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Customer Profiling: The Key To Improving Marketing ROI

December 13, 2017

The ROI or Return on Investment of every business is important in defining its success. Improving the ROI in their marketing campaigns and sales is an everyday goal of businesses. Since every business needs its customers in order to reach that goal and success, building an ideal customer profile is a necessity to all competitive businesses to increase their marketing ROI.

To help you further a customer profile template [PDF] is attached to this blog =)

What Is Customer Profiling in Marketing?

Customer profiling is basically collecting details about customer demographic criteria i.e personal interests/hobbies. Even SIC Codes. This information is used in marketing to understand customers better in order to make more targeted advertising and promotional material.

Traditionally, a customer profile only consists of basic information such as their age, location, marital status, income range, etc. Today, more complex strategies and sophisticated techniques are being used, like mining data from many databases. It’s a way of identifying meaningful patterns to produce more useful segmentation, even in large groups of customers.

Developing An Ideal Customer Profile

Building an ideal customer profile really isn’t that complicated but you’ll definitely benefit greatly from external expertise. Developing the best customer profile begins with three essential steps:

  1. Analyzing the Market — The first step to creating a customer profile is to analyze your market. What does the competitor’s customer look like? What do typical customers in the market usually look like? How do they behave currently and how have they behaved in the past?
  2. Use Third-Party Data — Using third-party data enriches your information and increases your demographics. It will also show connections in relationship information, showing the hidden opportunities of cross-selling and up-selling. Don’t miss adding more information that could help in enriching your customers’ profiles and maximize the value of your existing data. The corporate family linkage may also give your profiling added value, for it shows relationships and connections between different companies.
  3. Apply Marketing Analytics — Applying analytics in your customer profile can give you the kind of quality customers that are very valuable to your business. It can also help you predict future behavior. Usually, customers are ranked according to their response-rate or purchase history. A baseline is then created to determine the standard of the ‘most valuable’ type of customers and will serve as the ‘model customer’ in segmenting your data according to each customer’s value. In customizing scores based on your information, you may do the following:
    1. Choose the best model
    2. Segment your prospects based on their similarity to the model customer
    3. Estimate demand ( the revenue potential the best customer can offer)
    4. Eliminate low-potential customers

What To Include In A Customer Profile?

The most typical and effective customer profile must cover a combination of two important factors: the Demographics and the Psychographics.

  • Demographics – quantifiable characteristics of your prospective customers, such as their:
    • Gender
    • Age
    • Physical Characteristics (body type, hairstyle)
    • Hometown/Neighborhood
    • Race/Ethnicity
    • Education Level
    • Occupation
    • Household
    • Living Situation
    • Religion
  • Psychographics – psychological or mental characteristics, interests, and beliefs
    • Likes/Dislikes
    • Hobbies
    • Favorite TV Shows, Music, Websites, or Other Media
    • Interests
    • Political Views
    • Anxieties
    • Spending Habits

The End Result

When using this information to take action, the data from your customer profiles is a major factor in increasing your profitability or return on investment. The success of lead generation relies on the marketer’s understanding of the profiles of their customers. Building an ideal customer profile is every business’ weapon in generating leads, turning their leads into sales, and most importantly, improving their marketing ROI.

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