Know Your Customers: Customer Profiles & Personas

Imagine your perfect customer. The more you understand them, the more you can target others like them and win their business. A customer profile is a simple tool to help you better understand current clientele and target demographics to grow sales. Buyer persona – a semi-fictional depiction of your ideal customer based on market research and actual data – is often used interchangeably with customer persona.

Both customer profiles and buyer personas are a collection of information to determine why people buy or don’t buy your products and services. Customer profiles also help you develop targeted marketing plans and ensure your products and services meet your intended audience’s needs. Here are the three basic types of profiles:

• Demographic profiles. These are based on characteristics like age, gender, income levels, marital status, place of residence, etc. In marketing, demographic profiles break down customers into age, social class, and gender. For example, younger buyers may make buying decisions based on how they feel the purchase enhances their image. Older buyers may focus on quality or safety. Wealthy customers may be willing to pay a premium for service or perceived value, while lower-income customers may be more likely to focus on price.
• Psychographic profiles. These profiles answer why, how, and what. Understanding why your customers buy certain products and services and why they buy from you can provide a psychological piece to your buyer persona. A better understanding of what benefits drive customer action is essential for marketing. Diving into how they spend their money and what motivates them to do so can guide your call to action (CTA).
• Buying Behavior profiles. This model focuses on actions: which items were purchased, purchase frequency rate, average transaction value, or which items were purchased in conjunction with other products. Customer buying habits can help you create strategies to maximize your ROI.

Demographic Profiles

Demographic profiles are relatively easy to create. If you service a specific geographic area, use online tools to gather population and economic data. An excellent place to start is the U.S. Census Bureau website, which provides a broad range of demographic information.

You can also quickly evaluate your current customers: Check out your previous six months’ sales, identify your largest customers, and create their profiles. This could be difficult if you run a retail business or a restaurant. Still, since you likely serve a fairly broad demographic, using the averages for your area may yield decent data for analysis.

Finally, go one step further and add subjectivity. For example, if you provide financial services, your best customers will likely be professionals or business owners with a high net worth. In all likelihood, you already know your customers better than you think you do. You simply need to think about their specific demographics.

Psychographic Profiles

While demographic information is relatively easy to acquire through research and third parties, psychographic information requires that you know your customers well. Psychographic data is usually qualitative, so you must generate concepts and themes to organize your data.

One method of getting closer involves debriefing your sales staff about their observations regarding customers. Ask them what groups your customers belong to and describe their personality types. Dig deeper in exploring how your customers like to communicate and why they choose you over your competitors. You can collect data through surveys, focus groups, and questionnaires.

The bottom line is that the more you learn about customer base psychographics, the more likely you’ll retain them as customers – psychographics are all about understanding motivation.

Buying Behavior Profiles

Behavior profile development can be more subjective, but you can apply some objective measures. A straightforward method is to evaluate the frequency and value of purchases.

This protocol works well because:

• Customers who purchase frequently are more likely to buy again.
• Customers who purchase multiple items are more likely to purchase again and to purchase multiple items on their next visit.
• Customers who spend higher relative amounts per transaction tend to purchase more frequently in the future.

Start by evaluating the rate of customer purchases. Rank your customers from highest to lowest in terms of purchase frequency.

Then, evaluate the customers’ total spending per a specific time period. Rank from highest to lowest in terms of dollars spent.

Now, compare the two lists. In many cases, the results will be similar. Specific customers will make infrequent large purchases; others will make frequent small purchases. Both are still good customers.

Evaluate the Results

Now, examine your demographic profile to determine where your best customers fit in terms of demographics. Explore what characteristics, age, gender, or income levels they share. Try to find similarities and themes to help you better understand your customers.

Establish how the demographics tie to the psychographics. When you combine the two, can you predict who makes the best customers for your small business?

Then, look at your current marketing strategies. Do you target your best customers? Determine if you are spending advertising dollars on demographics who do not purchase frequently or in high-dollar amounts.

If so, you have two basic options:

• Change your marketing strategies to attract better demographics and psychographics you currently fail to attract
• Change your marketing strategies to better focus on the demographics and psychographics you currently attract so you can grow your business

You also can modify advertising that doesn’t work and enhance advertising that does work. All these measures dovetail to help you better serve – and cultivate – your target market.