- IMD Business School

A complete guide to successful customer analysis

If you want your business to succeed, you must understand your customers. This is where customer analysis is critical.

When companies understand their customers, they can serve their needs better. When customers’ needs are better served, they become loyal and profitable.

Knowing precisely what your customers want or what makes them tick will help you set expectations for your team and focus your efforts.

For many organizations, customer analysis is rudimentary and unfocused. Sometimes this research barely scratches the surface and focuses on unnecessary or irrelevant information. In other cases, departments operate individually, meaning customer analysis and research aren’t usable for the whole organization.

Practical customer analysis is based on detailed research, shared across an entire organization, and focused on what matters: customer pain points and goals.

  1. What exactly is customer analysis, and why is it important?
  2. Five steps to running successful target customer analysis
  3. Remember that customer analysis is not a one-off activity

What exactly is customer analysis, and why is it important?

The customer analysis‘s goal is to understand how customers behave and what their preferences are. It involves gathering and studying demographics, buying patterns, product usage history, spending habits, loyalty metrics, and more. This aims to understand wants, needs, pain points, and objectives.

Typically organizations that conduct customer analysis use a variety of methods to do so. These methods include analyzing first-party data (such as CRM or Marketing data), focus groups, interviews, market data, existing customer feedback, and more.

Organizations must ensure that their customer analysis strategies are accurate and up-to-date to remain competitive in today’s changing market. They should always strive to provide relevant insights by utilizing the latest technologies, such as artificial intelligence (AI) or machine learning (ML). Additionally, they should protect customer data’s privacy by assuring customers that any information shared is secure.

Here are some key reasons why you should implement customer analysis:

  • It allows you to shape your strategy around the needs of your customers
  • It enables you to customize and personalize your marketing and communications messaging to address customer needs better
  • It helps you build lasting, meaningful, and profitable relationships with your customer base
  • It enables you to receive product and/or service feedback to inform improvements

By leveraging customer analysis, organizations can build relationships with customers across channels, foster loyalty and increase long-term profitability.

Five steps to running successful target customer analysis

1. Leverage existing customer data

Existing customers should be the starting point for your research when performing customer analysis. This data source is likely to be your CRM (Client Relationship Management) system, and segmenting it or grouping it by customer characteristics can provide invaluable insights into consumer behavior.

Typically segmentation methods may include:

  • Geographic (such as city, country, regions, or territories)
  • Demographic (such as age, gender, education history, or socioeconomic status)
  • Behavioral (how they interact with you and your products/services)
  • Consumption (related to where or how they consume media)

This type of data – zero-party data – can be compelling, offering a detailed insight into customer behavior. It is an effective way to create personalized experiences that drive loyalty, engagement, and long-term customer relationships. By understanding customer preferences through careful segmentation, businesses can deliver targeted services, increase conversion rates and retain more customers in the long run.

2. Utilize customer feedback

A simple yet often overlooked method for garnering feedback is to ask customers for reviews. Companies must understand that reviews provide valuable insights to help them better understand their customers and take appropriate action. Product or Service reviews are helpful in industries such as hospitality or e-commerce, but direct customer feedback can be incredibly beneficial for organizations in any sector.

Reviews act as the “voice of the customer,” By responding to these comments, a company can create more trust between themselves and their customers, improve customer satisfaction levels, drive advantage over competitors and even enhance their brand’s reputation.

The qualitative nature of feedback in review format is an effective way to spot any issues before they become serious problems and enables businesses to take corrective measures quickly. Moreover, engaging customers through reviews helps build relationships, leading to greater loyalty, higher purchase rates, and longer-term revenue growth.

3. Leverage your other first-party data

In addition to your CRM data, several other marketing and engagement platforms can be used to collect valuable customer data.

These may include Google Analytics, Social Media Platforms, chat tools, and contact requests.

The analytical data that can be harvested from such tools could help give you valuable insights about:

  • How people found your website in the first place
  • What products or services are they most interested in
  • What marketing messages have they already been exposed to
  • What links or call-to-actions have they clicked

Moreover, this type of data from Google Analytics can often be sliced into further segments for a more detailed level of analysis that helps companies identify areas of improvement and develop strategies for customer retention and growth.

4. Use your existing internal knowledge

Many businesses are split into various departments, and these departments often have different perspectives concerning their customers’ needs. Gathering insights about your customers from internal teams can be incredibly beneficial as it allows you to develop a comprehensive view of the customer and their requirements.

Sales teams may have more significant insights into customer needs, while marketing teams will likely understand how customers respond to different content or visual stimulus. On the other hand, Account Management and Customer Success teams might possess an even more intimate understanding of the customer’s day-to-day needs.

By leveraging all the available insights from across multiple departments, companies can capture a more rounded picture of their target audience and create better strategies to meet their customers’ needs, and deliver quality experiences that generate loyalty and growth in the long run.

5. Develop your customer personas or buyer profiles

Once you have developed a comprehensive view of your target audience and identified the customer profile types you are interested in targeting, it’s time to start thinking about customer personas. A persona is a fictionalized version of your average customer, created by gathering and analyzing all available data points. It helps bring the customer to life, capturing their motivations, desires, and needs, and provides teams with a clear understanding of who they are targeting.

Personas should be detailed enough to accurately reflect the demographic you’re dealing with and include age, gender, occupation, income, location, and interests. You may also want to note how customers usually interact with your company and how they prefer to be communicated with – e.g., by email or social media.

Further research can then be conducted on each persona – such as what makes them tick and what content they are likely to engage with – to create more innovative campaigns that appeal directly to each segment. By doing this, you can ensure maximum impact from any marketing efforts!

Remember that customer analysis is not a one-off activity

Customer analysis should be conducted regularly to stay ahead of the curve. Doing so will ensure that your business is always aligned with current customer preferences and demands while helping you focus your efforts where they can generate the most impactful results.

An up-to-date understanding of customers’ motivations, needs, and desires provides teams with a clear framework to develop their strategies and successfully engage their target audience. Identifying who your customer base is composed of can provide invaluable insight into how you should develop relationships with them and inform decisions about the services and content you create for them.

Ultimately, being aware of ever-changing consumer trends and applying them throughout the customer journey can increase your business’s visibility amongst prospective customers, help build trust and guarantee satisfaction from existing customers.

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