How to Effectively Implement and Use Customer Analysis

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customer analysis

Who is your target customer? What do they need? How does your product meet those needs? These critical questions are the essence of a customer analysis (also called “customer profiling”). It’s one of the most important aspects of marketing and product development. How you conduct market research to gather data regarding who the customer is and how they behave is equally important. Once you have that data to segment the market, you can translate insights collected into a product and marketing strategy designed specifically for your target market.

What Constitutes a Customer Analysis?

Market researchers develop the customer analysis first, then map product, packaging, messaging and fulfillment channels to match that profile.

Customer analysis contains a number of components that enable market segmentation. The first factor is an in-depth understanding of customer demographics: how old they are, the gender they identify with, their employment status, job title, career aspirations, daily responsibilities, income and other aspects which can include ethnicity, family composition and more. Secondly, it includes customer geographics, such as where they live, what type of building they live in, which amenities are available within their neighborhood plus other factors. Then, it details their psychographics, such as their opinions, values, interests and activities, which need to be assessed to understand what will motivate them to buy. Finally, a behavioral assessment is included, which requires learning about how and where they shop. This is particularly important to ensure fulfillment channels for your product are aligned with their shopping habits.

A number of market research tools are available to conduct a customer analysis. Surveys are a particularly good choice to understand the general customer demographic and geographic profile. They offer an easy, rapid way to interrogate a large chunk of the target customer base to ask broad questions. Moreover, this approach is highly cost-effective.

Survey output data can then be used to inform more time-consuming, in-depth and costly analyses. Focus groups, interviews, panel research, online research communities and other qualitative methods are helpful ways of elucidating the customer psychographic and behavioral profile. Such tools, when used appropriately, reveal what drives your customers to behave the way they – and why.

Why is Customer Analysis Important?

Market segmentation and predictive analytics inform everything from sales channel selection to direct marketing to how to build loyalty and manage the relationships with your customers. Customers today are bombarded by marketing and face the dilemmas associated with a plethora of choices. These customers are also extremely savvy and utilize online reviews (or develop their own “pros/cons” checklists) to evaluate whether they should buy – or pass – on your product. Whether it is cost-benefit or some other set of metrics, customers are mentally assessing how satisfied they anticipate being if they buy your product, versus how they will feel if they don’t. If you haven’t developed a customer analysis, the odds of your product, packaging, branding and messaging randomly resonating with them sufficiently enough so as to trigger a buy decision are pretty slim. In sum, don’t bet on luck – bet on data.

How Do I Effectively Implement and Use Customer Analysis?

Perhaps one of the key practices to follow is to routinely repeat your customer analysis. Today’s market shifts faster than any time before and a slight tweak or two in your customer analysis may be warranted from time to time. Another is to remain customer-centric as you develop new or modify existing products, packaging and messaging. Customers are highly attuned to how you are connecting with them. Are your communications personalized and specific to their needs or is it general spam? What are their objections to buying your product? Knowing this, you can take precautions to counter and overcome those objections through education and outreach.

The effective implementation of customer analysis is based on the following aspects:

    • How customers use technology informs how your brand should connect with them
    • Social media, CRM or other customer databases and digital platforms including online panel research studies plus surveys allow marketers to identify general trends which in turn inform future lines of questioning for more intimate and in-depth customer analysis studies
    • Analytics enable data scientists to identify gaps and differences between insights and trends that are broadly apparent across the customer population versus those that are unique to each segment of your market to inform more precise targeting
    • Analytics can also reveal who your best customers are so that they are flagged to ensure that they receive adequate attention and to help you find more customers like them
    • Predictive analytics can identify linkages at the individual customer, household and neighborhood levels to forecast sales as you expand your rollout
    • Response rates can be measured to assess marketing effectiveness and inform future messaging, promotional offers and product development
    • Pinpoint where the majority of your customers (and prospects) live and work which can inform where else you should look to find more customers like them
    • Understanding what will motivate your customer to buy, particularly in the context of financial considerations, informs how to price and promote your product
    • Responses including complaints, reviews, shares and other measures uncovers insights to inform how you can and should tailor your messaging and products more specifically to better align with your customers
    • Reduce mailing costs, bolster efficiencies in direct mailing and inform media planning
    • Supplementary content (often acquired from syndicated sources) can fill gaps in your understanding and further the development of your customer analysis
    • Informed efforts are always superior to and preferred over “gut” level decisions
    • Communication plans should be informed by the analysis which reveals how they react to an email, direct mail, phone call or other engagement
    • Media, what they read and who they follow will inform where and how you should reach out to your target customers

There is not one single “right approach” or fail-proof process. The only critical error you or your organization can make is not doing a customer analysis. Make sure to universally applying what you learned via a customer analysis across all business functions to inform product, packaging, marketing and selling efforts.

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