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What are the keys to customer observation?

Customer Observation
Topics
What is customer observation?
How customer observation makes businesses more profitable
6 keys to customer observation success
Final thoughts

To engage your ideal customers, you need to know who they are, what they care about and the problems they face. Only then can you provide value at every buyer journey stage.

Some market research methods take a broad, generic view of buyers in any industry – but customer observation is more personal and precise.

It gets you closer to your customers so you can understand what they value in a product or service and hone your sales and marketing strategies accordingly.

What are the keys to customer observation? We’ll answer that question and explore the major benefits of this often-overlooked tactic for improving customer experiences.


What is customer observation?

Customer observation means monitoring your customers’ behavior to gain deeper insights into your target audience. It uses various market research techniques to understand how people interact with your products, services and brand.

Some of those techniques include:

  • Customer feedback surveys

  • Webinars

  • Focus groups

  • Social media monitoring

  • Sales conversations

Different customer observation methods suit different business types.

For example, a business-to-business e-commerce (B2B) brand may never come face-to-face with customers but can monitor their behavior on social media to gain valuable insights.

On the other hand, a business-to-consumer (B2C) brand with brick-and-mortar shops can physically watch customers interacting with items in-store to learn about their preferences.

Any business can pair direct observation with other data collection methods, like marketing analytics and web visitor tracking, to map the typical customer journey in more detail.


How customer observation makes businesses more profitable

Customer observation aims to enhance customer experiences (CX), increase sales and grow profitability.

Done well, it generates insights that help businesses make better sales, marketing, account management and support decisions, leading to more brand loyalty and advocacy.

Here are customer observation’s key benefits in more detail.

Personalized sales and marketing touchpoints

When you understand your customers' preferences and behaviors, you can deliver tailored messages and offers that are more likely to resonate with them. The results are extra engagement and more conversions.

Say you learn from survey results that most of your customers enjoy interaction over email but feel that telephone calls disrupt their day. Switching your primary lead-generation tactic from cold calling to email marketing could help you engage potential customers sooner.

You could get even more specific with your personalization. For example, you might follow up on survey results by addressing individual respondents’ concerns or help a social media follower who has posted a message about your brand.

Data-driven product development

Observing customer interactions helps you identify the most pressing areas for improvement in your products or services.

For example, a software company’s sales reps monitoring onboarding comments may find new users are eager to connect the app to others in their tech stacks. The company could ensure integration is a key part of the setup process.

Using first-hand research to develop offerings that better match your customers’ needs will ensure you make sales easier and increase long-term customer satisfaction. Buyers will get more value from their purchases, meaning they’re more likely to return, leave positive online reviews and tell others about their experience.

Other ways to collect customers’ feedback for data-driven product development include:

  • Focus groups. Get a cross-section of your target audience together for a frank discussion about your product’s pros and cons.

  • Post-purchase questionnaires. Follow up on sales by asking directly, “What do you think of your recent order?” You can ask this over email or in a pop-up web form on the page.

  • Tracking review trends. Look out for the phrases and themes that show up most in product reviews to learn what’s important to your customers.

See any negative feedback as an opportunity to improve. If the same criticisms and suggestions keep appearing, it’s a sign to work on your product.

The chance to discover unmet needs

The more time you spend studying your customers, the better chance you’ll have to spot gaps in your market. Being more prepared than your competitors allows you to act first to boost sales and gain the trust of your target audience.

Imagine you offer training courses for bartenders. Watching candidates in their working environments might reveal they spend as much time selling bar snacks as alcoholic beverages. Instead of just focusing on the sale of alcohol, you can capitalize by creating an extra course on food and drink pairing.

As the only course provider who observed its customers enough to spot this unmet need, you gain a profitable head start on your competitors.

When monitoring customers, always ask the broad question: “What would make your life or job easier?” Some issues won’t be in your remit but you may stumble across a challenge you can solve.

Monitoring trends to challenge competitors

Regular customer observation and client interaction management keep you informed about emerging industry trends. This knowledge allows you to adapt your marketing and sales strategies to stay ahead of your competitors.

Pipedrive surveys salespeople and marketers when compiling its State of Sales and Marketing reports. We learn how our customers’ attitudes to technology evolve and adapt our lead-gen tactics accordingly.

For example, remote work is increasingly helping our ideal buyers increase productivity and morale so we generate interest by highlighting our product’s cloud and mobile credentials.

When customers feel seen, understood and catered to, their engagement and trust grow, which leads to more conversions, repeat business, positive word-of-mouth and referrals.

Setting up Google Alerts is another simple way to track industry trends. Enter a topic into the search bar and add your email address and you’ll receive the latest relevant news stories (including industry research) in your inbox.

Google Alerts


Alternatively, you can check a service like AlsoAsked to see what people who search for your industry online are also interested in. Check weekly or monthly to see how trends evolve.


6 keys to customer observation success

To harness the full power of customer observation, consider the following key practices.

1. Make customer observation everyone’s job

Encourage all team members to monitor customer behavior as they do their jobs. Valuable insights come from regular interactions of all types, not just organized market research initiatives.

For example:

  • Account managers can learn from regular reviews and other meetings

  • Salespeople can observe during sales conversations and negotiations

  • Marketers can gain information from website visitor behavior

  • Customer service staff can learn from support tickets

  • Accountants can learn from purchasing trends

Integrate customer observation into your staff onboarding process to ensure new employees are actively observing customer behavior from day one. Run training overview sessions so existing team members know what to look for.

Use training sessions to showcase the opinions of real customers, like sales conversations and survey results. Then, encourage staff to give their interpretations of what they see. This activity will help to foster a culture of curiosity among your team.

Note: Customer observation isn’t the only reason to get teams working together. Our State of Sales and Marketing Report 21/22 revealed that companies with well-integrated sales and marketing functions were 26% more likely to say their revenue exceeded forecasts.


2. Vary your customer observation methods

All customer observation tactics have pros and cons. Varying your techniques is the best way to build a well-balanced and accurate customer understanding.

For example, organized techniques like focus groups and customer surveys are great ways to ask direct questions in controlled environments but they don’t guarantee accuracy. Response bias is the human tendency to provide inaccurate or false answers to questions in these types of environments. It’s when we let external factors affect our responses, like societal norms and what we think researchers’ expectations are.

On the other hand, asking specific questions to shoppers trying new products in your store is unhelpful as they could give false positive answers. However, you can learn more about their natural, unbiased behaviors by simply watching them.

Here are some best practices to consider when choosing observation methods:

  • Segment your audience. Tailor your observation methods based on customer segments, as different customer groups may have unique behaviors and preferences. For example, if you target different age groups, consider which social media platforms they’re most likely to use.

  • Look for real-time feedback. Prioritize instant feedback mechanisms like chatbots, live chat support and sales conversations to capture immediate customer sentiments. This method allows for timely responses and course corrections when necessary.

  • Complement your workflows. Some tactics will suit your business processes better than others. For example, if you deliver support via live chat, you’re already generating valuable data from these conversations. Learning from the transcripts will be more cost-effective and less disruptive than creating a series of focus groups.

Combine everything you learn from different techniques into a note-taking app, spreadsheet or customer relationship management (CRM) system to build a detailed profile of your target audience.

3. Look out for the ordinary

Instead of looking for extraordinary stories from your customer base (save those for testimonials and case studies), focus on finding out how typical customers think and behave. You can apply what you learn to a much broader section of your audience.

Pay close attention to the small details of everyday actions, like how long a person looks at items in your store before buying something or how often online buyers view your SaaS pricing page before checking out.

The more you observe these behaviors, the better you’ll understand how the average customer makes buying decisions. Then you can tailor your interactions to that process.

For example, internally linking the web pages that buyers visit most often before paying could improve your website’s user experience (UX) and speed up the buying journey.

4. Report back to the whole team

Share your observation findings with your team so everyone can make informed decisions.

Knowledge-sharing creates a unified understanding of customer behaviors, preferences and pain points. It helps all team members pull toward the goal of delivering exceptional customer experiences so your business can get there faster.

Say you run a focus group to research customers’ views on your industry. In it, participants discuss their thought processes when choosing which brand to buy from (i.e., you or one of your competitors). This information is valuable to all your sales reps and marketers, who can use it to ensure buyers have everything they need to make confident buying decisions.

You don’t need to hold a meeting after every customer observation activity. Instead, add your notes and recordings to a shared resource, like customer interaction management software, Google Docs or a spreadsheet. Then, users can access insights as and when they need them.

5. Act on your findings

Customer observation is only valuable if you apply its insights effectively. Implement changes based on your findings to address pain points and seize opportunities.

Regular in-person (or video) meetings are helpful. They give your team and others a chance to contribute ideas for improvements based on your latest findings. Keep these ideation sessions informal to ensure everyone feels comfortable contributing – the more suggestions, the better.

Actively apply insights to enhance your products or services and demonstrate to customers that you value their views. If you make any changes based on review trends, social media monitoring or direct feedback, publicize the reasons to help build trust, loyalty and advocacy.

6. Refine your customer observation tactics

Regularly assess your customer observation methods’ effectiveness and look out for new learning opportunities. As your business evolves, so do your customers’ behaviors. You must always be in the right places to collect valuable insights.

Social media offers many great examples of how customer behaviors can change. Ten years ago, TikTok didn’t exist but now it has more than 1 billion active users – that’s important for many e-commerce brands that observe their customers’ behavior online.

More recently, Threads rocketed in popularity. Consider whether that could be a useful place to learn about your customers. Comparing your company’s follower counts on different social platforms can help you determine the most popular channels for online observation. You can also ask customers about their preferences in surveys and interviews.


Final thoughts

Incorporating effective customer observation into your audience research processes is a powerful growth strategy, especially for small businesses. However, you’ll only benefit if you carefully manage, distribute and act on the data you collect.

Invest in a CRM tool or client interaction management software to store and organize all your customer insights. Then, users from all teams can make informed decisions that lead to better customer experiences across the buyer journey.

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