Customer Profiling and Its Benefits

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Recall the last time you had a good conversation with someone you’d known for a long time. Compared with talking with someone you’d just met, wasn’t speaking with an old friend far easier and more enjoyable — simply because you knew them well?

Something similar is true with your customers. When you when you understand what motivates your customers, you’re in a vastly better position to understand what to say to them, when, and how.

Though there is the occasional showman on television who seems to manage it, authorities do not recommend attempting to drive with your eyes closed. Yet trying to ‘sell’ people on your product or service without understanding your customers is very much like doing exactly that. You are at the wheel, but you cannot see the road, nor the pedestrians.

Why Profiling Works

Understanding that the people you are steering towards are human is a key first step. After all, many large companies do market research and still seem to ‘run over’ their clientele.

This is why the newer generation of research firms has moved away from a strictly numbers-and-facts approach and focused on presenting actionable, ‘human readable’ data — as Australian company Play MR puts it, “we give each customer type a name and use an image to represent them. This may sometimes feel a little cheesy but identifying customers as real people (rather than just a collection of data points) helps businesses think of better ways to communicate.”

Understanding what your customer types are and why they are buying from you allows you to see their individual needs. Characterising your ‘ideal customer’ as “the kind of person who buys our product” is less helpful, since you may have e.g. small business customers that care about low cost while at the same time having big-business customers fed up with the bulkiness of existing solutions.

The first type of customer may not be well aware of your competitors’ offerings. To this customer, your marketing will need to instruct them on the basics of understanding your product. Otherwise, they might walk away confused.

The second example customer would already know the industry very well. Therefore, providing them with basics would be at best wasting precious ad space and at worst suggesting your offering is unsuitable for their needs.

To be sure, your customer data is not simply a guide for constructing marketing messages. Most companies find that incorporating this vital information into their decision-making elsewhere provides outsize returns, since they can now craft products or introduce services which they know will serve a need. The chances of producing a ‘blockbuster’ increase significantly when you know which block to bust.

How Customer Profiling Works

Customer profiling proceeds differently for each client and industry. For a retail store, exit interviews done face-to-face by a market researcher might be the best option. Online surveys can work well in the financial industry, with web businesses, or some manufacturers. B2B businesses are often served by telephone interviews with their clients, whereas medical professionals many times respond best to an in-depth individual interview.

The questions involved similarly vary, though ultimately the goals are usually the same: collect their demographic interviews, and then determine from their perspective how well your business is serving their needs and where there are untapped opportunities.

Once there’s a sufficient base of customer responses, it’s possible to start developing customer profiles and using the data. The market research firm will analyse the interviews and surveys and produce ‘composite people’ which are easy for business decision makers to use.

How to Use Profiles

From there, it’s up to the business. These profiles let firms find what differentiates them from the competition in the eyes of the customers, and dozens of other useful points. Equipped with profiles a company can figure out an appropriate communications strategy which will deliver the best possible marketing message to the right type of consumer, at the best possible time. Similarly companies often find new opportunities for selling their products, creating new ones, or increasing sales in existing channels.

Here is an example. Having identified customer types, the business can now ask — what kind of TV shows and magazines will the customers read? what kind of marketing material would appeal to them most? what other brands do they consume?

Based on the answers to these questions, often new (and much more powerful) advertising strategies become obvious, and opportunities for joint venture deals reveal themselves.

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Alex Pejak is an economist currently working on a few projects in Australia, including one for Play MR based in Sydney. She is interested in topics related to market research and project management.