Ask these 5 questions to know your customer

Someone once asked me who my ideal customer was, and it took me a minute to answer. I realized – that is something I should be able to answer immediately. So, I undertook a process of analyzing what my current customers looked like, and how to “know” my customers better. And I’m going to share some of that process with you here.

In today’s world, with the ever-increasing amount of data that technology can deliver to business owners, you can know your customer more accurately than ever. (See my blog article Big Data. Big Deal? for more insights about this.) It’s easy to make the mistake of answering the “Who is your customer?” question anecdotally with answers like “I get most of my customers from this area” or “Most of my customers are older.” So there is no excuse for having general answers based on basic observations or educated guesses when you have access to so much detailed information about your customers.

Here are some questions to start the process of knowing your customer better:

  1. Why do my customers choose to buy from me as opposed to my competitors?
  2. What value am I bringing to my customers?
  3. How big is my market?
  4. What is my customer profile – age, gender, income, household size, education level, home size, geographic location, marital status, and more. (I have run across many business owners who are truly surprised when they start digging into these details)
  5. What is it about my business that appeals to this type of customer profile?

As you are going through this list, you can see why the answers to these questions are so valuable for your business. These questions strike at the heart of why individuals choose to buy from you, which is ultimately why you’re in business.

In addition to the above questions, you may have additional information you’d like to know about your customers. So how can you go about finding this information about your customers (or potential customers)?

Collect information and deliver more personal service

Targeted marketing with redemption codes and surveys are great ways to learn about your customers. Search analytics, social media, and websites can also be great ways to collect information. If you invoice your customers, you already have their addresses and zip codes. Collect information from every contact you make with your customers (and even potential customers!) Build mailing lists and birthday lists to start building a database of your customers and constantly expand it and keep it up to date.

Most importantly, use your customer data to gain insights about your customers. What does the data tell you about your customers? Which products and services do they like/dislike? How much money do they spend with you each year and when? Which of your promotions seem to be most effective?

Know your customer and spend your marketing dollars wisely

For example – if you have a lot of customers in the low-income category, but spend the majority of your marketing dollars trying to reach high-income individuals, you need to make a decision. Do you want to earn more low-income customers or do you really want to adjust your business to appeal to high-income customers, and if so, what customer data would lead you to that decision (since you already have a lot of low-income customers)? How do you want your brand to be identified?

So I will ask you the same thing I was asked several years ago – “Who is your ideal customer?”

If you don’t know the answer immediately, start working on it. And if you don’t know how to do that, let me know. Helping businesses learn about their customers is just one of the things I talk about with my business clients every day.