If you base your shop performance on sales, you’re not alone. But while the number of transactions you’ve made is important, revenue offers only a glimpse into how your store is valued. Beyond sales is a wealth of information looking at how your customers shop, the intent of browsers who didn’t buy, and patterns among different demographics.
Ready to learn the value of your shop beyond your transactions? Discover the importance of analysing customer behaviour and how to get started in this guide.
What is Customer Behaviour?
Customer behaviour in retail refers to how individuals and groups act in your store. This includes customers who make purchases as well as those who are just popping by to browse (at least for now).
Stephen Sutton, store manager at Cry for the Moon, explains, “Customer behaviour analysis can uncover a wealth of information about your specific target audience, including their intent when they enter your shop and how needs can change over time. Learn what motivates a purchase, improves customer satisfaction, and boosts loyalty by analysing crucial data.”
When looking at customer behaviour, you might begin by exploring:
- How customers make decisions
- Similarities in the actions of different demographics
- How your shop influences their choices
Sales vs. Customer Behaviour in Retail Analytics
When measuring store performance, sales insights are valuable. They tell you how many people are actually converting, which can be a good indicator of:
- The success of your marketing strategy
- How well your products/services meet the needs of your target market
- Whether your pricing correlates with your target market’s income
Keeping tabs on your sales is also essential for your finances, giving you a clear picture of your income so that you can better plan for your expenses and budget.
Relying solely on sales figures, though, can create blind spots in your business analysis. These numbers don’t look at why customers are converting and why others walk out without making a purchase, for instance.
If you want a better understanding of your store value and how you can improve, you need to dig a little deeper into customer behaviour.
How Can Customer Behaviour Uncover Store Value?
When businesses observe customer behaviour, they might be looking at foot traffic patterns, dwell time, and interaction with displays. These move beyond sales to develop a deeper understanding of what drives or hinders purchasing decisions.
In other words, exploring customer behaviour helps you identify areas of value for customers that go beyond sales figures.
For example, you might notice that a large number of customers return frequently. They may not always make a purchase, but this highlights strong customer loyalty and a connection with your brand that sales data alone can’t capture.
It also works the other way, too, by helping you spot areas where your store might not be performing so well. For instance, if your last aisle is frequently ignored, it could indicate that your layout isn’t intuitive or the presentation of this area is off-putting. You can then develop opportunities to boost engagement in the last aisle.
The end result? By looking at the how and why of customer behaviour – what catches their attention, where they engage with your displays, and why they leave without making a purchase – you start moving beyond seeing your store as a sales engine. Instead, it becomes a dynamic, holistic environment full of potential value to influence and meet customer needs.
Tips for Analysing Customer Behaviour
One of the key reasons that business owners don’t dig deeper into retail analytics is that they simply don’t know where to start. How do you learn more about your customers? To make this task a little simpler, we’ve compiled top professional advice for gaining in-store customer insights:
Know the Types of Buying Behaviour
Customer buying behaviour can be split into 4 categories:
- Habitual: Customers make repeat purchases without much consideration. This is usually for commonly bought items, like toothpaste or washing-up liquid, where shoppers might stick to brands they know.
- Variety-seeking: Customers actively search for new products and services and switch frequently between varieties.
- Complex: Customers will spend time weighing up their options before making a purchase. This involves a lot of research and product/service comparisons, and is frequently seen when customers make large financial purchases.
- Dissonance-reducing: When customers are regretful of making a purchase, they might look for reassurance that they’ve made the right choice, such as researching reviews or learning more about what they’ve bought.
Understanding the different buying behaviours can help you identify how your customers are shopping, pinpointing where they find value in your business model. You can then enhance customer experience by gearing your layout and marketing towards their preferred buying behaviour.
Collect Customer Feedback
You can learn a lot about behaviour by speaking with your customers, which is where feedback comes in.
There are tons of ways to collect feedback from the people who come into your shop, including handing out paper questionnaires or displaying QR codes that link to surveys. Incentivise feedback with discounts and freebies, and ask questions that can help you identify where your store value lies, such as:
- Why did you choose us over a competitor?
- If you’ve returned to our shop after a previous visit, what made you come back?
- Which products/services are you the most satisfied with?
- If you made a purchase, what was the main reason behind your decision to buy?
For well-rounded feedback, make sure to survey customers who made a purchase as well as those who didn’t.
Utilise Smart Technology
Smart technology is brilliant for collecting a wealth of data on customer behaviour.
There are cameras, for instance, that generate heat maps to quickly show you where people spend the most time in your shop, highlighting areas that hold the most value.
You can also install AI-powered cameras that generate insights based on visual data. This could include how long customers spend in your shop and how many products they engage with before making a purchase or leaving. With around 16% of businesses already using at least one example of AI technology, this is a great time to jump on the bandwagon.
Segment Your Audience
Overwhelmed by shifting patterns and behaviour? It might be that you need to segment your audience into different groups based on similarities like:
- Age
- Gender
- Income
- Interests and values
- Purchase frequency
Not all customers are going to find value in the same aspects of your store. For instance, if you run a local post office, busy parents might appreciate your convenient location and range of child-friendly snacks. Retired customers, on the other hand, could visit frequently because of your friendly customer service.
Segmenting your audience helps you understand your store value holistically and cater your marketing, services, and products to suit different demographics of your overall audience.
Final Thoughts
From why customers are loyal to what drives a conversion, customer behaviour can help you uncover what motivates your target audience and why they hold value in your store. In terms of optimising your business’s performance, these insights are crucial.
