What is a customer profile and why is it important?
A customer profile is a detailed description of your customers based on their demographic information, geographical location, purchasing behaviours, and more. Access to all these insights allows you to understand who your best customers are and to target others like them with tailored and personalised marketing.
As well as helping you identify the types of people who are most likely to engage with you and buy your products and services, customer profiles also help you refine your marketing messages and improve your customer experiences. That means you can get away from ineffective ‘spray and pray’ approaches to customer communications and create targeted and personalised marketing that maximises conversion.
Armed with this kind of customer profile, you can identify and target your most valuable customers across channels. Not only that, but you can also create campaigns to attract new customers with a similar profile to your best customers or create bespoke campaigns for customer segments that are likely to have different needs or respond to different messages or offers.
Why traditional customer profiles are no longer fit for purpose
Creating customer profiles to gain consumer insights isn’t new. However, more traditional approaches tend to be limited to collecting and analysing data that companies have within their own four walls. While this is still extremely valuable in terms of getting to know your customers better, it provides a limited view of their characteristics and preferences as compared to the population at large.
‘More than ever, marketers need accurate up-to-date analytical insights to understand, identify, locate, and target their prospects and customers.’
Debbie Oates, Director of Customer Engagement, Experian.
Additionally, just looking at internal data means companies often fall behind as markets and economic conditions continue to shift. This has been especially evident recently with the rapid adoption of home working, rise in online retail versus traditional bricks and mortar stores, and other disruptive trends. With traditional approaches to customer profiling typically updating customer data just once a year, newer and more innovative solutions are needed to stay on top of customers’ changing situations and preferences.
Three steps to modern, highly effective customer profiling
To overcome these historical challenges, companies need to update their consumer data strategies – starting with their approaches to customer profiling. Here are three ways to ensure your customer profiling can keep pace with shifting markets and customer preferences.
- Get the most from the data you already have
The best place to start with your customer profiling strategy is to consolidate and enrich the data you already hold about your customers. Make sure your data is accessible, verified, and usable, and create a single view of your customers by deleting duplicate entries. Starting with information such as customers’ names, addresses, and length of relationship with your business, you can add enriching insight such as revenue per customer, product mix, times they visit stores or purchase goods, favoured communication and purchase channels, and more. This way, you can start to understand what makes your customers tick and ensure that your marketing messages and channels are appropriate for their needs and preferences. Much of this can be achieved with tools that are inexpensive and readily available, making the process accessible for companies of all kinds and sizes.
- Enhance and enrich your data with third-party data sources
When it comes to creating targeted and personalised marketing, your own data can only take you part of the way. This is because the context provided by external data is critically important for understanding your customers in a comprehensive yet granular way, and for creating actionable insights that drive engagement and revenues. For example, external data is needed to understand what your customer base looks like in terms of demographics, home ownership, behaviours and preferences, income and spending, and a host of other characteristics that help you refine your marketing strategy. For example, you may have two customers who purchase the same product (e.g. a television); however, one customer may live in a large, detached property whilst the other lives in a small, one-bedroom flat. This additional insight can help you to understand their wider needs and further enrich your own data.
- Create profiles that tell the whole (current) story about who your customers are and what they want
Once you have rich internal and third-party data about your customers, you need a way to understand how they compare to, and what makes them different from, the average person on the street. In other words, are your customers typically younger or older than the national average, are they wealthier or less wealthy, and are they more likely to be married or single than the norm?
Finding the answers to these questions requires you to create profiles for each customer type or segment and compare them against each other and the population as a whole. By understanding the full gamut of customer ‘types’ based on a wide range of demographic, economic, geographical factors alongside population attitudes and behaviours very quickly converts your customer data into actionable marketing insights.
In summary, to translate macro-consumer trends into action, marketers need additional ‘lenses’ to deliver a greater depth of understanding. That means understanding customers through both consumer and social data, and through financially focused segmentation as well.
How to use your customer profiles to grow your business
Once you have the fullest possible picture of who your best customers are, and you know exactly who you’re targeting, it becomes far easier to build successful, cross-channel marketing campaigns.
As well as ensuring that your offers are tailored for the desired customer segment, you can also improve the relevancy of your messaging – whether that’s email, social, direct mail or digital advertising – to increase marketing efficiency and customer engagement. You can also measure the effectiveness of your campaigns over time by customer group to accurately calculate your marketing return on investment (ROI).
While customer profiles are critical for effective marketing, they’re also a major asset in many other business areas, from customer service to new product development. For this reason, the outputs from customer profiling initiatives should always be distributed across the entire organisation to achieve the best outcomes.
How can Experian help?
We can help marketers identify their best customers, find more of them, and then coordinate seamless and intelligent interactions across the most appropriate channels. For example, Experian Mosaic can help you to deepen customer loyalty, strengthen brand advocacy and maximise profits. Being effective across all channels – from traditional offline to digital TV and online display – the Mosaic consumer classification enables accurate and consistent targeting, so consumers receive marketing relevant to them.
Find out how Experian’s broad range of datasets and tools can help you uncover your best prospects and find more like them – enabling you to reach the right people with the right message at the right time – every time.