What is a customer profile?

In building a customer profile, an organization must do customer profiling. This includes collecting information about customer segments, such as demographics, psychographic data, purchasing preferences and pain points.

The purpose of customer profiling is to help an organization learn who their customers are and how to best serve them. It’s an in-depth analysis of who the general audience is, what they like, what they dislike, who they are and what they want.

Profiles can help lower customer churn, develop a better pricing strategy, and help with product development teams looking to better align with customer needs. A Gartner online survey found 84% of customer service leaders found customer data and analytics to be “very or extremely important.”¹

The overall goal is for an organization to use customer profiles as fuel to make a more targeted individual customer experience, increase customer loyalty and thus improve the bottom line.

The first place to start when understanding how a customer profile works is deciphering between the two business types that use this document: Business-to-business (B2B) and business-to-customer (B2C). The data being collected from users will vary depending on which type the organization falls under.

B2B organizations often use account-based marketing tactics which customer profiles can help bolster. The purpose of a B2B customer profile is typically to better understand segments of business customers rather than focusing on just one particular customer. A B2B organization might use an ideal customer profile (ICP) to find the best customer for the business or look at firmographic information like company size and industry trends to understand potential client companies.

The data in B2B customer profiles is more focused on quantitative analysis, whereas B2C customer profiling is focused on the individual customer and their demographics, including age, gender, lifestyle preferences, job title and personal preferences.

The short answer is no. Buyer personas include similar information to customer profiles, however the information being collected is fictional. While the data is based on real customers, buyer personas create a fictional version of an ideal customer or segment. It can be a valuable analysis if an organization is looking to make a broader campaign strategy and reach a particular target audience.

However, the biggest difference is that customer profiles only includes true customer data, like purchase history and customer support interactions. The customer profiling process is built to help organizations retain existing customers and provide insights on how to engage potential new customers.

Customers expect personalized experiences across the customer journey. Customer profiles are essential to organizations because they provide a deep understanding of customer behaviors, needs and preferences. This data helps businesses tailor products, services and marketing strategies more effectively. By developing customer profiles, organizations can optimize their operations and increase their chances of success in a competitive marketplace.

Most importantly, customer profiles enable organizations to segment their customer base more effectively. By now, most business leaders and their teams recognize that no two customers are the same. Understanding the different groups within a target market allows businesses to create personalized experiences.

An example of this is a retail company that segments its customers based on demographics (age, gender, income), psychographics (lifestyle, values), and behavioral data (purchasing patterns, online activity). This type of segmentation ensures marketing campaign messages and product offerings reach and resonate with the right audience, leading to higher engagement, better conversion rates and a greater overall customer lifetime value.

Separately, customer profiles can help businesses identify unmet needs and pain points. By analyzing customer data, organizations can pinpoint gaps in the market or areas where their products or services might be improved. For example, a technology software company begins noticing that a specific group of users is consistently struggling with a feature. With customer profiling, the company can adjust the product design or offer extra support, ultimately increasing customer loyalty and customer retention.

Several more specific benefits to customer profiling include:

A customer profile can help sales teams create personalized messaging and create communication channels specific to target users. This can result in more poignant leads and a more targeted marketing approach that can result in more customers.

By having customer profiles, an organizations’ sales team can save precious time chasing leads that likely won’t result in a sale. A customer profile can serve as a benchmark to measure every lead against so sales teams can perform quick decision-making on whether to pursue a lead or not.

The ultimate goal of a customer profile is to give a customer a better, more personalized experience. By doing so, it should increase customer loyalty and impact a customer's overall purchasing decisions in the long term. The customer profiles can give sales and marketing teams specific touch points when creating customer strategies.

Having a system in place that puts all customer data into one unified system helps ensure deeper personalization. One home for all data across departments will allow teams to find customer data quickly and efficiently.

Customer profiling gives sales teams ample information to target specific leads. Take a customer profile example that gives the brand, the name, gender, location, interactions, pain points. With all this information sales teams can weed out leads that likely are a dead end and instead focus their time on high-quality ones.

A successful customer profile has more than just the basics, such as name, gender and age. Instead, it should include many data points that can help the organization determine who the target audience is and how they are interacting with the brand. The steps for creating a customer profile can vary but these five steps serve as a foundation for where an organization can begin.

The first step to building customer profiles is gathering and analyzing available customer data. Depending on the size of the organization and the scope of data to collect, it is likely a software system, such as a customer database platform or contact management system, will be needed. Organizations should look to software systems that can gather, aggregate and analyze data fit for building customer profiles.

Once the customer data has been collected and sorted, it is time to use that data to figure out the type of customers the brand draws. With customer profiling, data an organization can start to sort through data points and determine shared demographic information and behaviors. Organizations can start finding similarities between customer groups such as motivations or locations. This step is crucial in helping a business target customers, personalize outreach, refine social media marketing tactics, and optimize other customer experience offerings.

The next step in the customer profile process is to determine common customer pain points. This can be done by analyzing customer data and figuring out where customer needs are not being met and analyzing buying behavior. Organizations can take the demographic data and use it to see whether there are any patterns of common pain points from one customer group to the next.

An organization might have multiple ways of surveying its users. During this step organizations should gather all feedback to help get a clear picture of what an ideal customer for the brand looks like across all customer groups. Feedback can be collected through customer satisfaction surveys, customer effort scores, community forums and focus groups. After both qualitative and quantitative customer profile data has been collected organizations can make data-driven decisions for their business.

After an initial pass at setting up customer profiles it is important to find the right customer relationship management (CRM) system that works best for the organization and marketing team. The right CRM software includes tools to help manage and track data from current customers and develop accurate customer profiles. Some software might come with customer profile templates to make it easy to get started. It is important to keep updating customer profiles regularly to help ensure that the business is focused on the right audience.

This is the simplest type of customer profiling. It just includes the most fundamental information, such as age, gender, race and pain points. This is best for simple business models or if the business is on a tight timeline for generating customer profiles.

This type of customer profiling can be used to identify key demographics and then use that data to target specific individuals. A business can also use this basic information to create marketing campaigns or personalized customer experiences. Generally speaking this form of customer profiling is versatile and only works as well as the data that is input into the system.

This method is best for if the organization is using market segmentation for the business. It separates profiles for each marketing strategy that the business is using and separates customers based on which segment they fall under. This method acknowledges multiple types of customers a business might work with instead of focusing on one specific group.

With this customer profiling method businesses can create tailored messaging materials specific to an individual's preferences. Another use for segmentation is through channel optimization, such as messaging through channels relevant to each segment. This can be an email or physical marketing material for loyal customers or a text message for younger users.

A buyer persona is a type of customer profile that uses semi-fictitious information to get into a customer's mindset. The data collected in this method is more qualitative information to understand a customer's fears and beliefs. The main purpose for this type of customer profiling is to again tailor a businesses' marketing or sales strategy to better align with the customers it wants to attract.

A buyer persona can be used to generate leads, optimize a website layout or design, and help mold a sales strategy. The buyer persona, though fictitious, can be beneficial for a business trying to interpret audience behavior or perhaps diversify its content strategy.

The ICP can be thought of as a baseline for the sales team. This customer profile method is an internal tool that uses customer data to build the ideal profile of a company believed to be the perfect fit for the products or services the business is offering. The ICP is typically a fictitious company that would be the businesses dream lead.

For example, a person is selling limousine services to hospitality businesses. The ICP in this case might be hotel chains or banquet halls. While a buyer persona might be an event planner or operational manager for the company. The ICP is mainly used to help a business home in on a particular kind of lead and focus on accounts that are home runs.

While customer profiling is a critical tool for businesses aiming to understand and target ideal customers, creating accurate and effective profiles presents some challenges.

Organizations are collecting data from various sources and it isn’t always clear if the information being provided is current and complete. This makes it harder to form a comprehensive, real-time understanding of customer behavior. But the solution to this challenge is to find a CRM system that can handle data and analyze it to ensure it’s all consistent across profiles.

Another challenge is that customer behavior is constantly evolving. Changing preferences, economic shifts and new technologies can quickly alter how customers behave and what they value. Keeping customer profiles updated requires continuous monitoring and adaptation. The dynamic nature of consumer behavior makes it difficult to create static profiles that will remain relevant over time. The solution to this issue is to keep the sales team on top of the customer profiles and update them in real-time.

Lastly, segmentation challenges arise when businesses try to balance personalization with broad targeting. Too narrow a focus can limit market potential, while too broad a profile might result in generic messaging or marketing efforts that fail to resonate with customers. A solution to this challenge is to have decision-makers constantly re-evaluating marketing and sales tactics.

Artificial intelligence (AI) is used in both the building of customer profiles and working with customer profiles. In the former, AI is revolutionizing how businesses approach and understand their target audiences.

Specifically, AI can enhance customer profiling through its machine learning (ML) capabilities. By using ML algorithms, AI analyzes vast amounts of customer data, ranging from transaction history to social media activity, to identify patterns and predict future behaviors. AI-powered tools can analyze large amounts of data unlike ever before, building stronger customer profiles, such as ICPs and buyer personas.

AI technology can also automate repetitive tasks, such as data cleaning and segmentation, freeing up valuable time for marketers to focus on strategic initiatives. AI-powered customer profiling is paving the way for businesses seeking to make smarter decisions, optimize marketing campaigns, and improve overall customer engagement.

Separately, AI can work with customer profiling to process data in real-time, helping brands quickly adapt to changing customer preferences. Unlike traditional methods, AI is used to work with customer profiles to uncover insights and patterns that might go unnoticed through manual analysis, revealing hidden trends and emerging needs. AI can then act as a copilot for human employees creating relevant customer-centric experiences, services and solutions.