Data Analytics: Customer Profile

In our last post we gave an overview of what Impact’s Data Analytics do for you. We’ll continue this series and look at Response Analysis, Sales Analysis and RFM Analysis but this time we’ll look a little bit deeper at a Customer Profile.
What is a customer profile?

  • A profile answers the basic marketing questions: “Who are my customers and where are they located?”
  • A standard customer profile has five elements:  Age, income, Spectrum lifestyle segments, zip code list, and trade area mapping. An enhanced profile includes an additional 2-4 elements (Example: net worth, length of residence, marital status, etc.), and an advanced customer profile includes multiple basic or enhanced profiles to account for multiple stores, or distinct product/spending groups.

How does a profile answer the question: “Who are my customers?”

  • A profile compares the distribution of customer households to the distribution of market households for each attribute.  In addition to the raw counts, percentages and index scores are calculated.
  • A profile is the beginning of the process for identifying and targeting customer market segments.  Generally, market segments worth targeting are those that already show signs of being likely customers by having high customer counts, percentages, and index scores.

How does a profile answer the question: “Where are my customers?”

  • A profile compares the count, by zip code, of customer households to the distribution of market households within an effective trade area. A profile also includes a map, showing the customer population density within that trade area.

What are the key concepts involved in developing and presenting a customer profile?

  • The most important concept is that the foundation of a customer profile is the identification of a business’ effective trade area.  This is generally defined as the list of zip codes that account for the first 80% of a client’s customers.  This concept is important because it defines both the customer and market data that will be used for the profile.  If the effective trade area is not defined accurately, the resulting analysis will likely be misleading.
  • “The best place to fish is where you caught fish before.”  The index scores are intended to help identify where concentrations of customers are greater than average.  Market segments defined by high index scores are more likely to respond to both prospecting and cross-selling offers.

What is needed to do a customer profile?

  • In order to create the most accurate profile, a customer list with around 1,500 households is recommended for each distinct product, service, or location to be evaluated.
  • A profile can be done with as few as 500 customer households, if the customer base is geographically and demographically concentrated.

How can I utilize a completed customer profile?

  • Prospect targeting, counting, mapping, list development and, eventually, response analysis to confirm the performance of identified market segments are made possible by the customer profile.
  •  Profiles can also be used to help identify areas with population demographics similar to the customer data.


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