Understanding your audience is essential to building great products and effective marketing campaigns. For startups, it’s a survival factor. Most startups fail before reaching any product/market fit as there is no market need for their products. The most successful startups pivoted at least once in their lifetime after it becomes clear that they have to change the product or the market they’re targeting.
The goal of a startup is to figure out the right thing to build - the thing customers want and will pay for - as quickly as possible. - Eric Rice
In other words, the goal is not to build the most beautiful, feature rich, AI/machine learning/blockchain/you-name-it based product. The goal is to understand who is the customer, how can we help this customer and how much he is willing to pay for the solution.
Life is too short to keep building something nobody (or not enough people) want. - Ash Maurya
However, even finding the right solution for a big enough problem that the big enough market has and wants to be solved is not enough. We have to know how to reach out to our customers and how to talk to them, the product has to have a great on-boarding flow with a clear in-time wow effect. We also have to know how to keep users engaged (bring them back and keep providing value), so eventually, they will pay for the product and refer friends to us. That’s a lot to accomplish and do it based on assumptions and gut feelings doesn’t sound like the winning business strategy.
In order to succeed we have to have a deep understanding of our customer's segments. And by saying "we", I mean every team member. Everyone should be on the same page - product, marketing, sales, customer support, customer success, etc. The best way to accomplish that is by using customers personas.
A customer persona is a collective image of a specific customers group that represents their behavioural patterns. The concept of personas, proposed by Alan Cooper in his book The Inmates Are Running the Asylum, may significantly change how we collect customers insight and act on them when done right.
Big companies for years conducted serious studies followed by a single “high ceremony” approach to modelling the research as a persona. Huge expenses, both in terms of the effort to build them and the damage they can do to your product. Those “set and forget” personas are too long to develop and become set in stone, unable to keep up with the changing realities around the user.
On the other hand, there are lean approaches that use continues research and modelling. Lean personas represent much more research than traditional personas ever did. Not only that, they represent the most recent understanding of customers which is crucial for fast-moving companies and their rapidly evolving products.
The worst thing startup can do is to spend several months on in-depth customer research only to find out that the reality has changed and those finding are not relevant anymore. New well-funded competitors popped up, and they bring new pricing strategy, more features/value, etc. Technologies or regulations may change as well. As a result, users now have different expectations.
Over the years I've developed my own approach for customers research and personas modelling based on lean methodology. The approach is easy to follow: organise, research, iterate.
Let’s take a closer look at each step.
The first step is to organise the data, hypotheses and assumptions that we have, set a starting point and get everyone agree on it. Get together and write what you think your personas look like based on your experience, data and gut feelings. Create as many personas as you think you have. The goal here is to get everyone agree on this set and have the very same picture of your personas. It’s much easier to steer every one if they have the same model in their head.
No need to go deep with personas characteristics at this stage. All we need is just a necessary data that answers the most crucial question - who is this customer, what he is trying to achieve, how can we help him. That’s it.
I'm starting every persona development by specifying 6 data points:
Basic info: image, name, age, gender and occupation
Customer type (user, buyer, decision maker, influencer)
Background story: form-free text describing who is this persona, challenges and journey that brought him/her to us
Goals: what the persona wants/trying to achieve/hire you for
Needs: personas requirements
How can we help: how your product or service helps to that particular persona (from persona’s standpoint)
If there any additional data points that vital for your persona definition, nothing should stop you from adding them. For example, if you manage an online shoe shop, and you think that customers from Boston behave differently (in terms of retention, spendings, shoes they buy, etc.) add “location” characteristic to your persona.
At this point, you probably don’t have a real data and will mostly right down your assumptions. That’s totally fine. However, it’s crucial to define what do you really know about the persona and what you’ve just made up. For that matter, we use what we call a “veracity level” - a simple five steps slider that indicated how truthful is the data.
"Very low" - The data is a pure assumption.
"Low" - The data based on own experience or 1-2 customers interviews.
"Medium" - The data based on a few customers interviews, surveys or some analytics data. Too small to be totally sure in it, but definitely has some ground and can be used for decision making.
"High" - The data based on enough interviews, surveys and other data sources to be sure in it and use it.
"Very High" - The data based on an obvious thing that doesn't need to be validated or it based on a pattern.
It’s important to let everybody know what characteristics of your persona are not validated yet and cannot be used for product and marketing decision making.
How many personas do you need to develop?
That actually doesn't matter a lot. Different types of products may have a different amount of personas. From 1 to 100 (or even more). However, it's essential to define your best customer, secondary customers and negative customers.
Best Customer Persona
There is always one type of customers who bring you most of the revenue. That may and will change from time to time as your product and the market changes. It's important always to know who is your best customer at the moment and give this customer all your attention in terms of product features, design and messaging, marketing and sales activities.
For example, companies have to find early adopters for their new products and make them happy in order to be able one day to start selling to their early and late majority. That simple rule described by George Moor in his book "Crossing the Chasm" shows that even if your industry is not changing a lot, and there are no new players on the market, you will inevitably target different segments in different periods of time.
Secondary Customer Persona
Those are all "other" customers who are (or might be) interested in your product or service. The Pareto principle says that, for many events, roughly 80% of the effects come from 20% of the causes. It business it means that 80% of your revenue comes from 20% of your customers (best customer) and 20% comes from 80% of your customers (secondary customers). We keep an eye on our secondary customers since one day one of them will become our best customer.
Negative Customer Persona
Also known as "exclusionary persona" - those who you don't want as a customer.
May never actually buy your product or service.
May become a customer, but they were an inordinately expensive customer to acquire.
May become a customer, but you never recoup the costs of acquiring them because of a low average sale price, their propensity to churn, or their unlikeliness to purchase again from your company.
Knowing who is your negative customer will help you to avoid developing redundant features and unnecessary spending of marketing dollars.
The second step is to research and validate the assumptions. Once again, no need to conduct huge research. Our goal is to identify and verify the most vital persona characteristics that might significantly change our product and marketing.
If you have a lot of uncertainty now, you don’t need much data to reduce uncertainty significantly. When you have a lot of certainty already, then you need a lot of data to reduce uncertainty significantly. — Douglas Hubbard
The type of research depends on product and characteristics we want to validate.
Surveys are best for the type of questions where answers are simple and may be chosen from the predefined list of options.
Interviews are best for deep digging and clarifications. For instance, we may ask “please tell me what you had for a breakfast today”, and after interviewee answers that he eats bread we may dig deeper by asking “what kind of bread it was”.
Observations and usability tests are best for understanding behaviour, clarifying challenges and understanding the real needs. Customers may not know what they want, but they can’t hide what they need. By seeing a customer in his/her environment, we have an opportunity to uncover the real challenges and needs.
Analytics and raw data are always useful for the general understanding of the segments.
Only by asking the right questions we can get the right answers.
The research will reveal new customer’s insight that might be translated into persona characteristics if we find them important. We may also find that some of our assumptions were completely wrong or not relevant and we need to remove those persona characteristics. We may also find that the persona itself is not necessary as he/she is not our target audience neither negative persona we should know about.
To make it easier to follow we need to keep validating and updating personas. That might be a monthly or bi-weekly process. Go over our personas, remove unnecessary personas or add new. Add new characteristics or remove things that not important or not in use anymore. Keep updating the personas as user research will definitely uncover attributes of a real customer.
Get your 60 min consultation call
To sum up
For the love of God, please create and use personas! They are your customer's representers. If you have no idea who your customers are, no way you could end up building a good product and effective marketing campaign. You might be lucky, but that’s not a business strategy.
Customer development is “advocating for the business.” It’s not something that you should do because it makes customers happy. It’s something you must do to build a sustainable business where people open their wallets and pay for your product or service.
When personas are created, they help companies visualise the user experience from the customer’s point of view. Creating user stories humanise the purpose of product or service. Personas give companies an understanding and connect with their customer’s needs, which help in making an informed decision. Especially, if it is a startup and trying to figure the right target customers, they can understand their users and pivot based on the user persona created.