Understanding customers
Who are your customers?
If you take the time to understand your customers you will be far more likely to understand what they want from you and why. In order to successfully market to your customers you need to be able to 'identify and satisfy their needs profitably' and for that you will need to do a little bit of work to understand what makes them tick.
Rather than treat the whole town/county/country as a potential customer you need to break it down a little. This guide to understanding customer behaviour, and more importantly, buying behaviour, will give you an indication of how to carry out this customer segmentation and anlaysis.
By breaking down your market into key customer types you will gain a much better insight into their needs.
Gaining customer insight
If you’re selling to individuals, you need to create an image in your mind of your typical average customer. This customer image should include their age, gender, lifestyle, home address, occupation and income bracket.
It’s just the same if you’re selling to companies or businesses - you need understand their main business challenges, which industry they are most likely to operate in, the number of employees, level of turnover, and who makes the buying decisions. It’s only by understanding these things that you will be able to identify how best to sell to them.
Find out who you're dealing with:business intelligence information
Gain added insight into your customers to find out their credit rating, financial information and company director information by subscribing to a good database service. Now Let's Get Started visitors can benefit from a free 3 month trial of market intelligence data.
Understand your customers' buying behaviour
Understand WHEN your customers buy
Depending on the nature of your business, the time of day, day of the week or month of the year could all be key times that you might experience demand peaks or troughs. Examples might be:
- The volume of ice-cream sales in winter versus those made in the height of summer.
- A retail business whose customers are local office workers. Their busy times will coincide with the workforce’s movements at the beginning and end of the day and during lunchtime.
Whatever timescales influence the customer buying behaviour make sure you recognise and understand them and the impact they have on your business. By understanding customer behaviour in this way you will be able to tailor your service to meet their needs and demands, and so increase the chances of them buying from you. Better still, you will be able to forecast your busy and quiet periods with greater accuracy and adjust your work patterns accordingly.
Know HOW OFTEN your customers buy from you
Consider the average life-span of your product. This will enable you to forecast when your customers need an update or a replacement for something they have purchased from you. Will that be daily, monthly, quarterly, or once every 3 years?
By knowing your product, and how your customers are likely to use it, you will have a much better idea of when they are likely to make a repeat purchase. If you have provided them with a good service in the past they may want to buy from you again so why not encourage them to do so. Keep a record of all your customers and what they have bought from you and use this information to contact them at the appropriate time with details of your latest product range and invite them to buy from you again. This is known as customer retention and it's a key activity that's often forgotten in the rush to find new customers.
If you are holding customer data to use in this way, see our article on Understanding the Data Protection Act to make sure you understand how this affects you.
Know in WHAT QUANTITIES customers are likely to buy
Your customer analysis should indicate how much your typical customer will buy from you in an average sale. Take your customer insight one step further and consider what might increase or decrease the amount each customer buys from you. One sure way to increase your sales revenue is to increase the amount of money each customer spends with you so. Changes in buyer behaviour may be due to seasonal factors, your prices, or external factors affecting your industry or the economy in general. By understanding the factors that affect different customer types and their buying patterns you are in a much better position to judge future demand.
It may sound obvious, but if you’re planning a promotional campaign you should expect demand to increase (otherwise why are you running the campaign?) so make sure your business is geared up to cope with the increase.
If you’re selling to wholesalers you’re on a different quantity scale compared with selling to consumers or end-users so the impact of fluctuations in buying behaviour is even greater. Under these circumstances it’s even more important to know your customer types and have a very good understanding of what affects their buying behaviour.
Know WHERE your customers prefer to buy from
Does your customer segmentation and customer analysis indicate your customers prefer to buy from a shop, via mail order, via a face to face visit, or via the internet? If it’s via a shop where should it be located? In the middle of town? On the outskirts? In an out-of-town business park?
Understanding where your customers prefer to buy from allows you to:
- Establish the most effective presence
- Decide upon the most effective sales channels
- Decide where and how best to promote your business.
Remember, in order to buy from you customers need to know you exist, so concentrate your promotions in areas or places they are most likely to see them.
Understand WHY customers choose to buy from you
Customers will buy from you because you are satisfying a need, they benefit from using your product or service, and because you offer them something your competitors don’t. This ‘something’ is called your USP (unique selling point) and the better you understand what your USP is, the better you can market your product.
Your USP could be something very simple, such as shorter delivery turnaround, or it could be very technical related to the specifications or quality of your products. Whatever your USP is you need to understand it, protect it, and make sure you use it in all your marketing and customer communications.
Understanding customers
Who are your customers?
If you take the time to understand your customers you will be far more likely to understand what they want from you and why. In order to successfully market to your customers you need to be able to 'identify and satisfy their needs profitably' and for that you will need to do a little bit of work to understand what makes them tick.
Rather than treat the whole town/county/country as a potential customer you need to break it down a little. This guide to understanding customer behaviour, and more importantly, buying behaviour, will give you an indication of how to carry out this customer segmentation and anlaysis.
By breaking down your market into key customer types you will gain a much better insight into their needs.
Gaining customer insight
If you’re selling to individuals, you need to create an image in your mind of your typical average customer. This customer image should include their age, gender, lifestyle, home address, occupation and income bracket.
It’s just the same if you’re selling to companies or businesses - you need understand their main business challenges, which industry they are most likely to operate in, the number of employees, level of turnover, and who makes the buying decisions. It’s only by understanding these things that you will be able to identify how best to sell to them.
Find out who you're dealing with:business intelligence information
Gain added insight into your customers to find out their credit rating, financial information and company director information by subscribing to a good database service. Now Let's Get Started visitors can benefit from a free 3 month trial of market intelligence data.
Understand your customers' buying behaviour
Understand WHEN your customers buy
Depending on the nature of your business, the time of day, day of the week or month of the year could all be key times that you might experience demand peaks or troughs. Examples might be:
- The volume of ice-cream sales in winter versus those made in the height of summer.
- A retail business whose customers are local office workers. Their busy times will coincide with the workforce’s movements at the beginning and end of the day and during lunchtime.
Whatever timescales influence the customer buying behaviour make sure you recognise and understand them and the impact they have on your business. By understanding customer behaviour in this way you will be able to tailor your service to meet their needs and demands, and so increase the chances of them buying from you. Better still, you will be able to forecast your busy and quiet periods with greater accuracy and adjust your work patterns accordingly.
Know HOW OFTEN your customers buy from you
Consider the average life-span of your product. This will enable you to forecast when your customers need an update or a replacement for something they have purchased from you. Will that be daily, monthly, quarterly, or once every 3 years?
By knowing your product, and how your customers are likely to use it, you will have a much better idea of when they are likely to make a repeat purchase. If you have provided them with a good service in the past they may want to buy from you again so why not encourage them to do so. Keep a record of all your customers and what they have bought from you and use this information to contact them at the appropriate time with details of your latest product range and invite them to buy from you again. This is known as customer retention and it's a key activity that's often forgotten in the rush to find new customers.
If you are holding customer data to use in this way, see our article on Understanding the Data Protection Act to make sure you understand how this affects you.
Know in WHAT QUANTITIES customers are likely to buy
Your customer analysis should indicate how much your typical customer will buy from you in an average sale. Take your customer insight one step further and consider what might increase or decrease the amount each customer buys from you. One sure way to increase your sales revenue is to increase the amount of money each customer spends with you so. Changes in buyer behaviour may be due to seasonal factors, your prices, or external factors affecting your industry or the economy in general. By understanding the factors that affect different customer types and their buying patterns you are in a much better position to judge future demand.
It may sound obvious, but if you’re planning a promotional campaign you should expect demand to increase (otherwise why are you running the campaign?) so make sure your business is geared up to cope with the increase.
If you’re selling to wholesalers you’re on a different quantity scale compared with selling to consumers or end-users so the impact of fluctuations in buying behaviour is even greater. Under these circumstances it’s even more important to know your customer types and have a very good understanding of what affects their buying behaviour.
Know WHERE your customers prefer to buy from
Does your customer segmentation and customer analysis indicate your customers prefer to buy from a shop, via mail order, via a face to face visit, or via the internet? If it’s via a shop where should it be located? In the middle of town? On the outskirts? In an out-of-town business park?
Understanding where your customers prefer to buy from allows you to:
- Establish the most effective presence
- Decide upon the most effective sales channels
- Decide where and how best to promote your business.
Remember, in order to buy from you customers need to know you exist, so concentrate your promotions in areas or places they are most likely to see them.
Understand WHY customers choose to buy from you
Customers will buy from you because you are satisfying a need, they benefit from using your product or service, and because you offer them something your competitors don’t. This ‘something’ is called your USP (unique selling point) and the better you understand what your USP is, the better you can market your product.
Your USP could be something very simple, such as shorter delivery turnaround, or it could be very technical related to the specifications or quality of your products. Whatever your USP is you need to understand it, protect it, and make sure you use it in all your marketing and customer communications.