Authors

Jes Kirkwood, Content and Community Marketing Manager at Autopilot

Lesson 2: Develop Target Personas

Target personas help teams create winning products, effective messages, and compelling customer journeys.

Buyer personas sum up core segments of your target audience, helping your team to quickly grasp what makes your customers tick. While defining your target personas can feel like you are excluding other potential buyers, it actually brings clarity and focuses you on your “market center” customer—the 80% who have the most to gain from your offerings and are most likely to respond to your marketing.

In this lesson, you’ll learn:

target personas stat
Target personas focus your marketing on the 80% who have the most to gain from your solution
 

What personas are and why you should create them

What are target personas?

First conceptualized in the 1980s by renowned software designer Alan Cooper, target personas are data-driven profiles that represent core segments of your ideal customer base.

They’re fictional in the sense that they don’t actually represent living and breathing human beings. Instead, they summarize the quantitative and qualitative data collected while researching a specific group of ideal customers.

Target personas are data-driven profiles that represent core segments of your ideal customer base

Because each segment of prospective customers shares demographic, psychographic, and behavioral traits, these data points can be lumped together to create synthesized portraits of your ideal customers.

Conversion Copywriter Jan Havice perhaps said it best when she wrote,

Personas are fictional representations of segments of buyers based on real data reflecting their behaviors.

Keep in mind: Target personas aren’t a document, even if they’re presented that way. Your goal should be for you and your team to know your ideal customers inside and out.

Why should you create them?

According to a 2015 study by Econsultancy’s Stefan Tomquist, 4 out of 5 brands claim to have a holistic understanding of their key customer segments. Despite this, just 22% of customers feel understood by brands.

That means that either brands are failing to tailor the customer experience based on what they know about each customer segment, or there’s a gap between how well brands think they know their customers and how well they actually do.

4 out of 5 brands claim to have a holistic understanding of key customer segments, yet just 22% of customers feel understood by brands

Creating target personas is the first step to reducing this gap. Completing this exercise also comes with three important benefits:

  • They boost your team’s productivity
  • They guide your company’s product development
  • They focus your brand’s messaging

Without this understanding, you can’t define a resonant brand voice, craft relevant content, or choose appropriate outlets for promotion. Target personas are thus valuable because they concisely summarize key points about your audience.

How to develop target personas

Target personas concisely summarize what you’ve learned about your core audiences. Consider these visual representations of target personas your “end goal” output:

high-level target persona
This high-level slide concisely summarizes three distinct target personas

Once you’ve completed the following exercise, you should be able to sum up each of your target personas in one descriptive sentence. For example:

Growth Gary is a passionate early adopter who needs efficiency and agility to scale.

This sentence tells us who Gary is, what he needs, and what he wants to achieve.

When crafting your own one-liners, use this formula:

one sentence target persona description
Use this formula to craft target persona one-line descriptions

You’ll notice that we’ve named our target personas. Not all marketers believe in this practice, but we’ve found it super helpful.

Giving your personas descriptive names (like “Growth Gary” or “Executive Ellie”) helps distil essential attributes about your ideal customers. It also helps increase adoption of your personas since these names are easy for team members to remember.

Use this template when creating your own target persona:

B2B target persona template
Use this template to create your target persona

Here’s what it looks like when it’s filled in:

sample target persona
What this template looks like when filled in

Now it’s time to dig a little deeper into target personas. In the following section, we’ve outlined 7 core elements of informative target personas:

  • Demographics
  • Firmographics
  • Titles
  • Roles
  • Pain points
  • Why you win
  • Value propositions

Demographics

Most marketers include demographic and/or firmographic data in their target persona deep dives. These details help transform a profile into a person.

At minimum, B2C marketers should include core characteristics, such as age, gender, and location. However, they may also want to include total household income, education, and family composition.

Most marketers include demographic and firmographic data in their target persona deep dives. These details help transform a profile into a person.

Firmographics

At minimum, B2B marketers should include the persona’s company type, size, and industry. It may also be helpful to include their location, annual revenue, and number of employees.

For example, our software is used by both B2B and B2C marketers. Because these customers face significantly different challenges on a daily basis, it’s important for us to understand whether the majority of buyers under one persona work for B2B or B2C companies. That way, we can craft relevant content that speaks to their needs.

Titles

How do we know Growth Gary when we see him? We look at his title. While this isn’t an exact science, it allows us to make an educated guess about who we’re talking to early on.

You can easily pull titles from your contact database, but it’s only after speaking with buyers that you’ll come to understand which titles fit within each persona and what their role in the buying process is.

Roles

Each individual plays a specific role within the buying process, separate from their role within the organization.

Individual roles in the purchasing process vary from company to company. In a small business environment, a marketing coordinator might be tasked with researching potential solutions in preparation for a purchasing decision. At a larger corporation, a marketing manager might occupy this same role.

Each individual plays a specific role within the buying process, separate from their role within the organization

Whatever you do, don’t make the mistake of thinking C-level executives always have the final say when it comes to making purchasing decisions.

When speaking with buyers, keep these questions in mind:

  • Regardless of title, what are they responsible for achieving?
  • During the buying process, are they an evaluator, influencer, or decision maker?
  • What level of authority do they have? Can they sign checks and/or approve expenses?

Pain points

Some marketers stop short of providing strategic direction in their target personas. But it’s a fantastic way to get everyone on the same page while making your colleagues’ lives easier.

The first step is to identify your customer’s pain points. These are challenges or underlying frustrations that block your buyer from achieving their desired outcome.

To discover your buyer’s challenges, ask probing questions like, “What do you spend the most time doing?” or “What’s preventing your company from achieving your desired outcome?”

If your company can help the buyer overcome these issues, they’ll have no problem paying to make it happen.

Pain points: challenges or underlying frustrations that block your buyer from achieving their desired outcome

Needs

Needs are urgent problems that must be solved, which is why they take priority over mere pain points. While customers are interested in relieving their pain points, they’re much more motivated to get their needs met.

Ask these questions to hone in on your target audience’s core needs:

  • What challenges require a budgeted organizational initiative to resolve within the next 6 months?
  • What would happen by the end of the year if this need was not resolved?
  • What would be the benefit to your organization if this were resolved within the year?

Pro tip from Autopilot CMO Guy Marion: Aim to deliver morphine, not vitamins. While vitamins help reduce painful symptoms, qualified buyers can’t live without morphine.

Needs are urgent problems that must be solved, which is why they take priority over mere pain points

Why we win

Next, identify the top 2-3 reasons these customers buy your product or service over a competitive solution, based on the pain points you’re uniquely positioned to solve.

These reasons typically fall into the following areas:

    • Alignment with your vision or brand. Your company clearly stands for something that is attractive and compelling.
    • Time to value. This refers to how quickly a buyer can get the full benefit of the product or service and, in doing so, solve their core problem.
    • Unique features or user experience. Do you offer functionality or an in-product user experience that’s unique to your solution? Does it solve one of their top needs or challenges?
    • Price. Pricing is the exchange rate between the value of the product and spending power of the target buyer. Price too low and risk being unprofitable (which is unsustainable for business) and/or undervalued. Price too high and risk shrinking the size of your market or introducing complexity into the sales process. The sweet spot is to charge the maximum amount that your ideal customer is ready to pay with minimum push-back, while still attaining attractive financial terms for your company.
    • Total cost of ownership (TCO). This refers to the total cost of using a given solution, on an annual basis and over it’s lifetime, when factoring in every relevant cost. This might include license fees, third party add-ons, consulting and implementation services, support costs, staffing and recruiting costs, and even development time.
    • Customer experience. Companies like Zappos and Amazon rewrote the rules of customer service by going to extreme lengths to deliver a wow experience. For many, this is enough to overcome technical, budget, or even alignment concerns.
    • Ease of setup and implementation. When the risk of failed implementation is low because your service is easy to use or has a bulletproof onboarding process, customers are far more willing to try your solution.
    • Integration and connectedness. The rise in popularity of API-based app ecosystems means that connected and open technology platforms win clients seeking highly customizable configurations.
    • Referred by a trusted peer. A startling 71% of consumers who receive a referral on social media are likely to make a purchase, while 90% of people are influenced by their friends’ brands recommendations.

    Back in 2013, Tomasz Tunguz wrote an article called Startup Judo. In it, he wrote:

    There are two basic tenets of judo: First: never to oppose strength with strength. Second: maximize leverage.

    Keep these tips in mind as you work through why you win.

    The sweet spot is to charge the maximum amount that your ideal customer is ready to pay with minimum push-back, while still attaining attractive financial terms for your company

    Value proposition

    Now, combine your target persona’s pain points and why you win into one sentence to create your value proposition. The end result should be a statement like this one:

    Growth Gary is frustrated with inflexibility of systems and scattered customer lifecycle. We win because Autopilot gives him the controls to manage the complete customer lifecycle in one system.
  • Use this formula to create your own value proposition:
  • [Persona name] is [key pain point] and [key pain point]. We win because [key reason] and [key reason].
  • What target personas look like in real life

    Now that you’ve got a firm grasp on the basics, get inspiration from these sample target personas:

Sample target personas

How to quantify your buyer personas

Businesses that rely on recurring revenue require strong unit economics to grow, which notable SaaS VC David Skok defines as an LTV:CAC ratio of 3:1 or higher.

Before you can work toward achieving this goal, you’ll need to dig into the quantifiable aspects of your personas.

Sample quantified buyer persona
Source: Price Intelligently
quanitified buyer persona

In this example, the company has determined each persona’s WTP, CAC, and LTV in addition to their most and least valued features. We dive into each metric (and more) below.

What is this buyer willing to pay?

Willingness to pay (WTP) refers to the dollar amount your customers are willing to pay for your product.

How do you collect this information? Most people can’t tell you how much they’re willing to spend, which is why we recommend using Van Westendorp’s Price Sensitivity Meter.

This method prompts you to ask four questions:

  • At what price would you no longer consider buying the product? (Too Expensive)
  • At what price would the product seem so inexpensive you begin to doubt its quality? (Too Cheap)
  • At what price would you consider the product to be expensive, but not out of reach? (Premium)
  • At what price would you consider the product to be a bargain—a great buy for the money? (Good Value)

Van Westendorp’s Price Sensitivity Meter is more effective than alternatives (like price laddering), because it defines an accurate price range.

Sample price range based on Van Westendorp's Price Sensitivity Meter
Source: QuestionPro
Van Westendorp's Price Sensitivity Meter price range

 

Price Intelligently’s Eric Yu elaborates:

The first two questions force respondents to anchor themselves to an acceptable price range and the last two questions help narrow the optimal price band. Once a statistically significant number of people respond to these questions, you can graph the responses and determine an optimal price band and a more specific optimal price point.

You’ll want to collect this data on a segment-by-segment basis. That way you can design plans that include the core features each segment wants, at a price point that’s optimal for each segment.

What is the average lifetime value of this buyer?

Customer lifetime value (LTV) refers to the total revenue you collect over the customer’s lifetime.

To calculate your customer lifetime value, you’ll first need to determine the average value of a sale (e.g., $44) and the average number of repeat transactions over time (e.g., 12 transactions per year for 2.33 years).

Once you’ve collected this data, simply multiply the numbers to determine your customer lifetime value (e.g., $44 x 12 x 2.33 = $1,230).

Pro tip from Autopilot CMO Guy Marion: Early-stage SaaS startups often don’t yet know the average lifetime of a customer. These companies can estimate their LTV using the inverse of their monthly churn rate, multiplied by their average monthly recurring revenue. For example, if a company is experiencing 3.5% monthly gross MRR churn, and customers are paying $85/mo, the LTV is (1/0.035) x 85 = $2,429.

Estimate your LTV using the inverse of your monthly churn rate, multiplied by your average monthly recurring revenue

How much does it cost you to acquire this buyer?

Customer acquisition cost (CAC) refers to the amount of money you spend to acquire a new buyer.

Calculating your average customer acquisition cost is easy. Simply divide the number of customers you acquired during a specific period by the amount you spent on marketing and sales (including payroll).

For example, if you spent $12,000 to acquire 100 customers in December, your customer acquisition cost would be $120.

Unfortunately, this number can be misleading, which is why it’s important to break it down by segment.

If you’re already tracking CAC at the account level, pull a list and then segment it by customer type to determine your average CAC on a per segment basis. You’re likely to discover that one segment is more costly to acquire than the other, which may or may not indicate it’s time to reevaluate your acquisition channel strategy.

To calculate your CAC, divide the number of customers you acquired during a specific period by the amount you spent on marketing and sales (including payroll)

What features matter to this buyer?

You’ll want to determine what features matter most and least to your buyers on a segment-by-segment basis. You can collect this information in one of two ways:

  • Ask buyers what features matter to them when speaking to them 1:1. Members of your sales and success teams do this regularly, so that should be your first stop. After collecting insights from them, get on the phone with a few customers from each segment and ask them directly.
  • Create a survey designed to reveal preferred features. Use Likert scales to determine how important each feature is. Then, ask your buyers to rank the features in order of preference to discover relative importance. Be sure to send your survey to enough customers to achieve statistical significance.

Now that you understand why these metrics are important, use this table to compile the data you collect:

quantified target persona template
Use this table to compile the quantitative data you collect

When and why you should pivot

You may need to revise your target personas for one of three reasons:

You make new discoveries about your customers

Startups have few to no customers in the beginning, which makes the process of developing target personas difficult. Instead of interviewing your existing customers, you’re stuck with talking to people you think could benefit from your product.

You also make a lot of educated guesses. Maybe you couldn’t nail down interviews with enough of the people you think will benefit from your product, so you attempt to fill in the gaps. You try to put yourself in their shoes. You make assumptions.

As your startup grows, you’re bound to make new discoveries about your customers. When you do, it’s time for a refresh.

What you discover during this stage may or may not be relevant down the road. But as your startup grows, you’re bound to make new discoveries about your customers. When you do, it’s time for a refresh.

For example, if you discover that your target persona’s motivations for purchasing is different than you originally thought, take the time to update your target personas to reflect this change. You might see an uptick in sales as a result.

Too much time has passed

As time passes, things inevitably change. That’s why it may be time to revisit your target personas if the last time you updated them was more than 2-3 years ago.

As a new generation enters the workforce, the way your solution is searched for may change. If their communication preferences differ from the previous generation, it may also impact the places where your target persona hangs out, which may in turn influence the conversion rates you achieve across various channels. Ignoring this change would negatively impact your performance—hurting your bottom line as a result.

As time passes, things inevitably change. That’s why it may be time to revisit your target personas if the last time you updated them was more than 2-3 years ago.

The speed at which technology changes makes it even harder to keep up. For example, complex technologies become easier to use, which may impact who’s responsible for managing them. New channels emerge, which may impact where your customers are. You get the idea.

The key here is to avoid relying on information that’s no longer relevant.

Your current customers aren’t your ideal customers

Just because someone pays for your product or service doesn’t mean that they’re your ideal customer. If you’re converting a lower number of leads into customers than you would expect, or have a higher-than-average churn rate, this might indicate a poor product-market fit and a need to revisit your ideal customer.

Just because someone pays for your product or service doesn’t mean that they’re your ideal customer

If you’re a startup marketer, your first few rounds of creating target personas were likely based on who you thought would benefit from your product or service. As you attract more customers, you may learn that your initial hypothesis was wrong. When you reach this conclusion, it’s time to revise your target personas.

While startups often experience this problem, they’re not alone. Companies all of sizes need to pivot occasionally.

Matt Brochinni explains:

The better the fit, the higher the market share, the more loyal customers tend to be, and the more difficult it is for a competitor to lure customers away.

Resources

Want to learn more about developing target personas? Check out these helpful resources:

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