The importance of understanding your customer

Can you answer who is your customer? in detail and with up-to-date information?

As a business owner, the answer to who is your customer? should be as easy to recall as your own name. After all, the customer is why you’re in business, so everything you do should be about them.

Most new businesses start by knowing who their customer is and what solution they want to offer them. However, as time goes on, many companies can forget to check if their more profitable customers have changed. Not having this information can lead to decreased sales and inefficient business operations.

The following guide is here to help new businesses identify their target customer and ensure existing businesses have an up to date profile.


Why is understanding your customer important?

Knowing who your customers are forms an essential foundation for all your business, marketing and sales planning.
This understanding will help you structure your business and better communicate with your target audience to help convince them to use your products and services over your competitors. This information will also help you retain profitable customers and help you find more like them.

Regularly checking in and keeping this information up-to-date will also help identify new opportunities and allow you to have more informed conversations within your business. For example, when you started your business, a physical store on the high street might have been the best place for your customers. Now, in light of the COVID-19 pandemic and a general preference for online sales, an e-commerce website might be a more profitable sales platform.

Knowing who your customers are is the key to adapting your business to become more efficient, increasing sales and improving profitability.


How to identify your target customers

When identifying your target customer, it’s essential to start broad and then narrow it down. Starting too narrow might mean you miss more profitable opportunities.

You may need to split customers into different audiences. This segmentation is sometimes necessary to help create specific messages later in your marketing planning process.

For example, you may need to start as broad as separating UK customers from international customers. You can then follow this line of discovery down – are you targeting businesses or consumers; are they affluent or low price point; are they buying for themselves or someone else?

Asking these types of questions will help give you a range of customer types. Your next step is to identify who your primary target should be. This should be based on who will buy the most from you and who is the most profitable (which might not be the same customer type).


Creating target customer avatars

Once you understand all your customer types and have a clear target customer, many people like to build a customer avatar (an image of what their ideal customer looks like). Let’s use a flower shop as an example:

Step one: Identifying the customer goals and targets
Flower customer A wants to show appreciation/sympathy to someone else (occasional/circumstantial purchase). Customer B wants to buy flowers for themselves (regular purchase).

Step two: Find their influences
Flower customer A will typically search online and be heavily influenced by imagery, delivery availability and customer reviews. Customer B wants a tactile experience to ensure the flowers are fresh and will last (florist knowledge and advice is critical).

Step three: Their demographic information
Flower customer A will statistically be male buying flowers online for someone else. Flower customer B will statistically be female buying flowers in the store.


How to keep your information up-to-date

Things inevitably change, and it’s important to keep checking in on your target customers to ensure you’re meeting their needs.

Over the course of your business career, customer buying behaviours will change. Continually profiling and understanding your customers will help you adapt your business structure, marketing message and sales process to help meet their needs.

To keep your information up-to-date, you can:

  • Regularly review top-performing customers, understanding why they continue to purchase from you – a case study can be a great way to obtain their information and document it for others to read
  • Ask new customers where they found you and why they chose you over your competitors – an introduction meeting can be a great way to establish the relationship and gain a fresh perspective of what marketing/sale message is working
  • Understand why customers leave you – assuming you maintain a good relationship, this can be a great way to identify areas to improve and maintain a connection for potential future business


How ETC can help

If you need help with your marketing and understanding who your target customer is, please get in touch.

If you are new to ETC, why not contact us for a free new business review? We’ll spend two hours with you, giving you professional coaching and will leave you with actions for immediate implementation.