The Complete Guide to Understand Customer Psychology

The Complete Guide to Understand Customer Psychology

Written by Neil Patel & Ritika Puri

Chapter One

The Mind Of Today’s Consumer

In the early days of online marketing, businesses could get away with a lot of shady tactics. It’s almost surprising. Between overwhelming email spam, free iPod scams, and flashy “surprise banners”, consumers were continuously bombarded with obnoxious, over-the-top ads.

The scary thing? These tactics worked. Consumers clicked on sketchy banners hoping for — who knows what.

Flash forward to today. Consumers are wiser than ever. They’re still bombarded with aggressive marketing messaging, but they are empowered with anti-spam and ad blocker tools to keep the BS to a minimum.

It’s safe to say that the days of shady, aggressive marketing are over and done. For good. Hammer the nail in the coffin, and don’t look twice.

More so than ever before, marketing today is about consumer empowerment. This chapter explains why.

Driven By Research

Rishi Dave, Dell’s executive director of global marketing hits the nail on the head when he says that today’s consumers are 60% through their buying journeys by the time that they reach out to company sales reps.

Today’s consumers have a wealth of resources at their fingertips. No matter where they are in the world, they can access an infinite number of customer reviews, blog posts, and competitor websites.

Even if they’re standing in the middle of your brick and mortar storefront, far away from a computer, they can still place orders — right then and there — from your competitors.

Your brand could fight it — and probably annoy a lot of customers.

The better option is for your brand to fully support this natural consumer behavior. Just think about it logically. If your consumers are looking for information but can’t find it, they’ll feel frustrated. If your brand gives them access to absolutely everything they need to make a decision, they’ll be thrilled.

That perspective is one of the biggest drivers of the KISSmetrics Blog. If you’re unfamiliar with KISSmetrics — the company provides web analytics software for businesses who are trying to collect user level data. This type of information is extremely valuable for engineers, marketers, and small business owners.

Needless to say, web analytics is a complicated field, and there’s significant diversity in expertise levels. KISSmetrics sees quite a bit of that diversity with customers ranging from beginning to advanced-level analysts.

KISSmetrics’s support team receives a number of questions about KISSmetrics and web analytics in general.

That’s why the KISSmetrics Blog was created ­— to teach audiences about web analytics, marketing, and technology. The content is peer-generated, which means that information comes from experts outside of the KISSmetrics brand.

In addition, KISSmetrics hosts webinars and publishes how-tos for customers who are learning to use the software for the first time. The idea is simple — people don’t want to waste time sitting on a customer support phone line. They’d rather self-direct their own research and learning.

KISSmetrics aims to make its user experience positive, delightful, and pain-free.

It’s not enough, however, to simply produce content. With the Internet, people have infinite resources at their disposal. When online audiences want information, they want it now in the exact moment that they have a question.

That’s why it’s so important for brands to make their content accessible and available — in the exact moment where their customers and prospects have questions.

Brands can accomplish this goal in two ways:

  • When pushing information, make sure that you’re targeting the right stage of the conversion funnel. This technique requires some level of prediction and intuition about what decisions your buyers are making and when. If you haven’t heard the term conversion funnel before, don’t worry — we’ll get to this concept later in this chapter.

  • The second approach that brands can take is to be available where users are asking questions. That means optimizing your website for SEO-friendliness, being available on social media, answering questions on Quora, and LinkedIn, etc. When people ask questions, they’re generally turning to search engines. Make sure that your answer — whether it’s a blog post, guide, or whitepaper — is front and center.

Information should function as a pull mechanism to find the information they need, just when they’re looking for it.

Brands need to make sure that they’re creating and distributing the right information. If you publish a guide on a topic that consumers are already educated about — but don’t focus on the supplemental details that they’re actively seeking (and can’t find), you’ll end up with the equivalent of nothing.

Tailor what you create to the specific needs of your audience. The guide that you’re reading is an example of this concept — it was produced because people asked for it.

You probably have an idea of what your customers are seeking out. If you don’t, now is a good time to get the process started:

  • Look at your Google Analytics and Webmaster Tools data to see what users are looking for when they end up on your website.

  • Talk to your customers to learn about their needs and interest. Meet up in person, or get them on the phone. Have an open-ended conversation about how you can provide better customer service.

  • Talk to your sales reps, account managers, and customer service teams about common questions they’ve been receiving. You can create a knowledge center (like Eventbrite’s) to answer some of those questions.

You could easily talk about anything with your customers Instead of overwhelming yourself, pay attention to the most common patterns in human psychology. Learn — exactly what — motivates your customers and prospects by reading between the lines of your conversation. Being able to clearly identify what customers care about will help you navigate this process.

Strong Filtering Systems

We can process information at lightning speed. We have impenetrable noise blockers that keep us focused on the information that we want and need. We’re natural skeptics, and we can identify BS from miles away.

Although we’re bombarded with noise, we’re constantly on the lookout for valuable information. We’re constantly looking to learn and grow in our careers. We want to be entertained, we crave opportunities for brain breaks, and we love brands that can make us laugh.

We are constantly bombarded with aggressive marketing messaging and sales pitches — and we’re trained to power through the noise. We’ll hit the ‘delete’ button and never, ever look back.

Consumers filter information with both their rational and emotional brains. Brands are in the strongest position when they can appeal to both mindsets. Success starts with understanding what motivates us as shoppers.

Top Motivations

Readers of this guide are equal parts consumer and marketer. It’s sometimes hard to separate these two components of our identities. We think of great marketing as an art form – when we see something done well, we think it’s awesome.

The thing is, while we perceive the world through Internet geek goggles, the general population doesn’t. Most of us aren’t marketers. We’re small business owners who started using the Internet in our ‘50s. We’re surgeons who spend only 5% of our lives in front of the computer. We’re students who’d rather be online to kill time, not work.

Here are the key motivations that influence consumers today:

Personal Gain

We care about products, services, and businesses that add value to our lives. We hold on to our time and money closely and are unwilling to give up either for a sub-part product or quick fix. We need to see a clear and compelling benefit.

Questions consumers are asking:

  • What’s in it for me?
  • What will I get from using your product?
  • What product will give me the most for the money and time that I’m putting in?

Here is how ModCloth, a women’s fashion retailer, appeals to personal gain.

Delight

Life is stressful, and we’re generally feeling bored, tired, or somewhere in between. We’re usually busy running errands, working our tails off, or dealing with our kids. Moments of pure joy are few and far between — but we actively seek them out. When we find those moments of pure happiness, five minutes can feel like five amazing hours.

Questions consumers are asking:

  • Do I have to go back to work?
  • How did I get so lucky?
  • Is it possible to feel this way forever?
  • How do I make this moment last?

ModCloth inspires delight through its user style gallery, where customers can upload photos of their favorite trends. The experience is fun for ModCloth’s audience (‘20-something women) and directly funnels into the company’s business model -- clothing sales.

Social Influence

We trust the perspectives of our friends and family. We’d rather work from personal recommendations than start our product searches from scratch. Even if we’re independent from the ‘crowd’, we still crave the guidance of our peers and mentors.

Questions consumers are asking:

  • What products are my friends using?
  • What would my best friend think of this?
  • Would my mom give this the seal of approval?
  • How do I know if I can trust this brand?

When ModCloth tells you to find their brand on Facebook, you’ll see which of your friends have done the same.

“You”

There’s something about the word “you” in marketing that helps brands build an instant rapport with their audiences. Right off the bat, the word shows that you’re invested in your audience.

Questions consumers are asking:

  • Does this company care about me?
  • Does this company understand me?
  • Has this company designed this product for me?

That’s why ModCloth uses the word “you” to make its products about its customers:

Familiarity

People are driven by their past experiences. Even when we’re looking to try something new, we rely on our memories to make the right judgment calls about what we should and should not buy. If we see an ad, over and over, for a product we’ve been eyeing for a while, we’ll be more likely to buy it.

Questions consumers are asking:

  • Is this a product that I’ve wanted in the past?
  • Is this something I’ve been thinking about buying for a while?
  • Where have I seen this before?

Repetition is the heart and soul behind ModCloth’s Facebook and remarketing campaigns. They’ll feature items that their customers and prospects have already been browsing.

Trust And Safety

The Internet has a bad rap for being completely sketchy. Even if your company is legitimate, users are going to questions your motives. Until you prove otherwise, you are — in their eyes — a spam site.

Questions they’re asking:

  • How do I know that this site won’t rip me off?
  • How long has this company been around?
  • Is my personal data safe?
  • Do I feel ok giving these people my credit card number?

Take a look at how ModCloth builds trust on its checkout page with security guarantees and badges.

InVision, an app to help designers create high-fidelity prototypes, builds trust with prospects by showcasing testimonials from existing clients.

The Conversion Funnel

As a marketer or business owner, you’ve probably heard talk of “conversion funnels” or “sales funnels”. If you’re familiar with this concept, feel free to skim over this section. If you’ve never heard the term before, keep reading — it’s the most important concept in marketing.

When users visit your website, they may not be ready to make an immediate purchase.

Image Source: Smart Insights

This idea can feel unsettling for business leaders — when people come to your website, you want to see an immediate transaction. It’s human nature to seek instant gratification. This type of marketing is called direct response, and it always follows the same pattern — a user comes to your website and completes a transaction. The path to conversion is always a direct line.

As with many things in business, conversions are not always that simple. Paths to sale can be windy.

Image Source: Ion Interactive

That’s where the marketing funnel comes in. It’s a breakdown of the full journey that prospects take before they become paying customers.

Top Of The Funnel — Brand Awareness

Users are in exploratory mode, and they’re definitely not ready to buy. At this point, they are gathering information, researching options, and learning about your brand. To use a cheesy analogy, think about it like a first date. You’re not ready to commit to a marriage, let alone a second date.

Most users at the top of the funnel aren’t going to do business with you. That’s why marketers use the funnel analogy — as users progress through the different stages, the number of interested buyers will become smaller and smaller.

Image Source: Dom Lane

To capture prospects at this stage of the funnel, you need to cast your net wide using blog posts, freebies, e-books, offers, and deals.

Here is an example of a top-of-the-funnel marketing program from LearnVest, a platform that helps people manage their finances. LearnVest publishes content to build brand awareness and build a subscriber base. The revenue generator, however, is not the blog — it’s product conversions.

Your goals and success metrics will be:

  • Web traffic
  • Email list sign-ups
  • Average time on website

Middle Funnel — Consideration

Your company and product won’t be everybody’s cup of tea. Only a proportion of your prospects will make it to this funnel stage — and that’s okay.

At this point in the funnel, prospects are evaluating your brand and deciding whether they want to do business with you. They’re far from committed to a decision, but they’re interested in learning about your brand.

As the following infographic from Dom Lane points out, marketing starts with casting your net wide (the top of the funnel). The next step is to transform those inbound clicks into leads — a small proportion of whom will become paying customers.

Your goals and success metrics will be:

  • Building leads
  • Getting prospects to call your sales reps
  • Starting 1:1 conversations and building relationships
  • Generating free trial sign-ups

Bottom Funnel — Conversion

At this point, some of your leads will want to become paying customers. They’ll be committing to deals, buying your products, and shopping with your company again.

The time that it takes to reach this point will vary based on your company’s business model. For e-commerce businesses, the path tends to be more direct and much shorter — buyers will spend less time in the consideration stage. For client service organizations, buyers will spend a significant amount of time in the middle of the funnel.

Your goals and success metrics will be:

  • Number of transactions
  • Average order value
  • Starting 1:1 conversations and building relationships
  • Generating free trial sign-ups

Post-Conversion

Don’t leave your happy customers hanging. Repeat purchases can be a significant source of revenue for your business. Build a community around your customer base, encourage social sharing, and always find ways to welcome your existing customers back. Email marketing is a great way to re-engage past and current customers.

Your goals and success metrics will be:

  • Repeat purchases
  • Lifetime customer value

B2B Vs. Consumer Marketing

B2B markets to individuals acting on behalf of organizations, while consumer marketing targets single individuals who pay for their own transactions.

boundless.com

Marketers will typically separate their efforts and audiences into two distinct groups: B2B and consumers. B2B marketing means that your customers are fellow businesses. Consumers are customers who are buying products for their home, families, and pleasure.

The truth is that the line between B2B and consumer marketing is relatively thin. Many consumers are also employees. We go to work, but we also spend time at home relaxing and enjoying life with our families.

Marketers need to be considerate of context, understanding when consumers are thinking with their professional brains and personal-life brains. No matter the substance of your advertising message, however, it’s always important to speak to consumers on a human level.

LinkedIn recently analyzed the behavior of more than 6,000 social media users to examine how their usage differs between personal and professional networks. The study concludes that on professional networks, audiences are more information-driven.

People approach personal social networks more casually to reconnect with old friends, share funny moments, and kill time. People approach professional networks with more intensity — our jobs are our livelihoods. On platforms like LinkedIn, people are looking to learn and become stronger in their careers. Audiences are more information and education driven.

Take a look at the following three examines to dive into the differences and areas of overlap between B2B and consumer marketing.

HubSpot

HubSpot sells inbound marketing software to help companies blog, email, monitor social media, create web and landing pages, do marketing automation, and SEO in one integrated platform.

The company aims to educate its customers about topics in marketing through its blog and case studies. The company even hosts an inbound marketing academy to help its customers develop core marketing skills.

By reading HubSpot’s blog and case studies, passionate marketers can become smarter (and advance) in their careers.

ModCloth

ModCloth aims to keep consumers engaged, happy, feeling good about themselves, and entertained. Understanding that fashion is a part of women’s professional lives, the company aims to help its audiences feel confident about what they are wearing.

ModCloth also empowers consumers by inviting them to customize their own styles and be a part of the ModCloth brand. With the ‘Be the Buyer’ program, customers can vote on items that they’d like ModCloth to buy.

General Assembly

General Assembly is a company that exemplifies the intersection of B2B and consumer marketing. The company hosts events, workshops, and classes for learners who are looking to change careers or advance their skill sets.

Customers come to General Assembly to invest in their knowledge bases and capabilities. Customers also come to General Assembly on behalf of their employers. Companies also come to General Assembly to recruit graduates as new employees.

General Assembly’s marketing team is equal parts B2B and consumer.

The Value Of Personalization

The days of broadcasted marketing messages are over. Consumers are busy and don’t have time to sift through the volumes of information that they come across every day.

The most effective way to inspire a response from your audience is to reach them 1:1. The following techniques can help you strike this balance:

  1. Create customer personas

    Buyer personas will help you put a face to the name. In contrast to typical market research (that classifies customers by demographic characteristics), customer personas will help you analyze (and group) your users on an individual level. Here are the steps for creating a customer persona:

    • Take one of your buyer segments (product managers, men, marketers, designers, etc)
    • Pick a name and a photo that represents a person in this group
    • Answer the following questions about them:

      • What are the most common ways that prospects find out about your company? Word of mouth? Referrals?
      • What are some of the initial questions they’re asking?
      • What is the typical decision-making process for buying? What kinds of follow-up questions are they asking, and what types of stakeholders are involved with conversations about your brand?
      • How long does the overall process last? About how much time does each stage take?
      • What are common reasons why sales don’t happen? Cost? Lack of fit between your product or service and your prospects’ needs?
    • Imagine that you’re actually talking to these people when crafting your marketing messaging. This process will help you humanize your approach and copy.
  2. Target your messaging to conversion-related activities on your website

    Clarity, a network that connects advice seekers with subject matter experts, does a great job identifying when to engage users.

    The company monetizes when users book calls with Clarity’s network of experts. Let’s say that you want to book a call but then become lazy (and not follow through). Clarity will send you a targeted email that reminds you to finish setting up your call.

  3. Be casual in your tone

    Let’s face it. Board rooms are stuffy and boring. Whether you’re commuting with audiences in a B2B or consumer-facing context, a formal tone will either scare them away or put them to sleep.

    Conversation with friends are much more engaging. We’d much rather be joking around with friends over dinner, during coffee, or at a bar. Marketers frequently get hung up on legalese and grammatical correctness. If you fixate on the formalities, you will bury the heart and soul of your marketing message.

    Just be you, and let the people behind your company shine through.

    The way to emotionally engage your buyers is to talk to them like they are your friends. Don’t act like you’re giving a corporate sales pitch. Be warm, kind, and down-to-earth in your tone instead.

  4. Pay attention to subtleties

    Sometimes, it’s not about what you say. It’s about how you present your message. Marketers will frequently put together pre-fabbed messaging and imagery because they think it looks good. Rather than take photos of their own customers, for instance, they’ll use stock photos that look completely cheesy.

    Sure the photos look okay. But they’re just not real. There’s no way to explain why, aside from the fact that consumers are psychologically wired to notice these details.

    Consider the difference between this cheesy (and incredibly awkward) stock photo:

    And this landing page from Coworks, a platform that curates UX and visual talent and uses photos of actual customers:

  5. Talk to people 1:1

    Spray-and-prey marketing is the norm rather than the exception. It’s way too easy to broadcast a message to 100 people instead of talking to people 1:1. That’s why so many marketers are quick to do it.

    The problem is that this approach will quickly fall flat. More so than we realize, the human eye is trained to resist half-hearted, generic marketing. When planning out your marketing strategy, make it personal.

    Some example techniques that can help you achieve this goal are: marketing automation, retargeting, and content marketing. We’ll talk about these techniques later (spoiler alert!) :)

  6. Reciprocal Altruism

    Last but not least, we want to talk about a concept in consumer psychology called reciprocal altruism. The phrase originated from Procter and Gamble (at least in the marketing sense) and basically says the following:

    When brands give something away, they’ll earn their customer’s loyalty for life. Give something away, and your company will generate 10x the ROI. This concept is the reason why many organizations invest in branded content production through blog posts, videos, and e-books. Companies build trust with consumers by giving content away.

    What’s important to understand is that reciprocal altruism is quantifiable and measurable. You can use tools like Google Analytics and KISSmetrics to build attribution models to see the conversions and sales that your efforts are driving.

How To Measure A Customer Bond

Successful marketers are able to drive sales by appealing to customer psychology. This is a fact that is grounded in more than just faith — brand loyalty is something that organizations can closely measure and optimize.

The key is to prioritize one foundational metric — lifetime customer value (LTV).

Marketers building bonds with customers should prioritize LTV above all other ROI metrics. Many times, organizations will fall into the trap of monitoring direct response only. This approach is a mistake that can inhibit your marketing from fully flourishing.

For instance, a $1,000 marketing spend may lose money in the interim, but generate $5,000 ROI over the long term. If you only focused on the immediate sales opportunity, you would miss out on the longer-term growth lever.

What you need to optimize is the gap between your in-session revenue and your LTV. That way, you have a bit of a buffer and can minimize how much money you’re ‘losing’ in the short-term.

Key Takeaways

  • Consumers don’t want to listen to aggressive sales pitches. Marketers should focus on engaging — as opposed to selling to — their audiences.
  • Customers are significantly through their shopping journeys by the time that they reach out to a sales rep at your company. The mind of today’s consumer is heavily driven by research — to make customers happy, your business should invest in communicating the information that they’re already looking for. In other words, be the first to connect with prospects when they want information.
  • Treat customers (and audiences) like they’re humans — not clicks. Marketers who focus on metrics alone make a huge mistake — they’re ignoring the key psychological drivers that inspire their customers.
  • Customers have strong B.S. meters, and they’re constantly bombarded with information. Companies can stand apart from the crowd (and competitors) by producing extremely high quality marketing materials. ‘Good’ is never good enough. Your stuff needs to be amazing.
  • Conversion funnels are the heart and soul of business online. The concept is in same, but in practice, applications will vary between companies and business models. Paths to conversion are typically windy, not direct. They can also take varying amounts of time, depending on your business’s revenue model and product (or service). For instance, B2B sales will typically take longer than B2C sales to close.
  • Today’s marketers should focus on having a heart. Giving more than you expect to get is a powerful way to build an instant bond with your consumer base. Marketing efforts should capture customers for a lifetime. Don’t focus on pure direct response.
  • Marketers can track whether their marketing efforts are successful by monitoring lifetime user value (LTV). This metric explains how much money your business is learning over-the-long term. You should compare LTV with in-session revenue to monitor how short-term losses stack up against long-term gains.

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