Recognize Your Customers: A Complete Guide on Customer Behavioral Cues and Building Customer Relationships
You decide to buy a phone. Do you go for the phone of your dreams even though it’s beyond your budget, or would you settle for a functional, but less-ostentatious one that fits into your budget? Do you wait for special offers so you can avail a discount, or get the device on credit?
These are the kind of behavioral indicators that decide the types of customers and what aspect of a product/service appeals to them.
To understand consumers better, psychologists conducted an extensive study on how people made financial decisions, and what factors influenced them. The likelihood of gains and losses, current wealth, and pattern in relation to risk contributed to their financial decisions. The common thread in all these indicators is the fact that humans dread the idea of losing something of value. Thus, framing choices in a way that gave them the context of losing a great offer worked the best. For instance, look at the example below:
Option 1:
- A) You get to take home $250 (or)
- B) You can take a bet to win $1000, where the probability of winning is 25%, and losing is 75%
Option 2:
C) You are going to lose $750 (or)
D) You can take a bet to win $1000 with a winning probability of 75%, and losing probability of 25%
Framing the exact outcome as a gain or a loss has very different outcomes in customer behavior. Behavioral psychology deals with such day-to-day influences that customers go through.
Factors that Affect How Customers React to Your Product
Behavioral cues go beyond persuading customers to buy your product with eye-catching phrases. Everything from where and how your prospect gets to know your brand to their first point-of-contact with your company, decides the kind of relationship the customer is going to have with your brand.
We’ve put down the major factors that influence the customer-company relationship, and how to make the most of these scenarios.
It’s Complicated!
Studies have shown that customers don’t always quit on service providers who provide subpar service1. People who get locked in with such bad business relationships often have multiple reasons to do so. The reasons range from feeling like they owe it to the company, the long history they share, the cost of switching being high, to being unsure of alternatives.
It seems rational to stop doing business with a dissatisfied service provider whose negatives outweigh the positives. But as humans, we aren’t always rational when it comes to long-lasting relationships. The zero-price-effect is one such phenomenon, where people tend to systematically overvalue a product or service that was free or purchased at subsidized rates. Being on the receiving end of free services feels good, thus making it feel like one owes it to them to stay.
This, in turn, connects to the reciprocity theory, where customers feel guilty of moving to another service after availing of the offered subsidized rates/discounts, especially when they feel the favor was exclusive to them.
Similarly, an individual’s character plays a significant role in business relationships too. People who avoid confrontation try not to show dissatisfaction or anger when they don’t like a product/service. This also explains why certain consumers don’t switch even when they’re not particularly happy with a product/service, which is described as the customer “lockdown”.
How to identify leads that are in the “lockdown” –
- They tend to focus more on the free products or perks they get, and not the quality of service they receive.
- The business they are subscribed to is of a family or friend of theirs.
- Emphasizes the long history they have with the business.
How to deal with a locked-down lead?
- Give them options to dial-down their existing service and slowly migrate to yours, rather than a hard exit. Provide a program where you give your customers a reasonable migration time frame that eliminates downtime to their business.
- Talk about the current and long term benefits in choosing your service.
- Weigh in on the pros and cons of their existing relationship and how your product/service stacks up against it.
- Show them what they need. Sometimes consumers suffer through certain services as there aren’t any alternatives. Uber disrupted the commercial transportation industry and showed consumers how they suffered to usher a cab every time. Uber highlighting this gap/pain point got them to a place where they are indispensable today.
Not All That’s New is Fancy
New offers can be exciting, but they might not beat the perks of comfort and familiarity that come with it. Customers tend to stick to proven techniques that give them minimal profit and avoid bad outcomes. They don’t want to risk it all to achieve better results. A typical excuse given in such risk-averse circumstances is that “it is not right for us at the moment.”
When their risk aversion tendencies kick in, every customer is going to see a switch as a potential risk. Here are some best practices to make your potential customers see the value in your product/service.
– Pick a reassuring tone when you converse with your customers. Terms like safe, sure, guaranteed, tested, and risk-free give a positive tone to your service.
– Low pricing makes deals attractive. Offer a low price or a discount as a token of welcome to get more people interested in trying/using a product/service.
– Tell a story. Statistics and facts state the reality and are surely necessary, but humans connect better with stories. Customer success stories in the form of testimonials and case studies are a great way to tell your customers why you would suit them the best.
– Money-back deals give a sense of assurance to customers. Advertise risk-free cancellations and cashbacks on cancelations like the example below.
It’s All in the Mindset
Now, let’s consider you have convinced your lead to buy your product. Your customer would then get ready to actively take action and move towards their goal. This is known as the predecisional action mindset (PDM). The predecisional action mindset decides how a person would respond to new ideas and execute it. The PDM has two phases – deliberative and implemental. Customers who stay in the deliberative phase are more open to new ideas while customers who move to the implemental phase will want to get things done their way. Some customers can also keep going back and forth.
How to identify customer mindset.
– Social skills and manners speak a lot about a person. When a customer receives a message from you, do they call you immediately or message you? Such indicators reflect how the customers would prefer to be contacted.
– Listening to the language they use will help in understanding the level of urgency of their concern and in what priority you must address it.
Best practices to nurture customers –
- When customers are able to be in the deliberative mindset for long, they expect intense brainstorming sessions. Be ready with fully-prepared plans for them.
- Be open to suggestions from people who enter the implemental mindset. Make them feel that their voices are heard.
- When the customer keeps going back and forth between deliberative and implemental mindset, give them time. Try getting weigh-ins from other seniors in the organization.
Put it to the Test
Mapping your customers’ personality traits and dealing with them accordingly makes things easy for both sides. It helps customer service agents identify the underlying emotions of customers and assist them proactively. There are two common personality tests that are used to understand customer personalities, how they would respond in different situations, and how to face them.
Myers Briggs Type Indicator (MBTI) –
MBTI is the most commonly used personality indicator used in professional circles to build teams, co-work, and get a clear image of the work environment. This test helps customer service agents identify the behavioral characteristics of people in their workspace and offer their services to them accordingly.
The test in itself is divided into four broad categories, which further branches into two each, with different pairings, forming sixteen different sets of personalities in total. Out of this, psychological attitude forms the most distinct characteristic. Here’s a brief breakdown of it.
The Dominance, Inducement, Steadiness, or Compliance (DISC) Model –
The DISC is a similar personality analysis test that is used to determine the types of customers and how to make your service enticing to them. The test consists of four major categories under which a person can be analyzed. Everyone is a combination of the said traits at varying degrees. By understanding the cues of your leads, you will be able to understand them better, connect with them at a better pace, and deliver both what they would like best and what they need.
– The dominant trait determines how people look at challenges/obstacles. People with dominant tendencies withstand a hostile environment, are goal-oriented, have strong opinions, and like to have a say in the final call.
– The influential trait has an impact on their surroundings with their thoughts and ideas. These people are confident, inspiring, and are open to ideas.
– The stability trait indicates how a person responds to the ambience. These people are good listeners, calm, and encouraging.
– The conformity trait is an indicator of how people reply to a situation. People with strong conformity trait lean more on knowledge and facts to make a decision.
How to make use of personality traits in customer service –
– Make use of your helpdesk to keep track of customer personalities so you can serve them better. Adding little notes on their traits makes future conversations with them a piece of cake.
– Personality traits provide cues on customer conduct. This helps agents to handle irritable customers in a professional manner.
– Using personality tests to determine customer characteristics also promotes healthier internal communication within your company.
– Educating your agents on how to handle respective customer personalities promotes self-awareness, social skills, and self-regulation among your agents.
Cognitive Biases
Cognitive biases are those presumptions that customers make when they are influenced by factors they do not realize.
There are multiple ways cognitive bias comes into play in customer relationships.
- People tend to believe information that sides with their preconceived notions. In such cases, customers are prone to seek information to prove that their existing service or business providers are better for them.
- People generally believe that the outcome of their decision is reasonable and the best out of all options. While trying to persuade a new customer to change to a new plan that has a better result projection, they might think the jump would be a risk, given that a reasonable profit is lesser.
- A customer can process data that sides your service differently from how you expect them to. This difference would root from what they believe is the best, rather than what has been stated.
Best practices –
- Explain how your solution would work best with their existing work model, operations, and infrastructure.
- Provide case studies, success stories, and statistics to explain why you would be a better fit for their business.
- Be open to criticism to show that you do not hold cognitive bias yourself.
- Customer cognitive biases are not always a bad thing. You can use their biases to your benefit. When you get an idea about customer preferences, modify your pitch into a version that excites their cause.
- The appearance holds a reasonable amount of appeal. Creating a brand and a friendly user experience for your service encourages people to stay loyal to your service, and also makes them your advocates. This is known as the bandwagon effect.
Apple is one such brand that has successfully made use of the bandwagon effect. Anything they launch is a great success, and they have one of the most loyal global customer bases even when there are multiple competitors in the market.
Here’s an amusing but poignant take on how Apple wound brand themselves if they sold water.
Loyalty Programs
We all love being on the receiving end of freebies. We have also discussed how offers and discounts can make customers loyal to your brand. But when your acknowledgment technique goes wrong, it has more chances to backfire and take you to a negative place in your customer’s eyes than when you did not carry out any sort of customer gratification. People find more satisfaction in a thank you note than in monetary appreciation. This is known as the trivialization effect.
- Opt for nonfinancial options of gratification in the initial stages of the customer relationship.
- Gratification can also be a great way to do value-add marketing. Take Mykitco for example. This website that sells make-up products and accessories also has a section for tutorials by the owner of the brand – James Molloy, a world-renowned makeup artist. When customers buy products from him, they can also make use of his tutorials free of cost. This intertwined gratification/ knowledge base approach has grown his customer base into a community, where people can rent studio space, learn makeup, and communicate with other students in the community.
- Sustainability of your acknowledgment program plays a vital role in customer satisfaction. Customers feel a higher level of dissatisfaction when the acknowledgment incentive is stopped, than the gratification they felt while receiving it.
Customers constantly compare your gratification not just with your competitors, but with gratification they’ve received across all their business transactions. For example, businesses like hairdressers and home maintenance have higher levels of positive feedback while cell phone service providers and banks had a negative outlook. A simple way to overcome this bias is by thanking your customers with a heartfelt personalized note and frame it in a way that their actions are acknowledged.
Some tips to build successful loyalty programs:
– Adopt an omnichannel customer support system. There’s no better way to show that you care for your customers’ well-being than to be available to them on their preferred channel of communication.
– Building customer relationships that doesn’t stop at just purchasing and adds value to your target audience’s lifestyle will increase customer loyalty. For example, Redbull sponsors extreme sports events and shows that have a strong viewership of its customer base.
– Create idea/knowledge forums where your customers could connect with each other and build a community. Studies 2show that customers who are emotionally connected to a brand have a lifetime value that’s four times more than an average customer.
Final Thoughts
Building a good rapport with your customers is no simple job. There are so many factors that influence how your customers view your service. Understanding customer behavioral factors and acting according to them can help businesses create long-lasting, mutually beneficial relationships.
Understanding customer behavior through psychology can act as the final push toward building lasting relationships. Saying “customers like you prefer” instead of “our plan” makes all the difference in customer support.
Source:
1- https://www.tandfonline.com/doi/abs/10.2753/MTP1069-6679200403
2 – https://www.motista.com/resource/leveraging-value-emotional-connection-retailers
