Understanding Your Customer

Understanding your customer is a fundamental ingredient of business success. It’s also a key marketing principle, in that, if you understand what your customer wants, you’re in a better position to deliver it. If you don’t know your customer then how can you meet their needs and win their business? Here’s more about Understanding your Customer

Customer profiling

Identifying and understanding your customer can be achieved by answering questions such as:

  1. Which customers would benefit from your product or service?
  2. Why do they buy it?
  3. How do they use it?
  4. When and how often do they buy?
  5. How do they buy? (e.g. face-to-face, telephone, tender process)
  6. Who is involved in the buying process?
  7. How much money do they have to spend?
  8. Can you match what you’re offering to what they can afford?

You can answer these questions by doing some Market Research, or if you’re already trading you should have access to lots of information about your existing customers e.g. purchase history and patterns, invoices, customer correspondence, etc. Depending on the nature of your business, key staff that are in regular contact with customers will have additional information about them, which may not be recorded formally but will be really valuable.

This information and insight can be used to build a picture of your existing and/or prospective customers – who they are, their needs, how you can reach them, and convert them to customers.

Most organisations find that there are many types of customer that may be interested in their products or services.  However, it is not always possible or advantageous to target all of these. Not all customers are the same and by focusing on the ones that you are best able to serve, you’ll use your time and resources wisely and gain a better return for your hard work.

Segmenting and targeting your customers

The process of segmenting and targeting starts with dividing the market for your product/service into several segments or customer groups.

  • If your customers are individuals (consumers) you may decide to group them according to where they live, demographics (age, gender, family size, income, occupation, and education), their personality and lifestyle, how often they would use a particular product/service, or the benefits they are looking for.
  • If you are selling to businesses or organisations, you could segment according to variables such as their industry/business sector, company size, location, usage (heavy, medium, light, or non-users), and size of order.

Each segment is then assessed for its desirability and the most attractive segments are chosen as prospective customers. Deciding which segments to target is usually based on factors such as the size of the segment, how well it is served by competitors, as well as your ability to reach those customers, profitably.

Finally, marketing activities are designed and tailored for each segment (see Marketing) to ensure that your organisation is firmly ‘positioned’ in the minds of the customer when they are looking to buy.

Here is more information about segmentation and its benefits.