Segment Your Customer Personas for Better Business Operations
Pivot on your axis, Change your perspective
INTRODUCTION
If you search on the Internet, you will come across countless posts on Customer Personas and how to create them. Even I have dared to write something on making the most out of your personas. I am going forward with the assumption that you have your personas cut and dried for you.
What I would like you to do is to take your personas one step forward and segment them. Then use that information to market yourself and your business. Philip Kotler’s Marketing Management textbook has a chapter dedicated to segmenting, targeting, and positioning. But this is a topic that is often overlooked or not given adequate attention from a business sustainability perspective. It is not enough to segment your market and choose to target one or a few such segments. That only helps to an extent. What about growth?
In this post, I will tell you how segmenting your personas can help you to target them precisely for efficient small business operations and sustainability.
How will this post help you?
- You will identify the strengths and weaknesses of your customer persona mix through the segmentation exercise.
- Based on point 1, you can do exploratory desk-based research of the external environment to identify the opportunities and threats.
- The SWOT analysis will guide you to concentrate your marketing efforts on the weak areas to turn them around into considerable strengths, therefore, making your business durable and resilient.
SEGMENTING CUSTOMER PERSONAS
We start creating personas once we are in business and have been operational for some time enough to build a reasonable customer base. Because initially, it is all about existence and survival. As our customer base grows, assess the in-house skill sets and core competency and develop a strategic intent (knowingly or otherwise) for the future, and fine-tuning our business goals.
An average small-scale business has at least a couple of personas if not more. This is applicable for both manufacturing and service businesses. Normally, you will create a few homogeneous groups of your customers and customize the marketing message of your product or service to each of them.
But have you ever considered segmenting the personas for the purpose of business sustainability instead of solely trying to sell them your offering and gain more leads or convert still more prospects? Maybe not.
1.1 Analyze your customer persona mix
Try and analyze your persona mix on the lines of their percentage of contribution to your revenues and bottom-line. Different personas need varying amounts of resources allocated to them per week or month, per unit, or whatever the case may be in the context of your business.
For example: If you have a window cleaning service, a large estate owner’s need is more than that of a small house owner’s. (Fewer windows and all eh?) Our family’s small business is into manufacturing corrugated cartons. A carton that weighs 500 grams and another one weighing 15 kilograms require the same set of machines. But often the smaller one requires them for a lesser duration. Are you getting what I am trying to emphasize upon?
The complexity of skills required to serve a certain segment versus their contribution to revenue, the effort versus outcome ratio is critical business performance indicators.
Expand your customer persona data a few more steps ahead and slot them into segments based on revenue, growth potential, task complexity, need for generic versus specific skill sets, the scope for standardization, automation, earnings per unit.
It will enable you to analyze the business potential of each segment and influence your future strategies from a deeper commercial perspective.
1.2. Strengths and weaknesses of your existing customer base
At the start of any business, it is our tendency to pick any customer, order, or contract that comes our way because the immediate objective is to gain traction, cover the operational costs and breakeven. I think you can relate to this mindset.
We have to stay afloat. Over time, we build or acquire additional skills to serve our esteemed customers. However, at times, it makes more business sense to drop certain personas and add new ones to increase the diversity and hedge the business risks to make it sustainable. Weed out the ones which are draining your resources and not even adding to your skills or portfolio.
Such decisions often lead to better returns or lower our cost of operation. Either way, the business benefits from such radical moves. Analyze your personas in terms of projects/ products, money, efforts, and outcome to determine whether they add to the strength or weakness of your business. Make a list.
It is important to remember that every business operates in a perpetual state of scarcity and depends on the ability to make effective choices. The ones who deploy their resources for optimum outcome lead the market.
IDENTIFYING THE OPPORTUNITIES AND THREATS
This is business school knowledge 101. For everything that you do, if you wish to be successful; you must continuously monitor your internal and external environment. The internal environment impacts your strengths and weaknesses, the external ones either offer you opportunities or pose threats.
For example The Covid-19 pandemic is an external threat that might affect your business but if you have the internal agility to move your business online and continue delighting customers then you are nullifying the threat or cushioning the impact.
External environment analysis can be done through exploratory research. Mind you — do not restrict this mission to your immediate industry but also create a world view. Sometimes businesses become obsolete due to innovation in some other industry. How many fax machines do you see today? Where is Nokia in the world of android smartphones or Kodak cameras? Netflix is eating into DTH services. The list goes on.
Our products might get substituted not by a new entrant in our industry but in some polar opposite one which was never in our radar. There could be technological improvements that enable you to operate your business with lesser human capital and with a higher percentage of accuracy and reliability.
2.1. The growing segments
To identify opportunities, start by conducting trend analysis. Start with a small radius that borders only your business and gradually expand. Conduct surveys to find out which persona segments are growing and why. How entrenched are you in them? If the weight of that persona is less in your customer base; initiate those prospect engagement and acquisition.
Alternately, if your exposure is more; it is not time to rejoice. You need to determine your growth potential in the growing segments based on your current skill sets and resources. If there is a gap, you know what to do.
It is not easy to scale up or attract particular persona customers but nothing in life is easy. If they are a growing segment, then you need them in your persona mix. Period. The very existence of your business is to help simplify the lives of your customers and prospects. You just need to know the ones which are more lucrative. You might need to make the difficult decision of letting go of certain group of customers for the “greater good”.
But before you let go, make a strong business case for your decision and back it up with hardcore data.
2.2 . Shifts in demand
You might be faced with a challenge that the shifts in demand in the markets put unnatural stress on resources. The in-house resources might be falling short to fulfill the growing demands.
The sudden changes in the environment often pose serious threats to your business. Like restaurant business was severely hit due to Covid-19. It was not because the hoteliers and restaurateurs were unprepared. It happened due to the nature of the business. Such threats can throw your business into significant turmoil. Anticipating a pandemic is too much for small businesses but there could be a certain persona who might soon pose a threat to your business growth.
Identifying the threats can help you to prepare for emerging changes and staying relevant in the world of business. Armed with a SWOT analysis of your persona mix, you can go about the task of restructuring it for rapid advancement.
RESTRUCTURING YOUR PERSONA MIX
Take it from me right at the beginning. You must destruct, restructure and renovate your customer mix from time to time. It is scary but that is how you can move forward.
The SWOT analysis that you have done will give you a deeper insight of your business and its prospects. It could be the information that enables you to transform and rejuvenate.
Nokia should have seen the changes in the android market and stayed ahead of the curve. Hind sight is 20–20. But it is a glaring example for small businesses who are a million times more vulnerable than an MNC. Look at Samsung on the other hand. They have mobiles for every segment but the simplest one too has a ton of features. Why? Because we need every segment of customers albeit in different proportions to achieve the all encompassing business goals.
3.1. Targeting emerging segments
I am a fan of the BCG matrix. What you need is to create a balance of personas on the lines of the BCG matrix. There is a need for cash cows, dogs, stars and even few question marks. Who knows — they might be the source of some break thru innovation that puts you in a different league? Because a business does need sustainability and safety but must take some amount of risk to grow. You cannot be a fence sitter for life and expect to reach the stars. Target the emerging segments to get the early-mover advantage.
Cash cows will remain so only for a finite period and not eternity. It means you need to try new things and keep moving ahead, target emerging segments of customer persona. That is how you can maintain your company in a perpetual growth curve before it hits maturity.
At all times, keep an eye on your core competency, things that you are good at. In today’s world, you can acquire more resources and expand your competency. It is possible but before that you need to know what you need. Which industries or persona segments do you wish to target for growth and sustainability?
3.2. Positioning for business growth
Your core competency will direct your business objectives. Your customer mix should ensure that you are operating at optimum capacity, with a balanced workflow most of the time. Over exposure to a particular customer mix could slowly drain your resources leaving you tied to low-value work and missing out on the challenging ones.
Position your business to attract a healthy mix of customer personas who keep the revenue counter ticking while enabling you to continuously learn and evolve. Do not get comfortable attracting easier personas. Go after the tough ones, who have greater potential.
CONCLUSION
We all have short and long-term goals in our business. Today the focus is on becoming a learning organization, one that is agile to sudden environmental changes. The ones who can pivot swiftly manage to turn any adversity into an opportunity. How do you do it if you are not aware of your strength and weaknesses in the face of opportunities and threats?
I look at my customer persona mix as a way to keep my pipeline flowing at a near steady state instead of phases of gushes and trickle. Such unevenness affects our cashflow and strategy execution. We need both growth and sustainability through reliable business operations.
So do not just restrict your customer persona for marketing objectives. Develop a holistic view to weave it with your business objectives. Instead of the personas determining whether your business will grow or not, carve them to suit your objectives.
Here’s what you should do now:
- Perform a SWOT analysis of your personas
- Develop a persona mix diagram
- Measure the contribution and align it with the growing segments
- Make a plan to target the emerging persona segments by positioning your business as the desired partner or product supplier
Pivot on your axis. Change your perspective.
If you liked this post (or did not), please share your comments and views. Subscribe to this blog, and get informative and actionable content that will help you steadily grow your small business through online channels.
