Customer profiling and how to approach it?

A mention of a customer profiling project will either delight or scare the living daylights out of the recipient of the news. If you’re a marketer or business principal you’ll be thinking this is exactly what you need, “Should’ve done it last year!” on the other hand if you’re a member of the in-house ICT team, you’ll be thinking, “How on earth are we going to do that with the resources we currently have?” 

What is it? Customer profiling

Customer profiling is a way to create a portrait of your customers to help you make design decisions concerning your products and services.

Profiling customers allows you to define a clear set of messages for specific customers to improve their customer experience with you and potentially boost your organisation’s efficiency and effectiveness.

In marketing, knowing your audience helps you better interact with existing customers and find ways to improve your services to others.

If you’re selling a product, knowing which type of customers buy from you and how, may yield the opportunity to cross sell, up sell and even identify new types of customer. On the other hand if you’re delivering a service understanding your customers can help you to prioritise and shape service delivery to improve customer experience and drive an increase in customer satisfaction.

What data do I need?

The typical approach is to start with a list of your customers. In some organisations this is fairly straight-forward: we have all of our customers in our customer relationship management system right? If you do, then you have the starting point. However, the reality is that this may not be the case and you may have several systems that you need to collect data from to form an agreed and aggregated set. A list of customers alone is generally not enough to profile, you need to have some more information. If you can, the following base information will help:

• Title
• Name (first name and last name)
• Initials
• Address
• Postcode
• Date of birth
• Gender
• Ethnicity
• Email
• Mobile

Once you have as much of this basic information as you can source you can start to look at broadening the information further with additional information you might hold about product and service engagement:

• Product and service used/bought
• Transaction date
• Balance of account
• Payment history

And if you are using some sort of customer review system you might also have their latest experience.

At this stage, you’ve probably not spent a lot externally as you have been largely sourcing information you already hold. Another layer that is often used is to look at external data sources: either data you pay for, or data from public domain sources that can be blended with your own data. A simple example is a mapping of the postcode to latitude and longitude values to enable you to plot customer locations on a map. If you can do this you can also expand this further by calculating travel distances to your shop or service delivery outlet.

Other sources of data can expand your knowledge of your customers. Data sets such as Experian’s MOSAIC can be matched at either the postcode or name/address level and help you to identify information such as an individuals’s propensity to use Facebook, shop online or even the most likely car they own and whether or not they are likely to have children.

Other commercial data sets enable an assessment of probable household income and in some cases data sets like CAIS (Credit Account Information Sharing) can help you to understand credit profile and history.

There are lower cost sources of data such as that provided by the ONS (Office for National Statistics) including indices of multiple deprivation which can highlight the economic, health and education status of an area.

Challenges Customer profiling

What data you need to collect will largely depend on what you are trying to achieve and understand about your customers. However, the data generally won’t all come from one source and invariably you’ll come across data quality problems: that is data that has been entered incorrectly onto source systems. There are things you can do about this: services that will assess your initial data and provide suggested corrections, and you may even want to use the opportunity to engage with your customers to tidy your data up.

GDPR might be another opportunity to engage with your customers to correct your data and gain consent for the data you do hold about them.

You will almost certainly find procedural and process issues affecting the collection of your data. A customer insight project can be the opportunity to develop and enhance business processes.

What tools do I need?

Invariably you will need a system capable of drawing together data from a variety of data sources and combining and blending the data into an aggregated data set that you can then cleanse and analyse.

Of course there is other data you might want to build into your customer profiling system. For example, feedback and experience data from customer surveys and rate and review systems. This can be achieved “on the cheap” by combining ad-hoc survey results but is not easy to do. It is far better to build in a process of capturing customer engagement and feedback from the outset and link this directly to your main customer data repository.

Once you have your aggregated, cleansed data, you will then need the tools to analyse the data and typically you will want to ask many questions of your data in a very flexible way. Ideally you want this to be fairly easy to do and not involve an army of SQL Ninjas to do it for you otherwise it will not only cost to set it up, but cost even more to capitalise on it.

Finally, don’t make the mistake of thinking that this is a one-off. If you build it correctly it should stand the test of time and continue to deliver value to your business way into the future. It should therefore be usable by the people who will benefit most from being able to access and use it – your product and service delivery personnel and your marketers.

Clearview have the tools, knowledge of, and access to 3rd party data and the expertise to assist or build your customer profiling system. We’re also ISO 27001:2013 certificated so we know all about Information Management issues so you’ll be assured that we are dealing with your sensitive customer data in a professional and secure manner. If you’d like to discuss your customer profiling requirements then please get in touch to discover how we might be able to help.