Segments and Personas. How to use them and why they are not the same.
A doctor, a lawyer and a cop walk into a bar… This classic joke opener is a sure bet because it offers up three different “types” of people that we are likely to recognize or will be able relate to. You could call these characters personas.
In working with marketing, BI and sales teams over the years, I've noticed a regular misuse of the terms segments and personas. Although often used in complementary ways, they are not one and the same. Here’s how I would differentiate:
The purpose of market segmentation is to identify groups of customers (or potential customers) within a market. Markets tend to be geographical or a particular industry vertical. Once identified, these groups are referred to as segments and allows the organizations to then target particular products, services or marketing messages to those segments over time.
Customer segments are created primarily to be able to manage and measure marketing performance. Typically they are formed and analyzed on the basis of revenue and profit potential.
Segments are often created based on purchase behaviour and buying patterns, clearly identifying what they are buying but not how or why they are buying it. This is where personas come in.
Segments should be data driven and used in business planning and forecasting. The benefits of creating customer segments are to:
Clearly break down prospecting activity and messaging and deliver tailored messages at the right time in the buying cycle (from awareness to retention)
Measure or forecast the growth of particular customer groups based on buying patterns
Measure and track macro-level customer trends
Align business processes to customer trends and buying habits
Personas on the other hand are used to further understand customers on a personal level. They tend to be more qualitative than segments to include socio-demographic, psychographic and behavioural data. Through third party research, surveys or interviews with real people, marketers can construct character profiles that share similar beliefs, values, attitudes etc. Web design teams in particular use personas to gain a deeper understanding of whom they are designing for as well as the wants, needs and motivations of various types of visitors. An important point here is that personas can cross across segments. The benefits of creating personas are to:
Describe your customer with stories, anecdotes and/or scenarios in order to humanize them and relate to them based on needs
Capture customer goals and motivations as well as possible pain points in particular during the purchasing process or other interactions with the brand
Further refine your value proposition and differentiation for key personas
Improve product planning or include the "voice of the customer" in research and development
Supplement quantitative market data with qualitative insights
What to use when?
Both segments and personas are tools to help us "sort" customers and prospects but used together, they paint a comprehensive picture of how a business should market to its customers. For example, personas used in isolation can be inaccurate from a behavioral perspective, as there is often a significant difference between what customers state as preferences and what they actually do in reality. We all say we are healthy eaters but we purchase ice cream every week. (I’m not lying, you’re lying).
In short, personas help us to understand the emotional needs of our customers, while segments help to forecast whether specific products or services will resonate in the marketplace.
As I was saying, a doctor, a lawyer and a cop walk into a bar…