A Guide to Customer Analysis: Cracking the Code

Key takeaways

Customer analysis involves gathering data to identify your target customers' needs, then offering products and services that meet those needs.

• Customer analysis can help you develop marketing strategies, create useful products, discover trends, and recognize areas for improvement. 

• The three components of customer analysis are customer buying criteria, purchasing patterns, and customer demographics. 

• You can use customer analysis to improve marketing initiatives, build sales, and increase profits.

Explore customer analysis, including why it’s so valuable for helping determine your target customer base, their needs, and how to satisfy them. If you’re ready to enhance your marketing analytics skill set, enroll in the Meta Marketing Analytics Professional Certificate. In as little as seven months, you can learn about business metrics, data analysis, data-driven marketing, marketing strategies, and more. 

What is customer analysis?

Customer analysis is the method of examining a customer's demographics, behaviors, purchasing history, and interactions with your business. It is a way for companies to learn more about their customers and identify potential leads who may show interest in the business but have not purchased yet. In addition to gaining a better understanding of current and potential customers, this data can help the success of your business in other ways, including:

• Creating marketing strategies: Use the data you collect by analyzing customers to design marketing campaigns that can effectively reach your target customers.

• Producing useful products or services: By learning about your customers' wants and needs, you can get an idea of what features you should add, remove, or change to your products or services. You can also use the data to learn which new products or services to consider.

• Discovering trends: Use customer data, such as feedback, social media information, and sales data, to analyze and anticipate industry trends. 

• Recognizing areas needing improvement: By analyzing what your customers want, you can make more informed decisions and find out about any changes or enhancements that can improve your products or services. 

Read more: Social Media Best Practices for Effective Engagement

What is customer segmentation analysis?

Customer segmentation is a method used during customer analysis to divide customers into more specific groups by focusing on shared characteristics. By segmenting customers, you can more effectively reach your target audience by marketing personalized content. Customer segmentation allows you to create groups that align with your company’s objectives and target their needs. It also gives you an idea of what products or services you can introduce to the industry to fill a void. 

Customer analysis framework

Customer service frameworks offer a structured approach to creating business goals that support your customers' desires. One popular framework to help you understand customer needs is SPIN (situation, problem, implications, and need payoff). This basic framework allows the customer to answer open-ended questions that help you better understand their needs. Another strategic framework is Porter's Five Forces, a model you can use to analyze any industry’s strengths and weaknesses using five factors: competitive businesses, the threat of new competition to the market, the power of suppliers, the power of customers, and the threat of substitutes for your product. 

What are the 3 components of customer analysis?

Customer analysis relies solely on collecting customer information to help identify target customers, understand their buying habits, and discover how to market to them. Three important criteria to use in customer analysis include:

1. Customer buying criteria: By identifying customer buying behavior, you can better understand why a customer would choose your product over a competitor’s. This information is helpful for marketing efforts.

2. Purchase process and patterns: This behavior analysis offers a deeper understanding of customers' actual process when purchasing a product. Using qualitative and quantitative approaches with the information gathered during customer analysis allows you to extensively look at every interaction your customer makes to help you better understand their behavior.

3. Customer demographics: You can use demographics such as age, gender, geography, income, and more to create a market segment. This market segment can include customers who share similar characteristics and are interested in your products. This helps to create a marketing campaign specifically for a narrower group. 

What are the 3 C’s of analysis?

The three C’s framework in marketing is an analysis tool that focuses on the company, customer, and competitor. Also called the “strategic triangle,” it helps you develop a marketing plan your target audience can connect with, that separates you from competitors, and conveys the value of your brand. By doing this, you can learn how to serve your customers’ needs better than your competitors. A more detailed view of the three C’s:

• Company: Assets, core strengths and capabilities, brand perception, operating model, and cost structure

• Customer: Demographics, pain points and desires, behaviors online, willingness to pay, and buying journey

• Competitor: Current rivals, their strategies, cost positions, their strengths and weaknesses, market positioning, and emerging trends

How to write a good customer analysis

To be able to use the collected data to provide overall insight, writing an effective customer analysis can help you learn how to meet your customers' needs. When writing a customer analysis, focus on your current clients and which segment to prioritize so you can develop a marketing campaign created specifically for them. Some steps to include when writing a good customer analysis include information discovered through:

• Segmenting your existing customers

• Designing a customer survey to find out about what drives their purchases

• Collecting insights from customer-facing team members

• Using information obtained from a customer relationship management (CRM) system

• Creating the ideal customer for your business

• Applying your findings to develop a hypothetical customer profile

Customer analysis example

Many well-known companies use customer analysis to grow sales and run a successful business. Netflix, for example, uses customer analysis to create a customer journey map, which is used to personalize movie and show offerings for its customers. Another example is Amazon, which built its nearly $717 billion business by attracting shoppers by offering them an enjoyable experience, something made possible only by learning about its customers’ behaviors and preferences [1]. Doing so enables the e-commerce giant to provide personal recommendations based on customers’ previous buying habits, a technique that encourages customers to shop for other recommended products.

In an unconventional partnership, the Australian retailer Myer wanted to better understand its customers’ spending habits, even outside its stores. It used Mastercard’s Customer Data Enhancement program to obtain information on customers’ spending habits and the likelihood that they will shop across retail categories. This data improved the company’s target marketing. Myers and other successful companies remain at the top of their game by making customers and their needs a first priority. 

How to use customer data analysis for business growth

The insights gained by conducting customer analysis allow you to offer a positive customer experience by knowing the right segment to reach regarding products, updates, and personalized offerings. A customer analysis can help grow your business successfully through:

• Marketing initiatives: Learning individual customers' preferences helps you align your marketing campaigns to specific channels so you can either save money by cutting marketing costs or reach more of the types of customers that align with your business.

• Building sales: Using customer analysis, you can see both the positive and negative effects on sales and build on the positive while eliminating the negative. For example, are your customers looking for free shipping? Is there a minimum order or any bundled discounts? 

• Improving profits: The amount of profit each customer generates differs significantly. Knowing how much profit you earn from a customer can help you decide if the cost of marketing to those people is negatively affecting your earnings. 

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