How to identify your ideal customer
- Segmentation: A process that groups customers based on shared characteristics
- Behavioral segmentation: A form of segmentation that splits customers by behaviors such as CTA clicks, social media shares, and cart abandonment
- Cohort: Customer segments that share specific behaviors, characteristics, and usage patterns—such as new feature sign-ups, onboarding milestones completed, or activation goals hit—over a period of time
Acquisition encompasses numerous steps and strategies, but one question comes before any of this other work. Before answering how to add new customers, define who those customers are. After all, it’s hard to reach your target audience without understanding its needs, opinions, and preferences. It’s the only way to create customer-centric campaigns, content, experiences, and products, which are crucial levers for driving new sign-ups and giving you the best ROI.
A data-driven approach is central to this process. Employing segmentation will help you analyze customer data. There are several types of segmentation—including demographic and geographic—but behavioral segmentation is the most effective way to identify your ideal customer based on the actions that drive them to sign up for and use your product. That’s because behavioral data yields powerful information about what customers value, enabling you to do the following:
- Personalize messages for the acquisition channels most likely to reach your target audience.
- Identify the behaviors that drive customers to become active users so you can encourage others to do the same.
- Forecast trends to develop future marketing messages and outreach activities.
Start your behavioral segmentation by conducting a cohort analysis to learn how specific cohorts have interacted with your product or are expected to interact with it based on their past behaviors.
There are three types of cohort data: acquisition, behavioral, and predictive. All three are useful for acquiring active new customers.
- Acquisition cohorts, which divide customers based on when they signed up for your product, are used to track new customers and see how long they continue to engage with it after their initial interaction.
- Behavioral cohorts, comprising any combination of past behaviors or user properties, reveal how customers engage with your product and how that engagement affects retention, conversion, or other KPIs.
- Predictive cohorts, which look at what a customer is expected to do in the future, are best for determining which customers to target with a marketing campaign or deciding how to adjust pricing to increase the chances they take action.
Acquisition cohorts are great for revealing when customers stop using your product, but behavioral cohorts can tell you why they are leaving.
The first cohort to look at is users you successfully acquire, whether through sign-up or subscription, free-to-paid trial conversion, or another method.
Step one: Perform a funnel analysis to view how many customers you acquire.
Step two: Create a cohort for the customers you acquired.
Step three: Analyze members of this cohort to see what they might share in common, such as demographic characteristics, device preference, feature usage, or the channel or campaign through which they were acquired.
Step four: Use this information to inform the audience you target and how. For example, a music streaming app might find that the cohort of acquired customers primarily fits a certain demographic, signed up with their mobile devices, and used the favorite song feature—behaviors they could play on in their marketing messaging to similar audiences.