveys, NPS ratings and reviews may be useful to a business, but paying attention to the behaviors, actions, and events of users can expose a deeper level of insights.
Over time, customer behaviors reveal patterns, habits, and preferences critical to product improvement. With this product analytics information, you can begin to truly understand what your customers find valuable. If you consistently deliver that value, you have a better chance of achieving goals such as higher conversion and retention.
What Is Customer Behavior Analytics and Why Is It Important?
Behavioral analytics is raw data generated from what customers do (or don’t do) inside product applications, mobile apps, or websites. Purchasing an item, canceling a subscription, or abandoning a shopping cart are all considered customer behaviors that can be traced, measured, and optimized.
This form of data is different from demographic information. Demographic data helps explain who your customers are—behavioral data illustrates what they do. Sure, demographic data has its merits—it shows you who is interacting with your product. Surface-level information like age, location, and gender doesn’t help you the same way behavioral data will.
The best way to understand the effect behavioral analytics can have on your business is by seeing it in action. Below are three use cases where behavioral analytics lead to tangible benefits for the business and its customers.
1. Use Behavioral Analytics to Personalize the Product Experience
Using an analytics tool that tracks behaviors can offer deep insights into how to create a highly personalized product. After your customers have interacted with your product, you can create individual groups of customers based on specific actions. At Amplitude, we call these groups behavioral cohorts.
Some examples of behavioral cohorts might be:
- Customers who watch specific episodes of a TV show directly after subscribing
- Customers who abandon their shopping cart with a specific number of items still inside
- Customers who cancel their subscription but resubscribe after a certain period
Instead of tracking each customer, you can follow distinct cohorts throughout the customer journey to realize overarching trends. As customers move through your product, you can conduct tests and experiments to learn more about what works and what doesn’t. You’ll also discover key insights about critical business goals such as retention, conversion, and customer lifetime value.
NBC Universal measures user behaviors to increase viewership and retention. After separating users into behavioral cohorts, they found an opportunity to personalize the homepage experience specifically for Vizio TV users. Testing with just these users showed a 10% increase in viewership. Once NBC knew their adjustment would work, they made the same homepage change for their entire user base.
NBC Universal further personalized its streaming service based on each customer’s viewing history. With a targeted content recommendation strategy, they experienced double the retention for users after seven days. Customer behavior analytics can also tell you what not to do. When NBC found that a video-rating feature didn’t move any key metrics, they backed off wider implementation, which saved them resources, time, effort, and revenue.
2. Measure Behavioral Milestones to Spur Engagement and Make Predictions
Businesses have a better chance of success when their products become habits—when customers repeatedly engage with their product over sustained periods of time. This longer window of activity across the end-to-end customer journey reveals more behavior trends and gives you a chance to see where those trends occur.
At Amplitude, we call these special moments milestones. Milestones are the events in a product experience where customers turn an important corner—the moment they fall in love with your product, become more engaged, and increase activity. If they hit these milestones, they’re more likely to stay subscribed and invested.
If you can identify these milestones or events, you can tailor your products accordingly to direct more users toward those key moments.
Patreon was able to increase conversion rates by focusing on important behavioral trends and milestones throughout the customer journey. Patreon found that the more prospects entered their “pledge” flow, the more likely they were to make a pledge. Their mission became clear—if they could figure out how to funnel more users to the pledge flow, it would likely result in more business.
The resulting strategy? By blurring creator content, more prospects entered the pledge flow out of sheer curiosity. The theory worked, and the change led to a 2x conversion rate lift.
3. Increase Retention by Focusing on Revenue-Driving Customers
Tracking the behaviors and actions of your most active customers helps you learn why they keep coming back to your product. If your longest subscribers behave in a consistent pattern that differs from the majority of your customer base, this should clue you in on where they find the value.
The first step is to figure out who those revenue-driving customers are. Most apps share three groups of users:
- Power Users: These consumers are the ones who are just as proficient at using your product as your internal teams. They frequently take advantage of every bell and whistle—advanced functionalities other users might not know about are everyday use-cases for these customers. Oftentimes this group gives extensive feedback regarding ways to make the product better.
- Core Users: This is your bread-and-butter audience. Core users know the product well and spend a moderate time tinkering with product features. They’ll provide feedback every so often but won’t reach out about every little opportunity for improvement.
- Passive Users: Customers who stay subscribed but hardly use your product fall into this group. Maybe they had an initial burst of activity when they first subscribed, but now their activity is low.
If you can find out how power users are extracting value from your product, you can incentivize other user groups to follow these behaviors and increase retention.
Calm found that power users who set a daily reminder to use their application had 3x the retention of other users. Prior to the change, the daily reminder product function was buried within the app. Not many users found the feature, and Calm wasn’t aware that users valued it.
Calm ran an experiment with a portion of new users by making the daily reminder feature more accessible. Calm built in a notification screen that popped up after the first meditation session. It simply asked the user if they wanted to set a reminder which many did. By following the habits of their most knowledgeable users, Calm was able to make one small adjustment that led to an incredible increase in retention.
Use Behavior Analytics to Get Closer to Your Customers
In today’s fast-paced digital world, the business that adapts to the desires of its consumers is the one that stays ahead. But following behaviors and tracking patterns aren’t enough—you have to have a flexible mindset open to change and improvement.
No matter how you use customer behavior analytics, prioritize customer satisfaction. Remain committed to solving their problems. When thinking about how to achieve business outcomes, seek to make your customers’ lives easier by watching what they do, and you’ll be rewarded—no mind-reading skills needed.
Continue your learning. Read the Flywheels playbook to discover which customer behaviors drive growth across different product types.
