Hopefully, you’ve also spent time interviewing potential customers—learning about their behaviors and needs, and digging into publicly available data to support your research.
But you still need to document these findings in a way that gives you an actionable road map to grow your customer base.
This is where a well-written customer analysis can be extremely useful.
Including a customer analysis in your business plan will boost your marketing efforts by identifying your target customers, their needs, and how your product or service addresses these needs.
Customer analysis vs market analysis
A market analysis is a broader exploration of the market and potential customers. A customer analysis zooms in on the specific behavioral or demographic characteristics of individual customer segments in your target market.
The market analysis includes details like the number of customers you hope to serve and the types of competitors you must contend with.
By contrast, the customer analysis looks at the specific attributes of your potential customers – their personal habits, values, beliefs, and other characteristics that might affect their purchasing decisions.
What should a customer analysis include?
Some of the earliest information you’ve collected probably about your customers includes:
Age range: 30-60 (old enough to have used a variety of cleaning products in their homes)
Income: Above average (more likely to buy a higher-priced alternative to discount cleaning products)
Education level: college degree or equivalent (high enough education level to understand the product’s societal benefits).
Employment: full-time employee
Values and beliefs
This section captures the psychological and emotional factors that influence customer behavior.
Let’s return to the environmentally friendly cleaning product example. You are more likely to attract customers who prioritize sustainability and are willing to pay more for products that match their values.
Analyzing buying behaviors involves understanding how, when, and why customers purchase. These behaviors impact:
The channels customers prefer for shopping
Factors that trigger a buying decision
Example: Suppose you’re running an environmentally friendly cleaning products business. In that case, you might discover that most of your customers buy their cleaning products from a magazine for homeowners or that they typically buy multiple cleaning products simultaneously.
Key questions about customers’ technology habits include:
Are they active on social media? If so, which platforms?
Do they prefer online shopping or in-store visits?
Are they more likely to respond to email marketing, blog content, or social media campaigns?
Example: Let’s say you discover that significantly more of your target customers visit websites like yours on a smartphone than a desktop. In that case, it would be important to optimize your website for mobile viewing or develop a user-friendly app.
5 steps to write a customer analysis for your business plan
Now that we understand the individual pieces of a customer analysis, we’ll examine how to write a customer analysis for your business plan.
1. Use existing data
Regardless of your country, there are likely numerous sources of data published by government agencies, private industry, or educational institutions that could be relevant to your business.
Finding existing data is the best starting point for your customer analysis. It’s easy to find, it’s regularly updated, and it’s immensely valuable for providing context for your research.
For instance, if you determine that your target demographic is people between 30 and 60, Census data can help you determine the number of residents in your selling area within that age range.
We’ll look at some examples of publicly available data for businesses operating in the United States.
U.S. Census Bureau
The Census Bureau publishes official population counts for the country, states, and local communities. Demographic characteristics like age, gender, and race sort the data. Census data also includes useful data for businesses, such as the total number of businesses, employment counts, and average incomes in local communities across the country.
Bureau of Labor Statistics
Data from the Bureau of Labor Statistics tracks changes in the U.S. workforce and the overall state of the labor market. The BLS publishes the Consumer Price Index, tracks consumer spending, and gauges overall consumer confidence.
Examining this data can give you insights into the willingness of consumers to pay for your product or service.
Bureau of Economic Analysis
The Bureau of Economic Analysis takes a broader look at the performance of the U.S. Economy. You can use BEA data to find personal income and corporate profit data by industry.
If you make a product or service used by other businesses, these figures can help you understand the financial health of the broad customer base you’re targeting.
This data can give you important context about the financial health of your customers, which could help you determine pricing strategies—like whether you should offer flexible payment plans.
There are thousands of private sector industry associations in the United States alone. These organizations not only advocate for the businesses in their field. They provide members with a wealth of helpful information, such as “state of the industry” reports and business surveys.
You should leverage customer data from these peer organizations as a business owner.
Many university business schools make their research publicly available online. Scholars make a career out of researching market and industry trends, and much of their work is available through online searches.
2. Review customer feedback
One of the most direct ways to show an understanding of your customers in your analysis is by reviewing their feedback.
If you’re a new business without direct customer feedback yet, that’s OK. Instead, look around at what people are saying about your competitors. You might find common complaints from customers in your industry about the products available.
You can then reach out and interview potential customers to better understand their needs.
If you have an existing business, there may already be reviews of your company on Google or social media sites like LinkedIn. Doing so can help you determine if customers are struggling to use your product or have suggestions for improvements.
Read as many reviews as possible, and use them to show an understanding of your customers’ needs in your analysis.
But for those willing to dig deeper, third-party data providers can help you uncover information that’s truly unique to your business and your customers.
Third-party data providers like Google track the activity of users across numerous websites. Google has its own tool, Google Analytics, which makes that information available on your company’s website.
This data is a gold mine for understanding your customers. Besides giving you a demographic and geographic breakdown of your visitors, it can tell if they view your site on a desktop or smartphone, what pages they’re clicking, navigating around your site, and much more.
For new business owners, Google Trends is a powerful tool to discover what people are searching for online.
If your business uses social media, there are plenty of tools to help you understand your audience on these platforms.
Many social media companies make their data available to businesses at a cost. For instance, the Facebook Audience Insights platform gives you information about the types of people who visit your page or interact with your posts.
There are also third-party tools like Hootsuite, Sprout Social, and Buffer, which track various metrics across social media platforms.
Wherever you find the data, including social media metrics in your customer analysis provides instant feedback about how customers interact with your business.
Software companies have created numerous tools that collect and analyze customer data from various online sources.
Audience research tools like SparkToro and FullStory analyze large amounts of data online and spot trends—such as the topics people discuss online and which websites or social media accounts those audiences visit.
These are insights that would be incredibly time-consuming to get directly from customers. However, understanding where potential customers spend time online and what they talk about can easily turn your analysis into a targeted marketing campaign that addresses their needs.
4. Create a customer persona
After gathering and analyzing all this data, you should have plenty of information about your customers. The next step is to create a customer persona. In case you need a refresher, the customer persona is a semi-fictional representation of your ideal customer based on your collected data.
For example, a customer persona for that environmentally friendly cleaning products business will reflect that audience’s demographics, behaviors, and needs.
In addition to being an effective tool to focus your marketing efforts, creating this persona can help determine the size of your customer base and how to prioritize your time and resources to attract them to your business. It’s also helpful to show potential investors you know your target audience.
5. Connect to your problem/solution statement
Many business plans include a problem and solution statement as early as the introduction. It’s a reasonable way to start, considering that successful businesses identify a problem and provide a solution.
So as you put your customer analysis together, ensure the research is grounded in the problems they’re experiencing. Doing so will keep you accountable by making you validate your product or service as the solution they need.
Get started with your business plan template
A customer analysis is a key part of any business plan. But it’s just one piece. At Bplans, we take some of the pain out of business planning.
Elon is a marketing specialist at Palo Alto Software, working with consultants, accountants, business instructors and others who use LivePlan at scale. He has a bachelor's degree in journalism and an MBA from the University of Oregon.