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How to identify the ideal customers for your online eCommerce business

Ideal Customer for your Online Ecommerce Business

Continuing with our discussion on how to start an online retail business, let us focus on an important aspect of an online business, i.e., identifying the ideal customers for the business, their characteristics, and ways to target them.

For example, in a family, the elderly parents would like to shop in person at their favorite store. But the son, daughter or even grandchildren would like to buy online. Let us discuss how we will understand the concept of ICP through this example.

First-time online retailers assume that once they have an online store, their customer base is virtually everyone who can access their website/app. That is not how it works. Same way as not everyone crossing your physical store is your customer, not everyone present online is your target customer for the online store. Retailers need to be aware of who their target audience is.

We would have heard retailers who recently transitioned from offline to online say that their prospective customers outreach was unsuccessful despite offering good products/services. They try using traditional methods like paper ads, wall posters or local TV channels, radio advertisements. Some also try it on social media tools like Facebook, Instagram, Telegram.

The impact of broadcast messages sent through SMS or WhatsApp is difficult to measure, just as it’s difficult to measure the reach of a wall poster advertisement.

Many times, such broad-based attempts do not yield the expected results and end up costing time and money. This is because retailers start marketing even before identifying the right audience for their online business.

Before we dive into identifying the ideal customer base, let us first understand who an “ideal” customer is.

Ideal Customer Profile (ICP)

Ideal Customer Profile

I know of a friend who identified that there was a growing need for Indians working abroad to get groceries from their native places. Such people prefer getting the same taste of their food, in their country of work, as well, as they would get it back home.

These people were willing to pay for such a service but 20 years back, such services were not common. This friend of mine understood this and leveraged it to his advantage by connecting with such customers and arranged delivery of grocery items from his shop through international courier companies.

The customers were so thrilled at this that orders started flowing in even when eCommerce was not so prevalent in smaller cities across India.

Similarly, every retailer needs to be sensitive to customer problems and needs, to better define their value.

Identifying an ideal customer is not something new. Many shops are doing it already. How many times have we seen a store person offering a particular brand of coffee or shampoo just by looking at the customer! The same person would offer a different brand or a product at a lesser cost to another customer based on their earlier preferences.

This is exactly what we call here customer profiling.

To define the ideal customer profile, a retailer needs to know their Demographics (like age, location, gender), Psychographics (habits, interests), and Online presence.

Demographics

Demographics

Customer Demographics

  • 1. What is the demographic of my customer base? (Age, gender, purchasing power, education, location)
  • 2. What problem of my customers is it that my online business will address?
  • 3. What is the benefit of my online business to my customers?

An owner of a small retail store may feel these to be daunting and unnecessary. But it is just bringing structure to what they are already practicing. Let us now understand how the answers to these queries are helpful in the decision-making process.

If you are a retailer selling groceries, you may want to know if the customer resides in an independent house or an apartment. It would help you make better decisions around delivery planning and charges.

Following parameters are generally required for understanding user demographics…

  • Location
  • Age
  • Gender
  • Education
  • Income level (a rough range would be sufficient)
  • Family size

The demographic data gives a good idea of the customer profile and business owners can go deeper into it based on their specific needs.

Psychographics

Customer Psychographics

They help understand a customers’ habits, preferences, and interests that help retailers understand their “Why” behind a purchase.

For instance, some people would like to purchase online out of peer pressure or the perceived pride of buying online. Local businesses can leverage such trends to their benefit and deliver a personalized experience to their customers that large eCommerce companies can’t easily provide.

If this customer is a known person, the local business owners would know a lot of details about their preferences like their preferred brand of soap or a health drink. They may even know what brands can be used as substitutes in case the first choice is not available. This kind of customer information is an invaluable asset to retailers.

The same information and knowledge will help drive better customer adoption and retention when transitioning online.

Some psychography clarifying questions could be…

  • What is the intent of customers of a specific profile?
  • What are their hobbies and interests? (E.g., an avid sports fan may order more snacks during major tournaments or series)

These questions help decide how your product(s) can help improve customer experience or address their needs. Retailers can also plan their inventory accordingly, more so if the neighbourhood has a lot of apartment complexes. When interpreted along with demographic data, psychographics can drive effective decisions in defining the value proposition that resonates with the buyers’ psychology.

Online presence

Customer Online Presence

Another important aspect in defining the persona is to understand the customers’ online profiles. Retailers need to be aware of their customers’ technology accessibility, knowledge, and preferences.

Without knowing the customers’ online behavior, retailers would choose inappropriate online marketing channels that would offer a good return on investment.

If a retailer does not have the required data on customers’ online presence, they can either talk to customers when they visit the store or gather the data through the delivery person while fulfilling orders.

Stores can also avail services of local marketing agencies or part-timers to conduct custom surveys.

The following details will help understand buyers’ online persona:

  • What is the source of information online for my customers?
  • Which social media channels do they most use?
  • Is there a preferred form of communication?

Bring it all together

Let us now understand these 3 aspects of demographics, psychographics, and online presence with the same example that we started this article with. The family of elderly parents with a daughter, son and grandchildren.

Demographics

  • 1. What is the demographic of my customer base?
    People in the age group of 15–45. In our case, it could be the daughter, son and grandchildren. Although elders would also be potential customers, the younger group is the more “ideal” group to target
  • 2. What problem of my customers is it that my online business will address?
    The family could be hesitant to step out for shopping, given the pandemic situation
  • 3. What is the benefit of my online business to my customers?
    The family might move from their current locality to another location but still wants to buy from the same store

Psychographics

  • 1. What is the intent of customers of a specific profile?
    The intent of the “ideal” customer profile (the younger lot in the family) when they order grains could be health-oriented and stores can offer them organic food grains.
  • 2. What are their hobbies and interests?
    If the family members are avid sports fans, they may order more snacks during major tournaments or series

Online Presence

  • 1. What is the source of information online, for my customers?
    Where do the family members look for information when trying a new product? They may seek feedback from their neighbors, search Google or might check with their friends on WhatsApp or Facebook
  • 2. Which social media channels do they most use?
    The family may be very active on WhatsApp and YouTube
  • 3. Is there a preferred form of communication?
    They may not like to be disturbed on WhatsApp with marketing content. But wouldn’t mind getting a notification on their app.

Once the ICP is defined, you can target your marketing efforts to those who meet your definition of the ICP. Please remember that this is a “live” definition in that retailers will have to revisit and update constantly.

Leveraging the information

Your eCommerce platform must-have features to create and manage product catalogs easily. Following are some of the important ones to look out for:

The information you have collected on the customer demographics, psychographics, and online presence will guide your choice of the marketing channel (Google ads, social media, news etc.) and the messaging.

Retailers must continuously ensure that they use the proper marketing channels to reach their ideal customers and return expected results. If not, retailers must revisit the activity to find out if it is a problem with the definition of ICP or is with the marketing channel.

Following are some areas that can be tweaked for an eCommerce business to get the most out of the ICP definition exercise.

1. Personalized homepage

The homepage is where most users visit, and hence it needs to be configured to show personalized information and offers based on their shopping preference, important dates like anniversaries, birthdays.

It is essential to keep trying various homepage themes and measure the impact on customer’s shopping.

2. Notifications and reminders

Regularly sending notifications with the right messaging for the right products (based on their profile) positively affects shopping behaviour. eCommerce solutions offer customer segmentation for sending targeted notifications.

When they enable these, they will receive automatic alerts about any new product arrival, discount, special offer or any news at all you choose to share.

3. Offers and Discounts

One of the key factors contributing to the success of an eCommerce business is customer stickiness. It is the measure of how long your online store can retain a customer. It also, in turn, drives up average order value, and such customers become brand ambassadors.

Incentivizing such customers through various offers and discounts will want them to return to your online store. Again, these offers need to be personalized; else they will lose interest.

Retailers can decide on the offers based on the data collected from frequently purchased items and products marked as favorites.

4. Reviews and Feedback

Customers are more likely to purchase a product if their acquaintance or a peer has rated it highly. Such content is called User-generated content (UGC). eCommerce platforms provide various features to collect customer reviews and feedback.

These can be either for the entire order or items in the order. Getting to such a granular level will immensely help in personalization decisions.

5. Easy checkout

Like the homepage, the checkout page of your eCommerce app decides whether the customer places the order or abandons it. Providing multiple checkout options, including home delivery, store pickup, will add to the personal touch.

Similarly, provisions for various payment methods have a significant impact on customer satisfaction. There should also be provisions to remember the customer’s preferred payment options and take them directly there the next time they buy.

Conclusion

The process of defining the ideal customer profile may seem daunting at first. But it is easily doable. It is like a businessman hiring someone for a job. Like they would assess the individual for necessary capabilities, skills, and attitude, retailers must also evaluate their customers.

Various tools like customer survey tools, analytics tools and CRM tools make the process easy.

The benefits of the process are far greater than the effort needed to do it. Once you know your ideal customers, you can optimize their experience online and retain them for longer.