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What Is Customer Profiling?

Oct 06, 2021 Red Flag Alert Updated On: March 3, 2023
What Is Customer Profiling?

I want to tell you about an insurance company.

The business is a challenger brand based in Leeds.

It’s well-established and has ambitions to become the number one brand amongst its target audience. 

Their sales director is in his thirties, believes technology can solve business problems and understands the value of using data to make decisions.

It’s also not real.

So why have I given you a detailed description of this made-up business? 

Because it’s one of Red Flag Alert’s very own customer profiles.

Customer profiling helps companies understand who needs their products or services and the factors that govern purchasing decisions.

Businesses can use this to inform sales and marketing strategies across the customer lifecycle, from lead generation to retention.

It also helps businesses avoid pursuing prospects that are unlikely to buy or that they’ll struggle to please.

In this article, we will explain what a customer profile is, why they are important and how to make them. 

What Is A Customer Profile?

A customer profile is a set of characteristics and behaviours common amongst a section of a company’s existing customer base. 

Creating customer profiles involves studying the psychology and purchasing habits of buyers.

Companies use this information to create detailed, semi-fictional descriptions that inform business decisions. These descriptions are the customer profiles.

Customer profiles can apply to organisations, individuals or both. 

In this article, we’re mainly going to focus on profiling B2B companies. 

However, a lot of the processes we describe can apply to both.

It’s also worth noting that some terms are similar to, overlap with or can be used interchangeably with customer profiles. These include:

Customer groups: These are the different clusters of customers that share common characteristics. This is essentially interchangeable with a customer profile. The only difference is that you have gone through a process to identify a customer profile. 

Ideal customer: These profiles represent your most profitable customers. Your main aim is to identify these customers and target your sales and marketing towards them. 

Buyer persona: A buyer persona is a fictionalisation of the personalities that could buy from you. Companies develop them using market research and their own sales data. This applies to people and not businesses.

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Why Is Customer Profiling Important?

Selling to the broadest range of customers possible might seem like a good idea.

However, your products and services won’t be a perfect fit for everyone.

Some people don’t need your products, while others may be resistant to the idea of buying them.

Pursuing these customers can waste vast amounts of your sales team’s time and resources.

Even if you do win these customers, you may not be able to fulfil their requirements. 

This leads to higher churn rates, reputational damage and greater operational costs.

On the other hand, there are customers out there who are desperate for your services and could quickly become happy, loyal consumers.

Customer profiling allows you to avoid working with customers that drain your profitability and instead focus on those who boost it.

This benefits all parts of your business and gives it an advantage over competitors that aren’t using this focused approach.

Customer profiling benefits

Decisions over which customer groups are most profitable are often made based on the opinions of a few influential people at a business. 

Customer profiling is based on data, meaning facts and not perception will guide your sales and marketing decision making process. 

This brings several benefits, including:

Find Prospects That Suit Your Business

If you know the type of company that benefits most from your services, you can target similar businesses. 

This saves your sales team time researching which businesses might need your services.

More Efficient Sales

Once you know your customers’ needs, challenges, fears and ambitions, you can create sales pitches and marketing messages that address them. 

This will make your sales and marketing efforts more effective, allowing you to gain new clients faster and at a lower cost.

Better Customer Experience

You can structure your products and services to address customer pain points and needs, allowing you to solve problems before they even arise. 

This is especially useful for downstream parts of your business, like customer success.

Better Retention

The better your customer experience, the better your customer loyalty. 

Happy customers are more likely to buy in greater quantities, buy more often, and recommend your services. 

More importantly, it reduces customer churn. 

This is when you lose customers and have to look for new ones to replace them. 

It’s expensive and minimising it will make your business more efficient.

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Types Of Customer Profiling

There are four main customer profiling methods. 

To create the most accurate customer profile and be effective, you’ll need to include information from all four—although it’s likely that one or two will be more important than the others.


This is when you profile an individual’s tangible characteristics—in other words, things that one can factually say about the person.

This could include their:

  • Age
  • Sex
  • Nationality
  • Education
  • Income
  • Job title


You can also apply this to businesses. Include information like when the business was established, the number of employees and revenues.

These attributes will make a big difference to how you sell to your target audience. 

For example, if you provide software, a company with many employees might appreciate an offer for unlimited licenses more than a sole trader would.


As the name suggests, psychographic profiling looks at the psychological characteristics that drive your customers’ decision making.  

For individuals, this will cover things like:

  • Interests
  • Values and opinions
  • Goals
  • Pain points
  • Fears
  • Motivators


Most of these points can apply to a business as much as a person. For example, you could say that a company has an old-fashioned and conservative culture and that adapting to new technology is one of their pain points.


This is straightforward. Where is the company based and in what kind of environment? This could include:

  • Country, region, city
  • Rural or metropolitan
  • Coastal or inland


These factors can affect a range of things, like how the company does business and how easy it is for them to travel. 

For example, it will be harder to meet face-to-face with a business based in an isolated rural community than it would be in a city, due to the difference in transport links.


These are the habits and actions the customer makes from a sales perspective. This could include:

  • How, when and where they engage with your company
  • Buyer readiness
  • Purchase frequency 
  • Purchase history
  • Product or service use
  • Satisfaction 
  • Customer loyalty


Behavioural profiling also includes customer difficulty. In other words, how hard is it to get the customer to buy or how much support do they need once they have purchased your product? 

This shows how profitable they will be. If the customer takes up too much of your time, it may not be worth pursuing their business.

How To Create Customer Profiles

In this section, we explain the steps you should take to develop customer profiles. 

You might want to record your findings in a customer profile tool like the one below from Lean B2B.



1 - Group Your Customers By Use Case

First, you need to understand how your customers use your product. 

This is a fundamental way to differentiate your customer groups and impacts everything from messaging to pricing. 

That’s because it identifies the main problem that your product solves for them.

For example, Red Flag Alert has four main use cases:

  • Lead generation
  • Financial health checks
  • AML and regulatory checks
  • Supporting local authority decisions making


Each of these use cases can also be divided into subcategories. For example, some businesses that use our financial health checks will monitor the health of critical suppliers, while others will use it to onboard new customers.

We take a drastically different approach to customers between the different use cases, while our approach between each subcategory is more nuanced.

Write down your use cases and subcategories and the challenges faced by companies under each. 

2 - Plot Your Customer Journey

Now it’s time to map out the different stages that customers go through as they decide to buy from you. 

Start by listing the different stages of your sales funnel. A typical example is:

  1. Awareness
  2. Interest
  3. Consideration
  4. Decision
  5. Purchase
  6. Loyalty


Now list all the different ways that a customer would go through this process with your company. 

For example, a typical customer journey through the funnel could be:

  1. Sees an advertisement in a trade publication
  2. Meets a rep at a conference
  3. Participates in a demonstration
  4. Discusses the offer in a sales call
  5. Makes an order
  6. Makes regular purchases


Customer journeys can be complex. They may enter the funnel in different ways. Some will buy quicker than others. Some might even skip steps.

We recommend using a customer journey map like the one below from Columbia Road. This provides an overview of all the possibilities and allows you to plot journeys for different customer groups.




3 - Identify Demographics

It’s time to look at the demographic factors that we described earlier in this article.

There’s an almost endless amount of information that you could collect for this, so it’s essential to define the most useful data.

Try to identify factors that are most relevant to your product or service. 

For example, if your product is high value, then the customer’s budget is an important factor.

Or, if you provide insurance services, then the number of assets will be relevant.

4 - Identify drivers

Next, identify the psychographic factors that will impact the decision-making of each customer group.  

As with step three, you should focus on the factors most relevant to your product or service. 

So if your product is of high value, then your customers’ attitude towards spending will be an important factor.

If you sell insurance, then their risk appetite will also be important. 

The most important factors to identify are challenges, pain points and fears. 

That’s because they reflect the problems that your solution will help to solve. 

They also explain why a customer might not buy your solution.

Say, for example, a customer doesn’t like spending on new technology. 

If your product or service is low-cost and doesn’t involve technology then you can zero-in on this concern in your sales pitch.

But if you provide high-value software solutions, you’ll have to prepare a statement to allay their fears—perhaps it will save money over a longer period? Perhaps it’s cheaper than their current software?

5 - Add Richness With Customer Interviews

By this stage, you’ll have built a detailed picture of your different customer groups. 

It’s useful to enrich this information with first-hand interviews with customers from that group. 

These don’t have to be formal—you can ask the questions during sales calls or meetings.

Gather quotes that highlight the challenges and concerns faced by this customer group.

Try to test the information you have collected so far and make sure it reflects real life. 

If it doesn’t, then you should revisit the previous stages. Use the information gathered in interviews to inform your revisions.

6 - Understand Customer Perceptions

It’s important to know how each customer group views your product or service. 

This helps you to understand how you could improve it. It also indicates how difficult selling to them will be.

You can get this information during the interviews mentioned above or through customer feedback surveys and comments received during demonstrations or webinars.

Use this information to understand why customers could be hesitant to buy your product or service. It’s essential to prepare your sales team with a response to these arguments before approaching customers.

7 - Create Profiles For Personnel

Even if you have been profiling companies, it’s still important to know the kind of personalities that you will be engaging with at those businesses.

A good way to do this is to create a fictional representation of the roles that your sales team might engage with.

Plotting out these personalities helps you understand the needs and pain points relating to their role and personality. 

Most people give these personalities names, like ‘Paul the busy IT manager’, or ‘Sandra the ambitious CEO’.

Creating these personalities helps you prepare messages that resonate with them and create relevant content. 

This is important because B2B sales cycles rarely involve just one person. According to Gartner, the average B2B sales decision involves between six and ten people. 

Successful sales processes will usually involve switching between multiple messages, depending on who you are addressing.

8 - Design Targeted Solutions

You should now have a set of solid customer profiles and it’s time to put them to action.

Start by looking at your product/service and assessing the pros and cons that it presents to each customer profile. 

Use this information to develop packages tailored specifically to each profile. 

For example, you might offer different pricing models, levels of support or number of account users.

You could even do some R&D to provide a whole new product or service.

Each of your offers should have its own messaging and sales and marketing strategy to sell it to each respective customer profile.

Below is an example from app building platform The company offers two types of price plans. One for individuals and businesses and one for enterprises.  


The plans aimed at individuals are low cost and offer scalability in the number of users. The ability to create private apps is also an important feature.



On the other hand, the plans for enterprise businesses are significantly more expensive, support far more users and offer advanced security and integration features.

9 - Find Your Ideal Customers

Your ideal customers are the most profitable ones. 

Usually, these customers are likely to buy or order the most—but that’s not always the case.

It’s also important to consider how much work you need to put into the sales process to win that customer’s business and how much support they require.

Once you know which customers are most profitable, you should be able to see which customer profiles your time is best spent pursuing. 

A prioritisation matrix like the one shown below can help you understand which customer profiles to focus on and what action to take with them.



There are four main areas, each of which requires a different approach:

Grow: These are your most profitable customers. They are a great fit for your product, so they require less effort to win and maintain their business.

Try and get as many customers that match profiles in this quadrant as you can. 

You should also focus on growing these accounts by cross-selling and upselling. 

Strategic planning: These customers have the potential to be very profitable but may also take a lot of work.

There is also some risk involved, as you could lose the sale by using the wrong messaging or lose their custom by not meeting expectations.

To avoid these issues, you should meticulously plan how you approach companies in this sector.

Deprioritise: These customer groups require less investment, but they’re also not very lucrative. 

However, these companies could add up to sizable revenues, so you should still pursue them.

Work on these accounts during quiet periods or once you have completed work with customers in the two sections above.

Avoid: Customer profiles in this quadrant are likely to be unprofitable and should be avoided. 

If you already have accounts in this quadrant, you should seek ways to move them into another. You can achieve this by negotiating your rates or by finding better ways of working with them.

Also, don’t be afraid to turn down opportunities with companies in this quadrant. The whole point of this process is to make sure your business only works with perfect customers.

10 - Review Annually

Each year, you should revisit your customer profiles and ask the following questions:

  • Are they still accurate?
  • Are there any new ones? 
  • Has their profitability changed?
  • Are they helping my team win business?


You should also continue adding to your profiles with new interviews, customer data and information throughout the year.

The more detail and richness that you have, the more effective your customer profiles will be.

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Use Data To Create Rich Customer Profiles

Building customer profiles keeps your sales and marketing focused on companies most likely to need your services. 

This can help your sales process become more efficient as you focus on high-quality leads.

The more detail you have in your customer profile, the more useful it is. 

Red Flag Alert’s data provides rich financial company data that adds depth to your customer profiles.

This gives you valuable insight into a business’s performance, helping you identify your prospects’ challenges and create messaging explaining how your product or service can solve these problems.

We provide:

  • Detailed information on every UK business
  • Data on 50,000 new companies added every month
  • 100,000 real time updates per day
  • Crucial information and opportunities are sent straight to your inbox daily
  • Details on 2.4 million key decision-makers, including 900,000 GDPR compliant email addresses 
  • Instant access to data via your CRM using our API

To learn how Red Flag Alert’s b2b prospect data can help your business grow, get started by booking a demo with our team. 


Published by Red Flag Alert October 6, 2021

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