How to Identify Your Customer

You’ve created an idea for a product or service that you’re sure will be a hit. Now, here’s the next important question: who’s your customer?

By identifying and understanding your customers, you can assess their needs and determine whether your product or service will meet those needs (and, if applicable, how your product or service is better than the competition).

Research will help you determine the customer group most likely to purchase your product or service. This is your target market. Your target market may be businesses or consumers. By identifying your target market, its demographics and its buying and spending habits, you can more effectively focus your marketing and advertising efforts and ensure you’re reaching the right people.

In the preliminary stages of your market research, you may have many potential markets for your product or service. Use a variety of methods like market and competitive analysis, focus groups and other research to pinpoint the markets most likely to positively receive your business concept.

Creating a customer profile is one method of describing the individuals who comprise your target market. A customer profile can provide a clear picture of the type of person or business you are planning to serve. This information helps to drive your marketing strategy, promotional design, and sales process.

As you develop your customer profile (also called a persona), consider these additional factors:

THE CHOOSER VS. THE USER

Sometimes the customer who chooses your product or service is not the end-user. For example, you might create a great board game for children, yet children aren’t the ones who buy your game. The child is the user, but the decision maker is probably the child’s parent or guardian. The buyer is the adult who buys the game. The influencer is anyone who provides the decision maker and buyer with information. In this example, the influencer may be the child’s teacher, another parent, a neighbor, family friend or even the child.

When you describe your customer, consider whom you’ll be marketing the product or service to and who will buy it.

B2B VS. B2C MARKETS

Businesses can target other businesses or consumers. Entrepreneurs often refer to this distinction as B2B (business-to-business) or B2C (business-to-consumer) markets.

While some products or services are only marketable to other businesses or to individuals, some fit both categories. In that case, careful analysis can help determine which market has the greatest potential.

Whether your business is B2B or B2C, compile and consider both demographic and psychographic information.

DEMOGRAPHICS

Customers may be grouped by similar variables, such as age, gender, occupation, education, income levels, geographic location, industry, number of employees, number of years in business, products or services offered or other defined criteria. Generally, the Census Bureau, government or industry sources provide demographic information. Studies and trends are usually reported using predetermined variables from these sources.

PSYCHOGRAPHICS

Customers may also be grouped by similar psychographic variables such as values, beliefs, buying patterns, perceptions and lifestyle choices such as recycling, fitness, travel and hobbies. Psychographic variables provide insights into how and why customers buy. Although this information is valuable, it’s harder to collect because customers’ preferences change over time and this type of information often must be collected directly.

As part of your marketing plan, you’ll create an expanded profile of the potential customers who comprise your target market. For example, a golf ball manufacturer trying to identify the type of golfer most likely to purchase its product will consider the characteristics of customers in the golf market. The golf ball manufacturer needs to know demographics on customers: where customers purchase golf balls, how often they buy them, how much they pay, and their psychographic factors for buying golf balls, such as perceived value, desire for prestige, and price range.

You can collect demographic information about your intended customer from the Census Bureau and other secondary research sources that track consumer information. Psychographic information may require using surveys, interviews and other forms of primary research to collect information specific to your intended customer.

When businesses are your customers (B2B), you’ll collect general market information about them. This type of demographic information can usually be obtained from the Department of Commerce, Small Business Administration (SBA) or industry experts.

Psychographic information for businesses may be harder to locate as secondary research. B2B data may be collected from conducting informational interviews or reading about businesses you are interested in, contacting trade associations, industry experts, and others who are familiar with the industry or business group. You may find yourself doing industry profiles not only on your industry but also on your customer’s industry if the two are not the same.

Marketing a product or service to a business has some major differences from marketing to individuals. In sales to businesses, you may have fewer, larger customers, which can increase your efficiency and profits, as well as your risk.

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