Segmentation vs. Personas - Audience Definition Is Now More Important Than Ever

In a previous post, I talked about the importance of a solid segmentation approach to drive product, marketing, channel and sales programs and content. However, I was asked to provide a better explanation on the difference between segmentation and personas. So here you go...

Segmentation

Segmentation is the process of grouping your target market(s) based on like attributes including but not limited to:

• Size/Opportunity or total available market in terms of users or accounts or other metrics
• Firmographic (e.g. Industry, # of employees, Revenues, etc.), demographic, geographic, psychographic, lifestyle (activities, interests, etc.), etc.
• Buying behavior (how and where do they expect to purchase your products or services and most importantly what is motivating them to make such a purchase at that time)
• Target outcomes and value (what outcomes and measurable value do they expect from purchasing your products and services).

This provides a well defined, measurable and targetable market opportunity.

Personas

A persona is way to characterize individuals within your target segments by creating a semi-fictional archetype. Within a segment, there are two types of personas: a) buyer and b) user. The buyer personas are used to activate marketing programs, and user personas are used to drive UI/UX interactions to achieve specific outcomes.

In consumer applications, the buyer and user may be the same person but in more complex sales, Account Based Marketing programs target multiple buyer personas. Michael Rose at Mojo Media Labs does a nice job in a recent blog post to outline an example of multiple buyer personas. In his example, he describes three: the Champion; Decision-maker; and Power Sponsor.

In the same vein, enterprise software is likely to also have multiple user personas typically based on roles.

Let's Try A Simple Example

Many moons ago at Nextel, we were the little kid on the block and needed to come up with a targeted, cost-effective growth strategy. I helped lead an effort that identified 7 segments based on a number of attributes which included industry (SIC code), size of company (number of employees), use of wireless technology (pager, phone, push-to-talk radio), average wireless spend, wireless enabled business processes, and key process/business inhibitors.

The 7 segments included business entities across a number industries including construction, IT services, business services, and transportation, and represented around 1M businesses (accounts) with approximately 25M potential users.

Each segment had a playbook. These playbooks described the key pain points, value proposition, ROI, purchasing behavior and other information which was used by marketing teams to craft sales enablement tools and other marketing programs.

Each playbook also defined segment-specific buyer personas. For target segments with less than 50 employees, the owner was the only buying persona. In larger accounts, messages were created for specific buyer personas including decision maker (CFO or CEO), approver (Operations), influencer and/or champion (Mobile Workers).

The user personas initially focused on "Bob" (Mobile Worker) but over time, other user personas were added (e.g. dispatcher) as data and messaging became more prevalent.

Between 1993 and 2000, this approach enabled Nextel to create cost-effective and efficient sales and marketing tactics that ultimately delivered a 3500% market valuation increase, the industry’s highest ARPU ($70) and lowest churn (2.5%), plus acquisition of 4.5M subscribers.

In Summary...

1. Segments are groupings of target users or accounts based on specified attributes.
2. Personas define specific buyers and users of your product and services with each segment.
3. The combination of a well-defined segments and personas drive targeted, measurable sales and marketing programs and engaging user experiences.