What does behavioural psychology have to do with customer experience? Everything!

Behavioural psychology can sound a bit like something that’s only discussed within lecture halls of universities rather than in the context of small businesses.

And, for some, applying the principles of psychology to a business may feel a bit cold and clinical. But those in the know see the value in understanding the behavioural psychology of their customers and how it can help their business.

Here we look at some recent research into the customer experience and talk to author and behavioural strategist Warren Kennaugh to break down exactly what behavioural psychology is and how it can help to grow and develop your business.

Kennaugh says that in general terms, behavioural psychology “is the understanding of how a group of people are likely to think, feel and act in a certain context”.

“As an example, how people behave within a certain group or culture can indicate the psychology of the group,” he says. “How customers behave/make choices (which may be very different) will be determined on how they think and feel about the interactions with the business.

“Understand the reasons why customers buy certain products, why they do business with a company and not others, what their purchasing decision is based on, such as prestige, cost, service, availability, timeliness etc.

“Some business are too close to their own product and service and (only) see the benefits from the manufacturing perspective – this can be very different from the customer’s perspective.”

Know your customers’ habits

Understanding your customer, and their behaviours, is key to the success of your business, Kennaugh says.

“If a business understands customers as a group, or key customers as individuals, they can then pitch their sales approach, customer support, delivery of products in a manner in which the customer values.

“It’s also very important to understand the emotional needs of the customer which will drive their behaviour. This, coupled with an understanding of what the customer doesn’t value, will make a very compelling offer.

“In a lot of industries, most products are the same so we value dealing with people who are like us, understand us, value what we value, think like us and behave like we do – we want to deal with people who are easy to get along with and who are just like us.”

Your behaviour also shapes your business

As a business owner, it’s also important to take a look at your own behaviours and how they shape your business.

“Understanding the behavioural psychology of the owner, or CEO, is very important. That is likely to drive the culture of the business,” Kennaugh says.

“Very often we see an owner start a business and build it well, but then, when the business is more mature, we see the owner still applying ‘startup’ type behaviours which limits the potential growth of the business.

“Also with small business, the people within it tend to have similar values and beliefs. It’s very useful to know this as it can lead to blind spots in thinking, strategy, skills and therefore results.”

Give the customer some control

A recent marketing and sales report by McKinsey & Company says that customers are more likely to come away with a positive experience after dealing with your business if they are given control over the process.

“The more empowered, engaged, and updated they are in the course of the journey, the less likely they are to assign blame to the company when things go wrong,” according to the survey.

“Airlines and movie theaters allow customers to select their seats, providing customers with a sense of control.

“Most online retailers understand the value of allowing customers a sense of control and strive to keep their website displays, placement of buttons, and other functions consistently in line with customer habits.”

Build up trust and value

There are also some pitfalls business owners need to be wary of when striving to instil and promote brand loyalty.

“The value of the brand is created, lost and owned by the perception of the customer,” Kennaugh says.

“For some customers there are large ‘moments that matter’ and for them it’s based on one experience; for others trust is built over time a series of events which create the perception of the brand.

“One thing research shows is that when things go bad for the customer, that’s when true value is demonstrated – that’s when the business wants to be astute around the behavioural psychology it uses.”

He says asking customers to pay extra for shipping can have an impact on whether they choose to return.

“It may be a clever strategy for a business to make it difficult for customer to return items if there are a lot of false claims in their industry,” he says.

“But if I’m buying something online I tend to expect to pay for shipping, but I should have a choice of the cost and speed. For more prestige events (the customer owns the perception of prestige to some degree) paying a surcharge could be expected and seen as part of the prestige.”

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