How to use customer profiling to your advantage

Customer profiling is essential to your business because it helps you identify your ideal customers and their preferences and motivations. Without it, you may not effectively identify who your customers are and what will drive them to commit to you, increase their purchases with you and encourage customer loyalty.

This article will discuss profiling, why it’s important and how you can use it to benefit your business and keep your customers satisfied and loyal.

What is customer profiling?

Profiling is a way of dividing and organising your customers into different groups and creating descriptions of your ideal customers.

There are different ways you can divide them, and this might be by demographics, including age or location, buying patterns, preferred communication channels or social media channels, etc.

You build individual profiles by categorising customers into groups with similar demographics or objectives to help customer focus.

Why organisations use customer profiling

Customers are different, and their expectations will vary due to many areas. For example, age can be an essential factor. McKinsey suggests that two-thirds of millennials now expect customer service in real time. However, this may differ across age groups. Therefore, profiling can identify such trends and adapt accordingly.

Organising your customers into different groups allows you to target them more precisely and appropriately. For instance, you can ensure certain groups are targeted with specific services or products and communication because you know they are interested in or prefer this.

If you keep sending customers irrelevant information or communicate with them via channels they don’t engage with, you risk losing customers or not updating them at all.

How can customer profiling help your business?

Create ideal customers: Customer profiling allows you to create relevant audiences to tailor your marketing to those groups. However, before you begin, it’s essential to consider some questions to help to build the profiles:

● Who are your customers, and what do they want?

● How can you encourage customers to purchase more from you?

● Who or what influences your customers’ buying decisions?

By using effective customer profiling, you are essentially dividing your customers into groups by type or preference. This allows you to target them with the right products or services rather than bombarding them with things they're not interested in.

Profile groups: You can divide customers into different groups, and each has different benefits. The most obvious way to profile customers is by basing it on customer demographics. These may include gender, age or job title.

However, behavioural profiling focuses on the customer buying journey and associated data. For instance, this may include looking at customer behavioural metrics (including annual spending or annual purchases and purchase frequency) so that you can understand customer purchase patterns.

Alternatively, you can use psychographic customer profiling based on customer values or personality characteristics. This focuses on customer lifestyles (for example, how likely are they to have holidays or what hobbies do they have?) and their values, which will impact decisions.

Or, if you use geographic customer profiling, you will collect and analyse customer location information. Once you have this information, you can create profiles for different locations with communication, marketing, and products or services targeted in each area.

Preferred communication channels: Customers may vary in how they like to receive communication and updates. Therefore, by profiling this information, you can communicate with people in their preferred way. This should ensure that they receive the information where and when they want it, but you also increase the likelihood of them reading it.

If your customers receive the communication or information most suited to them and it fits their preferences, it should ideally increase click rates and responses. According to Real Business, improving your marketing efforts through profiling can lead to increased sales and higher conversion rates.

Loyalty and retention: Profiling also helps you with customer loyalty and retention because it lets you personalise experiences with specific customers. This personalisation should also enhance customer satisfaction because you’re giving customers what they want and what appeals to them.

Number of profiling groups: Ideally, cap how many groups you divide your customers into. If you have too many, it may make it harder for you to reach out to customers consistently. You may also have too many to work with. Therefore, consider the groups relevant to your products or services and your customer base before profiling.

Internal team consistency: Profiling helps teams to align and ensure a consistent approach to customers. For example, if the sales and marketing teams have the same information and vision of the target customers, they will know who to approach and how. Also, profiling can help your Marketing team to customise messages and adverts for specific customer profiles and help Sales to focus on pain points for customers and find the right solutions for them.

Attracting, satisfying and retaining customers requires customer profiling to focus on your ideal customers by organising them into groups and satisfying these groups throughout the customer journey stages. ServiceNow’s Customer Service Management helps you build a personalised experience, and the Now Platform offers advanced solutions to develop and maintain long-term customer relationships.

Discover how our ServiceNow customer experience tools can help you find your ideal customers and retain them in the long term.