Know Your Best Customer for Increased Sales – Profiling Characteristics vs. Behaviors
“How can I increase my sales revenue?” This is a question that any good business owner, manager or sales professional asks themselves on a regular basis.
A time-tested approach to finding the right answer for your company is to make sure you have covered 4 Ps of marketing: product, price, place and promotion. Getting each of these right is essential to sales success. But, together, they don’t paint a complete picture. You also need to make sure you are going after the right prospective customers.
The target customer factor is too often overlooked, since most companies believe that “pretty much anybody” might want to buy their product or service. But, research tells a very different story: even among relatively niche markets like spray-on truck beds, business-to-business enterprise planning software, or tofu ice cream, two competing brands likely have different “best customer” profiles. This is even more true when you are comparing customer bases of two completely different products or services.
Targeting those prospects most likely to convert to paying customers – as opposed to taking a shotgun or “spray and pray” approach – translates to a markedly higher return on investment for your marketing dollars.
When it comes to taking action on answering the question of who your best customers are, you are engaging in customer profiling.
In brief, there are two types of customer profiling:
1. Characteristics profiling: information about the customer in terms of how they think, demographic information (like age, income, owns vs. rents, etc.), and their opinions and attitudes. Characteristics also refers to habits and customs undertaken their daily life. This type of information can be gleaned from third-party databases of data compiled by research organizations. In most cases, customers’ characteristics are “modeled,” meaning, only a small sample of each type of customer was asked survey questions or observed directly. Then, those findings were applied to other people like them.
2. Behavioral profiling: information about how the customer behaves vis-a-is your company. For example, for hotels, it could relate to how often the person uses the pool, whether they typically visit the hotel lobby bar, or whether they tend to check out on time or late. This information is almost always gathered by the company (or a hired gun, such as a market or customer experience research firm). It is not available – or made available – in third-party databases.
Both types of profiling have huge advantages. For example, characteristics profiling’s biggest selling point is that you don’t have to gather any special data on your customers yourself. Rather, with information such as home address (or, for companies: name and address), you can acquire volumes of information about them and then put them into segments, or clusters. Most importantly, the characteristics-based model is generalizable and therefore can be applied to finding prospects that most resemble your best customers. This is key and is something that behavioral profiling cannot accomplish.
Meanwhile, the advantage of behavioral profiling is that you can tailor and customize your services to the needs of individual customers in a way that modeled (i.e., characteristics) data cannot achieve.
In summary, to increase sales once you have the 4 Ps in place, you need to profile your best customers. Then, to find more prospects who resemble your best customers, engage in characteristics-based best customer profiling. And, to squeeze more revenue out of existing customers, engage in behavioral profiling. Together, the combination cannot be beat for improving sales and increasing your marketing return on investment.