Despite being used interchangeably, customer segments and customer personas are not the same. They are applied to different use cases and achieve different objectives.
Customer segmentation divides a customer population into smaller groups to simplify customer management, target accounts by select criteria (such as those with the highest purchase propensity or profit potential) or deliver more relevant communications.
It's most commonly used for audience segmentation – to measure the size of customer markets, forecast marketplace acceptance of products and services, and tailor marketing offers by customer type for increased conversions.
Customer segmentation normally groups customers by some type of demographic or psychographic data (i.e. size, industry, geography). It's effective in identifying who any particular segment is, but not why and how they buy.
Customer personas are archetypes of fictional people, based upon market research with real people. Customer personas apply market research to create customer insights which reveal detailed stories depicting the goals, actions and decisions of buyers considering the company's products or services. Insights reveal when, why and how customers make buying decisions.
While customer segmentation provides a quantitative analysis of customers and markets, personas with insights provide a qualitative analysis of user behavior, emotion and action.
Below is a table I created to illustrate some of the key differences.
Both segments and personas represent groups of people, but they have different objectives, uses and benefits.
When to use customer segments
- To choose target audiences for prospecting and marketing campaigns
- To deliver the right message to the right customer at the right time in the right channel
- To measure or forecast customer groups or markets; segments may be used to measure the size of an addressable market, growth of a target market or forecast some type of market growth
- To measure and track macro-level customer trends
- To align customers with business processes; customer segments are helpful for business process alignment, or applying data to deliver differentiated customer experiences
When to use personas and insights
- To define your customer with stories, anecdotes, scenarios and historical experiences – to aid understanding, better relate and humanize customers
- To capture customer goals and motivations; pain points and obstacles; and emotions and behaviors applied during a purchase process or other company interaction
- To define and refine your value proposition and differentiation for key buyer types
- To aid customer journeys, by removing sources of friction, eliminating non-valued added activities and better capitalizing at customer moments of truth
- To aid strategic planning by applying customer insights to evaluate and prioritize growth strategies, business priorities and market opportunities
- To improve product planning or Research and Development (R&D) with voice of the customer (VOC) input
- To supplement quantitative market data with qualitative insights
- To improve marketing communications, offers and content by leveraging data such as role-specific pain points
- To aid customer strategies and customer-centricity
- To support sales methodologies such as The Challenger Sale model which is built upon customer insights
When used together, customer segments improve marketing campaigns, attract more qualified prospects and improve other top of the funnel marketing activities. Once a lead is acquired, customer insights apply known customer motivations, behaviors, emotions and actions to better engage, convert and retain customers.
Customer segments and personas are not substitutes nor mutually exclusive, but they are clearly complimentary in aiding business growth strategies.