How Customer Demographics Influence Your Business


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Demographics in business are more important than many companies realize. Amidst the other concerns presented in building a company, this one important aspect can easily be overlooked. However, when trying to grow a larger customer base, understanding the demographics of your target audience could be the key to your success.

Finding Customer Demographics

Demographics encompass any typical statistical data or specific information regarding the population of your target audience, or the people who will most likely buy your goods or services. This information includes:

  • Age

  • Annual income

  • Education

  • Number of individuals in a household

  • Occupation

  • Geographic location

  • Gender

  • Status of home ownership

  • Marital status

  • Race or ethnic background

A smaller chapter of customer demographics include psychographics, which takes a look at the psychology, lifestyle, and behaviors of your customers, and includes things such as:

  • Buying habits

  • Hobbies

  • Shopping patterns

  • Values and opinions

  • Behaviors

  • Travel habits

  • General attitudes

If you want a comprehensive analysis on the demographics and psychographics of your target audience, you’ll need to conduct thorough research on a certain geographical region and fill out customer personas, which will give you an accurate depiction of who your customers are and what, how, when, and why they’re interested in purchasing a good or service.

Using Demographics to Improve Business

Understanding customer demographics is one of the most important things for improving your overall business, but it also has a particular influence on the effectiveness of your marketing strategy. Here are just a few of the ways that understanding customer demographics can positively impact your business.

Exposes Shopping Habits: When is the best time to run an advertisement? Where will most of your customers see it? Is digital or physical more effective? When you understand the psychographics of your target customers, you get the answers to these questions and more. With this information, you can tailor your marketing strategy to produce advertisements when and where it will be most effective.

Targets Price Points: Regions throughout the country have a certain median annual income that shapes the asking price for your goods and services. For example, according to a chart from 42 Floors, Atlanta has a median household income of $46,000, which is below state averages. With this information, you know that a higher price point won’t get as far in Atlanta as it would in other areas of the state.

Prevents Costly Errors: Deductive reasoning through customer demographics helps to eliminate costly mistakes in your marketing plan. It helps you to hone in on what your customers are interested in seeing and helps you eliminate unsuccessful strategies. For example, researching customer interaction with similar businesses in a certain area can tell you what they’re buying and what they’re avoiding. It can also define a certain need of the consumer, which can help you avoid making many of the mistakes your competitors have already made regarding drawing in customers.

Identifies Product and Service Needs: Products and services are successful because they fulfill a customer need. Understanding the needs of your customers can help you comprehend what products or services you should offer in the future. This can also help you to evolve your product so that it can better meet the needs of your customers.

Successful companies don’t ignore the demographics of their company. They research them in depth, and apply the information to their business processing. From there, companies can see significant growth and improvement in their dealings with customers.

Larry Alton
Larry Alton is an independent business consultant specializing in social media trends, business, and entrepreneurship. Follow him on Twitter and LinkedIn.


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