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5 Steps to Understanding your Core Customer and Building Personas

Here's a business survival lesson.

If you're ever in a meeting and you hear your boss say: "Let's create a survey to figure out who our core customer is," then you have two choices.

The first choice is to immediately volunteer to be lead on this project, so you can do it the right way.

The second choice is to try slinking towards the door to escape becoming attached to a what just might be a doomed project.

The second option only works if you're near the door during the meeting (that's also a survival tip).

These projects are terrifying. If they go well, they can have a dramatic impact on the company (and your career). When done poorly, they become a turf war about who within the organization knows the customer better.

Also, these projects shouldn't start with a survey -- so many people assume they do (that's the frightening part).

A survey can be a useful tool in proving or exploring your assumptions about your core customers. But, it's a dangerous place to start right off the bat.

If you are in charge of your company's project to "learn about our core customers" or to create marketing personas, here's some simple steps to help you focus your efforts and come out on top.

Step 1: Start with data gathering, but not with a survey

Not to worry, you'll get to break out your favorite survey software before this project is over -- but before you do, you need to compile what you already know about your customers. The first two steps of a core customer analysis involve understanding your current most valued customers.

Most organizations define "most valued customers" as any customer who has spent a large amount of money with them. If that's how your organization works, it's perfectly valid and that's an easy list to pull -- but here are some other factors you might want to consider before you, run off to your finance manager for a lifetime value export from your CRM and base your decisions off that alone.

Here are the factors I suggest considering for your analysis:

  • Average purchase size - How much do these customers spend with your organization in a single purchase?
  • Lifetime Value - How much money has the customer spent with you over their entire lifetime?
  • Acquisition Cost - How much was the marketing and sales spend to acquire these customers use?
  • Support/Retention Cost - What services do your customers? How frequently do they need support and training? Those customers that spend the most with you, might also cost you the most!
  • Customer Happiness - How happy are these customers with your product or services. If you have a group of happy customers and a group of dramatically unhappy customers, what's the difference between the two groups?
  • Value/Mission Alignment - What is the north star for your business? Are you serving the customers you want to? If your mission is to empower small businesses with your product but all your core customers end up being educators instead, then you are out of alignment. That's good to know!

To gather all of this information and tie it all together will be a project in and of itself. As you can tell, the data will come form all over your organization, and depending on its size, it could be a fun political struggle to pull it all together. Don't give up, it might take a while, but this process is worth it in the end! ;)

My tip is to be forthright, tell each team in your company that has some of the data you need what you are doing and why you are doing it. Express that you will just need the raw data and you'll be doing all the heavy lifting (or paying someone to).

surveys for customer satisfaction

Once you've collected all the data you feel is relevant to understanding your existing customers as best as possible, it's time to bind it all together and look for patterns.

Step 2: Clustering your customers

Unless you are a complete data geek and love SPSS and Excel this is the stage in the process where most people give up. It's no wonder that many large companies that succeed at this process hire consultants to do at least the initial analysis for them.

Luckily we have staff that enjoys this. I'm not one of those people. This is when I run over to our data experts and ask for help.

In this stage of understanding your customer you are looking for different clusters of firmographic, demographic and behavior trends that correlate strongly with your best customers, your modestly valuable customers, and finally customers that don't seem to be a great fit.

Don't forget to factor in more variables than just the top line (total revenue per customer). Keep an eye on the hidden costs and customer alignment too.

What you are looking for, either from a consulting group, or from your own analysis is several groups of valued (and less valued) customers defined by behavior, merit and demographics.

It's alright to name these groups at this point, but try to keep the naming somewhat generic (A,B,C... etc). You don't want to bias your next phase -- which is interviewing a sample from each group to learn more about them.

Step 3: Qualitative Exploration (Also Known as Interviews)

The problem with spreadsheets is they are usually just numbers without a story. Usually the data we collect as a business shows the results of behavior, and not the motivation or reasons behind it.

Unfortunately, what you need to really understand your core customers is that missing detail. Remember, the goal of this project is to come up with a definition and focus on your most valuable core customer groups so you can focus the resources of your marketing, sales and product development effectively.

So, the next thing you need to do is call a sample from each of these groups and learn about them. Your initial calls may be vague, that's perfectly fine.

Start out with "Hi, I'm Jane from Widgix. I see that you've been a great customer for a while and I just wanted to know more about you and your business. Do you have a few moments to chat?"

What you are looking for are underlying needs, desires and influences that make these customers similar and make them desire your product and services. You should also look for similarities in the barriers to buying that your customers may have. Even if you are in a business to business field, ask about them as a person not just a business. Remember, people are always your buyers. They just happen to work for businesses. Get to know them.

As your interviews progress, you should start to see a pattern emerge. You'll notice that your customers are all trying to solve a similar need, or they are all in a similar stage in life, etc.

Start to verify those patterns in additional interviews until you feel confident you've nailed how each group from your analysis differs.

Attach the documentation from the interviews with your groups (you'll need the dirty details when it comes time to build personas in step 5).


Step 4: Quantitative Analysis. Now, it's Time for a Survey!

I bet you feel like you know your core customers pretty darn well now, huh? The gaps have been filled in, heck -- you can almost close your eyes and imagine your core customer personas in their day to day life....

Wait! You're not quite done yet!

What you have right now is base data and interviews derived from that data set (*cough* bias *cough*). Right now the information you've gathered paints a picture, but without certainty. It's highly valuable, but still rough.

Also, even if it is accurate and you've really located your current best "core customers" -- you don't know what the market looks like for those customers! Is it shrinking? Are there more to acquire? Can you're company make it's financial vision a success by focusing on those customers?

It would be dangerous to bet the farm on this type of data... so let's prove it!

The next step is to answer two main questions for each of the customer groups you've created.

  1. Are your behavioral, demographic and firmographic assumptions about each group accurate?
  2. Do those groups represent a viable market for your product and services?

Now it's time to create a survey. In your survey design, focus on those two main questions above. It's also important (particularly for #2) that you survey a sample that is not your customer already.

If it turns out that some of your assumptions do not seem to match the real population. That's great, see if that changes your core customer definitions. If it does, you can always return to step 4 and interview some more customers to understand the group better.

Step 5: Creating Personality Profiles

Congratulations. If you've successfully clustered, interviewed and validated your core customer groups you are likely one of the best qualified people in your company to discuss the needs and opportunities your customers present for your business!

The only problem is you are *the only one* that knows this. So how do you effectively communicate what you've learned to the rest of your organization? How do you get them all on the same page?

One of the most useful tools that an organization can use are customer personas. Essentially, you take the definition for each core customer group and you create a fictional person that represents that customer. It's more than just an archetype. You fill in enough detail and name the persona so they can be understood by everyone else in your organization. They need to be understood as well as any single customer or a co-worker.

At SurveyGizmo we created laminated "facebook" pages for each core customer persona. They have a name, age, interests and 10-20 "posts" on the page that help define who the person is. and what problems they currently face.

We gave copies of this to every person in the company and introduced them to the staff at a company meeting last year. I know some companies also build cardboard cutouts of their personas and have them in meeting rooms. Whatever works for your organization is great!

The best tip that I can give you on personas is to try to make them seem like "real" people. That's what all those notes you took during the interview process are for!

Use it, Live it... or Don't Do it!

If you've been reading my articles for a while, I'm sure I sound like a broken record when I say this: Don't bother doing this project if you are not going act on the results of the survey.

If you don't have buy in from the other departments or if your leadership is more interested in their "gut-feeling" than your data then this whole initiative (which could take months) is just a waste of time. Play solitaire instead; it's more fun and your company get's the same value if they are not willing to use your hard work anyway.

This process is only valuable if your company really wants to focus on their best customer base. You'll know you were successful in your part of the project by not only by seeing sales figures climb and costs go down, but you'll hear people in your organization using the personas that you created to discuss projects, marketing material, advertisements and trade shows.

Make sure you have good buy-in from the organization before you start on this initiative. It might require that you sell the idea for a while before you begin -- but it's worth it!

Final Words

Understanding your core customer is fantastic and can be very valuable. This is not a one-time project, but something that every company should do on a regular basis, every few years.

Each time you revisit your core customer analysis ask yourself the following questions:

  1. Is my core customer changing? If so, am I adapting my services for that core market effectively?
  2. Is the market changing? If so, how do I align my products and services to meet it?
  3. Are there customers that are different than my current core customers who would also find our products valuable?

One caveat I should mention is to be careful that you don't pigeonhole yourself once you find your most valued customers. This article is about finding and identifying your core customers and market. I recommend that you keep an eye open for new business development opportunities, as well.

Consider adapting your products and services to other markets -- your research may also identify a potential new core customer base you can market to!

Good Luck!

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