A Guide to User Behavior for CMOs and CROs

Companies sometimes view user behavior as a black box. The reality is that things don’t need to be complicated. Archimedes famously said that if you gave him a lever, he could move the world. I’ll show you how to use the lever of user behaviors without drowning in the complexity.

What’s the Point of Understanding User Behavior?

Despite what you may have read, I don’t think it is a given that all companies should study their users’ behavior. Companies should focus on tangible outcomes, such as revenue, growth, and lower costs. It just happens that a deep understanding of user behavior can accelerate these goals.

However, this field can be like walking through a minefield, especially on the data side. Since you can track whatever you want from a technical perspective, it’s easy to end up with too much data and not enough insights.

Let’s take a look at a few companies that do this well. Spotify, for example, leverages user behavior to determine what music to recommend to you. This, in turn, increases retention and engagement.  

Spotify Generates Playlists Based on Behavior
Spotify Generates Playlists Based on Behavior

I have an ecommerce client who uses data to determine where to optimize their checkout process and what products to develop. A retail store could do the same thing but for offline sales. A charity could take the same principles and use them to increase the number of donations.

The work here comes down to understanding what users care about and finding a more efficient way of giving it to them. However, don’t get caught in jargon. I’ll show you more examples in the third section of this article but keep in mind your north star, and you’ll be fine.

The Data Needed to Crack Open Your User’s Secrets

Data is at the heart of user behavior. This idea is incredibly popular with digital products because of how easy it is to track data. In reality, any business could follow the ideas below.

I also want to note that technology isn’t an issue here. Technology gets better every year, and it’s a highly competitive industry. However, just like drinking a milkshake too fast, too much of anything isn’t good for you. Here’s what you should focus on when it comes to data.

Think about your data in 4 dimensions: demographics, behavioral, quantitative, and qualitative. Finding a balance among these four areas will ensure you’re getting the complete picture of what your users are doing.

Let me break them down for you:

  • Demographics: think of attributes like names, city, and country.
  • Behavioral: think of the actual behaviors, including purchases, sign-ups, and cancellations.
  • Quantitative: think of data points, charts, and dashboards.
  • Qualitative: think of surveys, heatmaps, and interviews.

I want to underline the delicate balance between quantitative and qualitative. I created a handy 2 x 2 chart showing how these two dimensions support each other.

How Informed Are You?
How Informed Are You?

Leaning too much into either option will not be sufficient. I find that companies tend to dismiss one of them, and they rely too heavily on the other.

Focus on tracking the right things and not everything

Examples of Insights You Can Expect

What do you get for all your effort? Insights. 

These insights can change how you build your product, help you reduce costs, and drive growth. You should expect useful insights, and everything else is simply vanity. If someone tells you that California’s users convert at a higher rate than Texas’s users, the next logical question is: so what?

Ensure that your team is adequately set up to take these insights, validate them, and determine the best way to use them. In the example above, we could shift our budgets to California and see if that leads to increased signs up and/or revenue. If not, we can move on to something else.

I had a client in the tourism industry that helped build a dashboard summarizing the essential COVID-19 metrics. The dashboard became helpful to hotels and other partners in the areas because it provided clarity. That’s what useful data and insights can do.

I have been thinking recently about dry ice. When dry ice melts, it goes from a solid to a gas, completely bypassing the liquid state. This flies in the face of fundamental physics, and my question to you is: are you thinking of ways to skip optional steps within your business? 

You might think that something takes two months, but it could be done in two weeks. Customers could purchase larger orders if you asked them, or you might not need to focus as much energy on acquisition if you can improve your retention.

User behavior can help you predict the future and bypass optional steps. As Peter Drucker famously said:

“The best way to predict your future is to create it.”

Peter Drucker

Reject complexity and remember that business principles are as old as time. We may see them in different formats, such as digital products, but few things are truly unique. Obsess over insights and avoid getting bogged down in the technical.

One more thing before you go! Do you know how to get more insights out of your data? 

All companies are sitting on a goldmine of data that they haven't fully explored. It's not about technology or capturing more data. The key is to learn how to make the most of your current data and convert it into actionable insights. This is the main idea behind my first book, The Data Miage: Why Companies Fail to Actually Use Their Data

I'm excited to announce the release of the book through all major retailers. If you're interested, you can download the first chapter for free using the form below. You'll learn what the best data-driven companies do differently and how to make sure you're playing the right data game.

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