Having a thorough understanding of customers is vital to stay competitive in the contemporary, dynamic business landscape. To have a better comprehension of their existing customer base and target market, businesses should use customer profiling as it is a pivotal tool that can facilitate the acquisition of valuable insights into their behaviours, preferences, and motivations. In this article, we will discuss what is customer profilling, its difference from segmentation and personas, the importance of customer profiling, the steps to carry out customer profiling, and the best practices to be considered.
Customer profiling is a marketing strategy of using data to create a picture of an ideal customer that will use your product or service. Done correctly, a detailed customer profile can be used as a guide for your marketing and advertising campaigns to reach ideal customers.
To help you understand customer profiling better, you can also understand how it is different from customer segmentation.
Customer segmentation is part of customer profiling. Both have a goal to understand customers better and this is what often leads people to think the two are the same thing. In fact, both have fundamental differences in focus.
Customer segmentation aims to group customers using common characteristics, such as age, education, location, and others, into customer segments. Customer profiling, on the other hand, focuses more on the experience and habits of customers.
Customer profiling aims to understand the customer in terms of their behaviour, purchase habit, pain points, and touch points. All of this information is then used to create a better experience, products, and services to the people who actually use your product.
In short, customer segmentation focuses on the surface level of your customers; education, location, and others, while customer profiling allows you to understand your customer on a much deeper level, such as needs, purchase habits, and so on.
Other than segmentation, customer profiles are also often misunderstood as personas. This is because both of them often contain more or less similar information; characteristics of your business' ideal customer. However, it is important for you to understand the difference between the two so that you can make the most of both of them.
Customer profile is used to separate your potential customers from the rest of the market. A customer profile is usually used in the beginning of a sales funnel to give your sales team a guide on which customer should be targeted.
A customer persona, on the other hand, is used on the entirety of the sales funnel, not just in the beginning. A buyer persona is a semi-fictional and idealised customer that your business wants to reach.
To give you an example, imagine that you are having a B2B HR service company. Your ideal customer profile can be a company, for example a company that has more than 100 employees and has a profit of 5 million dollars a year.
For your buyer persona, it would be the head of HR, or the CEO of a certain company who seeks to streamline their recruitment process. Their pain point is that they have a hard time filtering out the right candidates that match their company culture.
In short, a buyer persona is a marketing tool that helps you to close the deal, while a customer profile is data that can help you to decide which customer to chase.
There are several reasons why your sales and marketing team need to profile customers such as understanding existing customers' needs and preferences, developing strategies that can yield maximum results, and increasing customer satisfaction.
For more details, here is the full explanation:
You can derive valuable insights into your customers' wants at different lifecycle stages and factors that affect their purchase intentions.
A major Japanese real estate developer was looking into building a luxury mall in Hanoi, Vietnam and wanted to target highly affluent shoppers. Through ADA’s Consumer Profiler, we identified the demographics, density of mall visitors at different malls at specific times of day, and their residential and work locations. The developer gained a comprehensive overview of the top 10% of shoppers in Hanoi.
You can craft effective marketing strategies that resonate well with your customers once you understand their likes and dislikes.
To appeal to the millennials that uphold environmental sustainability, sports apparel and footwear giant, Nike make the most out of its customer profiling efforts, adopt a customer-first approach and launched the “Move to Zero” initiative in 2019. It made changes to its operations, encompassing the use of 100% renewable energy, eliminating all single-use plastics and diverting waste into new products.
Being transparent about its commitment towards sustainability efforts in the said marketing campaign, Nike sets itself apart from its rivals as this has endeared itself to its target customers, influencing them to splurge on its premium lightweight shoes with waffle tread.
At ADA, we helped a major Japanese automotive company in the Philippines to understand their target market in specific points of interest (POI) – the young adults in universities and in central business districts. Through ADA’s Consumer Profiler, the manufacturer gained further insights into the online and offline preferences of the target audience. Their marketing messages were then crafted differently to better resonate with their target audience. The in-depth understanding of their core target potential customer successfully yielded a better conversion rate and lowered the cost per lead compared to the industry benchmark.
With an in-depth understanding of customers through customer profiling, you will be able to deliver personalised customer experiences, which is a precursor to customer satisfaction, loyalty, and retention.
This practice was one of the reasons for the aggressive growth gained by Amazon which frequently collects data on its customers' purchases, browsing history, and preferences and uses this data to create personalised product recommendations and targeted marketing campaigns. Its strategy of leveraging data from customer profiling led them to be consistently recognised for its excellent shopping experience.
Before starting to create a customer profile, you must understand what is needed to create it, in this case what data you must have.
To make an accurate customer profile, your business will need plenty of data such as demographic data, psychographic, geographic, and behavioural. Let us take a look into each type of data.
Demographic information includes:
If you are working in B2B industry, demographic data can also include company size, industry, and other organisational traits.
Psychographic data includes:
Psychographic data can be helpful to understand the customer journey to buy your products and even after they buy your products or services.
Geographic information includes:
Geographic or location insights can help your business to plan logistics and marketing efforts. A simple example would be your business effort should be concentrated the most on location with the most customers.
Behavioural data includes:
Behavioural information is useful for personalisation. Behavioural information can be used to provide recommendations based on the products or services they used before.
To create an effective customer profile, businesses should follow these steps:
Collect a large array of data on your current customers, including relevant basic demographic data, such as age, location, and job, purchasing behaviour, and psychographic information. To ensure the reliability of the collected data, draw on information from customer profiling software, such as CRM system, social media, and Google Analytics.
When gathering data, you can start to categorise your customers into three brackets: the most profitable customers, profitable, and least profitable. This categorisation can help you to determine which customer profile is better to chase than the other in terms of profitability.
Use data analytics tools through Machine Learning and AI to analyse the data as well as identify patterns and trends. This can help you obtain a broad understanding of your customer's needs, preferences, and motivations.
Leverage the data you have to craft your marketing strategies. Analyse your data to create customer personas that embody the characteristics of your ideal customers. Details of a customer profile will not only cover demographics like age group, gender, and affluence level, but also include geographics like district level and psychographics such as their interests, lifestyle, and behaviours.
Once you have created your customer personas, use them as a blueprint during the development of your marketing and sales strategies. This includes the creation of personalised and targeted marketing campaigns, the development of new products and services, and customer service excellency.
Regularly check, assess and update your customer personas to ensure that they remain relevant and mirror the latest customer behaviour and preferences.
Analysis of consumer’s footfall by time blocks of day, week, and month.
Analysis of age group and gender, affluence, interests, including mobile device models and tier, and home property prices which will be used as a proxy for affluence modelling.
Categorisation of visitors based on our 10 personas or customised personas per client’s focus.
Observe the switching behaviour of visitors, from one brand to another.
Analysis of telco providers and mobile device model used by consumers.
Analysis of distance travelled from home or work to selected location (your outlets, distributors, etc).
The benefits of customer profiling are not to be trifled with and it enables a company to achieve sustainable success. By gathering and analysing customer data, creating customer personas, and utilising these personas as a blueprint for marketing campaigns, businesses can gain a deeper understanding of their customer's demands and preferences, and create a more personalised and memorable customer experience.
At ADA, the integration between analytics, marketing, commerce, and customer experience are the key factors that define a business’ growth. Using a data-driven approach, we have helped clients of various sectors achieve their goals and won accolades such as the Campaign Asia Agency of the Year, Data Analytics Agency of the Year, The Drum, and more.