If you know your customer profiles you can make more money from your customers?
Well, actually, yes, it’s true.
But right now, to most small business owners, I’ll wager that the very idea of a customer profile is as clear as mud. It’s just one of those lovely marketing jargon phrases that people “in-the-know” use when they want to show off their marketing smarts.
Well, enough of that. 🙂
In this brief example I’m going to firstly explain what a customer profile is, and then show you how you can segment your customers by profiles in ways that will generate more sales and more profits.
Customer Profiles – A Definition
According to www.BusinessDictionary.com a customer profile is a
Customer description that includes demographic, geographic, and psychographic characteristics, buying pattern, creditworthiness, purchase history, etc.
Now that doesn’t sound too complicated but in practice it’s often hard to know how all the various possible elements fit together to create a separate profile.
So, for small businesses, I have another approach.
Rather than look at a complicated range of demographics and psychographic characteristics, go the quick and simple route instead.
Let’s say you run a hairdressing business. Most of your morning clients are middle-aged or elderly women. To start with, group them by information such as how often they come, what they have done and how much they pay.
Then look at what they’re buying from you – and, more importantly, what they’re not. Let’s say you discover that 70% of middle-aged women color their hair. That’s one of your more profitable products so you’re pleased to see such a high percentage.
But what about the 30% who aren’t coloring their hair? The obvious question to ask is: Why Not?
And here’s where customer profiling comes into play in a very practical way. Your job is to figure out why they’re not coloring their hair.
Of course, in a hairdressing business the easiest path is to simply ask your customers directly.
Some of them want to age more naturally, some will tell you price is an issue, and others will mention fear.
Profile only the people who aren’t buying a particular product or service from you and figure out what’s stopping them. That’s where the money is.
So if you have a subset of middle-aged ladies who are scared to color their hair because they’re afraid the change will be too radical, or they’re not sure what color to chose or whatever, break down their fear.
You could give out an information packet with answers to common questions, you could do a special promotion for first timers, you could organize a color party for groups of friends to come to together… The possibilities are many and varied.
But, at the end of the day, you’ll be a smarter marketer for having figured out what’s stopping people from buying from you – and it all starts with a customer profile.