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Why You Need to Understand and Measure Your Customer Demographics

Who are your current and potential customers? The success of your small business depends on you developing a clear answer to that question, and customer demographics organizes and clarifies the information you come up with.

Demographic analysis typically consists of the following characteristics:

  • Gender
  • Age
  • Income level
  • Geographic location or size of community
  • Ethnicity
  • Education level
  • Marital status
  • Occupation

Customer demographics are important for two separate reasons: product development and marketing. Here's an overview of each of those purposes:

Product development

Let's say you have a store that sells inexpensive, sparkly earrings and hair ornaments. It's obvious your customers are female, but if you're going to expand your product line, you have to know more about those females.

For example, if your customers are girls between the ages of five and 13, you might branch out into ear-piercing, temporary tattoos, and magic wands. On the other hand, if your customers are low-income young women and mothers, you may want to add some cute women's sandals and tote bags instead.
 
Having a clear image of your customers allows you to anticipate their needs. You begin with the demographic information you have gathered from Facebook, customer surveys, or your own in-person observations, and build a full story about your target customer.

You can go beyond the basic demographics and think about that customer's lifestyle, beliefs, habits and preferences. Once you have this information, it's much easier to picture how to meet their needs or add more products that will fit their lifestyle.

Marketing

Customer demographic information is also crucial for effective marketing. You're locating the customer in their natural habitat, (the media they are most likely to notice) and creating marketing content that will feel natural and appealing to that person.
 
Social media platforms such as Facebook make it easy to develop online advertising campaigns aimed at particular segments of your target market. Facebook Business Pages provide analysis, graphs and metrics of your current users and fans, as well as continuous real-life trends showing who is talking about your business and who is viewing your page.

Using this data, you can specify narrow demographic bands and create promotions or ads which will only be seen by one carefully-chosen group of potential customers. Customized marketing materials have a far higher rate of return on your advertising investment.
 
Demographic information is equally important in real-world business marketing; it influences every aesthetic choice you make, from your logo, signage and advertising material to the music that your customers hear when they walk through the door.

All these elements together create an environment that your target group of customers feel attracted to; when they walk through the door, they feel as if they're in a place created by someone who feels about the world the same way that they do. This sensation of familiarity and belonging, of shared world-view, is one of the most powerful motivators to buying that a merchant can construct.

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