Customer psychology

Understanding customer psychology is crucial for companies that want to be successful in managing customer experiences and achieving profitability. With the fast-paced development of technology and markets, it’s important to use new methods to complement existing ones in capturing customer experience. 

Customer psychology involves understanding the complex decision-making processes that customers go through when making purchases, such as when choosing a business service or planning a private trip. The brain has two decision-making systems, system 1 and system 2, which are used to regulate the brain’s energy supply. System 1 is inattentive, goes on gut feeling, is driven by underlying attitudes, and is used when the brain needs to save mental energy. System 2 is calculating, weighs pros and cons, analyzes, and evaluates, and is used when the brain has enough information to evaluate a question. 

Why do we need to understand our customers’ experience and behaviour? 

The majority of the most successful companies according to the the stock market in the United States are those that, according to surveys and statistics, are best at managing their customers’ experiences. It’s clear how only the management of customer experience within a company ensures good profitability, both in the short and long term. But, when the market and technology are developing at a pace we have never experienced before, in the midst of many crisis, companies need to understand and capture customer experience with new methods to complement the existing ones. 

What is customer psychology? 

Customer psychology is a concept that has been used in research for a very long time and recently become more acknowledged in business contexts. Retail companies were the first to grasp this concept to gain more insight about how small adjustments can make a big difference. This was mainly concerning aspects that our brain perceives unconsciously, such as colours, smells, product placement in a store, and so on. 

However, one should highlight customer psychology from several pint of views and dig deeper into how other markets can understand people’s slightly more complex decision making, other than the type of decision-making that will make a person choose one soap over another. The point is to understand the nature of more complex decision making, like when you’re buying a consulting service or trying to plan a private trip around the world. Big decisions are rational and irrational at the same time and therefore complex.  

How does our brain work in decision making? 

One can somewhat simplified say that we make decisions based on two different systems in the brain – system 1 and system 2. 

Short facts about system 1: 

• Works fast 
• Is easily distracted 
• Have a good or bad “feeling” about things 
• Precedes unconscious behaviour 
• Is driven by underlying attitudes 

Short facts about system 2:

• Works slowly 
• Is calculating 
• Weighs pros and cons carefully 
• Analyses 
• Evaluates 

Everyone shift between the two systems and do so to regulate the brain’s energy supply (our brain is a real miser when it comes to energy). System 1 is used when we need to save mental energy based on its ability to be quick and easy in make decisions without further ado. System 2 is used when the brain has got enough information to be able to evaluate all relevant facts, plenty of mental energy and few disturbing stimuli to be able to do this undisturbed. 

The world we live in today constantly exposed the brain to tons of information and impressions which requires a lot of energy and therefore makes the brain use system 1 more often when making decisions. That is why customers’ underlying drivers, attitudes, and feelings are becoming increasingly more interesting for companies, and customer insights are vital information for understanding customer behaviour. 

Capturing the customer’s underlying drivers 

The question narrows down to how we can access information about customers that they may not even be aware of themselves, i.e., information about how system 1 works. 

Using NPS programs and surveys is a good measure when, for example, you want to find out a customer’s opinion after using a specific service or purchasing a newly launched product, but through these “direct questions”, we’ll only get information about the customer’s rational decision making (system 2). 

We want to find out what precedes the actual decision, i.e. what happens in system 1 where emotions and attitudes are found, even before customers make their decision. 

One great methos is using the in-depth interview technique with open-ended questions. In so called “unstructured” interviews, there are no planned questions and the customer talks freely about their experience of the company, their life, and their everyday life. 

There are several advantages to this method, some of which are: 

• The risk of asking leading questions is very small 
• It is the customer who defines what is important to talk about 
• Customers like to talk a lot about themselves 

To capture customers’ underlying drivers, attitudes, and feelings, it’s important to go beyond direct questions and access information about how system 1 works. In-depth interviews with open-ended questions are a good method, as they allow customers to freely talk about their experiences and define what’s important to them. The material is then analyzed and takes into account not just what is said but also how it’s said, and the emotions associated with different events in the customer journey. AI-text analyzing tools can be great for this but make sure that a human representative reads or listens to the material as well in order to fully understand it. 

Measuring customers’ emotions can provide valuable insights into the decision-making process. By getting a complete picture of the customer journey, companies can reduce the risk of uncertainty and deliver the best possible experience to their customers. By letting customers talk freely about their interactions with the company, the customer journey becomes complete and the risk of leaving with a number of question marks is significantly minimized.