If youâre launching a new business, or expanding an existing one, you need a business plan. And as any successful entrepreneur knows, understanding your customers and how they fit with your products or services, is key to your success. Thatâs why the customer analysis section of your business plan is so important.
What is the Customer Analysis in a Business Plan?
A customer analysis thoroughly examines who your customer is, why a customer chooses your products or services, and why a customer will return to buy your products or services again and again. A completed customer analysis will also serve as important information for lenders or investors who examine your business plan. It tells them that you thoroughly know who will buy your products or services and why.
Customer Analysis Methods
Choosing the right customer analysis method, or a combination of methods, is a crucial step in developing a comprehensive understanding of your target market. These methods offer insights into customer behavior, preferences, and buying patterns, enabling businesses to tailor their products, services, and marketing strategies effectively. Whether you opt for a single approach or integrate multiple techniques, the goal is to gather actionable data that supports informed decision-making and strategic planning for your business’s growth.
Surveys and Questionnaires
One of the most direct methods of customer analysis is through surveys and questionnaires. This approach allows businesses to gather qualitative and quantitative data directly from potential or existing customers about their preferences, buying habits, and direct customer feedback on products or services. Carefully designed questions can provide valuable insights into customer demographics, psychographics, and behavior. Digital tools and platforms can facilitate the distribution of surveys to a wide audience, allowing for a broad sample size that can lead to more accurate and actionable data.
Social Media Analysis
Social media platforms are a goldmine of customer data and sentiments. Analyzing social media interactions can provide real-time insights into how customers perceive your brand, what they expect, and their level of engagement with your products or services. Tools like sentiment analysis and social listening can help identify trends, monitor brand mentions, and understand the overall customer sentiment. This method is particularly useful for capturing the voice of the customer and adjusting marketing efforts accordingly.
Focus Groups
Focus groups offer a more in-depth method of customer analysis, allowing for detailed discussions and feedback on specific topics, products, or services. By bringing together a diverse group of customers, businesses can explore customers’ attitudes, perceptions, and reactions in a controlled environment. Although more resource-intensive than surveys, focus groups can provide nuanced insights into customer needs and preferences, often uncovering issues or opportunities not visible through other forms of analysis. The key to a successful focus group is careful selection of participants and structured facilitation to ensure open and honest feedback.
How To Write the Customer Analysis For Your Business
Below, we outline steps that will guide you through creating a customer analysis section that not only aligns with your business goals but also resonates with investors and stakeholders.
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Develop Your Customer Persona
A customer persona is a general view of current or potential customers. Start by looking at your product or service. Who will buy it? Include the basics of your customer demographic, such as age, economic status, hobby or interest, gender, and type of residence. These demographics bring a profile of your âtypical customerâ into perspective. Gaining that perspective then allows your business to develop marketing messages directly to them. For example, if youâve just opened a juice bar business, you may quickly discover most of your customers are women who are looking for fresh juice after working out in the gym next door. You may note that several have young children who want juice without pulp. You may also see that the pricing is appropriate because customers easily make purchases. All of these observations quickly add up to knowing your customer demographics and then marketing to meet those wants and needs.
How can you find more information about customers? Search online for the competitors in your industry where customer demographics may be displayed. Look for products that are similar in some ways to those youâre planning to sell and examine the pricing, the intended audience for the products, and buyer reviews or ratings. Gather online research from as many direct and indirect competitors as possible to look for the intended audience. Who do they appear to be? Check out social media influencers who may target followers that match your customer profile. Conduct informal surveys of neighborhoods or businesses in your community to learn the preferences of potential customers. The more you include in your customer profile, the better you will be positioned to offer the products or services they want or need. -
Understand Their Buying Behaviors
Why will customers want or need your products or services? What compels a customer to make a purchase? What will drive customers to return again and again? Researching the answers to such questions will strengthen your customer profile and add depth to the marketing messages and sales strategies offered by your business. One of the most effective ways to study the buying behaviors of your potential customers is to arrange two to three small, informal focus groups to discuss your products or services. Provide a lengthy description of your product, create a questionnaire that asks several questions about the buying behavior of those in the groups and note the responses. Use the combined data to continue honing your customer analysis.
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Conduct Market Research To Identify Current Trends
Including market trends for your products or services in the customer analysis adds strategic purpose to the business plan. Trends are excellent forecasts and generators of change, so staying on top of them as a new business owner or entrepreneur is vital. Market trends speak more boldly and change faster than ever due to the far reach of social media. To gather market intelligence, examine trends in light of your products or services. Does your product or service have relevance in todayâs marketplace? Is your business capable of being adaptive to new market trends? In short, how will your business capture and keep customers as market trends create challenges? Including market trends in the customer analysis suggests to lenders or investors that your business is prepared to meet and adapt to trends when faced with challenges.
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Research What The Competition Is Doing
Although a competitive analysis may be included in the business plan, the data of potential competitors can be helpful to investors or lenders if included in the customer analysis, as well. A general overview of the competition, including industry trade news and trend reports, will indicate why the buying behavior of the customers will respond to the marketing of the business offers rather than those of competitors. Include the unique value or advantage of the product or service to identify for lenders and investors the reason why customers will remain loyal rather than turning to competitors.
Customer Analysis Examples
To illustrate the depth and application of a thorough customer analysis, consider the following two examples. These samples will provide you with a framework to craft a customer analysis that resonates with both investors and your target audience.
Example #1 – Little Dreamers Boutique
Little Dreamers Boutique primarily targets parents, guardians, and gift-givers seeking high-quality, fashionable clothing and toys for children aged newborn to pre-teen. The boutique’s ideal customers are individuals who value unique, stylish, and sometimes eco-friendly options for childrenâs attire and playthings. Situated in the vibrant downtown area of Greenville, the boutique also attracts foot traffic from locals and visitors exploring the picturesque row of shops and cafes. The demographic is largely middle to upper-middle-class consumers who are willing to invest in premium products for the children in their lives. Secondary customers include grandparents and extended family members looking for special occasion gifts.
Customers of Little Dreamers Boutique are motivated by the desire to purchase unique, high-quality items that are not found in typical retail chains. They appreciate the curatorial eye behind the selection of local and international brands offered at the boutique. Purchasing behaviors are influenced by the appeal of giving children and recipients stylish, comfortable, and sometimes eco-conscious clothing and toys. Seasonal trends, special occasions, and the continuous need for childrenâs clothing due to growth spurts also drive buying behavior. The boutique’s atmosphere, customer service, and product quality encourage repeat business and word-of-mouth referrals.
The children’s clothing and toy market is increasingly moving towards sustainability and unique, boutique-style offerings. Parents and gift-givers today show a preference for organic materials, ethical production, and products that support local economies. Little Dreamers Boutique is well-positioned to capitalize on these trends, with its focus on eco-friendly toys and sustainable fashion. Additionally, the rise of âshop localâ movements provides a favorable environment for the boutiqueâs growth. Staying adaptive to digital trends, like social media marketing and online shopping, is crucial for reaching a wider audience and catering to changing shopping behaviors.
Competition for Little Dreamers Boutique comes from both local shops and larger retail chains. While larger retailers might offer lower prices due to mass production, they lack the unique selection, personal touch, and community feel of Little Dreamers. The boutique sets itself apart by curating a diverse range of styles and brands that cater to the specific tastes and values of its customer base. Online competitors present a challenge in convenience and variety but cannot match the tactile, personal shopping experience offered by Little Dreamers Boutique. The boutiqueâs dedication to customer experience and unique product offerings creates a competitive advantage that keeps customers returning.
Example #2 – HandyFix Solutions
HandyFix Solutions targets a wide array of customers within the Austin metro area and its surrounding neighborhoods. We focus on homeowners and small business owners in need of dependable, high-quality handyman and maintenance services. The primary customer base includes:
- Busy Professionals: Individuals with demanding work schedules who lack the time to perform household repairs or maintenance tasks. They value quick, efficient service that fits into their busy lifestyles.
- Families: Homes with children often require frequent maintenance and updates. Families seek reliable services that can handle a diverse range of tasks, from simple repairs to major renovations, ensuring a safe and comfortable living space.
- Elderly Homeowners: Older residents may struggle with the physical demands of home upkeep and prefer to trust a professional for their home maintenance needs. They seek reliable, respectful and patient service providers.
Customers of HandyFix Solutions are primarily motivated by the need for convenience, quality, and trustworthiness. They prefer a one-stop solution for their home maintenance needs that offers both minor repairs and more extensive renovation services. The companyâs commitment to quality workmanship, flexible scheduling, and excellent customer service aligns with the desires of its target customers.
The growing trend towards DIY home improvement has influenced the handyman service market, with more homeowners willing to undertake small projects themselves. However, for larger, more complex tasks, or for those without the time or skills, HandyFix Solutions provides a valued service. Furthermore, the increasing number of aging homeowners contributes to the demand for home maintenance and modification services, presenting opportunities for HandyFix to cater to this demographic.
Competitively, HandyFix Solutions distinguishes itself from larger, generalized contractors and franchise handyman services with its local expertise, personalized customer service, and a broad service offering that caters to specific community needs. The company faces competition from other local handymen and national chains; nevertheless, its dedication to customer satisfaction and quality workmanship positions HandyFix as a preferred provider in the Austin area.
HandyFix Solutions has strategically positioned itself to meet the diverse needs of homeowners and small businesses in the Austin metro area. By focusing on high-quality service, reliability, and a broad range of offerings, HandyFix aims to cultivate long-term customer relationships and build a strong, loyal base within its target market.
Conclusion
A clear summary of your comprehensive findings in the customer analysis will go a long way toward demonstrating the value of your business. Moving through the checklists, adding research, listening to focus groups, and interpreting industry data will combine to form a customer analysis that holds a central position in the business plan. Whether used in the introduction of a new business or as an entrepreneur, the customer analysis indicates you know your customer very well.