How to Write a Customer Analysis for Your Business Plan + Example

What is a Customer Analysis in a Business Plan?

The customer analysis section which incorporates the essential steps of writing a business plan step-by-step is a key component of your business plan and assesses the customer segments your company serves. The objective of the customer analysis is to justify your market choice, identify differentiators, and prioritize the segments you are targeting.

A complete customer analysis contains 3 primary sections:

• Identify your target customers
• Convey the needs of these customers
• Show how your products and/or services satisfy these needs

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Why Your Customer Analysis is Important

In this section of your business plan, you will describe your ideal customer and their core needs. It is important since readers want to be sure you 1) know who your target customers are and what they want, and 2) your strategy (products/services, promotions strategy, etc.) aligns with your customers’ preferences.

A thorough customer analysis provides the following benefits:

• Supports your market choice and helps you avoid entering too broad a market
• Helps you focus on serving current customers rather than trying to find new ones
• Enables you to determine which segments to prioritize and how much effort to put into each one
• Helps you craft a strategic marketing plan and platform to reach these customer segments

 

Steps For Performing a Comprehensive Customer Analysis

The Customer Analysis section has two sub-sections: Target Customers and Customer Needs.

1. Identifying Your Target Customers

In the Target Customers section of your plan, you should provide a profile of your target customers.

For instance, how old are they? Are they married? Where do they live/work?

Below are several demographic (e.g., age) and psychographic (e.g., values) variables you can use to describe your target customers. Some are for B2C (business to consumer) and others are for B2B (business to business) companies:

• Age
• Income
• Gender
• Location
• Marital Status
• Family size
• Occupation
• Language
• Education
• Values/Beliefs
• Activities Engaged In
• Business Size

Once you have identified and defined the your target customers and their demographics, you need to determine the size of your target market: How many potential customers fit the given definition and is this customer base growing or decreasing?

Customer Segmentation Analysis

To further refine your target customer profile, consider segmenting your market. This involves dividing your target market into smaller, more homogeneous groups based on specific criteria. By segmenting your market, you can tailor your marketing efforts to specific preferences, increasing your business’s chance of success.

Here are some common segmentation strategies:

• Demographic Segmentation: Dividing the market based on demographic factors such as age range, gender, income, education level, occupation, and family size.
• Geographic Segmentation: Dividing the market based on geographic factors such as country, region, state, city, or neighborhood.
• Psychographic Segmentation: Dividing the market based on psychological factors such as lifestyle, interests, values, and attitudes.
• Behavioral Segmentation: Dividing the market based on customer behavior, such as purchase frequency, brand loyalty, and usage rate.

For example, if you’re selling athletic apparel, you might segment your market based on:

• Demographic Segmentation: Age (e.g., teens, adults, seniors), gender, income level
• Psychographic Segmentation: Lifestyle (e.g., active, casual), fitness goals (e.g., weight loss, muscle gain, endurance)
• Behavioral Segmentation: Purchase frequency (e.g., frequent buyers, occasional buyers), brand loyalty (e.g., loyal to specific brands, brand agnostic)

With an in-depth understanding of your target customers and segmenting your market, you can develop more effective marketing strategies, allocate resources more efficiently, and ultimately drive sales and growth.

2. Understanding Your Customers’ Needs, Pain Points & Preferences

A crucial aspect of your customer analysis is understanding the specific needs, desires, and challenges your target customers face. This information is essential for developing products or services that truly resonate with your audience and drive sales.

Identifying Customer Pain Points

To identify your customers’ pain points, consider the following questions:

• What problems or challenges do they face?
• What frustrations do they experience with current solutions?
• What are their unmet needs or desires?

To gather this information, you can use a variety of methods, including:

• Surveys and questionnaires: Ask for direct customer feedback to better understand their needs and preferences.
• Interviews: Conduct one-on-one interviews to delve deeper into their experiences and motivations.
• Focus groups: Facilitate group discussions to identify common themes and pain points.
• Market research: Analyze existing market and customer data to understand broader trends and consumer behavior.
• Social listening: Monitor social media conversations to see what people are saying about your industry and competitors.

Understanding Customer Preferences

Once you’ve identified your customers’ pain points, you can start to understand their preferences. This involves:

• Identifying their values and priorities: What do they value most in a product or service?
• Understanding their purchasing patterns: What is their buying criteria? What is their actual decision-making process? What factors influence their choices?
• Determining the channels customers prefer: How do customers interact with businesses (e.g., in-store, online, phone, social media platforms and other marketing and sales channels)?

By understanding your customers’ preferences, you can tailor your marketing and sales efforts to their specific needs. For example, if your customers prefer online shopping, you should invest in a strong e-commerce platform.

By thoroughly understanding and addressing your customers’ pain points and preferences, you can address how your business creates a solution for your target audience which increases your chances of building a successful business.

 

Example of an Effective Customer Analysis

Sample Customer Analysis for Fitness Clothing Line Business Plan

 

Conclusion

It is essential to truly understand customers to develop effective marketing messages that will encourage potential customers to interact with your business. That’s why including a customer analysis in your business plan is so crucial. Likewise, sophisticated investors require comprehensive customer profiles of a company’s target audience. By spending the time researching and analyzing customers in your target market, you will develop both enhance your business strategy and funding success.

 

 

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