How to predict customer behaviour
Category: Blog & News
Excavating my new backyard recently and I found a whole lot of paving that had been overrun by grass.
It struck me that this is not dissimilar to how we typically look at those we are trying to influence - we have based our assumptions on the grass we see before us when if we dig a little deeper we'll find a whole pattern of robust pavers just waiting to make our lives easier.
But what will they do?
One of the biggest frustrations in business is trying to predict what your customers (stakeholders, clients, staff, investors, managers) will do in response to your initiative. As a result we base our best guess on any or all of the following;
- Feedback: What they tell us
- Experience: What they've done in the past
- Intuition: How we assume people behave
Unfortunately there are traps in relying on these methods.
Feedback relies on self-reported behaviour that activates the conscious, rational and rationalising System 2 part of us i.e. what we use only a fraction of the time to handle important or unusual situations. Unfortunately most decisions most of the time are made by System 1, our fast, irrational and intuitive thinking mode.
Experience assumes that what people have done in the past they will continue to do. If this held true then I'd still be working at a flourishing White Pages because no one would have switched to Google to find phone numbers. That said if you are familiar with my work on habits you will know that we are creatures of familiarity and will unthinkingly follow our status quo if the conditions are stable. The trick here of course is that we are not trying to predict behaviour for a stable situation - we're interested in predicting behaviour where conditions have changed.
Intuition is the biggest trap. It seems that because we are human we think we know what it means to influence other humans. But as a couple of my recent articles have shown (How Font Size Impacts Conversion, Black and White vs. Colour ads), just because we assume people will be influenced by something we think is logical, doesn't mean they will be.
So that leaves us with the unanswered question. If I do this, what will they do?
Behavioural Economics is the paving underlying decision-making
Digging up the grass in my backyard has revealed a whole lot of pavers that had been sitting there quietly, shaping the landscape. By unearthing them I now have a clear and unfettered path to by which to navigate.
To understand what customers will do, you need to dig beneath the grass because there's a whole system of predicting behaviour available to you in the form of Behavioural Economics. It's no coincidence that I called my business People Patterns because I could see that it was the only field that gave me an immediate framework for understanding what people are likely to do. There are patterns to behaviour and anyone who is seeking a way to get scalable improvement on the way they take ideas, collateral, websites, proposals and campaigns to market needs should look no further than Behavioural Economics. Get digging.
P.S. here's a more detailed explanation on where Behavioural Economics fits in the scheme of analysing and predicting behaviour.
P.P.S. Speaking of digging deeper, if you are a business owner who is thinking about a new website don't act before you know what you need to know about what to look for in an effective site design. I'm running a seminar for those in Melbourne and a webinar for those anywhere with Internet access.
This article also appeared in Smartcompany.