Analyzing Customers in Your Business Plan

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).