A Model for Customer Behaviour. A more precise way to forecast revenue.

Your customers are your firm’s most valuable asset. To effectively acquire and keep customers you need to understand the dynamics of why they behave the way they do when they make buying decisions.

The idea that your customer base will grow exponentially as a result of improving your methodology of customer acquisition is a simple, universal belief. But growing your customer base should not be attributed only to consistently acquiring new customers but how well a business can keep existing customers. It is cheaper to keep existing customers when compared to acquiring new customers. If you are acquiring new customers at the same pace as you lose some, you might need to revisit your customer experience and get into the sociological and psychological elements of your customers buying choices.

According to Peter Drucker, the true purpose of business is to create and keep customers.


Companies make the mistake of focusing more on fundraising and maximising than on the understanding of the total lifetime value of their customers. When you focus on delivering value to your customers, everything else will eventually fall in place. Focusing on providing value to customers might not bring in immediate gratification case in point Amazon, but eventually becomes a sure way to secure increasing revenue.

Some models to consider and incorporate in your business;

  • The Customer Acquisition Model. (Forecast how to acquire customers)
  • The Customer Retention Model. (Have repeat customers and keep them)
  • The Purchase Model. Forecast how frequently customers will transact with your company.
  • The Basket Size Model. Forecast how much customers spend per purchase.

The Customer Acquisition Model:

Customer acquisition is how you bring in new customers to your business. The model allows you to create a deliberate intentional customer acquisition strategy that you can revise from time to time. A good customer acquisition model takes into consideration all aspects of the marketing funnel from lead generation to eventually making a sale. It is not just about acquiring a new customer, but the cost of acquiring a customer must make business sense. We should be able to predict what people want and be ready to offer it to them and make them buy.

What is the cost of acquiring a customer for your business?

You have to take into account all acquisition-related expenses to be able to calculate an accurate CAC.

This will include all your marketing and sales costs, salaries of sales and marketing team members, paid to advertise. To bring these costs to the barest minimum your approach to acquisition should be targeted, intentional and strategic.

Have a content marketing strategy. Define your audience, know who they are, and then speak directly to them.

Hire the right people if you are not doing it yourself. You don’t want to have people focused on customer acquisition once or twice a week. It should be an everyday affair. If you are too busy to do it yourself, please hire someone qualified to do this for your business.

A website or storefront that works. A website should be functional and serve the need of the visitors. Learn about who is visiting your website and why. It should not take 10 seconds to load your website the first time. If you sell cake, I need to see the cake and prices on the home page and not some flashy website with sliders that might not give me the information I want. We can help you build a robust fast loading website. We have clients all over the world. If you want to know more click here

The Customer Retention Model:

Predicting customers’ probability to return for business.

What is better than acquiring one customer, is not acquiring another customer but being able to retain an existing customer.

  • A customer’s experience is the highest predictor to determine if a customer will be back. Customers with high experience ratings are likely to come. Segment your customers based on their experience with your business. Create dynamic customer experiences
  • Have a plan for onboarding your new customer. An effective customer support system showing them how to use your product, your new website, or service. Have a plan to receive feedback from your customers and rate their experience.
  • Treat your customers like you would a good friendship. Reach out from time to time. Phone calls, WhatsApp messages, email newsletter, direct visits are ways you can communicate with your customers.

The Purchase Model:

Forecast how frequently customers will transact with your company.

  • Discounts can influence a customer’s decision to make another purchase. A timely discount tailored only to them and available for a specific period can influence buying decisions. Use this only when you are sure your customers will appreciate the value of a discount on the product.
  • Enhance the value to your users: When you make products & services with upgrades based on what you are learning from how people are using your offering, you end up giving people what they want, and they will thank you for it with consistent purchase or subscription.

TIP: People’s decisions say things about them and their values.

The basket size model:

  • Create deals, portray relevancy, record your customers’ reaction to them and you can predict basket size per purchase. According to promo codes during festivities is the #1 factor that attracts purchases and basket size. The idea that I can get more for less.
  • Encouraging your customers to pre-order and subscribe weekly, monthly or yearly is a great way to understand their buying patterns and predict future spending and size.
  • Understanding the income level, and buying preferences of your customer is another way to predict how much first time customers are willing to spend.

Follow me here for more business-related articles. I wrote a book on “Winning Pricing Strategy where I spent a lot of time on Customer Psychology and Behaviour. Check it out here

Business Strategist, Building Products for companies using Web and Mobile technologies. Fractional CMO.