How To Find Profitable Markets Using Your Existing Customer List

In this article, you will learn how to use your existing customer database to discover your best target markets.

[note: if you run a business and don’t have some kind of customer database, you need to do this immediately. You can use something as simple as an excel spreadsheet or a robust CRM platform like Infusionsoft]

How To Find Your Most Profitable Target Markets

If you’ve ever heard of the 80/20 rule, it will most definitely apply here. In most businesses, 20% of the customers produce 80% of the profit. We want to figure out what kinds of customers are already your most profitable and look for more customers like them.

The best way to look for niches is to sort your customer list under one major category (ie, total sales, specific products purchased) and then look for the common characteristics that make up that market.

Here are some things to consider when sorting your customers:

  • Are they male or female?
  • What age range are they?
  • Ethnicity?
  • Are they married? Single? Divorced? Have kids?
  • What is their career?
  • What kind of hobbies do they have?
  • What other kinds of products or services do they buy?
  • Do they live to travel?
  • Where do they live?
  • What kinds of organizations are they involved with?
  • What results do they enjoy by using your product or service?

By the time you are done with this exercise, you should have ten possible target markets.

Sort Your List By Total Sales

The first thing you want to do is sort by total lifetime sales. Who, since you have been in business, has generated the most revenue?


Sort Your List By Total Transactions

The second thing you want to do is sort by total lifetime transactions. Repeat business is where all of your profit is made in business, so figure out what type of customer likes to come back repeatedly.


Sort Your List By Frequency

The third thing you want to do is determine how often people are buying. This is going to vary from industry to industry. For a real estate agent, this could be once every five years. For a restaurant it could be once a week. For a dentist it could be once every 4 months.

Also, you want to look for the customers that are promotion driven. Do they only shop during sales? Do they only shop during a specific holiday? Is it seasonal?

You’ll find some interesting trends here. Sometimes the most profitable customers do large, infrequent transactions. Sometimes the most profitable customers do small, frequent transactions. From a cash flow perspective, you might prefer one over the other.


Sort Your List By Product Type

The fourth thing you want to do is sort by product type. Rank each product or service you sell in order by profitability. You’ll probably find that the majority of your business comes from a few products.

Focus on growing the sales of your best selling products/services first. The key is to become the market leader in that category (everyone wants to work with #1).

Here are some examples:

Real Estate – Lake houses, beach houses, income properties, new developments, houses in a certain neighborhood.

Cosmetic Dentist – teeth whitening, Invisalign, bridges, crowns

Men’s Clothing – Suits, sport coats, slacks, shirts, casual wear

Insurance – Health insurance, life insurance, car insurance, boat insurance


Sort Your List By Geographic Regions

The fifth thing you want to do is sort your list by geographic regions. Ideally you have all of your customers home addresses. If you are selling B2B, sort by industry instead.


Sort Your List By Front End Sale

The sixth thing you want to do is sort your list by front end sale. This could mean one of two things for your business:

  • Total dollar amount of the first purchase
  • What product or service is the most common first purchase

You want to know how customers enter your business. Do they start off with a smaller purchase and then move up to a larger sale on the backend? Is there a particular product that is the most popular product?

Some of your products and services will sell much better after a customer has bought a different product first. You want to know these kinds of things so you can offer an upsell at the point of purchase or make some kind of offer in the near future to get the next product in your line.

Sort Your List By First Time Buyer In The Past 12 Months

The seventh thing you should do is get a 12 month snapshot of new customer acquisition. Do you get a lot of new customers during certain months? Certain holidays? Certain sales?

Knowing which types of customers buy at what times of years will really allow you to create laser targeted marketing.

Creating Your Target Market List

You’re probably going to see a lot of overlap as you sort your list in different ways. You know you’ve got a winner when the same customer profile keeps showing up repeatedly.

Try to come up with ten possible target markets. You are only going to pick one to start. If your test fails with one market, just move to the next one.


You might wind up with something that looks like this:

Target Market 1:

  • Female
  • 35-50
  • Married with kids
  • Stay at home mom
  • Likes to stay active (ie. yoga)
  • Involved in local non-profits
  • Lives in [middle income neighborhood]
  • Buys natural health products


Target Market 2:

  • Male
  • 25-35
  • Single
  • Lawyer
  • Drives a $35,000 car
  • Lives in the city in an apartment
  • Frequents bars/clubs
  • Smokes cigarettes
  • Likes to travel
  • Wants women to think he is attractive


Target Market 3:

  • Male
  • 55+
  • No kids at home
  • Household income $100K+
  • Home value: $500K+
  • Likes to go on cruises
  • Likes to golf
  • Concerned about his sexual vitality
  • 30 pounds overweight


What To Do Now?

Go get your customer list and get started right now! This is one of the most important exercises you can do for your business.