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Business plans and templates | Enterprise | How we can help

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Ready to craft a winning business plan? Our expert guidance covers market research, strategy, start-up funding, competitor analysis, financial forecasts and more.

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What you need to do to set up depends on your type of business, where you work and whether you take people on to help.

Register your business

Most businesses register as a sole trader, limited company or partnership.

Sole traders

It's simpler to set up as a sole trader, but you're personally responsible for your business's debts. You also have some accounting responsibilities.

Find out more about being a sole trader and how to register.

Limited companies

If you form a limited company, its finances are separate from your personal finances, but there are more reporting and management responsibilities.

Some people get help from a professional, for example an accountant, but you can set up a company yourself.

Partnerships

A partnership is the simplest way for 2 or more people to run a business together.

You share responsibility for your business's debts. You also have accounting responsibilities. Find out more about being in a partnership and how to register.

Rules for your type of business

You may have other responsibilities depending on what your business does.

Check if you need:

There are also rules you must follow if you:

Where you work

Check what your responsibilities are if you:

If you rent or buy a property, you may have to pay business rates. Small businesses can apply for a discount on business rates and some may pay nothing.

Check if you can claim office, property and equipment as expenses.

Taking on people to help

If you take on agency workers or freelancers you have some responsibilities, for example their health and safety.

Becoming an employer

There are things you'll need to do if you take on your own employees. You'll have more responsibilities, including:

Get help and support

You can get help with setting up your business.

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What you need to do to start a business: choose a legal structure, see if you need licences and insurance, learn about reliefs and benefits

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Visa options after completing your course

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Find out about visas for living and working in the UK after completing your course, including Tier 1 Graduate Entrepreneur, Tier 2 and Tier 5 visas.

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UK registered organisations can apply for a share of up to £12 million for innovative clean maritime technologies. This funding is from the DfT.

UK registered organisations can apply for a share of up to £12 million for innovative clean maritime technologies. This funding is from the DfT.

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UK registered organisations can apply for a share of up to £12 million for innovative clean maritime technologies. This funding is from the DfT. UK registered organisations can apply for a share of up to £12 million for innovative clean maritime technologies. This funding is from the DfT.

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Illustration by Gracie Dahl

If you're a UAL student or graduate, our range of funding, mentoring and advice could help you to launch or grow your business.

We provide:

Business development programmes

Mentoring

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Inspiring events and workshops.

UAL students can access 16,000+ LinkedIn courses for free. Subjects include: UX, marketing, networking, Adobe CS and more...

Work for yourself or want to in the future? Sign up to be part of our brand-new Founders and Freelancers group on The Dots! Join the waitlist.

MA Arts and Cultural Enterprise online open day. Wednesday 8 February 2023, 2-3pm.

This workshop will teach you how to use storytelling to pitch and present your enterprise ideas.

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If you're a UAL student or graduate, our range of funding, mentoring and advice could help you to launch or grow your business. We provide: Business development programmes Mentoring Competitions and awards Inspiring events and workshops. UAL students can access 16,000+ LinkedIn courses for free. Subjects include: UX, marketing, networking, Adobe CS and more...

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Join the Enterprising Alumni Association to connect with other creative and business leaders in the UAL alumni network.

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Summary

Every team that's accomplished something phenomenal first had to set goals to get there. Teams that set goals can do great things like cure diseases, build more efficient and sustainable appliances, or make our oceans safer for whales and dolphins. When we set goals, we can visualize where we want to go and put our best foot forward to get there.

But hitting an ambitious goal isn't just about reaching for the stars-you also need a path to get there. That's where SMART goals come in. SMART is an acronym that can help you define and set great goals. With SMART, you can make sure every goal-from project goals all the way to larger company objectives-has everything you need to achieve it. Here's how.

What is a SMART goal?

SMART is an acronym to help you create defined, falsifiable, and attainable goals. SMART stands for:

The SMART acronym is a shortcut to setting great goals because it includes all of the ingredients you need for success. Here's how to break down and approach each piece:

Specific

Keep in mind that you're setting your SMART goal to attain a specific objective-not a broad one. You don't just want any initiative to succeed, you want your specific project to succeed. To make sure you can achieve them, make sure your goals are specific to what you're working on.

For example, instead of creating a goal to raise more money, you might create a goal to raise $20,000 by the end of the year. This is much more specific, and gives you a roadmap to work off of. In this case, you can break down how much you need to raise each day to hit your goal, and then create an action plan that enables you to hit that number every day.

Measurable

The "M" in SMART stands for measurable, which helps you evaluate the success or failure of your project. Your goals should have some sort of objective way to measure them-whether that's a deadline, a number, a percent change, or some other measurable element.

One way to do this is with benchmarks. Benchmarks show you what's "normal" for specific, recurring scenarios in your company, so you know what to expect. Using standardized benchmarks, you can set more relevant goals that are easier to measure. For example, let's say you have a benchmark showing that you have three new marketing campaigns each year to help you hit key performance indicators. You can then use that benchmark to set measurable goals to track progress for both the launches and their related KPIs.

Achievable

You don't want your goals to be easy to achieve-but you also want to make sure you're setting goals that you could, conceivably, hit. Achievable says that your goals shouldn't be totally outside the realm of possibility. Ask yourself this question: Is the goal within your project scope? If not, it's not Achievable.

For example, let's say you want to learn to speak Spanish in order to be competitive in your field. If you've never spoken a word of Spanish before, you can't expect to be fluent by next month. That simply isn't an achievable goal. However, you could set a goal to learn from your foreign language app for 20 minutes every day. By establishing a consistent practice, you can set a more achievable goal.

What about stretch goals-are those achievable?

Stretch goals are goals that are purposefully challenging. For example, if you usually get 30,000 monthly visitors to your website, a stretch goal would be to get 50,000 monthly visitors. That's a big increase! But this stretch goal is still within the realm of possibility. Make sure you make your stretch goals ambitious, not impossible-like aiming to go from 30,000 monthly visitors to 300,000 monthly visitors, for example.

Realistic

The "A" and "R" of SMART are closely related. In addition to setting Achievable goals, you also want to set Realistic ones. For example, maybe a goal is achievable, but getting there would require every team member to work overtime for six weeks straight. Even though it might be an achievable goal, it's not a realistic one. Make sure yours is both by creating a clear resource management plan.

Using our achievable goal example of learning to speak Spanish, the goal of setting 20 minutes aside each day to practice Spanish is both realistic and achievable. On the other hand, a goal to practice speaking Spanish for two hours every day is probably not realistic for most working adults, even though it's technically achievable.

Time-bound

Your SMART goal should have an end date. Without a time limit, your project could drag on, have unclear success metrics, and suffer from scope creep. Deadlines provide a sense of urgency, so that short-term tasks don't drag into long-term goals unnecessarily. If you haven't already, make sure you outline a clear project timeline.

Deadlines are crucial to implementing goals, since they pretty much force you to take action. If you want to have more focus time at work, you can decide to set a goal to only check your email for 30 minutes every day. But without a deadline, it's easy to brush it off. Imagine instead if you set a goal to only check your email for 30 minutes every day for one week-now, it starts to feel more attainable.

What are the benefits of SMART goals?

Making sure your important goals have all of the SMART components might be more time-consuming than setting regular goals, but the value you get from SMART goals outweigh the additional time spent on the goal-setting process. Goals shouldn't be something you set and forget-they're a key part of your project planning process. By setting SMART goals, you and your team will have:

1. Clear communication and alignment. When your project team knows exactly what they're working towards, they're more motivated and aligned as a team. Team members who know how their individual work contributes to broader company goals are 2X as motivated as their counterparts. Setting and sharing SMART goals can help you boost your entire team's motivation.

2. Clarity towards project success. Have you ever gotten to the end of a project and not really known if you hit your project goals or not? SMART goals help you set clear goals, so you can avoid vague or confusing goal language.

3. Clear roadmap and finish line. With SMART goals, you know exactly what you want to achieve and when you expect to achieve it. You've verified that these goals are realistic and achievable. And you know you'll be able to measure them to see if you hit them or not.

4. Trackable metrics. When you finish your project, SMART goals help you evaluate its success. Don't beat yourself up if you didn't achieve it. In fact, at Asana, we aim to hit about 70% of our goals. That way, we know we're setting challenging-but possible-goals. Whether you hit your goal or not, SMART goals can help you evaluate your goal, and you can learn from that.

5 examples of SMART goals

Ready to get started? Before you write your own SMART goals, here are five examples of SMART goals and how each goal meets the SMART criteria.

1. Business goal

Example: Produce at least three different types of large-scale marketing assets (e.g. ebook, webinar, videos, sales one- or two-pagers) per month for Q1.

Why it's SMART: This business goal is specific (large-scale marketing assets), measurable (three different types), achievable and realistic (this depends on how many project team members there are, but we can assume there are enough to cover the three assets per month), and time-bound (per month for Q1).

2. Team goal

Example: The product team will partner on five cross-functional projects focused on usability testing, customer surveys, customer marketing, or research and development during the first half of FY22.

3. Professional goal

4. Personal goal

5. Nonprofit goal
Read: How to build a strategic plan for your nonprofit (with template) Try Asana for nonprofits
6 steps to make your goal SMART

When you're ready to set your own SMART goal, start by writing your project goal as a sentence or two. Then, apply each of the five SMART attributes to your goal and make sure you cover all of your bases. Use this template to practice smart goal setting:

1. Initial goal: Write down whatever your initial goal is. Don't worry about it not being completely SMART-we'll get to that later in the template.

2. Make it Specific: Does your goal define exactly what you want to do? If not, re-work the language to make it specific to your particular project.

3. Make it Measurable: Have you established how you'll measure your goal once your project is complete? If not, add a way to measure success or failure at the end of your project.

4. Make it Achievable: Is your goal something you can achieve, given your project scope? Make sure this specific goal falls within your project capabilities.

Example, continued: Develop and use company-specific hashtags, in conjunction with popular hashtags in our industry, to generate 1,000 new Instagram followers.

5. Make it Realistic: Can your project team reasonably hit your goal? Even if it's a stretch goal, make sure this is something you can accomplish with your resources.

Example, continued: Post once daily on Instagram, and ensure every post has a mixture of company-specific hashtags and popular hashtags in our industry in order to generate 1,000 new Instagram followers.

6. Make it Time-bound: By when will you achieve your goal? Make sure you clarify your target date or time frame in your SMART goal.

Example, continued: Post every workday on Instagram for the first half of FY22. Ensure every post has a mixture of company-specific hashtags and popular hashtags in our industry in order to generate 1,000 new Instagram followers by June 30th.

Create a short-term goals template
What to do after creating your SMART goals

Do you track your goals in emails, meetings, or spreadsheets? If so, you're not alone. According to the Asana Goals Report, 53% of businesses track their goals via email, 36% track them in spreadsheets, and 31% track them in in-person meetings.

The challenge with tracking your goals is finding a way to connect your goals with your team's daily work. You've taken all of this time to create a SMART goal-keeping it front of mind can help you make sure you achieve it. At Asana, we believe goals should be closely connected to the work they're, well, connected to. Here's how you can do that:

1. Share your SMART goals with project stakeholders and team members

At the start of the project, make sure you surface your SMART goals to everyone involved in the work. Your SMART goals should guide your whole team as you work on project deliverables, so you know exactly whether or not you hit your project objectives.

The best way to do that is with a work management tool like Asana. That way, your team has a central source of truth with all information in the same place-from your daily work all the way to your project's goals. Instead of hiding your goals in docs, decks, and other hard-to-find places, connect them to your daily work so everyone is motivated, focused, and on the same page.

2. Check in on progress regularly

In addition to sharing your SMART goals with your team at the beginning of your project, make sure you periodically measure the progress you've made towards your goal. You don't want to work on the project and then find, at the very end of the work, that you've missed your goals. You've worked hard to set specific, measurable goals for a reason-you can use them as your north star, and course correct during your project if necessary.

The best way to regularly check in on your SMART goals is to send weekly project status updates. Status updates are a great way for you to highlight the important work your team did, any upcoming milestones, and whether or not you're on track.

3. Evaluate your success

SMART goals bring clarity to your goal-setting process-so you can gauge exactly whether or not you hit your project goals. If you did, it's time to celebrate! And even if you didn't, having such clear goals-and checking in on your goals regularly-can help you best identify what went wrong and where you can do better next time.

Remember, not hitting your goals doesn't mean your project was a total failure. You may have purposefully set a stretch goal to challenge yourself or your team. Even if you didn't set a stretch goal, it's more important to calmly evaluate why you missed your target rather than pretend it didn't happen. That way, you can learn from your mistakes and bring those learnings with you the next time you set SMART goals.

Set smarter goals

SMART goals can help your team succeed by bringing clarity into the goal-setting and project management process. When your team has clarity and is moving in the same direction, they're more likely to be motivated and to know what work to prioritize.

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Every team that's accomplished something phenomenal first had to set goals to get there. Teams that set goals can do great things like cure diseases, build more efficient and sustainable appliances, or make our oceans safer for whales and dolphins.

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How To Create A Revenue-Generating Business Model From Scratch

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Creating a revenue-generating business model is essential because it forms the foundation of a sustainable business.

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Many entrepreneurs start a business with little more than a dream and a shoestring budget. In fact, some business models require very little up-front costs, and at Shopify, we've personally witnessed the success of countless entrepreneurs with humble beginnings. But among the small businesses that get their business off the ground and don't last, more than a third cite a shortage of cash as the reason.

We wanted to understand: how much does it cost to run a business- really? And do aspiring entrepreneurs have any misconceptions about what those costs will look like in their first year of business? In October, we surveyed 150 aspiring entrepreneurs and 300 small business owners in the US to find out exactly that.

How much does it cost to run a business?

According to our research, small-business owners spend an average of $40,000 in their first full year of business.

We also asked our respondents to take it one step further-we had them look back at their first-year records and tell us how much money they allocated to various business expenses as a percentage of their total budget. To keep it simple, we bucketed the following functions and cost categories:

raw materials, inventory, supplier, Product: manufacturing , patents, etc.

Operating: incorporation/legal fees, accounting software and services, etc.

website/platform subscription, hosting and Online store: domain name , contract developer/designer, etc.

Shipping: packaging, labels, etc.

Offline: stall/table fees, office space, rent, gas, etc.

Team/staff: salaries, benefits, perks, etc.

Marketing: logo, branding, ads, printed materials, etc.

📊 What our research shows

In their first year, small businesses spent:

It's important to note that the amount businesses spent in their first year varied significantly, depending on factors like industry and business model; whether the business was a full-time, part-time, or hobby venture; and whether the business had additional employees. But more on that later.

Sources of financing for early-stage founders

While new entrepreneurs often rely on their personal savings to keep their business afloat in the early days, one-third of respondents reported reinvesting revenue from their business sales to cover their business costs in the first year.

📊 What our research shows

Top funding sources for business owners:*

Personal savings (66%)

Reinvesting sales revenue (30%)

Financial support from friends and family (23%)

Personal loan (21%)

* Respondents could select more than one funding source
👀 Why it matters

Accepting that your first year of business may not be very profitable is important for both financial planning and mental preparation. Many founders are the last to be paid in their first year, as all of the company's revenue goes back into the business. That's perfectly normal.

For companies struggling to make sales in their first year, creating a comprehensive financial plan with how much you're going to need and how you're going to use it will make it easier when you're applying for a small business loan or trying to attract investors.

Don't think of this as taking on debt: startup expenses are necessary to generate revenue, so the return on your investment will likely be greater than the upfront costs.

How much businesses spend in their first year

Perhaps unsurprisingly, having employees dramatically increases overall spend. If you choose to go the solo business ownership route, you can spend less than one-third what businesses with employees spend.

📊 What our research shows

Business owners with zero employees spent $18,000 in their first year.

Business owners with one to four employees spent $60,000 in their first year (including salaries).

Unexpected costs in the first year

Beyond fixed costs, business owners also noted common one-time costs that sprung up in their first year and warned of hidden expenses to look out for.

📊 What our research shows

The most-cited unexpected costs of running a business were:

1. Shipping: 34% of businesses cited packaging costs, damaged or returned items, and general shipping fees. This was particularly painful for businesses with low shipping volumes in the early stages.

2. Legal: 23% of businesses cited one-time business startup costs like licenses, permits, and business insurance as unexpectedly costly. They were also surprised that they were charged to incorporate both state-wide and federally in the US.

3. Inventory and product: 21% of businesses said that costs associated with their inventory, such as product testing and receiving and returning defective products, as well as surplus inventory, could quickly rack up bills.

4. Taxes and accounting: in the qualitative component of our study, business owners repeatedly mentioned taxes and accounting as painfully cumbersome-and worth hiring professional help for

👀 Why it matters

Recurring expenses and fixed costs are only part of your financial plan: hidden costs, one-time costs, and variable costs also need to be considered in advance. What happens if an unexpected event (e.g., a pandemic, a recession, or both) throws off your projections? It's always a good idea to do some contingency planning and set aside a cash reserve, just in case.

Aspiring entrepreneurs overestimated online costs

When we asked our aspiring entrepreneurs how much they thought their first year of business would cost them, they wholly overestimated in one area: they expected online costs to be more expensive than established business owners reported.

📊 What our research shows

Aspiring entrepreneurs expected to spend 12% of their budget on online costs in their first year.

Business owners reported spending only 9% of their budget on online costs in their first year.

👀 Why it matters

Entrepreneurs who expect to spend more to start a business may end up paying more than they have to. The rationale is simple: if entrepreneurs expect to spend more on a service, what they're willing to pay for said service goes up accordingly.

The perceived cost and complexity of launching and scaling an online business remains a barrier to entry for many aspiring entrepreneurs. But it's largely unfounded. For Shopify's part, our core ethos is to enable precisely those entrepreneurs who don't have coding or design skills to create an online store. And to do so affordably.

Our research corroborates this: of the 300 business owners we surveyed, we found that Shopify customers spent an average of $38,000 in their first year, compared to non-Shopify customers who spent an average of $41,000 in their first year.

Start your free trial of Shopify-no credit card required!

Spending patterns among high-earning businesses

Just because a business owner managed their budget a certain way in the first year doesn't mean it was the right way. Indeed, most of our respondents admitted that, in hindsight, they would have spent their money differently in their first year.

To provide better guidelines for aspiring entrepreneurs, we decided to look more closely at the data of businesses who reported higher earnings in their first year to see which decisions may have contributed to their financial success. Here's what we found.

High-earning businesses spend more on team costs

Businesses that reported higher revenue in their first year spent significantly more on team costs-almost one-third of their total budget.

📊 What our research shows

Businesses with annual revenue of less than $10,000 spent 8% of their budget on team costs.

Businesses with annual revenue of $10,000 to $100,000 spent 23% of their budget on team costs.

Businesses with annual revenue of more than $100,000 spent 32% of their budget on team costs.

👀 Why it matters

The relationship between revenue and team costs may seem like an obvious one: if you make more money, you can afford to pay yourself and hire employees. But the relationship goes both ways: adding members to your team can also drive revenue growth.

And while going it alone is good business sense at the beginning, it's worth noting that there's a ceiling with this approach. When you're a solopreneur, you have limited resources: they start and end with you. You're limited to the skills you possess and the skills you're willing to learn.

Many business owners reach a milestone in their career where they need to weigh the financial costs of hiring help with the time costs of doing everything by themselves.

It's important that entrepreneurs know what red flags to look out for that indicate it's time to hire help. Some red flags include turning down work because you can't keep up, seeing the quality of your product or service suffering, or seeing the quality of your sleep or mental health suffering.

Don't put yourself in a position where you're spread so thin that you can't run your business in a sustainable way.

Businesses who made less in their first year spent more on marketing

When we asked business owners, "How much did marketing account for as a percentage of your overall budget?" we found a significant relationship between marketing spend and revenue.

The less money a business made overall, the more it spent on marketing. And the inverse was true too: the more money a business made overall, the less it spent on marketing.

📊 What our research shows

Businesses with a yearly revenue of less than $10,000 spent 13% of their budget on marketing.

Businesses with a yearly revenue of $10,000 to $100,000 spent 7% of their budget on marketing.

Businesses with a yearly revenue of more than $100,000 spent 7% of their budget on marketing.

👀 Why it matters

If you're overspending on marketing without a clear return on investment, it could be an early sign of bigger problems, such as a website that doesn't convert-or worse yet, a weak product-market fit. It's imperative that business owners obsessively track, report, and revisit their marketing efforts on a regular basis.

Still, marketing is more of an art than a science, and getting the budget exactly right at the beginning is tough. Spend too little, and you won't get your brand in front of buyers; spend too much, and you're less likely to hit your break-even point.

Our findings, as well as findings by experts from the US Small Business Administration, suggest that the sweet spot for a marketing budget for an early stage B2C business is between 7% and 12% of revenue.

Our budget recommendations

Again, the costs of starting a business vary greatly and depend on many different factors, like the industry you're operating in, your business model, the size of your team, your cost of goods, and so on. Ultimately, there is no right or wrong amount of money to spend in your first year, it's about how you spend what you have.

Still, after analyzing trends among high-earning businesses and consulting startup advisers, there appears to be a general range that's advisable to spend in each cost category in your first year:

Remember: starting a successful business is a marathon, not a sprint. It's critical then that you don't measure the success of your new business by your first-year profitability. Give yourself a runway of 18 to 24 months to get off the ground. Spend the first year opening your online store testing, reiterating, and reinvesting your sales back into your business using the above budget guidelines.

Being an entrepreneur requires a certain appetite for risk. But with the right information and a clear sense of your financial goals, you can avoid many of the financial missteps common to new entrepreneurs. And with the right ecommerce platform, managing all the other moving parts is a whole lot easier, too.
*All of Shopify's 2020 Cost of Starting a Business is based on survey data collected in October 2020 from 300 small business owners and 150 aspiring entrepreneurs in the US. All values are rounded averages. All data is unaudited and subject to adjustment. All financial figures are in USD unless otherwise indicated. Illustration by Isabella Fassler
Data visualization by Datalands
The cost to start a business FAQ

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How Much Does It Cost To Start a Business? (Research)

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Many entrepreneurs start a business with little more than a dream and a shoestring budget. In fact, some business models require very little up-front costs, and at Shopify, we've personally witnessed the success of countless entrepreneurs with humble beginnings.

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5 Freelance Strategies to Boost Your Earnings and Impact

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5 Freelance Strategies to Boost Your Earnings and Impact

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5 Freelance Strategies to Boost Your Earnings and Impact

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Understanding how to communicate your value is the key to not only commanding higher fees but also attracting better clients and creating more sustainable business relationships.

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Ep 1 - Getting From Business Idea to Business Model

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Pros and Cons of Manufacturing Internationally

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Pros and Cons of Manufacturing Internationally

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Developing a brand purpose is a fundamental step for any company. Justin Lee shares how he uses the Section frameworks to uncover why his business exists.

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How Startups Build a Strong Customer Base

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How Startups Build a Strong Customer Base

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Your perfect customers are out there, so let's find them

Let me ask you a quick hypothetical. If you could fire off an email to 1,000 people who might be interested in your product or service, how many of them would convert and buy?

You might not have a ready answer for this question, and that's OK. Most of the time, I can't put...

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How Startups Build a Strong Customer Base

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Your perfect customers are out there, so let's find them Let me ask you a quick hypothetical. If you could fire off an email to 1,000 people who might be interested in your product or service, how many of them would convert and buy?

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Customer profiling is essential to serve your customers and meet their needs effectively.

And it's clear why: To market, sell, and offer customer support properly, you must understand buyers and get to know them.

But, what is a customer profile? How can you create one? In this post, we've compiled tips to get you started.

Continue reading or jump ahead:

If you don't create customer profiles, you risk marketing to a nondescript audience, leading to wasted time and closed-lost deals.

Defining your ideal customers will help you identify the attributes and purchasing behaviors of the customers whose business you've already won.

What can it actually look like? Let's take a look at a sample below.

Customer Profile Sample
Download the Free Customer Profile Templates
Creating a customer profile can be simple. You can create a customer profile just like this one using our free customer profile templates.

With our templates, you don't have to start from scratch. Just fill in the blanks and use the data from your service software or surveys to create a complete consumer profile.

Before creating a customer profile, consider your target audience.

If your company is in the B2B space, you'll need to include more detailed information about your customers, such as industry size, regional location, etc.

If you're in the B2C space, you'll want to create a customer profile focused on the individual.

Let's take a quick look at each element of the above template.

Products/Services Used

This section of the customer profile template describes which of your services your customers rely on and how they use them. You can also include other products or services customers use with your service.

If your product can be integrated with another service and customers are successfully meshing your service with another, add that to this section. This will help you better market to other companies or individuals later.

Demographics

Your customers' demographics are an essential piece of your customer profile. When writing this section, include your customer's career, industry, location, and gender identity.

Sure, not every customer will fit your demographic mold, but having a general idea of basic customer information is extremely helpful for your company's bottom line.

Understanding your customers' demographics will help you reach your goals and level up your marketing game.

Customer Benefits

Your customer profile should also include a list of benefits customers receive by using your product or service. How does your product or service provide value to your customers?

Think about how your product or service adds value for your customers and describe it in this section. The best way to answer this question is to ask your customer base. Compile and compare their answers and add a summary here.

Customer Pain Points

While you're surveying your customers, use the survey as an opportunity to ask about their pain points. Ideally, your customers' pain points will be solved by your product or service.

Be sure to list pain points that you can actually solve for your customers. You'll want to focus on these pain points in your customer profile.

Finding the Ideal Customer Profile For Your Business

The best part about customer profiles is that you create them from the already existing pool of customers.

Rather than coming up with ideal, imaginary attributes like you would for a buyer persona, you would survey your current customers and find out the consumers more likely to buy from you.

While a buyer persona provides a fictionalized individual who represents your customers, a customer profile is rooted in the data and factual information of your customer base.

Everything you need to know about a group of customers is captured within this one description. For this reason, a customer profile comes first, and then you build a buyer persona from it.

Once you've defined these qualities of your target audience, you can segment your customer base into different customer profiles.

Why is customer profiling important?

When building a business, developing a go-to-market strategy, or giving your sales team direction, it's important to clearly describe your current customers.

That way, you know who's more likely to buy your product in the future based on who has bought it in the past.

It also helps you identify the buyer who'll purchase a product from you, which is more valuable than targeting everyone everywhere.

Trying to build something that solves 100% of the problems for 100% of the market is called "boiling the ocean." You're "boiling the ocean" when your customer profile is too broad.

The irony is that targeting a broad audience solves only a few problems for only a few people. You end up spreading your product offering too thin and diluting your value across many customers.

Customer profiles act like guard rails for product managers as they develop a new product, marketers as they craft positioning strategies, and salespeople as they search for potential customers.

Customer profiling is incredibly beneficial for all teams and your business members - let's look at the benefits in more detail below.

Customer Profiling Benefits

Creating customer profiles is critical if you want to grow your business.

Customer profiling helps you do the following.

It helps all departments become more efficient.

Its benefits are impactful across your entire company, starting from your sales team all the way to your service organization. Each department in your company will use a customer profile differently.

Marketing

Understanding the client is key to creating engaging advertisements or emails for potential prospects and current clients. Marketers use a customer profile to determine how to customize a message for potential prospects and existing customers.

Sales

With a customer profile in hand, your sales team will be able to highlight a customer's pain points and help better sell your product or service as the solution to their problems. Your sales team may even use the customer profile to find ways to create connections with current and future clients.

Support

The customer profile contains all the necessary information your customer service team will need to assist clients in need. It can act as a record of queries, complaints, and previously tried solutions. This will help save time for your customer service team and keep everyone involved from becoming frustrated.

It allows you to identify better-fit prospects.

By knowing who benefits from your products the most, your organization can find better prospects and increase close rates.

If you're part of the service team, this might not mean much to you but remember: A better-fit prospect is a happier customer down the line.

A customer who doesn't benefit from your product is likelier to submit an unhappy ticket to your service desk.

It lowers customer acquisition cost.

Customer acquisition cost (CAC) is the amount of money you spend on marketing and sales campaigns to attract a single customer.

By knowing your customer, you can better target your campaigns and increase click-through rates and form submissions.

To summarize: The more specific your customer profile, the less you spend and the more successful your campaign will be.

It empowers you to serve customers better.

Knowing your customers is key to serving them better.

By documenting their pain points, attributes, and characteristics, you can deliver a superior customer service experience before they ever request help.

You can predict issues before they arise, provide effective self-help resources, and better align with their needs if they reach out to your service team.

It reduces customer churn.

Customer churn happens when you lose customers over a predefined period.

By creating strong customer profiles from the start, you can attract and serve customers who actually want to use your product or service - reducing customer churn in both the short and long term.

Now that you know the benefits of customer profiling, which data should you gather for your customer profiles?

Let's take a look.

Customer Profile Data

A refined customer profile can help your company build more impactful features.

It can also help you find and attract more people that are likely to buy your product, develop a stronger relationship with your customers, and put you on a better trajectory for market dominance.

For these reasons, it's a good idea to include different types of data in your customer profiles.

Here's the data you should gather for your profiling process.

Demographic

Demographics are the concrete characteristics of a customer and can be used to understand consumer behavior, albeit broadly.

Demographics include the following traits (and more):

If you're in the B2B space, consider attributes such as company size, industry, and other characteristics of the organization.

Psychographic

Demographics alone aren't enough to understand how, when, and why people make purchasing decisions, and that's where psychographics come in.

These factors relate to the attitudes and psychological makeup of a customer and may include:

Psychographics are helpful to understanding the buying journey and even the customer journey after they've already purchased from you.

Whether it's for understanding the triggering events that lead them to purchase or crafting value-based messaging to attract prospects, psychographics are extremely useful to consider.

Behavioral

While psychographics relate to psychological attributes, behavioral segments look at how that's manifested in action.

You may consider segmenting by:

Engagement

Readiness to buy

Purchasing history

Product usage

Satisfaction

Loyalty or account age

Attention required

Segments based on behavioral traits are some of the most valuable in customer support. It can help service teams find insights about customer interaction and how these trends manifest into recurring revenue and satisfaction rates.

And once those things are measured, they can be improved.

Geographic

Geographical factors are relevant when location affects how customers interact with a brand or receive their products.

Here are popular ways to segment based on geography:

Gaining insights based on geography can help your organization think through logistics, support implementation, and marketing.

Once you have this data, you can profile customers based on specific types, or "segments."

Segments help you unearth trends in satisfaction, churn, and lifetime value that help you understand more about your ideal customer profiles.

1. Use customer profile templates.

You can shorten the customer profiling process by downloading and using pre-made templates.

You won't have to come up with different sections for your customer profiles. Instead, you'll have them pre-written for you. The only thing you have to do is fill in the blanks.

We go into more detail about what you'll find in these templates later in the post. But if you can't wait (we don't blame you), download them now and follow along as we cover the rest of the steps.
Download Your Free Templates Here
2. Choose your customer profiling software.

Once you start creating customer profiles, you'll need several types of software.

Remember, you need to collect data from your current customer base to create effective and accurate profiles.

Let's go over the tools you'll need.

CRM

If you don't have one already, you should start using a CRM to keep track of contact data.

This software will give you all the basic information you need about your customers, such as their name, business name, location, business type, and more.

This type of basic information is foundational for customer profiling.

Get started with the HubSpot CRM platform for free and track contact data now.

Customer Feedback Software

The next most important piece of software you need is a survey tool that will help you collect additional data about your customers - data you won't necessarily have stored in your CRM.

After choosing a survey tool, you should get familiar with running questionnaires and designing questions that get you the answers you need.
: HubSpot's customer feedback software can help you set up effective surveys, and the results will be stored right within the CRM.
Analytics Software

While analytics software may seem like something only a marketing team needs, it's critical for your customer profiling efforts.

It will help you understand the content your prospects most respond to, and it will unearth the types of customers who are visiting certain product pages on your website.

These are just two examples of the important data points you can get from an analytics tool.

HubSpot's analytics software keeps all of your customer interaction and engagement data in one convenient interface. And it's connected to your CRM, too.

3. Dig into demographics.

You've got the customer profile templates and the software you need to start account profiling.

To define your customer profile, start by examining external demographics. Then, dive deeper into needs and look at your company's offering.

Here are some external attributes you can use to define your customer profile:

What market does your product best serve?

What specific vertical do they operate in?

What is their annual revenue?

How many employees do they have?

Where are these companies located?

4. Collect customer feedback.

After laying out the demographics, it's time to dive deeper. That's where gathering customer feedback comes in.

When building your profile, it's easy to rely on the basic demographic data you get from your CRM. But getting to know your customers is hard if you don't spend time with them.

You need to meet your customers to clearly understand what they're like. This makes customer surveys and interviews one of the best resources for building a customer profile.

Customer interviews allow your team to speak with users face-to-face. They can read their reactions to questions in real time and foster human relationships with your customers.

This helps them uncover valuable information that raw data simply can't show.

If you can't reach a specific group of customers, consider setting up a phone or video call. While it's less engaging than an in-person interaction, it's still an effective way of reaching your target audience.

If your customers are willing to schedule a call with you, you know they're loyal users and are worth the time investment. The more attention you pay to these customers, the more you'll have in the future.

5. Review your customer journey map.

As you begin examining your customer profile data, you should contextualize it using your customer journey map.

A customer journey map is a document that outlines every touchpoint a customer must pass through to achieve a goal with your company.

While these take time to complete, they paint a detailed picture of who's buying your products and interacting with your brand.

However, you don't need to complete a customer journey map to create a customer profile. Simply thinking about the customer's journey will help you understand who you're trying to reach.

By understanding their needs, challenges, and goals, you'll develop a stronger sense of what your customers want from your business. You can even take this one step further by interviewing customers about each stop on your map.

When creating HubSpot's customer journey map, we asked users how they felt about specific points in the customer experience. Then, we charted these stories on the map to see how customer perceptions changed.

This gave us a good idea of what our customers liked and didn't like about our products.

6. Focus on the problem that your business is trying to solve.

With so much data in hand, it's easy to get lost. If you find yourself overwhelmed, bring back the focus to the problem your business is trying to solve.

Identify the type of people who face this challenge. Take a close look at your current users and their behavior.

The common denominator between these approaches is people. It doesn't matter if you only have a few customers or are well on your way to 10,000. You need to understand who your

7. Examine contextual details.

Once you've defined the external factors that describe your customer profile, digging deeper into the contextual details is critical.

For example, if I'm running a SaaS company, I'd want to understand the following things about my customer:

How big is their team?

What are the biggest challenges they face?

What technology are they using?

What are their goals for the next three months?

What are their goals for the year?

How do they assess problems?

What does a perfect world look like for them?

What impact does the specific problem have on their team?

How are they trying to solve the problem today?

Based on these external factors and contextual details, you should now have a strong grasp of your potential customers' general makeup and goals.

The final step is to look internally to see how you can help them based on all this information.

Below are some key questions to answer when completing your customer profile:

What value can you provide these customers? (Save them money or time, grow revenue, etc.)

Can you solve their key pain points?

What are the features that differentiate you from competitors or a homegrown process?

How does your solution fit into their short- and long-term goals?

8. Understand your industry.

One major contextual detail you should consider is where your brand falls compared to others in the industry.

You should know how your customers perceive your brand and which companies you're competing with for their attention. This should give you a good idea of the type of customer you want to attract and retain.

Understanding your industry also helps you define your brand identity. If you're going to stand out, you need to find a way to differentiate your product and services.

But, you also don't want to advertise changes that your customers will react negatively to.

If you know which marketing strategies your customers already respond to, you can mirror your competitor's successful techniques for introducing and educating customers about a new product or feature.

9. Build personas.

Remember that you're serving people with actual personalities, feelings, and needs.

Once you've identified the attributes for your customer profile, the next step is to identify the individuals within the company that you want to reach.

This will be helpful when trying to establish a relationship with the account, as well as understand who the decision-makers and influencers are.

Here are some key things to uncover about the people in your customer profile:

Title(s)

Age range

Education level

Income level

How will they use your product/service?

On what marketing channels can you reach them?

What are the key responsibilities of their role?

What role do they play in the decision-making process?

If you need a tool to help you build, visualize, and share your personas, try HubSpot's Make My Persona tool.

10. Analyze and iterate on customer personas.

A customer profile is a key lever for growing your business.

This definition will act as a guide when informing what products or features to build, what channels to use in a marketing campaign, and much more.

Without it, you risk offering a product or service that doesn't meet any potential customers' specific needs. Or you end up marketing to prospects in a way that doesn't resonate with their understanding of the problem.

Your goal should be to operate in step with your customer profile to inform everything from feature development all the way to go-to market strategy.

As you build your customer profile, gather the external factors, qualify the contextual details, and develop a deep understanding of how your business adds value to each customer type.

But remember: You don't have to start from scratch. You can use templates to compile your consumer profiles.

B2B Versus B2C Customer Profiles

While both types of companies can benefit from customer profiles, B2B and B2C brands will need to survey different audiences.

B2C customers are looking at shoppers from a vast range of demographics. Let's consider Kellogg, for example.

Both parents and college students will add cereal to their shopping carts (albeit different brands). Customer profiles will need to segment these vast buyers.

B2C companies also need to consider geography and how people shop. In-store shoppers will be different from those who get their products online.

Meanwhile, B2B businesses need to think about two categories. Firstly, they'll need to consider the types of organizations they target.

Is the B2B offering crafted for a certain industry? A certain company size? You'll need to look at buyers at an organizational level.

Additionally, B2B businesses need to think about individuals. These teams should make customer profiles for both users and decision-makers at their target organizations.

Having an in-depth understanding of these customers can help you target marketing and sales efforts.

Customer Profile Templates
Download your free templates now.
We've created customer profile templates you can use to walk you through these steps. You can download them here.

Inside this kit, you'll find:

Short Customer Profile Template (Word / Google Docs): This one-page template helps you lay out all the basic information about your customer in a convenient bullet-point format. It gives you space to list your customer's demographics, pain points, talking points, retention tactics, and preferred products and services.

Long Customer Profile Template (Word / Google Docs): This two-page template gives you more space to define your customer profile. It's ideal for B2B account profiles. You can list external attributes, such as the customer's industry and internal attributes.

Colorful Customer Profile Template (PowerPoint / Google Slides): This template is ideal for B2C industries where customers interact face-to-face with your staff members. You have space to list user behaviors, joyful interactions, frustrating interactions, and customer communication notes.

Corporate Customer Profile Template (PowerPoint / Google Slides): This template allows you to list a professional overview of your ideal customer, as well as challenges, benefits, and restraints. We recommend this template for more corporate environments due to its color palette.

Simple Customer Profile Template (PowerPoint / Google Slides): This template lets you list your ideal customer's background, decision-making process, product preferences, wants, goals, and behaviors in easy-to-scan boxes.

Modern Customer Profile Template (PowerPoint / Google Slides): In this template, you have space to list your target customer's company goals, team challenges, points of satisfaction, and retention tips. We recommend this template for B2B companies, because you'll be profiling an entire organization.

Buyer's Journey Customer Profile Template (PowerPoint / Google Slides): This template is unique because it gives you space to outline your ideal customer's discovery story - that is, how they found you and what their research process was like. You can also list their goals and pain points.

Segmented Customer Profile Template (PowerPoint / Google Slides): If you'd like to create different segments as you profile your customers, this is the template for you. It lets you list critical information such as goals, benefits, and product constraints in a chart with different customer groups.

At a loss for what your customer profile can look like?

Below, we list alternative consumer profile examples with methods that you can use to list your ideal consumer's attributes.

Customer Profile Examples

If you're not sure where to get started, take a look at these top customer profile examples for getting both a granular and overarching overview of your customers.

1. Scorecard

Customer profiles can vary depending on your company's needs and preferences. Some customer profiles use a scoring system to determine whether a prospect fits the business.

The above example uses the BANT framework. Using the BANT framework helps salespeople assess prospects and gives them a score for each criterion ranging from zero to two.

If the total score meets a preset benchmark, the company will reach out to this potential customer with a sales pitch.

2. Segmentation

A segmented customer profile recognizes not every prospect is the same. What one customer needs from your business may differ from the next. In a segmented customer profile, each customer type is broken down by demographics, core values, and preferred communication channels.

It includes a short summary describing how the marketing team should advertise to these individuals.

With this information readily available, your marketing team can work alongside customer service to create effective campaigns that resonate with each segment of your customer base.

3. Basic Information
Download this Template
A basic information customer profile is just that - basic. This customer profile, available in our free customer profile templates, cuts right to the point.

It lists the fundamental information we need to know about each customer type. This includes background data, demographics, and pain points.

This is a great format to use if you want to build a basic customer profile. While the information is surface-level, it's enough to give you an accurate description of your target audience.
Download a free, editable copy of this customer profile example.
4. Buyer Persona

To construct a buyer persona customer profile, you will need to survey your current clients to get an idea of their general buying personality.

It's important to note that the buyer persona usually comes after you have some idea of your customer profile.

Nonetheless, many buyer persona builders can get you thinking critically about your ideal customer by asking valuable qualitative questions.

Use HubSpot's Make My Persona tool as a starting point for mapping and profiling your customers.

5. Demographics, Psychographics, and Behaviors

A customer profile can be as detailed as you need it to be.

Many marketers find the more they know about their audience, the better chance they have at engaging with a prospect and making a sale.

Gathering demographics, psychographics, and behaviors in one document gives you an overview of your most profitable customers.

Write your answers in bullet points or paragraph format, and you'll be able to better understand your customers' purchasing behaviors.

Customer Profiling Will Improve Your Service Experience

By creating thorough customer profiles, you can target better customers in your sales and marketing campaigns, reducing customer churn and resulting in happier customers later down the line.

The more detailed your profile, the more value you can extract from it, making your marketing, sales, and service experiences more effective and valuable for your customers.
Editor's note: This post was originally published in December 2018 and has been updated for comprehensiveness.

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10 Easy Steps to Creating a Customer Profile [+ Templates]

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Marketing, selling, and supporting customers starts with getting to know them. Get started with customer profiling using this guide and template.

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How to Do Market Research: A 6-Step Guide

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How to Do Market Research: A 6-Step Guide

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Today's buyers hold all of the power when making a purchasing decision. You're also likely aware that they're doing some of their research online.

But have you really adapted your marketing plan to match the way today's customers shop and buy?

Consider three recent statistics about modern buyer behavior:

What's a marketer to do to make sure your buyers find you early and often? Go where they're going.

That might sound obvious, but how deeply do you understand exactly where your buyers are doing their research and what is influencing their decisions? That's where market research comes into play.

Whether you're a newbie or experienced with market research, this guide will give you a blueprint for conducting a thorough study of your product, target audience, and how you fare in your industry.

Primary vs. Secondary Research

There are two main types of market research that businesses conduct to collect the most actionable information on their products: primary research and secondary research.

Primary Research

Primary research is the pursuit of firsthand information on your market and its customers. You can use focus groups, online surveys, phone interviews, and more to gather fresh details on the challenges your buyers face and the brand awareness behind your company.

Primary research is useful when segmenting your market and establishing your buyer personas, and this research tends to fall into one of two buckets:

Exploratory Research: This kind of primary market research is less concerned with measurable customer trends and more about potential problems that would be worth tackling as a team. It normally takes place as a first step before any specific research has been performed, and can involve open-ended interviews or surveys with small numbers of people.

Specific Research: This kind of primary market research often follows exploratory research, and is used to dive into issues or opportunities the business has already identified as important. In specific research, the business can take a smaller or more precise segment of their audience and ask questions aimed at solving a suspected problem.

Secondary Research

Secondary research is all the data and public records you have at your disposal to draw conclusions from. This includes trend reports, market statistics, industry content, and sales data you already have on your business.

Secondary research is particularly useful for analyzing your competitors. Here are three types of secondary research sources that make this process so beneficial:

Public Sources: These sources are your first and most accessible layer of material when conducting secondary market research. Being free to find and read -- usually -- they offer the most bang for your buck. Government statistics are arguably your most common public sources, according to Entrepreneur. Two U.S. examples of public market data are the U.S. Census Bureau and the Bureau of Labor & Statistics, both of which offer helpful information on the state of various industries nationwide.

Commercial Sources: These sources often come in the form of market reports, consisting of industry insight compiled by a research agency like Pew, Gartner, or Forrester. Because this info is so portable and distributable, it typically costs money to download and obtain.

Internal Sources: Internal sources deserve more credit for supporting market research than they generally get. Why? This is the market data your organization already has in-house. Average revenue per sale, customer retention rates, and other historical data on the health of old and new accounts can all help you draw conclusions on what your buyers might want right now.

How to Do Market Research

1. Define your buyer persona.

2. Identify a portion of that persona to engage.

3. Engage your market research participants.

4. Prepare your research questions.

5. List your primary competitors.

6. Summarize your findings.

1. Define your buyer persona.

Before you dive into how customers in your industry make buying decisions, you must first understand who they are. This is the beginning of your primary market research -- where buyer personas come in handy.

Buyer personas -- sometimes referred to as marketing personas -- are fictional, generalized representations of your ideal customers. They help you visualize your audience, streamline your communications, and inform your strategy. Some key characteristics you should be keen on including in your buyer persona are:

The idea is ultimately to use this persona as a guideline for when you reach and learn about actual customers in your industry (you'll do this in the steps below).

To get started with creating your personas, check out these free templates, as well as this helpful tool. These resources are designed to help you organize your audience segments, collect the right information, select the right format, and so on.

You may find that your business lends itself to more than one persona -- that's fine! You just need to be sure that you're being thoughtful about the specific persona you are optimizing for when planning content and campaigns.

2. Identify a portion of that persona to engage.

Now that you know who your buyer personas are, you'll need to find a representative sample of your target customers to understand their actual characteristics, challenges, and buying habits.

These should be folks who recently made a purchase (or purposefully decided not to make one), and you can meet with them in a number of ways:

In-person via a focus group

Administering an online survey

Individual phone interviews

We've developed a few guidelines and tips that'll help you get the right participants for your research. Let's walk through them.

Choosing Which Buyers to Survey

When choosing whom you want to engage to conduct market research, start with the characteristics that apply to your buyer persona. This will vary for every organization, but here are some additional guidelines that will apply to just about any scenario:

Shoot for 10 participants per buyer persona. We recommend focusing on one persona, but if you feel it's necessary to research multiple personas, be sure to recruit a separate sample group for each one.

Select people who have recently interacted with you. You may want to focus on folks that have completed an evaluation within the past six months -- or up to a year if you have a longer sales cycle or niche market. You'll be asking very detailed questions, so it's important that their experience is fresh.

Aim for a mix of participants. You want to recruit people who have purchased your product, folks who purchased a competitor's product, and a few who decided not to purchase anything at all. While your own customers will be the easiest to find and recruit, sourcing information from others will help you develop a balanced view.

3. Engage your market research participants.

Market research firms have panels of people they can pull from when they want to conduct a study. The trouble is, most individual marketers don't have that luxury -- and that's not necessarily a bad thing. In fact, the time you'll spend recruiting exclusively for your study will often lead to better participants.

Here's a simple recruiting process to guide your efforts:

1. Pull a list of customers who made a recent purchase. As we mentioned before, this is usually the easiest set of buyers to recruit. If you're using a CRM system, you can run a report of deals that closed within the past six months and filter it for the characteristics you're looking for. Otherwise, you can work with your sales team to get a list of appropriate accounts from them.

2. Pull a list of customers who were in an active evaluation, but didn't make a purchase. You should get a mix of buyers who either purchased from a competitor or decided not to make a purchase. Again, you can get this list from your CRM or from whatever system your Sales team uses to track deals.

3. Call for participants on social media. Try reaching out to the folks that follow you on social media, but decided not to buy from you. There's a chance that some of them would be willing to talk to you and tell you why they ultimately decided not to buy your product.

4. Leverage your own network. Get the word out to your coworkers, former colleagues, and LinkedIn connections that you're conducting a study. Even if your direct connections don't qualify, some of them will likely have a coworker, friend, or family member who does.

5. Choose an incentive. Time is precious, so you'll need to think about how you will motivate someone to spend 30-45 minutes on you and your study. On a tight budget? You can reward participants for free by giving them exclusive access to content. Another option? Send a simple handwritten 'thank you' note once the study is complete.

4. Prepare your research questions.

The best way to make sure you get the most out of your conversations is to be prepared. You should always create a discussion guide -- whether it's for a focus group, online survey, or a phone interview -- to make sure you cover all of the top-of-mind questions and use your time wisely.

(Note: This is not intended to be a script. The discussions should be natural and conversational, so we encourage you to go out of order or probe into certain areas as you see fit.)

Your discussion guide should be in an outline format, with a time allotment and open-ended questions allotted for each section.
Wait, all open-ended questions?
Yes -- this is a golden rule of market research. You never want to "lead the witness" by asking yes/no questions, as that puts you at risk of unintentionally swaying their thoughts by leading with your own hypothesis. Asking open-ended questions also helps you avoid those painful one-word answers.

Here's a general outline for a 30-minute survey of one B2B buyer. You can use these as talking points for an in-person interview, or as questions posed on a digital form to administer as a survey to your target customers.

Background Information (5 Minutes)

Ask the buyer to give you a little background information (their title, how long they've been with the company, and so on). Then, ask a fun/easy question to warm things up (first concert attended, favorite restaurant in town, last vacation, etc.).

Remember, you want to get to know your buyers in pretty specific ways. You might be able to capture basic information such as age, location, and job title from your contact list, there are some personal and professional challenges you can really only learn by asking. Here are some other key background questions to ask your target audience:

Describe to me how your work team is structured.

Tell me about your personal job responsibilities.

What are the team's goals and how do you measure them?

What has been your biggest challenge in the past year?

Now, make a transition to acknowledge the specific purchase or interaction they made that led to you including them in the study. The next three stages of the buyer's journey will focus specifically on that purchase.

Awareness (5 Minutes)

Here, you want to understand how they first realized they had a problem that needed to be solved without getting into whether or not they knew about your brand yet.

Think back to when you first realized you needed a [name the product/service category, but not yours specifically]. What challenges were you facing at the time?

How did you know that something in this category could help you?

How familiar were you with different options on the market?

Consideration (10 Minutes)

Now you want to get very specific about how and where the buyer researched potential solutions. Plan to interject to ask for more details.

What was the first thing you did to research potential solutions? How helpful was this source?

Where did you go to find more information?

If they don't come up organically, ask about search engines, websites visited, people consulted, and so on. Probe, as appropriate, with some of the following questions:

How did you find that source?

How did you use vendor websites?

What words specifically did you search on Google?

How helpful was it? How could it be better?

Who provided the most (and least) helpful information? What did that look like?

Tell me about your experiences with the sales people from each vendor.

Decision (10 Minutes)

Which of the sources you described above was the most influential in driving your decision?

What, if any, criteria did you establish to compare the alternatives?

What vendors made it to the short list and what were the pros/cons of each?

Who else was involved in the final decision? What role did each of these people play?

What factors ultimately influenced your final purchasing decision?

Closing

Here, you want to wrap up and understand what could have been better for the buyer.

Ask them what their ideal buying process would look like. How would it differ from what they experienced?

Allow time for further questions on their end.

Don't forget to thank them for their time and confirm their address to send a thank-you note or incentive.

5. List your primary competitors.

Understanding your competitors begins your secondary market research. But keep in mind competition isn't always as simple as Company X versus Company Y.

Sometimes, a division of a company might compete with your main product or service, even though that company's brand might put more effort in another area. Apple is known for its laptops and mobile devices, for example, but Apple Music competes with Spotify -- which doesn't sell hardware (yet) -- over its music streaming service.

From a content standpoint, you might compete with a blog, YouTube channel, or similar publication for inbound website visitors -- even though their products don't overlap with yours at all. A toothpaste developer, for example, might compete with magazines like Health.com or Prevention on certain blog topics related to nutrition, even though these magazines don't actually sell oral care products.

Identifying Industry Competitors

To identify competitors whose products or services overlap with yours, determine which industry or industries you're pursuing. Start high-level, using terms like education, construction, media & entertainment, food service, healthcare, retail, financial services, telecommunications, agriculture, etc.

The list goes on, but find an industry term that you identify with, and use it to create a list of companies that also belong to this industry. You can build your list the following ways:

Review your industry quadrant on G2 Crowd. In certain industries, this is your best first step in secondary market research. G2 Crowd aggregates user ratings and social data to create "quadrants," where you can see companies plotted as contenders, leaders, niche, and high performers in their respective industries. G2 Crowd specializes in digital content, IT services, HR, ecommerce, and related business services.

Download a market report. Companies like Forrester and Gartner offer both free and gated market forecasts every year on the vendors who are leading their industry. On Forrester's website, for example, you can select "Latest Research" from the navigation bar and browse Forrester's latest material using a variety of criteria to narrow your search. These reports are good assets to have saved on your computer.

Search using social media. Believe it or not, social networks make great company directories if you use the search bar correctly. On LinkedIn, for example, select the search bar and enter the name of the industry you're pursuing. Then, under "More," select "Companies" to narrow your results to just the businesses that include this or a similar industry term on their LinkedIn profile.

Identifying Content Competitors

Search engines are your best friends in this area of secondary market research. To find the online publications with which you compete, take the overarching industry term you identified in the section above, and come up with a handful of more specific industry terms your company identifies with.

A catering business, for example, might generally be a "food service" company, but also consider itself a vendor in "event catering," "cake catering," "baked goods," and more.

Once you have this list, do the following:

Google it. Don't underestimate the value in seeing which websites come up when you run a search on Google for the industry terms that describe your company. You might find a mix of product developers, blogs, magazines, and more.

Compare your search results against your buyer persona. Remember the buyer persona you created during the primary research stage, earlier in this article? Use it to examine how likely a publication you found through Google could steal website traffic from you. If the content the website publishes seems like the stuff your buyer persona would want to see, it's a potential competitor, and should be added to your list of competitors.

After a series of similar Google searches for the industry terms you identify with, look for repetition in the website domains that have come up. Examine the first two or three results pages for each search you conducted. These websites are clearly respected for the content they create in your industry, and should be watched carefully as you build your own library of videos, reports, web pages, and blog posts.

6. Summarize your findings.

Feeling overwhelmed by the notes you took? We suggest looking for common themes that will help you tell a story and create a list of action items.

To make the process easier, try using your favorite presentation software to make a report, as it will make it easy to add in quotes, diagrams, or call clips. Feel free to add your own flair, but the following outline should help you craft a clear summary:

Background. Your goals and why you conducted this study.

Participants. Who you talked to. A table works well so you can break groups down by persona and customer/prospect.

Executive Summary. What were the most interesting things you learned? What do you plan to do about it?

Awareness. Describe the common triggers that lead someone to enter into an evaluation. Note: Quotes can be very powerful.

Consideration. Provide the main themes you uncovered, as well as the detailed sources buyers use when conducting their evaluation.

Decision. Paint the picture of how a decision is really made by including the people at the center of influence and any product features or information that can make or break a deal.

Action Plan. Your analysis probably uncovered a few campaigns you can run to get your brand in front of buyers earlier and/or more effectively. Provide your list of priorities, a timeline, and the impact it will have on your business.

Conducting market research can be a very eye-opening experience. Even if you think you know your buyers pretty well, completing the study will likely uncover new channels and messaging tips to help improve your interactions.

Not to mention, you'll be able to add "market research" as a skill to your resume.

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Useful Reading

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Design thinking has become a business buzzword that's changed how companies approach problem-solving. Countless brands, including GE Healthcare, Netflix, and UberEats, have utilized design thinking to develop effective solutions to challenges.

What Is Design Thinking?

Design thinking is a user-centric, solutions-based approach to problem-solving that can be described in four stages:

1. Clarify: This phase involves observing a situation without bias. It leans into design thinking's user-centric element and requires empathizing with those affected by a problem, asking them questions about their pain points, and identifying what they solved. You can then use what you learn to create a problem statement or question that drives the rest of the design thinking process.

2. Ideate: Begin brainstorming potential solutions. Take your problem statement or question and ideate based on patterns or observations collected in the clarify phase. This is the time to let your imagination and creativity run wild.

3. Develop: Develop potential solutions using the ideas you generate, then test, experiment with, and reiterate to determine which are successful and which aren't. Be ready to return to the ideation or clarification stage based on your results. Stepping back in the process is common-and encouraged-in design thinking.

4. Implement: Finally, implement the solution you've developed. Again, it's likely you'll have to take a few steps back and reiterate your final solution, but that's a central part of this phase. After several tests and edits, you'll have a solution that can yield positive results.

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Examples of Design Thinking

What does a properly executed design thinking process look like? Examining real-world examples is an effective way to answer that question. Here are five examples of well-known brands that have leveraged design thinking to solve business problems.

1. GE Healthcare

GE Healthcare is an example of a company that focused on user-centricity to improve a product that seemingly had no problems.

Diagnostic imaging has revolutionized healthcare, yet GE Healthcare saw a problem in how pediatric patients reacted to procedures. Many children were observed crying during long procedures in cold, dark rooms with flickering fluorescent lights. Considering this, GE Healthcare's team observed children in various environments, spoke to experts, and interviewed hospital staff to gain more insight into their experiences.

After extensive user research, hospital pilots, and reiteration, GE Healthcare launched the "Adventure Series." This redesign initiative focused on making magnetic resonance imaging (MRI) machines more child-friendly.

For example, the "Pirate Adventure" transforms MRI machines from dark, black holes to pirate ships with scenery of beaches, sandcastles, and the ocean. By empathizing with children's pain points, GE Healthcare was able to craft a creative solution that was not only fun but increased patient satisfaction scores by 90 percent. This also yielded unexpected successes, including improved scan quality of pediatric patients, and ultimately saved customers time and resources.

2. Oral B

Design thinking not only succeeds at finding effective solutions for companies but also at putting initiatives to the test before implementation.

When Oral B wanted to upgrade its electric toothbrush, it enlisted designers Kim Colin and Sam Hecht to help. The company's request was to add more functions for electric toothbrush users, such as tracking brushing frequency, observing gum sensitivity, and playing music.

While clarifying the problem, however, Colin and Hecht pointed out that brushing teeth was a neurotic act for many people. Users didn't want additional functionality and, in many cases, thought it could potentially cause more stress. Instead, they recommended two solutions that could improve user experience without adding gimmicks.

Their first recommendation was to make the toothbrush easier to charge, especially while users were on the road. Another was making it more convenient for users to order replacement heads by allowing toothbrushes to connect to phones and send reminder notifications. Both proposals were successful because they focused on what users wanted rather than what the company wanted to roll out.

3. Netflix

Although many companies have successfully used design thinking, Netflix has repeatedly leveraged it to become an industry giant. During the company's inception, its main competitor, Blockbuster, required customers to drive to brick-and-mortar stores to rent DVDs. The process was the same for returns, which was a major pain point for many. Netflix eliminated that inconvenience by delivering DVDs directly to customers' homes with a subscription model.

While this revolutionized the movie industry, Netflix's real success has been in its innovation over the years. For example, when the company realized DVDs were becoming outdated, it created an on-demand streaming service to stay ahead of the curve. This also inadvertently eliminated the inconvenience of having to wait for DVDs.

Subsequently, in 2011, Netflix took its design thinking one step further and responded to customers' need for original, provocative content that wasn't airing on traditional networks. Later, in 2016, it improved its user experience by adding short trailers to its interface. Each of Netflix's major updates was in response to customers' needs and driven by an effective design thinking process.

4. Airbnb

Another household name, Airbnb, started by only making around $200 a week. After some observation, its founders recognized that the advertising pictures hosts were posting online weren't of a high enough quality, which often deterred customers from renting rooms.

To empathize with customers, the founders spent time traveling to each location, imagining what users look for in a temporary place to stay. Their solution? Invest in a high-quality camera and take pictures of what customers want to see, based on their travel observations. For example, showing every room rather than a select few, listing special features like a hot tub or pool in the description, and highlighting the neighborhood or areas in close proximity to the residence. The result? A week later, Airbnb's revenue doubled.

Instead of focusing on reaching a bigger audience, Airbnb's founders used design thinking to determine why their existing audience wasn't utilizing their services. They realized that rather than focusing on traditional business values, like scalability, they needed to simply put themselves in users' shoes to solve business problems.

5. UberEats

The go-to food delivery service app UberEats attributes its success to its ability to reiterate quickly and empathize with customers.

A prime example of this is UberEats's Walkabout Program, where designers observe cities in which the company operates. Some elements they inspect are food culture, cuisine, infrastructure, delivery processes, and transportation. One of the innovations that came from their immersive research is the driver app, which focuses on delivery partners' pain points around parking in highly populated urban areas. To address this, the driver app provides step-by-step directions from restaurant to customer to ensure smoother delivery processes.

Understanding that pain points vary between geographic locations helps UberEats implement effective upgrades to its service that solve problems in specific locations.

Practice Design Thinking

While these examples illustrate the kind of success design thinking can yield, you need to learn how to practice and use it before implementing it into your business model. Here are several ways to do so:

1. Consider the Big Picture

In the examples above, it's easy to say the solutions are obvious. Yet, try taking a step back to reflect on how each company thought about its customer base's perspective and recognized where to employ empathy.

2. Think Through Alternative Solutions

This is a useful exercise you can do with the examples above. Consider the problem each company faced and think through alternative solutions each could have tried. This can enable you to practice both empathy and ideation.

3. Research Each Company's Competitors

Another helpful exercise is to look at each company's competitors. Did those competitors have similar problems? Did they find similar solutions? How would you compete? Remember to walk through the four design thinking phases.

Design thinking is a powerful tool you can use to solve difficult business problems. To use it successfully, however, you need to apply it to problems both big and small.
If you want to learn more about design thinking, explore our online course Design Thinking and Innovation-one of our online entrepreneurship and innovation courses-for more real-world case studies and opportunities to practice innovative problem-solving in your career.

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5 Examples of Design Thinking in Business | HBS Online

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The design thinking process has played a key role in the success of modern organizations. Here are five examples of design thinking in business.