ANALYZING CUSTOMERS IN YOUR BUSINESS PLAN

ANALYZING CUSTOMERS IN YOUR BUSINESS PLAN
BY: DAVE LAVINSKY
the customer analysis section of the business
plan assesses the customer segments that the
COMPANY SERVES. IN IT, THE COMPANY MUST 1)
identify its target customers, 2) convey the
needs of these customers, and 3) show how its
PRODUCTS AND SERVICES SATISFY THESE NEEDS.

the first step of the customer analysis is to
DEFINE EXACTLY WHICH CUSTOMERS THE COMPANY IS
serving. this requires specificity. it is not
adequate to say the company is targeting small
BUSINESSES, FOR EXAMPLE, BECAUSE THERE ARE
several million of these types of customers.
rather, the plan must identify precisely the
CUSTOMERS IT IS SERVING, SUCH AS SMALL
businesses with 10 to 50 employees based in
large metropolitan cities on the west coast.

once the plan has clearly identified and defined
the company's target customers, it is necessary
TO EXPLAIN THE DEMOGRAPHICS OF THESE CUSTOMERS.
questions to be answered include: 1) how many
potential customers fit the given definition? is
THIS CUSTOMER BASE GROWING OR DECREASING? 2)
what is the average revenues/income of these
customers? and 3) where are these customers
GEOGRAPHICALLY BASED?

after explaining customer demographics, the plan
MUST DETAIL THE NEEDS OF THESE CUSTOMERS.
conveying customer needs could take the form of
past actions (x% have purchased a similar
PRODUCT IN THE PAST), FUTURE PROJECTIONS (WHEN
interviewed, x% said that they would purchase
product/service y) and/or implications (because
X% USE A PRODUCT/SERVICE WHICH OUR
product/service enhances/replaces, then x% need
our product/service).

the business plan must also detail the drivers
of customer decision-making. sample questions to
ANSWER INCLUDE: 1) DO CUSTOMERS FIND PRICE TO BE
more important than the quality of the product
or service? and 2) 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 an understanding of the
ACTUAL DECISION-MAKING PROCESS. EXAMPLES OF
questions to be answered here include: 1) will
the customer consult others in their
ORGANIZATION/FAMILY BEFORE MAKING A DECISION?,
2) will the customer seek multiple bids? and 3)
will the product/service require significant
OPERATIONAL CHANGES (E.G., WILL THE CUSTOMER
have to invest time to learn new technologies?
will the product/service cause other members
WITHIN THE ORGANIZATION TO LOSE THEIR JOBS?
etc.).

IT IS ESSENTIAL TO TRULY UNDERSTAND CUSTOMERS TO
develop a successful business and marketing
strategy. as such, sophisticated investors
REQUIRE COMPREHENSIVE PROFILES OF A COMPANY'S
target customers. by spending the time to
research and analyze your target customers, you
WILL DEVELOP BOTH ENHANCE YOUR BUSINESS STRATEGY
and funding success.

ABOUT THE AUTHOR:
as president of growthink business plans [2],
dave lavinsky has helped the company become one
OF THE PREMIER BUSINESS PLAN DEVELOPMENT FIRMS.
since its inception, growthink has developed
over 200 business plans. growthink clients have
COLLECTIVELY RAISED OVER $750 MILLION IN
financing, launched numerous new product and
service lines and gained competitive advantage
AND MARKET SHARE.

CIRCULATED BY ARTICLE EMPORIUM [3]
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