In most areas of life, you need a goal for which to shoot or you don’t know where to go. In a service or subscription business, this means having a clear picture of your ideal customer.
Who is your ideal customer?
There are three ways to define your ideal customer:
1) By naming them.
Many of us know our best customers by name. This is a good starting point. Name them as your ideal customers and then compare their behavior and engagement with others.
2) By making a hypothesis based on short-term engagement.
For example, the ideal customers could be those (i) with the highest engagement score or (ii) who spent more than this much in the past month.
3) By discovering them based on long-term engagement with the business.
For example, the ideal customers are those with (i) who converted from free to paying and from base to premium or (ii) who had the highest lifetime value over 3 years or better yet (iii) who had the lowest CAC/LTV ratio (Customer Acquisition Cost to Lifetime Value)
Once you have identified these customers, group them together into a segment. Then understand them better.
How do your ideal customers engage with your business?
How are these customers using your service and interacting with your business? What is the frequency and pattern of their visits? What kinds of actions are they be doing? What quantities of action?
If you are a user experience design professional, or have worked with one, these questions will sound familiar. One of our theses at Apptegic is that we are all user experience design professionals now. More business people have to think about measuring and designing the customer experience. See our previous blog.
How did the ideal customers’ engagement change over time?
Ask questions about your ideal customers to learn from their experience:
- How did your ideal customer’s engagement with your business change over time?
- How did they adopt your service?
- In what order to they use new modules?
- How long did it take them to settle into a pattern?
- When did they upgrade?
What can you do once you know your ideal customers?
You can compare each customer to the ideal.
- What is the same and what is different?
- Is your customer visiting more often or less frequently?
- Are there keys modules that your customers aren’t using or certain actions they don’t know about?
- What quantities of actions or key objects are these customers using and how does that compare to your ideal customers?
You can use this insight to respond to each customer and encourage them to get more from the system. You can guide them to success!