Jim’s Intro:  Profiles can be demographically or behaviorally based, and the difference is very important to your business.

Many people think using your customer data is about creating a customer “profile.” It’s a hot topic. Everybody wants to do it. But what’s a customer profile? Here are 2 kinds of customer profiles:

• Customer is married, has children, lives in an upscale neighborhood, and reads Time magazine
• Customer visited the site every day for 2 months, but has not visited the site at all in the past 2 weeks

The first profile is demographic, a set of characteristics.  The second profile is behavior-based, involving what the customer is actually doing.

Which seems more important to you?

They’re both important in their own ways. For someone selling advertising, or deciding on content for a website, the first profile is usually important, because it defines the market for ad sales and provides clues to editorial direction. These are important considerations in attracting customers and generating revenue in the first stages of an online project.

The second profile is about action, behavior, and for anybody concerned about what their customers are doing, is more important than the first. Will they visit again? Will they buy again? These are the questions answered by looking at behavior. Customer behavior is a much stronger predictor of your future relationship with a customer than demographic information ever will be. You have to look at the data, the record of their behavior, and it will tell you things. It will tell you “I’m not satisfied.” It will tell you “I want to buy more, give me a push.” It will tell you “I think your content is boring.”

I‘d argue the second type of profile is more important longer term, because if the customer stops buying from or visiting the site, you’re not going to have much of a chance to serve up the customized pages or ads based on any “profile” given to you. You could customize the heck out of the site based on demographics or self-reported survey data and customers would never see the results if they don’t come back. So for the long haul, if you had to choose the more important profile, the profile based on action and behavior would be more critical to you than a demographic one. Customer behavior profiling is critical to a company interested in keeping customers and increasing their value.

Next in Tutorial:
What’s a Customer Model?

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