Growthink presents—How to Write the Customer Analysis Section of your business plan.
The customer analysis section of the business plan assesses the customer segment or segments that the company serves. In this section the company must convey the needs of its target customer. He must then show how the products and services satisfy these needs to an extent that the customer will pay for them.
The first step at the customer analysis is to define exactly which customers your company is serving. This requires specificity. It is not adequate to say that your company is targeting small businesses for example because there are several million of these types of customers rather, your plan must identify precisely the customers it is serving such as small businesses with 10 to 15 pulleys based in large metropolitan cities in the West coast.
Once your plan has clearly identified and defined your company’s target customers, it is necessary to explain the demographics of this customer. Questions to be answered include—how many potential customers fit to given definition? Is this customer base growing or decreasing? What is the average revenues or income of these customers? Where these customers are geographically located?
After explaining the customer’s demographics, your plan must then detail the needs of these customers. Conveying customer needs could take the four-move past actions, future projections and/or implications.
Your business plan must also detail the drivers of the customer’s decision-making. Simple questions to answer include—do the customer find price to be more important than the quality of the product or service? Are customers looking for the highest level of reliability? Or will they have their own support and just seek a basic level of service?
There is one last critical step in the customer analysis showing and understanding of the actual decision-making process. Examples of questions to be answered here include—will the customers consult others in the organization before making a decision? Will the customer seek multiple bids? Will the product or service require significant operational change? Will the product or service cause other members within the organization to lose their job?
It is essential to truly understand customers to develop a successful marketing strategy. As such, sophisticated investors require comprehensive profiles of the company’s target customer. Most businesses target multiple customer type of segments. Each customer segment that is critical to the business model must be detailed in this section.
In addition, if partners are critical to your company’s marketing success, your plan must detail a specific partner your company seeks, the one that needs of these partners and how the partner’s decision-making process works.
Many companies must include an assessment of their customer’s customer in their business plan. Consider web developing companies that primarily serve online market places. When in-customers did not purchase the projected amount from these market places, many went out of business. As a result, the web development businesses lost customers and inherited significant financial difficulties.
In cases like these, it is important to show an understanding of the in-customers who ultimately drive your business’ success. While a comprehensive needs assessment of in-customers is not critical, your plan must show how your business’ customers are well-positioned to meet their customer’s need now and in the future.
By taking this advice into account, you will create a much more credible customer analysis section.
For assistance with your business plan, please visit us at www.growthink.com.
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