Anna has a Bachelor's in Finance and has spend multiple decades working in the private and public sector. She explores business from a financial point-of-view in her written content for various online publications.
Analyzing your customer base is an essential part of succeeding in business. Customer analysis is a key part of any successful marketing plan, as well as for your overall business plan. There are three elements to customer analysis: (1) identify your customers, (2) define their needs, and (3) show how your product or service meets those needs.
Identify Your Customers
No matter the age or type of business you have, it's important to define specific characteristics about your desired customers. How you go about getting the information will be different if you have a new startup compared to an existing business.
You will need to include key descriptive facts about your target and existing customers. Key information includes:
Demographics: Gender, age, family, location, income, and job type
Geographic: Location, population size, type of area (rural, suburban, or urban)
Psychographic: Social class, lifestyle, personality, motivation
Communication: Where the group spends time, how they prefer to get information
Size of Base: Size of the target population and whether it is group growing, shrinking or staying about the same
Customer Identification for Startups
As a startup, you may not have any existing customers. As a result, you don't have anything to draw from when answering these questions. However, don't assume that because your business is new that you have to guess who your target market will be. There are a variety of ways you can determine information about prospective customers, even before you start your business.
Benefits: Clearly identify the benefits of your product or service, and make a list of the types of people who would most need those benefits. Be very specific, drilling down into the gender, age, and life situation of someone who would really desire your products or services.
Questionnaires: Questionnaires can have some biases, but they can be a good starting point. Consider using Facebook ads to target the potential customers you identified in the first step and ask them to answer your a few questions. Consider incentives to increase participation.
Competitors: No matter what type of business you're planning to start, chances are that someone else is doing it too. Research your competitors and see who they serve. Find successful companies in the industry and notice who they seem to speak to, and who their customers are.
Locations of ads: Where do ads show up for the types products or services you plan to offer? Do you notice that your industry focuses ads in specific magazines, specific areas of town, or near particular businesses? Who reads the magazines or lives in those areas? Noticing these facts can give you a lot of information about who your likely customers may be - and where to find them.
Learning About Existing Customers
If you are creating a customer analysis for an existing business, you already have customers you can analyze to better understand your reach and focus. There are a number of ways to gather data about your existing customers.
Customer surveys: One way to learn about your customers' specific psychographic information and interests is to ask them via a survey. You can use your existing communication channels with customers, which include mailings, online surveys via email, or call-in survey numbers on receipts. Choose the channels your customers are most likely to use.
Data analysis:Analyze the customer data you already have to gain insights into your customer base. Chances are that you have quite a bit of information in your information system, including demographics, past purchases and more, that can provide a gold mine of information when you take the time to analyze it.
Social listening: Social listening involves pay attention to things like where people are discussing your business online and where your content get shared the most. Social media platforms have very specific user bases, and each one is different. When you see where people share about you online, you'll know who's interested. Some great tools for social listening include Google Alerts, Digimind, and Sprout Social.
Talk to customer-facing staff: You have employees who talk to your customers every day. Use this resource to learn more about your customer base. You can ask staff members for anecdotes or have them start tracking specific information. Either way, you'll gain insights from having discussions with team members who interact with your customers.
Knowing who your customers are is only the first step, but it's a vital one. Don't be satisfied with a surface-level understanding. Instead, dig deep for details and really get to know your target market.
Note: If the customer base for your existing business is small or you would like to expand, the methods described above for startups would also be beneficial.
Define Your Customers' Needs
Once you know who your customers are, it's important to clearly define their needs. This will help you know if your products or services meet the right needs or should be adjusted in order to help your company succeed.
What You Need to Know
The specific information to discover about your customer needs includes:
Emotional information: What are your customers' dreams, hopes, and fears?
Motivation: Does your customer base focus on quality, price, uniqueness, or other factors?
Language: How do they discuss their problems? What words and phrases do they use to describe the needs that your product or service fulfills?
Specific need: Is the specific need that your product or service fulfills significant to the customer? How important is it to the customer to get a solution?
Objections: What are some common reasons a customer might not choose to solve the problem with your product or service?
How to Find Out
The good news is that established organizations and new companies can use similar techniques when uncovering customer needs. Defining your customers' needs and the language they use to describe those needs can be determined by:
Ask: Take the time to ask your potential or actual customers what their needs are. Survey software, online outreach, mailings, focus groups or individual interviews can can all be effective ways to do this. Choose the outreach method that is most comfortable for your target demographic. Ask questions like, "What struggles do you have in (area)?" and "Are these concerns frequent, occasional, or rare?" You can also ask, "Which of these factors most influence your choice of (product)?" and list various options to get a better focus for your marketing.
Quora.Quora is a large website dedicated to questions and answers. Discovering what people are asking about your industry, products, or services can help you understand their needs. Do a search to get information for your business plan, but subscribe to updates about your industry as well. You may find that answering questions helps build your brand!
Online reviews. Online reviews on places like Amazon, Yelp and other sites can be a great source for understanding customer needs. Find products or services similar to yours and discover why they did or didn't meet expectations. This is also an excellent way to find keywords and phrases that customers use to describe their needs. A word of caution: when analyzing five-star reviews watch for signs that the information might not be legitimate.
Blogs and magazine content. Your customers will consume content related to their needs, desires, dreams, and fears. If you find during surveys, or by analyzing competitor ads, that a specific blog, magazine, or other content resource is popular with your customer base, pay attention to the publication's content. You can learn a lot about customers from the types of topics they tend to read.
Once you have combed these resources, compile your research to get a comprehensive view of what your customer truly needs and fears, along with the language they use to describe these problems. Use this information in your marketing going forward.
Determining Product-Customer Fit
The final step in customer analysis for a marketing plan is to show that your product or service fits the customers' needs that you have found. Regardless of whether your company is new or well-established, it's important to review product-customer fit.
Product or Service Analysis
Now that you've determined your customer base and what they need, it's time to analyze your product or service. There are four steps:
List the features of your product(s) or service(s).
Describe the benefits of each feature.
Describe the customer outcomes associated with each benefit.
Define the transformation the customer can expect from using your product or service.
The fourth step is the most important and can directly impact the direction your marketing should take. How will your customers' life look when their primary problem is completely solved by your product or service? This picture is an extremely persuasive way to sell your product or service.
Illustration
The example below illustrates applying these four steps for a service company providing career coaching to female middle managers.
Feature: ABC Coaching helps women gain new professional leadership skills.
Benefit: These skills help women gain confidence in their work and establish more effective leadership habits.
Outcome: When ABC Coaching's clients perform better at work, they are more likely to be noticed and promoted into positions of higher responsibility.
Transformation: When our clients achieve these promotions, they experience the professional success and financial freedom they've always dreamed of enjoying.
Once you've defined your product-customer fit, you've completed the customer analysis portion of your marketing plan. Great work!
Free Customer Analysis Template
To make it easier for you to organize your thoughts and format your customer analysis report, use the template provided here as part of your overall business plan. Simply click the image to access the template. It will open as a PDF file that you can edit, save and print. If you need help downloading the template, check out these helpful tips.
It may be tempting to do only a surface-level analysis, but it's important not to cut corners. A deep-level analysis is crucial to your success. Customers are more empowered than ever, and they have more easily accessible choices than any other time in history. By doing a full customer analysis for your marketing plan, you'll give your company the best chance to grow and succeed.
