Discover the key principles of customer profiling & learn how to optimize your segmentation strategy for improved marketing and sales efforts.
Customer profiling is a marketing technique that's used to gain better insight into the ideal customer and what encourages them to spend money.
It consists of taking information from a set of marketing segments to create a user persona. This user persona closely relates to the actual customer in terms of their demographics and how they think.
A customer profile can be used to reliably anticipate the reaction of a customer when they're presented with an offer of some kind.
The offer can be the introduction of a new or related product, a promotion, or giving a benefit that comes with the purchase of a product. It can also be used to generate customer retention strategies and foster customer loyalty.
Businesses can benefit from customer profiling in ways that range from saving money on marketing efforts to improving sales of an existing product or successfully introducing a new product.
Create stronger connections with your customers and find new ways to market to them with our suite of CRM tools. Read on to learn how to create a customer profile.
What is customer profiling?
The customer profile definition is the act of taking consumer information and placing them into groups that have distinct and/or similar consumer characteristics. A customer profile consists of different identifiers that are considered desirable by the business that's looking for its ideal customer.
In turn, a business can better target an audience by delivering information, promotions, services, and anything else it wants its ideal customer to know about.
This results in the customer receiving communications from the business that aligns with their interests and makes them more likely to spend money with the business.
It can also improve customer loyalty by making the customer feel that the business understands the customer and wants to serve their needs.
Is customer profiling different from segmentation?
Yes, customer profiling is different from segmentation, although the two overlap each other in terms of their purposes.
Customer or audience segmentation is the act of grouping customers together under characteristics and behavior in a more general fashion.
In contrast, customer profiling is more refined in that it uses multiple consumer characteristics for each person in order to better understand their motivations to buy.
Importance of customer profiling for businesses
Making customer profiles gives a company insight into its target market and makes better decisions when it comes to targeting them.
The customer profile delivers vital information that's used to determine what the customer is most likely to buy, helps improve sales of a particular product, provides a solution to a customer's problem, and improves customer loyalty.
A customer profile shows a business what makes its target audience tick.
In other words, the customer profile helps the business understand their customer's behavior, why they're likely to buy a particular product, the circumstances and conditions that motivate the customer to purchase, and how they use their budgets and discretionary funds.
Identifying customer segments
Customer segments consist of the different aspects that go into a consumer's way of thinking, behavior, and life.
Each of the segments make up a part of the customer profile, and when combined together, helps create a definitive picture of the customer.
Demographics
Demographics deliver an overview of the ideal customer in that the age, sex, race, income, residence, education and other details are clearly laid out.
However, demographics only give hard basic demographic data and aren't nuanced in that it doesn't reveal what drives a person to make their decisions.
Psychographics
Psychographics show how people think about and view their lives in a more nuanced fashion than demographics.
This category reveals how people think about a topic or issue, their past mental struggles with a given topic, and what they're seeking to help them solve the problem in a way that makes it stick.
Behavioral characteristics
This gives insight as to how a customer might think about a product, how much-existing knowledge they have, their response to seeing it on the shelf, and their overall opinion about a product and/or a brand.
Behavioral characteristics are frequently in alignment with demographics.
Geographic characteristics
Geographic characteristics categorize new and current customers according to where they live.
Regional attributes such as climate, general income of the area, and density all influence how people spend their money. This can help predict customer behavior when it comes to what they buy most and are likely to buy outside of predictable behaviors.
Firmographic characteristics
Firmographics refers to the characteristics of a business and are used for B2B marketing.
This segment contains information including industry, revenues on a quarterly and annual basis, and where the company is headquartered. This information is used to better target the company with informed sales and marketing campaigns to improve the potential for a sale.
Gather the right information
A user persona is a fictional character that represents the target audience you'd like to target.
In order to create a user persona, you need to collect data that helps you engage in behavioral targeting as part of your marketing strategies.
Customer surveys
A survey asks a customer for their opinion or how they would respond to a given question.
This information shows their interest in an existing product, changes to that product, and what they would consider as an alternative. The questions can be written to elicit a specific response or to get an opinion.
Social media monitoring
Tracking what the target audience has to say about a product on social media helps you collect data on their preferences.
There's no need to engage with the customer, but learning about their opinion in an unfiltered forum can provide invaluable information as to how to market to them.
Customer feedback
Customer feedback provides invaluable information as to how your existing customers feel about your product or service. When you collect customer feedback, you can learn how likely customers are to frequent your business going forward. It can also tell you how to modify your operations to provide the customer service they're seeking.
Web analytics
Website data shows you where your customers are going after they land on the main page. You can use their browsing and purchasing information to inform you of who's most likely to buy the products you're selling.
Sales data
Completed sales show you who's buying the product, its success among your ideal buyer, and how you can position the product to attract buyers with similar customer profiles.
Integrating data from multiple sources
Combining data from various sources provides a more comprehensive view of your existing and potential customers. This integration allows you to cross-reference information, identify patterns, and gain deeper insights.
Merging data from surveys, social media, customer feedback, web analytics, and sales creates a holistic profile that captures both quantitative and qualitative aspects of customer behavior. This allows for more accurate personal development and informed decision-making in your marketing strategies.
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How to analyze customer data
After you've collected the data, it needs to be organized into datasets that you can apply to your ideal user persona.
Recognize patterns and trends
Customer data reveals customer habits and when they're most likely to try something new. It can also show their buying patterns, enabling a business to increase its targeted marketing efforts in response to increases and decreases in a specific activity.
Create customer personas
Using a buyer persona template enables you to create an ideal fictional customer that aids you in your marketing efforts.
The customer persona can answer questions as to how likely they are to buy a product in the future, what draws them into the store or land on a website, and the types of products that are most likely to appeal to their sensibilities.
Asses customer value
All customers have value, but some are more valuable than others. Knowing which customers have the value you're seeking makes it easier to target your marketing in relation to the cost of the item you're selling.
Identify customer needs and pain points
Understanding the needs and pain points of a customer means you can offer them a product or service that provides a solution they're in search of. It can also help them overcome a reluctance to buy.
Improve the customer journey
An in-depth understanding of your customer helps you deliver a pleasurable buying experience for the customer. This makes the customer feel heard, that their needs are met, and the business is interested in helping the customer.
Leverage AI and machine learning for deeper insights
Artificial intelligence (AI) and machine learning (ML) tools can improve your customer data analysis. These advanced tools can process vast amounts of data quickly and find complex patterns and correlations you might miss.
For instance, AI-powered algorithms can identify new or unnoticed customer pain points, predict future customer behaviors, personalize recommendations in real time, and automate segmentation for more precise targeting.
Leveraging these technologies allows businesses to get actionable insights that can lead to better customer experiences and more effective marketing strategies.
Implementing customer profiling in marketing strategies
Once you've created your detailed customer profiles, you can put them into action. Here are some effective ways to use customer profiling in your marketing strategies:
Segmented email campaigns
Use customer profiles to tailor email content and increase engagement. Segmenting your email list based on fully developed customer profiles allows you to create more targeted messages and relevant content. For example, you can:
- Send product recommendations based on recent page views or purchase history
- Customize promotional offers according to customer preferences
- Adjust email frequency based on engagement levels
- Personalize subject lines and content to reflect individual interests
Personalized content marketing
Customer profiles inform the creation of targeted content across various channels. Examples include:
- Blog posts addressing specific pain points of different customer profiles
- Social media content tailored to the preferences of each customer profile
- Video tutorials or webinars designed for specific user personas
- Downloadable resources like e-books and white papers crafted for particular industry segments
Aligning your content with customer profiles can increase engagement, establish thought leadership, and guide customers through their buying journey more effectively.
Dynamic website experiences
Use customer profiles to personalize website content and enhance user experience. Dynamic website experiences can improve user engagement, increase time on site, and boost conversion rates by presenting visitors with content and offers that are truly relevant to them. This can involve:
- Customizing homepage content based on visitor characteristics or behavior
- Displaying personalized product recommendations
- Adjusting calls-to-action (CTAs) to match the visitor's stage in the customer journey
- Tailoring site navigation to prioritize content relevant to specific user personas
Benefits of customer profiling in business
As a business, using customer profiles for your marketing and sales team improves the perception of your business among the general public.
It also helps a business save time and effort on acquiring new customers and retaining current customers.
Targeted marketing efforts
Targeted marketing efforts make it easier for a business to streamline its marketing, spend less money on acquiring a new customer or encouraging an existing one to return, and deliver a marketing message in an effective fashion.
Improved customer service
Customer service teams can use customer profiles to get to know the types of people they're talking to on a daily basis. Customers like it when a business notices them and is interested in taking care of their needs. They're more likely to feel favorably towards a business when they get promotional materials that closely align with who they are as an individual.
Personalized customer experience
Customer data can be used to track a customer's personal likes and used for personalized marketing efforts.
Marketing directly to the customer and making them feel as if their needs have been anticipated goes a long way towards engendering customer loyalty as well as creating positive word of mouth between your ideal customers.
Optimized product development
Knowing and understanding the ideal customer profile definition means you can create a product that meets the needs of your entire customer base. It can also reach similar customer profiles that may not have considered the product in the past.
Enhanced cross-selling and upselling efforts
Understanding what your customer has an interest in buying makes it easier to determine their interest in a similar product, or buying an enhanced version of their regular purchase. You know who is most likely to spend more money on your offerings.
Challenges and considerations in customer profiling
While the customer profiling benefits are numerous, there are challenges you should be aware of, such as:
- Data privacy and security concerns: Comply with data protection laws like CCPA and GDPR to maintain customer trust. Implement security measures, be transparent about data usage, and obtain explicit consent for data collection.
- Keeping profiles up to date: Regularly update profiles with new data from various touchpoints to ensure accuracy. Use AI and machine learning algorithms to detect changes in customer behavior, and periodically validate profile accuracy through customer surveys or feedback.
- Balancing automation with human insight: Use automation for data collection and initial analysis but involve human experts for deeper interpretation. Encourage collaboration between data scientists and marketers to blend analytical and creative insights.
Reap the rewards of robust customer profiles
Creating customer profiles for marketing is worth making the effort to do. It makes it easier to identify your ideal customer, makes your marketing materials more effective, and helps you with your customer retention strategies.
In turn, your customers feel that your business is interested in providing them with quality customer service and that they're more than a dollar sign.
At Mailchimp, we have the tools and materials you need to build your customer relationship management (CRM) campaigns. We understand the importance of customer profiling and what goes into the creation of a buyer persona for marketing purposes.
Check out our resource library today and get started on learning more about the customer profile definition so you can get the best results from your marketing efforts.