Saving Sally. Particular Pete: Most personas are worthless
Saving Sally. Particular Pete. While their names may be a bit ridiculous, customer personas are a very popular marketing tactic with the goal of bringing the company’s customer segments to life. In fact, type the term “customer persona” into google and you’ll get 147MM+ results with advice, templates and other tools to help you create your personas.
Personas are intended to help you identify your ideal customer segments in the efforts to replicate and target them in the broader market. CRM platform Hubspot defines personas as “a semi-fictional representation of your ideal customer based on market research and real data about your existing customers.”
However, in the haste to create personas, marketing departments have replaced research diligence with some simple qualitative research, conjecture, lore and common knowledge. This may be a great way to create hypotheses about different personas but not creating personas themselves.
In fact, personas without diligence run the risk of wasting marketing spend targeting a customer segment that won’t create a maximized return on investment.
Yet, when done with the proper rigor, personas can be a very powerful tool to not only help marketing and messaging, but sales, customer service and product innovation. However, we’ve gone astray in developing personas focusing more on coming up with clever names instead of implementing the rigor to uncover what truly makes customer segments unique and, in turn, creating real value.
Creating personas that move your business requires four key steps.
Data Append (Learn More About Your Customers)
Bring The Persona To Life
A key component in persona development is understanding your core segments regarding their profitability. Analyzing data will allow you to create deciles of customers on profitability. Profitability is different than sales.
Profitability takes into account cost of acquisition and cost of doing business. For example, if you are in the service industry and you have a customer that spends a lot with your company but requires many call-backs or customer service time they may not be profitable.
So use your data to understand your most profitable customer.
Data Append (Learn More About Your Customer)
Upon identifying your top three most profitable deciles conduct a survey among your entire database to learn what differences exist between your most profitable and least profitable customers.
You will certainly want the demographic basics but go beyond that information to really build out your personas.
Usage of product/service
Complementary products/services used
Frequency of use
Attitude towards product/service
Success with your product/service
Competitive products used
Tenure using your product
For B2B – Experience in current role
By understanding these additional aspects of your most profitable customers you will reveal what makes them unique – especially compared to least profitable customers - and how to best communicate with them.
At this stage, you can begin to develop your personas, but focusing solely on your current customers may not yield the business growth that will ensure you make your annual bonus.
To grow, you need to identify how much of your target universe matches your most profitable customers.
To do that, segmentation is the right next step.
Among many things, segmentation research allows you to learn two key pieces of information.
What percent of your most profitable customers make up the target universe?
Is there a larger, more profitable segment and, if so, how do you convert them to customers?
Segmentation research is invaluable. It checks your customer personas against their market potential. A recent project with a consumer packaged goods company revealed their core target was 23% of the market, yet only made up 18% of the category spend. So while that segment was critical to market penetration they made up 54% of my client’s customers.
The segmentation identified they were missing out on a more profitable segment that was 20% of the segment, but 29% of the spend. This segment represented only 15% of my client’s customer base so they were missing out on a critical consumer segment. The segmentation served as the basis to evolve their marketing strategy, messaging and product development to appeal to this more profitable segment while identifying ways to remain true to their core segment.
Bring The Persona To Life
Having fully built-out personas in two dimensions is very valuable, but if you want to see how they live and interact with your product ethnographic research is irreplaceable. Ethnographic research brings you into your persona’s life – either at work or home. You learn what makes them happy, what frustrates them and how your product – or a competitor’s product - solves a problem for them.
Ethnographies make your persona’s real. One time, an Indian mom claimed she never served her family processed or frozen foods. The kitchen tour started in the pantry where we saw brownie mix. The freezer revealed many frozen appetizers. Towards the end of our time with her she was sharing with us how her pre-teen children wanted to stop bringing Indian food to school so she bought frozen foods that they could microwave at school and she could still provide them a warm meal. She didn’t want to share that with us initially because she felt guilty not making them lunch. That is richness we’d never have learned without being with her in her home.
Personas can be very powerful, but for them to reach their full potential you need to move beyond what you think your customer personas are and actually learn who they are, what makes them unique and how you can meet their needs to grow your business.
People Powered Business Metrics
by Mitch Ratcliffe
by Todd Olsen