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What Is Customer Profiling & How Can It Help Your Business?

what is customer profiling

Customer profiling is a helpful tool for business owners to understand their customers. It can be used to help target a business’ marketing efforts to ensure that they’re aligned with what their customers actually want and need.

Read on for a better understanding of customer profiling and how it can aid a successful business strategy.

What do we mean by customer profiling?

In customer profiling, different data points are used to create profiles or segments from a customer base. Key demographics such as age, location, gender, occupation are useful. Other important statistical areas like purchasing habits and their interactions with company’s campaigns are also included to help create customer profiles.

By using customer profiling, a business understands their target audience better which in turn helps them to serve them more effectively. Businesses can build long term and nurturing relationships with customers, thus increasing brand loyalty, customer retention and an increased customer lifetime value which translates to more profit.

How to create a customer profile

Although customer profiling seems like a daunting task due to the potential volume of data involved, it doesn’t have to be hard.

By following these five steps, a business can be well on their way to understanding their customers better than before by creating rich customer profiles that can lead to creation of targeted marketing campaigns, improved sales team direction, and the delivery of exceptional customer service. Let’s begin!

1. Define your target audience

The first step is to define your target audience. Your target audience needs to include people who are interested in buying or selling your product or service, and would benefit from it in some way. Make sure you know how your company’s products or services help people and who would be interested in it.

One of the first steps to complete is to define the demographic of your customers. Data on age, occupation, gender etc. should be assessed so that you can build a helpful picture of who you are selling to. Knowing this will enable you to build an engaging and relevant strategy to reach that defined target audience. That strategy should compel them to invest their time and money in what your company and product offers.

2. Research your target audience

Research should be conducted on your target audience and is an important step to ensure the effectiveness of any marketing approach you use. By analysing the target customers’ preferences and statistical data points, you can see how you can tap into their buying habits and drive them to your brand. For example, does your target audience tend to buy a coffee on their way to work? You could consider advertising in popular coffee chains in your local area.

Furthermore, if you can dig deeper to understand the particular pain points that these people face, you can then pitch your product or service as the thing that can help them.

For example, If you know that your target customer is likely to be short on time, you can present your product as a time saving initiative. Presenting a product which resonates with a consumer’s needs or requirements will definitely sell better than the one which doesn’t highlight those needs.

3. Create customer personas

Once you have gathered your initial data, your customer personas should be created. These personas will help you identify the customer types who are more likely to engage with a particular product or business. These valuable insights can lead to generation of tailored messages and services which fulfil consumer demands.

An example of a customer persona is:

‘Shopper Sandy’

Sandy is a middle aged woman who enjoys shopping in her leisure time. She is likely to travel into the High Street or out of town retail areas to search for luxury items that she can see and try on in person. Sandy like to frequent upmarket coffee shops and beauty treatments and has her food shopping delivered directly to her door. She works part-time but comes from a wealthy family so has plenty of time to commit to her shopping habits.

Tapping into customer behaviours, demographics and purchasing motivations further help to create relevant and personalised marketing campaigns for that customer. A persona gives your team a check point to refer back to when rationalising if a given campaign of marketing idea will be relevant or worth spending money on. If it won’t resonate with the persona that you’ve created, it’s best to move on to another idea that will!

4. Develop a marketing strategy

Once consumer profiles and personas are compiled, effective targeted marketing campaigns can be planned with the intention of reaching the customers you have identified in a way that resonates with them.

Multiple mediums can be used to reach the target audience with a personalised strategy. Whether it is by using email marketing, social media, televisions, a well crafted message which keeps the needs of the profiles in mind is more likely to resonate and entice them to take action – like buying your product or service.

5. Evaluate your results

Finally, it’s crucial to keep evaluating your campaigns and assess how effective they have been in reaching your desired goals.

Data from consumer surveys, reviews, social media engagement, website visits and number of sales should be analysed to understand whether a particular campaign has been successful or not, or even has room for further improvement or adjustments.

Regular evaluation of campaign results can help you determine the factors which are working and those which are not. These insights can help you improve your approaches and implement the best one. That best approach will better reach potential customers and drive sales.

Benefits of customer profiling

There are many benefits of customer profiling to a business, which is why it is one of the most used techniques in both B2C and B2B marketing.

Here are some of the key benefits of customer profiling.

1. Better understand your customers

Gaining deeper insights about customers is one of the major benefits of customer profiling. Helpful and valuable insights can be generated when data on customer demographics, behaviours and preferences is collected. This data can fuel improved marketing ideas, development of relevant products and enhanced customer services.

2. Target your marketing efforts

Rather than creating marketing campaigns at random because they look good or are a popular internet trend, customised campaigns can be created using customer profiling. By customised campaigns we mean those which are tapping into the desires and needs of consumers and which inevitably lead to higher conversion rates and more sales.

3. Improve your products and services

A business can also improve their products and service by using the data gained from customer profiling. Businesses can make changes to their product lines, offerings and deals to meet the needs and preferences of customers. If customers are happy, the business is happy!

4. Save money

Customer profiling can also lead a business to save money. By understanding customer needs, businesses can avoid spending money on ineffective marketing campaigns or keep an inventory of products which aren’t even popular with customers. They can cut back on products which don’t sell well, invest more in development of products which consumers desire or even modify products to suit the demands or needs of customers.

5. Keep up with the competition

Once a business is well versed with their target audience, their needs and purchasing habits, it can stay well ahead of the competition. By understanding their consumers, businesses can quickly come up with strategies which will work and influence the audience in this highly competitive world and ensure their customer retention rates stays the same.

6. Improve customer loyalty and retention

A more personalised experience can be created for customers once a business understands its target demographic. These experiences can make them feel valued, heard and appreciated thus increasing their brand loyalty and ensuring their retention with a business. Stronger customer relationships can lead to higher satisfaction rates and increased returns.

What is the difference between customer profiling and segmentation?

It is important to understand the difference between customer profiling and customer segmentation. Although both of these are effective techniques in understanding consumer behaviour, they are not the same. Using them together creates a big impact in a company’s marketing strategy.

In customer profiling, data is collected from the customers. This can include their contact and certain demographics to compile together to identify their needs and preferences better. It can help companies create more nuanced experiences for individual customers to increase their likelihood of purchase.

In segmentation, the target audience is further segmented or grouped into different segments based on the subtle factors that influence their purchasing habits. This might be psychological traits, birthday month’s, gender, location, or personal interests for example.

In segmentation, marketing campaigns are created and tailored according to groups rather than individuals.

What types of businesses should use customer profiling?

Any business which is looking to better understand their target audience and create impactful campaigns can benefit from customer profiling.

E-commerce, retail and travel businesses which operate based on consumer preferences can especially make use of this strategy, although it’s applicable to almost any industry.

A company can improve its customer service, tailor marketing efforts and increase customer loyalty by understanding its customers. Valuable insights generated from customer profiling can retain previous customers while also increasing the return rate of new ones.

A major benefit is that customer profiling helps a company be more flexible and adaptable in its strategies and beat competition.

By leveraging the power of customer profiling, best possible consumer experience can be provided which builds stronger relationships with customers.

FAQs

When should businesses use customer profiling?

Businesses should use customer profiling to gain a better understanding of their customers and create tailored experiences that meet their needs. Customer profiling is especially useful for businesses in the e-commerce, retail and travel industries, but can be beneficial for nearly any company looking to increase sales and grow relationships with customers.

How can customer profiling help companies increase sales and profitability?

By leveraging customer profiling, businesses can create tailored experiences that meet their customers’ needs. This will not only help increase sales but also create an environment of brand loyalty that can lead to repeat business and increased profitability. Additionally, better understanding of customers allows businesses to target their marketing efforts more effectively and become more agile when needed.

How can I get a deeper understanding of what my customers need?

Using customer profiling is a great way to gain a deeper understanding of what your customers need. By collecting data such as demographics, contact information and psychographic insights, companies can create customised experiences for each individual customer that make them more likely to purchase products or services.

Additionally, segmentation can help businesses evaluate the subtle factors that influence buying decisions and group people together who share similar traits and behaviours, allowing for more targeted marketing campaigns. This helps companies to better engage with their customers and create an environment of brand loyalty that can lead to repeat business and increased profitability.

How can I find out what my customers’ key challenges are?

The best way to identify customer’s key challenges is to listen to them. It can be done using various methods like surveys, interviews, customer feedbacks and focus groups.

Moreover, by collecting data like demographics and psychographic insights, a deeper understanding of customer behaviour can be gained which can be helpful in creating tailored campaigns for them. Through this, customer challenges can be well identified by businesses and solutions focussed to help them overcome it can be created.

Final Thoughts

To advance your business in a competitive market place, a tool like customer profiling can exponentially help a business stay ahead in the game.

Ultimately customer profiling helps businesses to create meaningful interactions and persuasion for consumers instead of using a generic message for everything.

Marketing strategies which are effective can be created, products and services which are important for customers can be developed and money be saved in the long run.

By knowing who you’re targeting, your marketing content has a much better chance to reach an engaged customer, which in turn is likely to generate higher conversion rates.

 

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