If you’ve read any content related to marketing, you’ve definitely heard of the “buyer persona” and how important intimately knowing the range of potential customers you can serve is to your business.
Yet, to be blunt, we’re awful at quantifying our buyer personas beyond a few pleasant faces and cute names in a slide deck - and sadly that means you’re leaving cold, hard cash on the table.
As such, let’s cut the superficial stuff and get down and dirty with the data that can make your buyer personas actually useful and actionable to your entire team. To do this, we’ll briefly review why your buyer personas are so critical to maximizing revenue before discussing the crucial steps to follow to quantitatively and unequivocally define them.
Brief Review: What Are Buyer Personas and Why Are They Important?
Simply put, buyer personas are research-based representations of who your buyers are, including their buying behaviors and preferences. Creating them requires a deep analysis of the pain points and goals that drive the customer’s decision to purchase.
The problem with developing your personas haphazardly is you can easily end up chasing the wrong customers, especially if your buyer persona definitions didn’t go beyond a few brainstorming sessions over danish (meaning you’re losing money). While it’s crucial to develop a great product, there’s more importance in ensuring you’re working to acquire high value buyers.
Digging deeper, proper buyer personas have an enormous impact on your pricing strategy. If you know your highest value customers (positioning), what those customers want (packaging), and how much they’re willing to pay, then your most important metrics will fall into place. Value will be aligned and churn will be minimized, because why would someone churn if they’re paying an optimal price for exactly what they want? Even better, if your value metric is aligned to your personas, you’ll ensure that your revenue expands right along with your customer’s value.
Creating Your Buyer Personas
Now that we’ve covered why identifying your target customers and analyzing their buying behaviors is so crucial, let’s dive into the actual steps that define the road ahead.
1. Conceptualize Five to Ten Buyer Personas (even if you think you only have three)
I know we made fun of customer development meetings and presentations above, but you have to start somewhere. This initial brainstorming session can go a lot further than you think, and by no means does finishing this step constitute the completion of your buyer personas.
You need a rough outline of who these customers are - their job title, the size of the company they work in, and hypotheses around what they care about in your product. Give them names, faces, goals, etc., and push yourself to come up with five or ten different types. Don’t worry if you think some of the personas you create are barely a decent fit, you’ll be able to validate or invalidate them in the next steps.
These buyer persona concepts are universally applicable, whether you're launching the next best landing page builder or helping Fintech startups nail their growth challenges.
2. Breakdown What Data You Need to Collect
Now that you have a rough idea of your potential buyers, you need to figure out what makes them tick and how they perceive value in your product. This isn’t a logical exercise that can be completed in a brainstorm session though. It requires collecting real data from your customers or potential customers.
The secret lies in structuring your questions along what your entire business could take action from. After all, the goal is to clone your highest value customers, and you can’t clone your customers if you don’t know your customers. We’ve found the highest value information to know concerns:
Feature Value: What features and aspects of the product do customers care most about? What do they care least about?
Quantified Value Propositions: What value messaging drives them through the sales and marketing funnel?
Price Sensitivity and Willingness to Pay: How much are they willing to pay for you to solve their problem?
This data remains essential to quantifying your customer personas, but you’ll also want to calculate metrics like your customer acquisition cost (CAC) for each persona (formula shown below). Granted you may not have this information if you don’t have those particular customer types in your pipeline, but back of the envelope calculations are exceptionally helpful when looking into which personas are truly the right fit for your business.
3. Collect the Data in a Methodical Manner
We’ve written extensively about the actual implementation in quantifying feature value, calculating price sensitivity, and ordering value propositions (all from the customer perspective), but the process boils down to simply asking them the right questions. The right questions provide the right data, limiting as much error and bias as possible.
Granted, you could use our software to smooth out the data collection process (shameless plug), but each of the above links talk about how you can do this on your own as well (if you have the time/bandwidth).
4. Segment and Analyze the Data
You’ve done the hard part with steps one through three, as step four simply involves taking the data, segmenting it by the personas you identified, and analyzing the differences and similarities. You’ll essentially have opened up an entire bevy of answers that were most likely just guessed and checked in the past.
A good representation of this is below in the graph comparing the value proposition preferences of three personas. Notice the differences that you can immediately make in your marketing if you simply sent three emails that accentuated the headlines that are most important to respective customer segments.
5. Target the High Value Customers
If you’ve done your calculations properly, particularly your willingness to pay/price sensitivity and customer acquisition cost metrics, you’ll be able to have an exceptionally healthy data driven dialogue around who you’re best set up to target for your product. You may discover a persona that you thought was useless is actually an ideal customer. Contrastly, you may find a persona you thought was your bread and butter is way too expensive to acquire for how much they’re willing to pay.
That’s why we’re doing this though, because you can’t develop your business in the dark by making the quantification of your customer's value an afterthought or “something we’ll figure out next quarter.” These numbers are central to your business, and if you aren’t inside your customers’ heads, you’re relying heavily on luck and wasting your most precious resource - time.
Remember, the name of the game here is cloning your customers, and the only way to clone them is to know them. Walk through this process. You don’t need to make it exceptionally complicated or even go as deep as some of the graphics above. Yet, you do need to take the act of getting this information in order seriously, because knowing or not knowing your customer will surely make or break your business.
If you want to dive into pricing page best practices, check out our latest eBook, The SaaS Pricing Page Blueprint, which offers in-depth data and analysis on building the perfect pricing page.