How to think about segments and personas
In my coaching and teaching PM courses, some things always come up as point of confusion to new PMs.
One of them is the confusion between Segments and Personas.
It’s important to differentiate between customer segments and personas as these concepts are foundational for effective product management and marketing strategies.
Let me explain.
Customer Segment
For the purposes of B2B, customers mean companies. Let’s say you are building software for marketing automation, then your customer could be a company like GE or JP Morgan or a small agency, maybe a real estate agency. The product is paid for by a company.
The company has its own customers which could be other companies or individuals. These are respectively called B2B2B and B2B2C, but let’s leave that out of this discussion.
For the purposes of our discussion, we are selling to business customers.
Customer segments are broad groups of customers that share certain characteristics and needs. These segments are usually defined based on demographic, geographic, psychographic, or behavioral factors.
Examples:
Industry: Companies within the technology sector vs. those in healthcare. VMware, Dell, Microsoft are all in the Technology segment. You can further niche the segment – AWS, Azure, Google Cloud are in the cloud infrastructure segment.
Blue cross or Anthem are in the insurance payor segment of the health care industry. Whereas a hospital or a Pharma company are the provider segment.
When you define your target segment, you need to be specific who your product is for. If you say health care segment, then it’s very broad. Your product requirements will not be specific and your marketing and positioning will be vague.
Company Size: Small businesses (1-50 employees) vs. large enterprises (1000+ employees). An agency or a small manufacturer could be considered small business. JP Morgan, Tyson foods, GE are large enterprises.
Depending on who you want to target your product will vary. Enterprises want more security, auditing, SSO, reporting, training, change management etc. Whereas SMB wants to quickly get to value with minimal resources.
Geographic Location: North American companies vs. European companies.
Your product will need additional capabilities if you decide to choose a segment beyond say North America. Language considerations, GDPR, other regulatory etc. If you say your product is for global customers, then you need to be sure you cater to their specific needs.You may consider Uber and AirBNB to be global companies but they approach each geography as a separate segment. The underlying platform maybe largely the same, but there are uniqueness and nuances in each geography.
Business Model: B2B companies vs. B2C companies. Salesforce, Hubspot are B2B companies because they sell to businesses.
Colgate, Netflix, Amazon are B2C companies as they sell directly to consumers.For a B2B product manager, understanding customer segments helps in identifying the common set of product capabilities and marketing/positioning it with the right messaging.
For instance, if you a are a PM for a CRM tool, you might target a specific segment say, small businesses. Now you can tailor your sales and marketing strategies accordingly. Even the product could be different. For example, an eSignature tool for real estate professionals might be different than for corporate procurement. The workflows are different. The reporting might be different.
The key thing to understand about segment is that the customers in that segment have similar needs and the same solution will work for them. And the way you position and message your product is also the same in that segment.
As a startup, you always want to start in one segment. I wrote about this in a separate post for startups.
As you grow, you will expand to other customer segments. These could be related segments or completely unrelated.
For example, you are building a software for real estate agents to manage their campaign. Over time you may advance to a related segment of say property managers who may have similar needs. As a startup, you don’t want to start in both.
Amazon started in Books and then went into other related segments like music and movies. Then they went into a completely unrelated segment – cloud computing.
Persona
Examples:
Emily, the Marketing Manager
Industry: Technology
Company Size: Medium enterprise (200-500 employees)
Goals: Improve lead generation and tracking
Challenges: Integrating marketing tools and demonstrating ROI
Behavior: Prefers detailed analytics and easy-to-use interfaces.
James, the IT Director
Industry: Healthcare
Company Size: Large enterprise (1000+ employees)
Goals: Ensure system security and compliance
Challenges: Managing multiple software solutions and ensuring data privacy
Behavior: Values robust security features and seamless integration with existing systems.
For a B2B product manager, creating personas helps in developing a deep understanding of the specific needs and pain points of different types of users within a customer segment. This, in turn, guides product development, user experience design, and personalized marketing efforts.
Imagine you are building a CRM application (Customer relationship management) and the primary audience is the sales team. There are many personas involved in a sales team ranging from SDR, Account reps, Sales leaders, sales operations etc.
Let’s pick two personas in a typical sales team. (There are umpteen variations of sales orgs but most typically follow this model)
SDR or Sales Development Representative (or sometimes called BDR)
AE or Account Executives (or Sales Rep, or relationship manager or account manager)
Apart from the skill sets and experiences, their goals are different. An SDR’s main goal is to make appointments. They cold call a prospect and do enough convincing to create a meeting of the prospect with the AE, who will actually make the sale. SDRs typically have a target of making 50 calls per day. So speed is extremely critical for them. The product UI design would have to allow for just enough information required for them to make a successful cold call. Once they complete a call, the product should allow them to get to the next call without them having to figure out who to call next.
An AE on the other hand are relationship builders. They may typically have 10-30 accounts to manage. When they have a meeting with a customer, they want to have a complete picture about them – how long have they been a customer, what products have they purchased, what are the new opportunities for expansion, how many service tickets are open and for how long, what’s the adoption of the users and so on. When designing the product requirements, it is important to maximize customer information so that the AEs have all the required info at their “finger tips”. Arming AEs with 360 view of the customer makes them a better sales rep and allows for a better customer experience, in addition to helping increase sales.
As you can see, both personas are sales people but with vastly different objectives which then provides the basis of building the right products.
Both are in the same segment. My previous company was in the CRM space and their primary customer segment was a medium sized enterprise. In this segment, the personas the product catered to were – SDRs, Accounts reps, Sales Ops and executives.
Key Differences
Here are key points to differentiate the concepts of segments and personas.
Example in Practice
Imagine you are managing a project management software:
Customer Segment:
Industry: Consulting firms
Company Size: Mid-sized businesses (100-500 employees)
Personas within that Segment:
Anna, the Project Manager
Goals: Streamline project workflows, improve team collaboration.
Challenges: Managing remote teams, tight deadlines.
Behavior: Uses project management tools daily, values integration with communication platforms.
Brian, the CEO or the Managing Principal
Goals: Ensure projects are completed on time and within budget, gain insights into project performance.
Challenges: Limited visibility into day-to-day project issues, balancing strategic and operational responsibilities.
Behavior: Uses high-level dashboards, prefers mobile access to project reports.
You will build the software for the professional services segment and the product features will include specific capabilities for the principal and project manager roles.
The value the persona receives is to better manage their products.
The customer receives value by managing all their projects in a profitable manner.
All customers in that segment have similar needs.
Now, if you decide to change your segment e.g. build project management software for construction companies then your product capabilities might be a different. The persona’s will likely be similar – a project manager and a principal. And their specific needs will be a bit different than for the professional services firms.
What about B2C?
My explanation and examples above are relevant for a B2B business. There is a clear distinction between the scope and purpose of segments and personas.
In B2C, the distinction can be a bit narrow. Let’s say you are building a mobile app for working professionals to manage their daily tasks. In this case the customer segment you choose (e.g. C level execs in Fortune 2000 companies) is the same as the user/persona.
But if you are building say a mobile education app for small children, then your segment is small children or families with small children. The user persona is small children but also the parents, because ultimately they will control the purchase and the experience of your primary persona.
Conclusion
Segmentation helps you with your go to market and positioning. It helps you focus on what product to build and what capabilities are important for the segment.
Personas help you build the right product capabilities and the user experience based on the actual users. Each segment will have one or multiple personas. Each persona has unique design or product needs.
For more on persona based design, read my previous article.
