Customer Analysis: Using Data to Know Your Customers Better
Customer analysis is a critical part of building your business marketing plan. In this customer analysis guide, you will learn what customer analysis is, what the process entails, and how to use it strategically.
What is Customer Analysis?
Customer analysis is a process through which a company obtains information about its customers. The process involves the following 3 stages:
- Identifying who the current customers are
- Identifying the needs of the different customer groups
- Bridging the gap between the customer needs and how the company meets these needs
Understanding what motivates customers to make a purchase is vital. A marketing plan can then be structured around providing solutions to customer needs.
Customer Analysis Importance and Benefits
If a business doesn’t know what a customer wants, it cannot effectively market products or services to meet the customer’s needs.
- Define the target market
- Assist the business to accurately reach its target market
- Assist the business to choose strategic operational sites
- Allow the business to develop an effective marketing plan, using the allocated budget in the most influential way
What Data Should a Customer Analysis Include?
It is vital to know exactly the target audience for your product or service. This data can include various demographic information. Gather the following data when performing your customer analysis:
- WHO are your customers?
Determine which income group your products are targeting. Your product or service may be a luxury catering to high-income individuals or businesses. You may have a range of products catering to various income groups. Segment your market according to which income level is the best target for your products.
Products and marketing strategies geared towards different age groups will vary. Preferences, priorities, and the way various age groups respond to marketing methods will differ. Consider the age range in your analysis, so that you can develop effective marketing across the right channels.
Life Stage and Interests
People in different age groups may be at a similar life stage. For example, first-time home buyers can be in their 20’s, or their 40’s. Homebuyers of the same age could be looking for a family or home or a weekend party condo. Consider your customers’ education level, hobbies, marital, and family status.
When considering location, look at where your target market is situated. Consider which brands you are competing with in the same area. If you have a physical business, assess whether your business location is convenient for your customers. Perhaps it is more convenient for them to go somewhere else.
Looking into consumer buying behavior will present information about regular purchases, timing, and quantities. These insights will assist you in creating loyalty programs, returning customers, and knowing when to market specific items.
Be aware of the brand and lifestyle quality that your customers are after. Some customers will be willing to pay more for preferred brands, while others are concerned only with the price. If customers prefer premium brands, learn what they are and what makes them sought after.
- WHAT are their needs?
Now that you know who your customers are, it is easier to identify their needs. Needs may include physical, emotional, and educational aspects. Consider the following examples:
- A security company will target the need for safety. The security company may delve deeper addressing the client’s concern to protect their family or business assets.
- Fashion brands often tap into a need for acceptance and beauty. This message will be interpreted differently by various age groups and cultures.
Analyzing customer needs will help you determine what your market share potential is. Question whether there is room for expansion or if the market is oversaturated. This may merely mean a change of strategy in the way you market your products.
- WHAT drives purchasing decisions?
An important part of customer analysis is to determine the decision drivers behind purchases and behaviors. Tapping into the reason customers buy a product can greatly impact marketing effectiveness.
Reasoning behind purchase decision-making can include:
- Accessibility to alternative choices
- Customer knowledge
- Client-business relationships
- Customer loyalty
- Product compatibility of the products used by customers
- HOW does your product or service meet customer needs?
With your customer analysis complete, you can determine how your product meets the client’s needs. Keeping in mind the decision drivers, make a clear connection between your customer needs and the solution you bring. If required, redefine what you are offering to connect customer needs to your solution.
How Do You Write A Customer Analysis?
Once you have collected the essential customer data, compile your customer analysis marketing plan in the following layout:
Under the introduction, include the objectives of the customer analysis. These would be to:
- Define the ideal business customer
- Evaluate the current strategy for reaching the target group
- Recommended adjustments to improve the marketing or service strategy
- Customer Classification
In this section, describe the customer demographic specifics acquired through research. State clearly who the target group is including their gender, age, lifestyle, spending habits, and needs.
- Target Marketing Strategy
Evaluate the current business strategy for reaching the target customer group. This could include a variety of methods such as sales, events, social media, after-sales service, sponsorships, and billboards.
End the presentation with a section highlighting gaps in the current strategy. Make suggestions for improved marketing methods.
When performing a customer analysis you gain specific information to improve your marketing strategy. Every customer analysis should identify:
- Who the target customers are,
- What the customers’ needs are,
- What drives customer purchasing decisions, and
- How your product or service meets customer needs.
When presenting the customer analysis marketing plan, include the following:
- An introduction stating the objectives of the customer analysis
- Outline the customer demographic specifics
- Evaluate the current Marketing Strategy
- Conclude with suggestions for strategy improvements according to the analysis outcomes
By regularly gaining insights into your customer base, you can market your product or service effectively ensuring on-going sales growth.
CustomersFirst Academy offers comprehensive customer service training designed to help you grow your skills and advance your career.
To keep learning and developing your knowledge of customer service, we highly recommend the additional resources below:
How to Succeed in a Customer Facing Role
Effective Strategies for Managing Escalations in Customer Service
How to Succeed at Internal Customer Service
Customer Service Tools: Finding the Best Customer Database Software for Your Team