Every business would like to find more customers. How about more customers just like your most profitable existing customer?
The good news is that these customers are right under your nose. Thanks to a process called performance modeling, you can find them.
There are three basic ways that performance modeling can be done:
Do performance modeling yourself.
This can be very time consuming but you will be justly rewarded with the wealth of information you learn in the process.
Bring an expert in to do performance modeling for you.
If you look to a consultant, make sure you give them clear direction and access to every bit of customer data you have.
Send your customer data somewhere else.
Collect your data and send it to a firm that specializes in analyzing customer data. Companies that perform customer data analysis can create a customer profile for you.
How performance modeling works.
Regardless of which method you choose, it all starts with your data, and the process is pretty much the same.
- Start collecting every bit of data you have about your current customers: sales history, demographics, psychographics, industry and any other bit of information you can tag your customer with. Save it in some kind of CRM system, whether it’s a sophisticated software solution or a simple spreadsheet.
- Determine who is your best customer. How you define this customer depends on your business objectives. Potential criteria to rank customers includes lifetime value, tenure with company, products purchased, profit generated and more.
- Comb through your data; categorize it, group it and analyze it. Look for trends and patterns that map towards your best customer.
- Finally, sort and pull out the data that is tied to your best customer. Look for the customers who meet your most important criteria. You have now created “Your Next Top Model.”
Here’s an example. After analyzing top-performing customers, we’ve discovered that the highest percentile consists of males between 25 and 35 years old. They’re renters who live in cities with more than 50,000 people. They also have pets.
Sample Customer Profile from Performance Modeling
Customer performance modeling can help you determine which demographic and lifestyle variables are important to your business. It will identify key demographic attributes of those customers most likely to buy your products or use your services. Your model will show which variables differentiate your customer base – so you can target your efforts on people who are most like your Top Model.
