We all know why understanding consumer behavior is so essential. If businesses are able to gain a deeper understanding of consumer needs and habits, then they’ll be able to provide better products and services. But better doesn’t just mean more profits for a company: it means innovation and advancement. Understanding consumer behavior is a goal that every organization is continually striving to reach, a process that never ends but still pushes society and culture forward in meaningful ways.

That may seem grandiose, but we all know the power that the best products have. Think of the iPhone: the demand was growing for a more powerful cell phone, and Apple set itself above the competition with a design that was sleek and accessible. It set the standard for modern smartphones — all the mobile apps that your phone uses (whether Android, iPhone, or other) is because of Apple.

So we know why consumer behavior is essential. But the real question is: how exactly do marketers go about understanding consumer behavior?

To start, it’s important to realize how much information is provided through the many interactions between a consumer and a brand. According to a study by KPMG, online shoppers spend 42 percent of their time researching products. The kind of information this act provides is what’s known as “intent data,” which indicates that someone is likely to make a purchase in the near future. Researching, clicking on various product pages, or reading reviews are all signs that a consumer may want something that your brand provides. 

This is a fundamental example of how data helps marketers: it lets them know that someone is interested. With that basic knowledge, you can then begin to figure out how to take advantage of that interest.

Beyond that, it gets way more complicated. After all, people are complicated. But that complex blend of data allows brands to effectively personalize their products and services to individual consumers. This personalization is part of why companies like Amazon and Netflix are so successful. 75 percent of Netflix viewer activity is driven by recommendations, and more than a third of Amazon’s sales are generated by their recommendation engine.

There are three kinds of data that can be used for personalization: contextual, demographic, and behavioral. Contextual data is information like location, time, date, what device is being used, etc. Demographic data is age, gender, and income. And behavioral data includes things like previous purchase information, which products you viewed most, or how frequently you buy products. Much of this information can be discovered through customer behavior analysis, which then allows marketers to formulate strategies and measure the results.

Of course, collecting and analyzing data isn’t as simple as it might sound. Companies can collect tons of data, and some of that data is more valuable than others. Organizations want to make sure that they’re making the most out of that data, and that requires resources and expertise. Brands need technological tools to handle massive amounts of data, and they need dedicated data analysts to see the process through. This is something that must be thoroughly addressed by businesses — they must be proactive in training their relevant members of the workforce, in recruiting new talent, and in integrating data analytics into the business’ main strategy.

To reiterate, using data to understand consumer behavior is no small feat. It can be complicated and messy. The brands that get it right, that are able to sort through the noise and find meaningful insights, will not just be more successful or profitable, but they may just have a long-lasting impact on society.