‘How to use customer profiling to gain a competitive advantage’ download article .pdf
Why use customer profiling?
Today’s marketplace is extremely competitive with businesses competing for market share, customer acquisition and customer retention. In order to gain this advantage, to find more customers and to increase customer loyalty, businesses need to target the right prospects with the right offering at the right time. How can businesses understand who might be most interested in their product or services? When consumers are ready to purchase and how to provide a service that makes the customer feel valued and engaged? Customer profiling is the key to gaining a competitive advantage and, if undertaken correctly, can help address all of the above criteria to increase sales and gain market share.
Customer profiling explained
Customer profiling looks at customer’s characteristics including demographic (age, gender, life stage), geographic (location), and psychographic characteristics (influencers, interests, lifestyle), as well as past buying behaviour to understand who they are and what motivates them. Similar types of customers, those with shared traits, goals and motivations can then be grouped and targeted based on who they are and what they are interested in.
Benefits of customer profiling
Marketing is a highly competitive environment, more so now than in the past, with consumers empowered by technological advances enabling them to become more demanding and discerning. Brand loyalty is decreasing, whilst customers expect timely highly personalised communications that are relevant and an overall good customer experience. Any less and consumers will happily take their business elsewhere. To provide a good user experience, businesses need to understand their customers and what they are interested in to be able to communicate with them, as and how they expect. The silver lining to this technological age, is the wealth of data consumers now create through multiple devices and touch points such as mobiles, tablets & computers. Profiling and analysing this data provides the intelligence that can answer not only what consumers are interested in but also how they prefer to be contacted and when they might be ready to purchase. This knowledge, often referred to as customer insight, can then be used to drive your future marketing strategy, help improve targeting and provide a better customer experience.
“The silver lining to this technological age, is the wealth of data consumers can now create through multiple devices and touch-points”
Customer profiling advantages: –
Customer knowledge – profiling enables you to understand your customers, who they are by age, gender, life stage, location, hobbies and past buying behaviour.
Relevancy – ability to tailor communications based on customer’s specific interests which will enhance experience, engagement and ultimately sales.
Increase response rates – communicating with the right people at the right time drives better campaign results and sales, this insight enables a nurturing process to lead your prospects through the buying process.
Customer Experience – If you know your customers you can make them feel recognised and valued, increasing the customer experience and therefore loyalty.
Customer acquisition – If you understand who your best customers are you can look for prospects with the same characteristics. These prospects will have a higher propensity to be interested in your offering and potentially purchase.
Opportunity Sizing – Understanding who your most profitable customers are enables you to focus resource where it matters. Do a small percentage of your customers provide a higher proportion of your profit margin?
Market Penetration – Once you know your customer profile, you can analyse the potential opportunity available to you. What percentage of your target market are you talking to, what’s your market penetration like?
So you know that customer profiling will enhance and improve your overall marketing, but how does customer profiling work?
Customer profiling process
The following provides a simple overview: –
Data Cleanse & Validation – Your customer data needs to be cleaned and validated to enable customer analysis and enhancement enabling profiling.
Single Customer View – If you have disparate data sources, marketing and operational this needs to be consolidated in a single customer view so that each customer’s information whether email response, brochure download or purchase can be analysed together.
Data Enrichment – Your data can be appended with variables such as age, life stage, income, hobbies or consumer classifications such as Mosaic to provide flags against individuals
Customer Segmentation – The process of grouping customers into similar characteristics which may be by demographics, purchasing behaviour or a more sophisticated combination of the two.
Strategy Alignment – Once you understand who your customers are and have segmented them into groups you can develop a strategy to drives sales and performance based on their individual requirements. Each segment will require a different strategy and communications based on who they are and where they are in the sales process.
Targeted Marketing – Once you have developed your marketing strategy to nurture both customers and prospects you are in position to implement targeted marketing. This is marketing based on the interests and needs of each segment rather than blanket marketing to all.
Gain the competitive edge
Customer profiling is a powerful tool for marketers, providing the insight and knowledge to improve strategy and decisions. In a customer centric age, to overlook the value of customer intelligence or to base decisions on gut feel alone could be a costly mistake.
Customers have the world at their fingertips (literally with the technology available). The buying process has changed with consumers now being able to conduct in-depth research on your products and services from home, instore at point of purchase, days, weeks or months before they buy.
To connect to your target market, you need to communicate and engage effectively. If you want to get ahead of your competitors, treat your customers and prospects as valued individuals. To achieve this customer profiling is key – ignore at your peril!
Contact us now to find out how customer profiling could benefit your business – find out more
Why consumer insight is better than ‘Gut Feel’
Customer Segmentation – The Basics