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  • Writer's pictureRachel Morgan

Know Your Customer

Updated: Aug 18, 2023

Why knowing your customer is important

Your business will have some kind of customer, whether that someone buys a product from you or a service, whether that’s another business or visitors to your website.

How well do you know your customers though? Who is buying your products?

A recent study by Mckinsey states that 72% of customers expect businesses they buy from to recognise them as individuals & know their interests, with the majority being frustrated when this doesn’t happen.

Being more relevant and personalised with your customers will increase the likelihood to repurchase and increase revenues by 10-15% according to McKinseys.

By understanding more about your customers, you will be able to make your product or service more relevant to them, so they are more likely to buy or come again.

This insight can be very useful when shaping your business strategy and marketing plans, to promote your products and services to the right customers.

This is what all the big brands like Tesco, Amazon and Boots have been doing for years to make them the success that they are today.

Most businesses can now replicate what the retail giants have done to generate growth and competitor advantage.

How to get to know your customers

There are several ways in which you can get to know your customers better, you can ask them and do some market research or you can analyse customers' behaviour to see how they’re buying or engaging with you. Or you can use a combination.

Whichever route to insight you take, it is important to have a plan for turning the data and information into insight that you can use within your business development and marketing plans.

How to use the insight within your business?

There are broadly two areas:

1. Build an emotional connection with your customers to increase the likelihood of them buying from you and is often done through customer research.

Building an emotional connection

Once you know who your customers are, you can really start shaping your products and services to be more relevant for them and also start to use messaging and content that resonates with them. They can also help you to shape your brand so it’s more appealing to your customer audience.

This is hugely helpful when developing creative and messaging, but also when developing new products, price points and competitive advantage.

2. Develop a relationship with your customers by delivering relevant experiences, timely communication and target new customers. This is done by using your customer data and we will go into more detail below on how to do this.

Delivering relevant experiences

Your customer may demonstrate the profile of your ideal customer, but this does not mean that they are all going to be high-value customers.

Customers have different spending patterns and shouldn’t be seen as all customers being equal, and worst of all is to look for the average customer as you will underestimate those who are spending more with you and overestimate the ones that aren’t valuable at all.

A relatively simple approach to segmenting your customers based on how much they’ve spent with you, how frequently they visit and how recently they visited. You can be incredibly insightful in understanding where a customer sits on the value spectrum.

This is called a RFV segmentation which can enable your business to spot opportunities in how to grow different groups of customers.

For example, identifying customers who could visit once more and calculate how much revenue that would generate would provide insight into which customers you should prioritse to get an offer.

Creating objectives around different segments of customers for example rewarding your high-value customers to retain their spending, or growing the customers with the most potential, i.e. to encourage them to visit again, will create a solid customer marketing strategy.

There are lots of different ways in which you can segment your customers to gain more insight about who they are and what they are buying. If you want to learn more about segmentation you can read more here

Getting started with customer data to deliver relevant experiences

Nowadays, most businesses have some form of customer data thanks to digital transformation and marketing technology platforms that are tracking and capturing information about a customer's movement on a website or what they buy and when.

This data is critical to understanding more about your customers either through research or by analysing their behaviour with you.

If you are at the beginning of your journey using customer data, these are the following steps we would recommend as a way in which to start building the insight.

  1. Audit of what customer data is available, ie what customer information or behaviours are being captured/tracked.

  2. Data analysis to determine the quality of each field, especially useful for data that has been asked for i.e. any preference data

  3. Exploratory analysis to determine customer trends and to start seeing the value distribution against spend and products purchased.

  4. Segment your customers by recency, frequency and value, to create clear customer groups and start defining who your customer are, i.e. high-value customers and active customers

  5. Create business plans and objectives around each other big groups.

If you are looking for more support or resource to make this happen for you, our Customer Diagnostic product may be what you are looking for and we would guarantee we would find 3 opportunities in your data to cover the fee or your money back.


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