Defining customers to inform strategy and design_Part 1

Businesses don’t compete with each other; they compete in the ways they can create and deliver relevant value and experience to the customer. This race could only be won if you truly understand the people whose lives you want to improve. Understanding your customers is an essential step towards building a product or designing an experience for a service that people are willing to pay for. To understand who they are and what they care about, and why they care about it, you need to put yourself in the shoes of your target customers. Only then you can build a product that customers need and deliver it in an efficient way. However, understanding your customers goes beyond merely knowing their functional needs and pains points. You also need to understand the context of the need and pain points and your customers’ mental model and motivations.

Most companies understand and define their customers by creating customer segments and personas. Customer segmentation is a broad and general approach to defining a customer based on your product or service offering, an inside-out approach, while customer persona builds a narrow, focused, and specific representation of the customer in that segment. But there is much more about the customer beyond customer segments and personas that gets missed in these two artifacts that can bring significant value to the business in winning them. This 2 part article aims to guide in developing a holistic definition of the customer for the creation and delivery of value propositions and experiences, thereby design and strategy.

Customer segment

Let’s begin with the most commonly used term in the business world, the Customer segment. Customer segment, also referred to as market segment, is the process of creating customer groups based on common characteristics or attributes. Customer segments are often created based on socio-demographic factors such as Age, Gender, Marital status, location (urban, suburban, rural), Life stage (single, married, divorced, empty-nester, retired, etc.), behavioral and attitudinal elements (high to low engagement, category interests, etc.). Some prelevant ways of referring to various customer segments include Millenials, Generation X, and Baby Boomers. In organizations, marketing research team develop the segmentation models to craft custom, targeted advertising to grow the audience for the existing products and solution. Besides marketing, segmentation can be used to inform things like focus group research recruiting or finding market survey participants. Segmentation is the first step towards understanding your customer, but it doesn’t explain why customers do what they do. Segmenting customers by demographics, engagement, and preferences may help in predicting their behaviors, but it doesn’t give us a sense of their motivations, challenges, pain points, and opportunities for an improved experience.

Persona

As the era of software development started emerging, organizations started having design teams, and more so, people started buying into the Design Thinking philosophy; we started seeing the rise of Personas. Customer segmentation is helpful for businesses and product teams to think about campaign messaging and develop product strategies, but it lacks a sense of empathy towards the customer or the end-user. Customer segments carry general working titles such as students, high-value customers, Homebuyer mortgage customers etc., with no name or face attached to those titles. There are no relatable human elements in the description of the customer segment, such as thoughts and feelings. To design a product or an experience in a human-centric way, you need a human in it, not a customer segment — That’s where Persona helps. Persona brings the customer segment to life by personifying it, describing a customer using a photo, name, job title, description of their living situation, actions, fears, and pain points.

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Opinions expressed are solely my own and do not express the views or opinions of my employer.