CUSTOMER ANALYSIS
Introduction to Customer Analysis
A customer analysis (or customer profile) is a critical section of a company's
business plan or marketing plan. It identifies target customers, ascertains the needs
of these customers, and then specifies how the product satisfies these needs. A
customer analysis can be broken down into a behavioural profile (why your product
matches a customer's lifestyle) and a demographic profile (describing a customer's
demographic attributes).
A customer profile is a simple tool that can help business better understand current
and potential customers, so they can increase sales and grow their business.
Customer profiles are a collection of information about customers that help
determine why people buy or don't buy a product. Customer profiles can also help
develop targeted marketing plans and help ensure that products meet the needs of
their intended audience.
Ten things you need to know about your customers
Consider the following questions to build your understanding of your customers’
needs:
1. Who they are
If you sell directly to individuals, find out your customers' gender, age and
occupation. If you sell to other businesses, find out what industry they are in, their
size and the kind of business they are. For example, are they a small private
company or a big multinational? Knowing this can help you identify similar
businesses that you could target.
2. What they do
If you sell directly to individuals, it's worth knowing their occupations and interests.
If you sell to other businesses, it helps to have an understanding of what their
business is trying to achieve.
3. Why they buy
If you know why customers buy a product or service, it's easier to match their needs
to the benefits your business can offer.
4. When they buy
If you approach a customer just at the time they want to buy, you will massively
increase your chances of success.
5. How they buy
For example, some people prefer to buy from a website, while others prefer a face-
to-face meeting.
6. How much money they have
You'll be more successful if you can match what you're offering to what you know
your customer can afford. Premium, higher priced products are unlikely to be
successful if most of your customers are on a limited budget. This is the case unless
you can identify new customers with the spending power to match.
7. What makes them feel good about buying
If you know what makes them tick, you can serve them in the way they prefer.
8. What they expect of you
For example, if your customers expect reliable delivery and you don't disappoint
them, you stand to gain repeat business.
9. What they think about you
If your customers enjoy dealing with you, they're likely to buy more. And you can
only tackle problems that customers have if you know what they are.
10. What they think about your competitors
If you know how your customers view your competition, you stand a much better
chance of staying ahead of your rivals.
Techniques to Help You Truly Understand Your Customers
1. Apply Intelligent Customer Engagement
An optimized customer experience is valuable for revenue and retention. If you get it
right, it can be a source of customer insight.
Engaging with your customers in real-time has become more easily accessible
thanks to new tools. Messenger is becoming an ever more popular customer service
channel, while tools like Drift allow you to talk with your customers as they browse
your website:
As you work to keep your customers engaged during the first stages of the customer
journey, think of your budding relationship as a two-way street. Encourage
customers to share their thoughts and opinions by including a customer satisfaction
survey into your email drip.
2. Create More Robust Buyer Personas
Many marketers make the mistake of using generic demographics like age,
profession, and location to develop their buyer personas. These data points simply
don’t provide enough information to create messaging that resonates with your
audience on an emotional level.
One way to dig deeper into customer preferences is to use the Acquisitions tab on
Google Analytics to see which social media outlets, industry blogs and professional
forums your site traffic comes from. Then, apply this information to your personas so
you can find out where and when to reach them more effectively.
3. Generate Data from Customer Analytics
From clicking on a link to reading through a web page, every customer action offers
valuable insight into customer behavior.
To determine how customers interact with your website, you can try a user behavior
tracking tool. Tools like Google Analytics and Inspectlet are great tools for gathering
insights such as time on page and bounce rate. Inspectlet can even provide short
videos of users on your page in real time.
The behavioral data you collect should lead you to conclusions about what your
audience doesn’t understand, what they do and don’t like, and how you can create a
stronger website experience.
If people had trouble navigating to a certain sales page, for example, adjust the
interface to allow for a more user-friendly experience.
If there’s one page people spend more time on than others, analyse that page’s
content to see what’s retaining people’s attention. Most importantly, if there’s a page
with a high bounce rate, try to see what’s making people leave.
4. Anticipate, Predict, and Plan for the Future
Creating a plan for future customer engagement is just as important as creating a
plan for the present. This puts customer experience teams in the right frame of mind
to respond to customers during stressful or challenging situations.
Predictive modelling software mines existing customer data to identify cyclical
patterns and trends that can inform decision making. Two great tools are Rapid
Miner and Angoss’ customer analytics, both of which create realistic future
models.
5. Traverse Your Customer’s Path
The only way to understand the unique and dynamic customer buying journey is to
put yourself in your customer’s shoes.
This is made possible by an advanced technique called customer journey mapping —
a method where companies create a detailed, graphical representation of the
customer journey based on critical touch points — interactions between a customer
and your brand before, during, or after purchase.
9 Vital Customer Analytics Every Manager Should Know
1. Customer satisfaction analysis
Customers who are happy with your product or service are much more likely to buy
from you again. Customer satisfaction analysis is the process of assessing whether
your customers are getting what they want and expect from your business, product
or service – in short, whether they are satisfied or unsatisfied. The most common
way to assess customer satisfaction is with a combination of quantitative and
qualitative surveys.
Tip: Instead of spending a fortune on surveys, why not encourage your customers to
interact with you via your Facebook page or Twitter.
2. Customer lifetime value analytics
If you are able to attribute a lifetime value to each customer, you can immediately
see which ones are the most valuable and therefore most important to you.
Customer lifetime value analytics is the process of analysing how valuable the
customer is to the business over the entire lifetime of the relationship. Instead of
looking at transaction profitability, you look at how long a customer is likely to stay a
customer, how often they are likely to buy during that period and therefore how
valuable they are across that timeframe. This allows you to focus marketing
attention on the most valuable customers. Done well, this analysis can also
potentially identify ways to increase the length of the relationship and the value of
the customer.
Tip: The biggest challenge with lifetime value is finding the right formula for your
business. A KPI expert can help with this.
3. Customer segmentation analytics
Seeking to sell all things to all customers via the ‘shotgun’ approach doesn’t work.
Customer segmentation analytics is the process of finding sub-groups or segments
within the overall market. Being able to assess your customers and split them up
into various segments that might buy more of one product than another or buy more
often allows you to tailor your marketing and communication efforts. The internet is
a vast source of useful customer data, helping companies identify clear segments –
data mining and text analysis are useful tools for this.
Tip: It is possible to take segmentation too far and seek to split your customer base
down into increasingly smaller subgroups. Instead, stick to some core groups who
appear to behave and buy in similar patterns.
4. Sales channel analytics
Unless you know how your sales are made and what channels are most profitable
then you may be wasting time and money on sales channels that don’t work. Sales
channel analytics looks at all the various ways that you distribute your products to
your market to see which channels are the most effective, allowing you to make the
best use of your resources. For this analysis, you need to identify all the sales
channels that you currently use or could use, then attribute each sale to a channel
and subtract the relevant cost of sales for each channel.
Tip: Keep in mind that you don’t always know if the customer was exposed to a
different sales channel before purchasing. In other words, a customer may have
seen your product in a shop but preferred to buy online.
5. Web analytics
Online sales in just about every industry are increasing. Web analytics is the process
of analysing online behaviour so as to optimise website use and increase
engagement and sales. There are two types of web analytics: off-site and on-site.
Off-site web analytics is useful for assessing the market and opportunity whereas
on-site is useful for measuring commercial results. There are many web analytics
tools and service providers available, such as Google Analytics.
Tip: The real value of web analytics emerges if you continue to do it and can see
how your online performance is changing over time.
6. Social media analytics
If you don’t know what people are saying about your company or products, you can’t
resolve any issues that arise. Social media analytics is the process of gathering and
analysing data from social media to see what people are saying about your product,
service, brand or company. In social media analytics, text data from social media
posts and blogs is gathered and mined for commercially relevant insights using text
analytics and sentiment analysis.
Tip: The real power of social media analytics is its real-time, immediate nature. If
you can spot unhappy customers quickly then you have an opportunity to turn that
situation around and create a loyal customer.
7. Customer engagement analytics
Businesses are notoriously bad at customer engagement, yet it has a direct impact
on a company’s bottom line. Customer engagement analytics is a rapidly evolving
field where businesses are trying to map the entire customer interactive journey on-
and off-line. Essentially it is the process of assessing how well (or otherwise) you
engage your customers with your products, services or brand through these various
interactions. Ways of measuring customer engagement include surveys and social
media analytics.
Tip: You can’t please all of the people all of the time but customer engagement
analytics can help to identify what aspects of your product or service customers
value so you can constantly improve your offering.
8. Customer churn analytics
Keeping your existing customers is always much easier and cheaper than trying to
find new customers. Customer churn analytics is the process of assessing how many
customers you are losing over the course of a year. It also allows you to predict
customer churn in the future and take evasive action before you lose those
customers. Customer churn can be assessed using KPIs such as customer retention
rate and customer turnover rate.
Tip: Pay particular attention to how you count customers and set that as a
companywide benchmark for the future. If you don’t then different departments may
count customers differently which can pollute the data.
9. Customer acquisition analytics
If you don’t have enough customers your business will fail, and the same applies if
you spend too much money acquiring those customers. Customer acquisition
analytics seeks to establish how effective you are at acquiring new customers,
including how effective you are at pinching customers from your competitors. There
are a number of metrics that can help to establish customer acquisition, such as the
cost per lead and customer conversion rate KPIs.
Tip: When calculating cost per lead and cost per qualified lead, calculate them
separately for each marketing initiative or campaign you execute. This will give you
a much clearer picture of what is working and what is not.
Benefits of Customer Analysis
1. Marketing Efficiency
Focusing on the individual customer takes your marketing analysis beyond just
knowing your spend and the eyeballs you received in return. Knowing which
marketing channels bring the highest value customers in terms of order size,
retention rate and profitability allows you to either cut marketing costs or expand
your reach more efficiently.
2. Customer Retention
Customer acquisition is expensive, so it's important to understand what causes
customers to leave. Customer analysis can help you identify common denominators
among lost customers and give you an early warning that existing customers may be
in danger of leaving if you don't take corrective action.
3. Increased Sales
Understanding customer purchasing decisions is the key to increasing sales. Use
customer analysis to identify factors that have both a positive and negative impact
on sales. This could include shipping times, how customer service interactions are
handled, whether you have a minimum order or bundled discount, or the customer's
location or income.
4. Improved Profit Margins
Not all customers are equal. Some customers are more profitable than others, and
some may even cost you money. Factors that affect customer profitability include
order size, cost of handling the order, time spent servicing the account and returns.
