How to Define Customers in Your Business Plan

By Steven D. Peterson, Peter E. Jaret, and Barbara Findlay Schenck from Business Plans Kit For Dummies, 3rd Edition

Without enough customers, you don’t have a business at all, so spend time when developing your business plan to understand who your customers are, what makes them tick, and exactly what they want from your business.

The more you know about your customers, the more you know about where to find others just like them, how to reach them with media or other marketing communications, and what kinds of messages, offers, and incentives move them toward buying.

As you profile your customers, four terms apply:

Geographics: This term describes where your customers and your potential customers — or prospects — reside. When you know this information, you can target your marketing efforts into specific regions, counties, states, countries, or zip codes.
Demographics: This term describes who your prospects are in factual terms, including age, gender, race, education level, marital status, income level, and household size.
Psychographics: This term describes lifestyle characteristics, including attitudes, beliefs, and opinions that affect customer-purchasing patterns.
Behavioral patterns: This term describes how customers buy, including when, why, how much, and how often they buy, their level of loyalty, their purchase occasions and timing, and whether they make buying decisions based on price or quality, on impulse or after careful consideration, based on personal decisions or on the recommendation of others, and other such behavioral patterns.

Use the following questionnaire to develop your customer profile. If yours is an existing business, create a profile of your current customers. If you’re planning for a new business, describe the person most apt to purchase your offering.