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Most sustainable businesses in the world are built around one thing: The customer...
Most sustainable businesses in the world are built around one thing: The customer. You may remember the iconic quote from Walmart’s founder Sam Walton:
“There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”
Growth led by retention is a key indicator that you are indeed building a great and sustainable business. Retention is a fairly simple phenomenon — When your core product experience brings your users back time and time again, you gain some incredible advantages. But, according to a 2013 study by the Edelman Group, companies failed to understand some fundamental motivations and concerns their customers have. The study found 51% of respondents felt companies are under-performing when it comes to understanding their needs.
You may be wondering how you can avoid this pitfall of not understanding your customers. Well! Enter Personas. They are one tool to help you and your team understand who your customers are and why they choose to come back to your product. This is the first post in our product series on personas, we will dive deeper into how you can build an efficient customer persona in subsequent posts. Here, I will share some of my experience, and principles learned from high growth startups on how you can start to leverage personas for high growth.
You learn a lot about your customers while searching for the elusive product-market fit. You look at who actually gets value from the product, then redefine the market and continue to refine the product. But as a high growth startup, you also tend to acquire customers you didn’t intend to build the product for. The tendency early on will be to just go after everyone who intends to use the product. This indecision or wishful thinking of everyone being our customer becomes a barrier to growth. This can be seen in your product teams struggling to prioritize, or customer success teams fighting fires.
According to Brian Halligan, Co-founder & CEO, Hubspot: In the startup days of HubSpot, the team argued for years about which target persona to pursue. They were toggling between focusing on marketing manager types at midsize businesses and focusing on small business owners wearing multiple hats, including marketing. This indecision meant the marketing and product teams had to serve multiple masters — and ended up creating middling solutions for each of them. Once they ripped off the Band-Aid and decided on one persona, the marketing and product teams could focus their efforts and craft the perfect solution. They had delighted customers more, the close and growth rates went through the roof.
So, what did Hubspot teach us? Hubspot’s Target personas went beyond the demographics and psychographics normally associated with target markets. Their Personas focus more on the specific needs, pain points, and buying process of your ideal prospects and customers for stellar outcomes.
Persona as a practical tool to develop great user experiences was formally introduced first by Alan Cooper in his book, The Inmates Are Running the Asylum (1998). For the uninitiated, Alan Cooper was an early software entrepreneur who authored several business applications including an early, critical-path project management program called SuperProject. Cooper sold SuperProject to Computer Associates in 1984, where it achieved success in the business-to-business marketplace. He is also considered the Father of Visual Basic, which was created when he sold his Ruby Visual programming language to Bill Gates to create what we know as Visual Basic.
Cooper play-acted fictitious characters to help solve design questions. But today, Creating personas has become synonymous with creating a document, known as persona profile, instead of an “activity of empathetic role-play”. According to Cooper, the best personas are created by deliberate research and understanding of data — both qualitative and quantitative. In the last decade, we have seen jumps in terms of how we research and understand our customers. In the age of growth, outside traditional data like demographic or general analytics, 2 sets of data become highly critical to crafting your growth personas.
Behavioral data: This is the grouping that can be on the basis of how much your product is being used/consumed by the customer. Hence, the usage frequency is considered an integral part of behavioral segmentation. If you have not done already, start collecting behavioral data today.
Experiential Data: This is the qualitative aspect of data that shows “Why” your customers are using your product today. This is accomplished by talking to your current customers from the above cohorts and through customer success teams.
The two big goals of studying your current users are:
I promise this is the last of the key principles. As it is with every other strategy or framework, Personas aren’t a one size fits all. Different types of companies at different phases use different styles of personas, and even different teams within a company use and refer to personas differently. Primarily understanding the different terms helps us avoid analysis paralysis.
Personas for companies:
B2B SaaS and marketing teams focus on what is generally considered a Buyer’s persona. As enterprises the first level of growth is finding and impressing upon the buyer of the software product, understanding the buying environment, behavior and triggers become key to close and growth rates.
B2C and Design teams focus on User Personas. The key lever of growth for consumer companies tends to lie in user growth and adoption. The same applies to success of the product’s design i.e. success of a design team. This leads them to think towards the needs and behaviors of the archetypal user to better cater to their needs.
User segments, or customer profile, although rare in today’s product-driven world, they were commonly found in sales-driven organizations of the yore. Often, the term Persona is used interchangeably with Customer Profile. So, what’s the difference between a Customer Profile and Personas? The difference between the two terms is the Customer Profile is a shallow version of a persona. It mostly consists of demographic data accumulated from market research. The conclusion from that research is a particular group of people you know want, and can afford, your product or service. Personas however go deeper into Jobs to be done, emotional needs, motivations, goals. Hence, this style is not recommended for organizations that crave high growth.
With the above in mind, we at Accel’s venture development team have been co-developing a hybrid framework with fast-growing startups which we endearingly call: The spiral model. We will demystify and see how to construct these rich personas for your product in future posts as part of our personas playbook.
Growth is possible only when we have relentless repeatability. Prioritized focus on scalable process, measurement, and fine-tuning of every step leads to predictable growth. — Shekar Kirani, Investor, Accel
In conclusion, the fastest way towards growth is by sharpening your tools and making it repeatable. By building a deep understanding of customers through personas will provide meaningful repeatability that you and your teams can use to assess your product development against. Constructing personas will help you ask the right questions and answer those questions which drive 3 outcomes that are essential for High Growth:
1) Lightweight clear thinking
2) High-velocity decision making
3) High-quality prioritization
Need help building Personas to fuel growth? Follow our series on the topic.
If you are an #AccelIndia founder experiencing high growth and feel the need to build personas, please reach out to our venture development team at:firstname.lastname@example.org .