What is a customer profiling?
Customer profiling is the process of defining who your customers are in order to understand their needs or wants better. This information can then be used to make customer-specific marketing decisions to increase customer satisfaction and loyalty.
A customer profile is basically a description of your ideal customer or customer segment.
Customer profiling can be done through various methods, such as demographic analysis, psychographic analysis, perceptual mapping, customer surveys, and customer focus groups. This can take many forms, but customer profiling is generally done to answer some of the following questions:
- Who are my customers?
- What do my customers want?
- What influences their buying decisions?
- How does this differ by customer segment or customer type?
- How can I get more of my customer’s business?
These questions, among others, will help you define customer types and customer segments to tailor your customer service and marketing to meet their individual needs.
What are the elements of a customer profile?
A customer profile is a customer’s data, characteristics, and details that allow businesses to understand their customers’ behavior better. The customer profile usually includes information such as customer activities, customer demographics, product preferences, buying patterns, customer retention history, customer service history, among other details.
Why is customer profiling important?
Customer profiling is important because customer demand drives business. Understanding your customers’ preferences, buying behavior, and motivators will help you deliver customer service and products that meet their needs.
Customer profiling is also necessary because customer loyalty is critical to business success. Loyal customers are more likely to return to do business with you, which means more revenue for your company. Plus, loyal customers are more likely to recommend your company to friends or family members.
Why is it used in marketing?
Customer profiling is widely used in customer service, but customer profiles are also beneficial when planning customer-focused marketing initiatives.
When using customer profiling to make marketing decisions, you can take the guesswork out of what your customers want (and don’t want) by basing your decisions on actual customer data.
Customer Profiling Methods
Customer profiling methods include customer surveys, customer focus groups, and customer experience monitoring.
Survey data can be collected in-person, via email, online customer feedback forms, or telephone interviews. As for customer focus groups, this method brings together a cross-section of your customers or prospects to gather information about what matters to them the most.
Lastly, customer experience monitoring involves listening carefully to conversations customers have about your business (both positive and negative) on social media platforms and review sites.
3 types of customer profiling
1) Demographic
Demographic customer profiling is based on basic customer demographics such as age, gender, job title, and level of education. Demographic information is important because it provides a basis for customer segmentation and understanding of customer needs.
2) Psychographic
Psychographic customer profiling is based on personality characteristics or customer values. This information can be used to develop customer profiles and define customer types by looking at how they behave and make buying decisions.
Typical psychographic categories include:
a) Values and attitudes: These can be thought of as your customer’s personal beliefs about certain things such as family, work ethic, money, and politics.
b) Lifestyles: What type of lifestyle does your customer lead? How do they spend their free time? Where do they like to go on vacation? What types of hobbies do they have? Such questions help you identify your customers’ likes and dislikes.
3) Behavioral
The behavioral customer profiling method uses customer purchasing data such as customer lifetime value, customer purchase frequency, and customer referrals to understand customer buying patterns and their needs. It is typically done using a combination of transactional data (such as customer profiles) and behavioral metrics (such as frequency of purchase, number of purchases made per year, amount spent annually).
4) Geographic
Geographic customer profiling involves collecting information about customer demographics for a specific geographic region. This information can be used to develop customer profiles for different locations so you can market your products or services more effectively in each target area.
Using customer profiles to improve your customer service
Customer profiling can be used to enhance your customer service approach. Customer-facing professionals who understand their customers well can provide customer service that’s more personalized, fast, and effective.
Customer profiling can help service staff tailor their responses to meet customer needs, communicate more effectively, and provide answers that are customized to individual customer needs.
