How Well do you Know Your Target Customers?

Can you identify your target customers… in detail? Do you have a really clear profile of those prospects who see the most value from your software or service? What is your ideal software customer profile?

The three most important things to know about your customers are:

(1) Their detailed target customer profile,

(2) The customer painpoint that your software addresses, and

(3) Their average customer lifetime value.

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Target Customer Profile and Painpoint

Especially in the current times of tight marketing budgets and even tighter customer budgets, you must make every dollar you spend on your software marketing work for you. That is why you need to have a clear-cut customer profile.

Your marketing must be focused and directed at your most profitable prospects:

  • Who are they?
  • What is their pain point?
  • How valuable is your software or service to them (how much are they willing to spend)?
  • What is your unique selling proposition (USP)?
  • Where do they look for information?

Answer these questions and you will be able to truly focus your marketing mix.

You may have several customer profiles. First, you may have different versions of your product or different messaging for different subsegments. Second, if your product has a longer software sales cycle with more than one stakeholder in the buying process, you need separate profiles and messaging for each type of stakeholder.

Apple is an excellent example: they know which customer segments value their products the highest (eg, education, graphic design) and that is where they target iMac messaging. This comes out in their case studies, landing pages, product shots, etc.

Adobe is another good example, showing products targeted by solution with landing pages for each type of user from their website: not only are their individual products targeted to certain users but they have solution bundles by segment available also: web publishers, print publishers, consumer photo editing, etc.

Here’s how you can better communicate your software messaging to your most profitable target customers:

  • Identify your best prospects(those subsegments that have the highest perceived value for your product)
  • Develop detailed customer profiles
  • Identify your customer pain points that are addressed by your product or service
  • Refine your USP and messaging
  • Look at your website and your marketing material with fresh eyes. Does it speak directly to the pain points and needs of your best prospects? Could it do with a revision?
  • Can you do a better job sub-segmenting your market with your material, landing pages, etc?

Also take a look at this article on identifying your best target customer.

Customer Lifetime Value

Customer lifetime value is the total amount of revenue that you will on average receive from each of your customers over their lifetime.

Why is it so important? Because the customer lifetime value must be larger than the amount you spend to acquire that customer in the first place. If you're spending more to get customers than they are giving back to you... your business will be in the red for years to come.

Customer lifetime value is important when thinking about the target customers you plan to focus on. If you have a number of possible market subsegments you could target, then consider the average customer lifetime value of each. That may help you narrow down to the most profitable areas to target your lead generation.

In fact, customer lifetime value is a critical variable to be aware of if you are selling SaaS (Software as a Service) solutions. That's because customer values tend to be low, and if you're not careful the customer acquisition costs can easily get too high.

To effectively calculate your customer lifetime value, we recommend using the financial planning sheets in our SaaS Business Planning package (for SaaS providers), or our Software Company Business Planning package (for licensed software vendors).