Growing your Business by Working Smarter, Not Harder.

By Dr. Betty Uribe

July/August 2012

Who are your best customers? You may know which customers generate the most revenue, and even the most profit, but do you really "know" them? The more you understand your most valued customers, the more you can target other potentially great customers and win their business, too. Developing a customer profile is a simple way to better understand current customers, acquire new ones and build on those relationships to grow sales and boost your business.

The ideal customer profile is built on information from your existing customer base. The profile will help you determine why people purchase – or do not purchase – your products and services. Customer profiles, also known as “the stick man,” help you develop targeted marketing plans and ensure your products and services meet the needs of your target audience. There are two basic types of customer profiles. Demographic profiles answer the question, "Who?" and behavior profiles answer the questions "How?" and "What?" Both are essential in gaining an understanding of your customer’s behavior and help define and predict the characteristics and actions of your target customer.

Demographic profiles consider characteristics such as age, gender, income levels, marital status, and place of residence. In marketing terms, demographic profiles identify customers by age, social class and gender. For example, younger buyers may make purchasing decisions based on how they feel the purchase will cause them to be perceived. Older buyers may focus on quality or safety. Wealthy customers may be willing to pay a premium for service or for a perceived value, while lower income customers may be more likely to focus on price.

Step 1: Create a demographic profile of your customers. If you service a specific geographic area, use online tools, such as the Census Department website, to gather population and economic data of the customers in your current service area.

Step 2: Evaluate your current customers. Review your sales over the past six months, identify your principal customers and create a profile of those customers. Those who purchased most frequently, higher volumes, and spent the most will likely be your best target customers.

Step 3: Add subjectivity. You probably already know your customers better than you think. But look closely at the characteristics they share. What are their ages, gender and/or demographic characteristics?

Behavioral profiles are focused on actions: which types of items were purchased and how frequently, which items were purchased in conjunction with other items and, lastly, the average transaction value. There are three predictors here: 1) customers who purchase frequently are more likely to do so again; 2) customers who purchase multiple items are more likely to purchase again and to purchase multiple items on their next visit; and 3) customers who spend higher relative amounts per transaction tend to purchase more frequently in the future. If you continue to meet each of these customer needs, they are likely to become better customers over time.

Evaluating the Results

Now examine your ideal customer profile. What characteristics do your best customers share? What age or gender characteristics do they share?

Next, look at your current marketing strategies. Are you effectively targeting your best customers? Are you spending too much advertising to audiences that don’t buy your products or use your service?

If so, you have two basic options:

  • Adapt your marketing strategies to better attract demographics you’re currently missing, or
  • Adapt your marketing strategies to improve focus on the demographics that currently support your business

Which strategy is best? That depends on the priorities of your business, but either will help your business grow.


Betty Uribe is an Executive Vice President of California Bank & Trust, which recently launched a new financing initiative aimed at minority and women-owned businesses in California called T.E.A.M. (Tools, Education, Access and Mentoring).  For more information, please visit http://www.calbanktrust.com/team.