Customer Analysis: What, How, Types, 5W Model

PESTLEanalysis Team
PESTLEanalysis Team
Customer Analysis: What, How, Types, 5W Model
Table of Contents
Table of Contents

By conducting effective customer analysis, businesses can increase their customer base and retain current customers for a long time.

What's the one thing that matters to businesses the most? Customers. The prime objective of any business is to maximise its profits. Therefore, businesses pay special attention to customers since customers help businesses grow.

Customers keep changing their needs and preferences. So to stay relevant in the market and match their customers' expectations, businesses have to closely examine their customers. This is why businesses use customer analysis.

By conducting effective customer analysis, businesses can increase their customer base and retain current customers for a long time. A high customer base increases the profits of a business and helps it expand.

This article is a guide to customer analysis. It discusses customer analysis and its uses in detail. Besides that, this article also sheds light on how to conduct customer analysis and its types. In the end, this article also discusses the 5W customer analysis model. So let's start with discussing the customer analysis in detail.

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What Is A Customer Analysis?

Customer analysis is collecting and analyzing customer information to gain insights into their needs, preferences, behaviors, and characteristics.

This information is used to create a customer profile or persona, which can help businesses develop effective marketing strategies and improve their products or services to better meet customer needs.

Customer analysis typically involves collecting data from various sources, such as surveys, interviews, focus groups, sales data, and social media analytics. This data is used to identify patterns and trends in customer behavior, such as purchasing habits, product usage, and brand loyalty.

Businesses can also use customer analysis to identify customer segments and target their marketing efforts to specific groups of customers. Ultimately, customer analysis aims to help enterprises to understand their customers better and create strategies to build stronger relationships with them.

By understanding what customers want and need, businesses can improve customer satisfaction, increase loyalty, and drive sales and revenue growth.

Now that we have discussed what customer analysis is let's take a look at how to conduct customer analysis.

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How To Do A Customer Analysis

Businesses analyze their customer base with the help of customer analysis. To conduct the customer analysis, several steps are required.

Analyze The Data

A robust analytics system is crucial for businesses as it provides valuable data on customer behavior.

However, businesses should also look beyond their current customer base to gain a complete understanding of their target audience. By doing so, they can obtain insights into the specific types of individuals who are most likely to purchase from them.

Businesses use various data collection methods, such as surveys, to gather this additional data. For example, the data collected in the customer analysis is qualitative and quantitative. These surveys allow them to reach individuals who may not be current customers but fit the profile of their ideal customers.

By gathering information on these individuals, businesses can better understand their needs, preferences, and buying behaviors to tailor their marketing strategies and products accordingly.

Customer Segmentation

Customer segmentation is dividing customers into groups based on common characteristics or behaviors. By segmenting customers, businesses can better understand and target different groups of customers based on their specific needs and preferences.

Businesses divide customers on various bases, such as demography. This involves grouping customers based on demographic factors such as age, gender, income, education level, and marital status.

For example, a business that sells baby products may segment its customers by age, targeting new parents with infants, toddlers, or young children. Moreover, the division is also done based on the customers' behaviors.

For example, a business that sells beauty products may segment its customers by purchasing habits, targeting customers who frequently purchase high-end products or have shown interest in specific types of products.

Besides these, other segmentations are also used, such as psychographic and geographic segmentation.

Identifying Customers Needs

Identifying customer needs in customer analysis means understanding customers' specific requirements and expectations when interacting with a business.

This involves gathering information about the problems, desires, preferences, and pain points that customers experience and using this information to improve the customer experience and meet customer expectations.

There are different methods through which the needs of customers can be identified. For example, businesses use reviews, surveys, and customer interaction tools to learn about customer needs.

Data collected in this step would be qualitative as well as quantitative. Once businesses have identified customer needs, they can use this information to improve their experience, develop new products and services, and tailor marketing strategies to meet customer expectations.

For example, a business that identifies a need for faster shipping times can offer expedited shipping options or partner with a logistics provider that can provide more immediate delivery. This can help improve customer satisfaction, increase customer loyalty, and drive revenue growth.

Develop Customer Profiles

Creating customer profiles is an essential step in conducting customer analysis. Customer profiles are descriptions of your customers that include relevant demographic and behavioral information.

They help you better understand who your customers are, what motivates them, and how they behave. This can help businesses to tailor their marketing and product strategies to meet their needs better.

Businesses create customer profiles for different segments of their target audience. For example, businesses may have one profile for first-time customers and another for repeat customers. Each profile should be based on data and insights gathered through customer analysis.

Creating profiles helps businesses to understand their target audience and its behavior. This information can create targeted marketing campaigns and product offerings that appeal to each profile's unique characteristics.

Additionally, customer profiles can help businesses identify areas where they may be falling short in meeting the needs of their customers, allowing them to make improvements to their business strategies.

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Types of Customer Analysis

Now that we have discussed the process of conducting customer analysis let's look at different types of customer analysis.

Customer Sentiment Analysis

Customer sentiment analysis is a technique used to analyze and understand customers' emotions, opinions, and attitudes toward a brand, product, service, or specific topic.

It uses natural language processing (NLP) and machine learning algorithms to analyze customer feedback from various sources, such as social media, customer reviews, surveys, and customer support interactions.

The analysis focuses on identifying the sentiment behind the text, whether positive, negative, or neutral. The sentiment is determined by analyzing the words and phrases used in the text and the context in which they were used.

Businesses can gain valuable insights into customers' perceptions of their brand, products, or services by conducting customer sentiment analysis.

It can help businesses identify areas where they need to improve their customer experience, product features, or customer service and identify trends and patterns in customer feedback.

Customer Feedback Analysis

Customer feedback analysis is collecting and analyzing customer feedback to understand their satisfaction level, identify areas for improvement, and make data-driven decisions to improve customer experience.

The analysis typically involves using text analytics and data mining techniques to identify trends and patterns in customer feedback. For instance, the analysis can help identify common customer feedback themes such as product quality, customer service, and pricing.

The insights gained from customer feedback analysis can be used to improve various aspects of the business, such as product design, customer service, marketing, and sales. For example, suppose customers frequently mention poor customer service. The business can improve its customer service processes and training in that case.

Customer Profitability Analysis

Customer profitability analysis is a technique businesses use to evaluate the profitability of individual customers or customer segments. The analysis is conducted by calculating the revenue generated by each customer or customer segment and subtracting the costs associated with serving that customer or segment.

Customer profitability analysis aims to identify the customers or segments most profitable for the business and allocate resources accordingly. It helps businesses make strategic decisions on maximizing profitability by focusing on the most profitable customers or segments and minimizing resources spent on less profitable ones.

The insights gained from CPA can be used to make data-driven decisions on pricing, marketing, and product development strategies. For example, a business may identify that a particular customer segment is more profitable than others and develop targeted marketing campaigns to attract more customers in that segment.

Alternatively, a business may identify a less profitable customer segment and discontinue products or services that are not profitable for that segment.

Customer Journey Analysis

Customer journey analysis is a technique businesses use to understand the customer experience from the customer's perspective. It involves mapping out a customer's various touchpoints with a business, from initial awareness to post-purchase follow-up, and analyzing the customer's behavior and emotions at each stage.

Customer journey analysis aims to better understand the customer experience and identify areas where the business can improve customer satisfaction and loyalty.

By analyzing the customer journey, businesses can identify pain points, opportunities for improvement, and areas where they can differentiate themselves from competitors.

Customer Loyalty And Retention Analysis

Customer loyalty and retention analysis is a technique businesses use to understand and improve customer loyalty and retention. It involves analyzing customer behavior and identifying factors influencing customer loyalty and retention.

The goal of customer loyalty and retention analysis is to identify the customers most likely to remain loyal to the business and develop strategies to retain them. By understanding customer behavior, businesses can create more effective retention programs and increase customer lifetime value.

5W Model of Customer Analysis

The 5W model is a framework used to organize information and gather details about a specific topic or event. First, let's discuss the 5W model for customer analysis.


This component focuses on the demographic and psychographic characteristics of customers. It answers questions such as who the customers are, what their age, gender, income, and lifestyle are, and what their needs and preferences are.


What component focuses on the products or services that customers are interested in? It answers questions such as what customers look for in a product or service, what features they find most important, and what benefits they seek.


The "Where" section focuses on the channels and locations where customers interact with the business. It answers questions about where customers shop or research products, what channels they prefer to use for communication, and where they live or work.


This section focuses on the timing of customer interactions with the business. It answers questions such as when customers are most likely to make a purchase, when they are most receptive to marketing messages, and when they are most likely to require customer service.


"Why" in the 5W model represents motivations and emotions that drive customer behavior. It answers questions such as why customers choose one product or service over another, why they are loyal to a particular brand, and why they may be dissatisfied with a product or service.

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Customer Analysis: Final Word

Customer analysis helps businesses in analyzing their actual and potential customers. Businesses gain insights into customers' needs, preferences, behaviors, and characteristics by conducting customer analysis.

After gaining the insights, businesses match customers' preferences in the market to stay relevant. In this article, we discussed the significance and the customer analysis process.

Moreover, this article also discussed five different types of customer analysis. These analyses provide further detailed information about customer and market loyalty, journey, feedback, profitability, and sentiment.

In the end, this article analyzed the 5W model of customer analysis. In this section, all five components, who, what, where, when, and why, were analyzed concerning customers.

Businesses often use customer analysis since knowing customers deeply help businesses to increase their market share and maximize their profits.

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