Can you share your experience about segmentation and personas definition?

I’ve typically seen segmentation and personas fall flat in one of two ways: either they were purely based on readily available internal data (usually, transaction or product-focused), or they were purely based on external interviews and didn’t come with a perspective on how representative they were of our customer or prospect base.  The result: Sales uses one, Product uses another.  To drive towards maximum alignment of “who is our customer, and what do they care about”, it’s important to merge both of these approaches.  

My recommendation would be to start with one or the other, depending on whether you have a mature customer (start with internal data) or nascent (start with market data/interviews), but quickly merge the two and build from there.  For example, if you see clusters of product behavior, what hypotheses do you have of the needset that would drive that behavior?  Source a few interviews, and test whether you’re hearing that in the market.  If so, keep pushing in that direction.  If not, you should refine the way you think about that specific product data.  And so on.

In our more mature customer base, I work across 4 steps:

1. Feature usage analysis to shape quant/qual market research (sampling and questions)

2. Quant market research to identify coherent segments of the population, and what makes them in common

3. Qual market research to bring those segments to life and develop product personas

4. Deeper dive with sales to make those personas about specific buyer types (as necessary)

Segmentations and personas both have a role to play in informing product strategy and targeting for marketing.

Defining segments is more of quantitative exercise with a primary goal of optimizing your business and operating model. Typically, I couple an external prospect survey with internal data on how existing customers interact with your product. You're looking for attributes that are correlated with customer outcomes and behaviors. Some key dimensions for segmentation include purchase behaviors, customer barriers to entry (i.e. switching costs), demographics, and jobs to be done. Note that most companies will have multiple segmentations to drive different business decisions, such as retention segmentations identifying high attrition risk segments versus market segmentations which are focus on prioritizing who is your addressable market.

Defining personas tends to be more of qualitative exercise leveraging focus groups and customer interviews. In this case, some of the important dimensions can include lifestyle, attitudes, and motivations that humanizes the segment(s) you are trying to reach. These help inform marketing messaging, creative, and tone that ensures your company can connect with real human beings versus statistics.

I have a 5-step approach that i've developed over time. It does change based on the situation, but the main flow typically stays in tact. I presented this at an event, so you can watch the full breakdown here. https://play.stuff.co.nz/details/_6208820879001

Vanessa’s 5-Step Approach for Successful Positioning, Segmentation, Targeting, and Persona Development.

1. Have an opinion
2. Know your customer
3. Know your use case
4. Persona Development
5. Build your winning position

We think about this as a layered approach, of which time is an important consideration. Here are some ways to think about the differences:

• Jobs To Be Done (JTBD): Essentially, what is the 'job' someone is 'hiring' your product to do? What is the outcome they're looking for? This is extreme helpful when you need something actionable, fast. In fact, it's good to consider this as a preliminary research step so that you have a clearer picture of your audience when developing a Segmentation RFP
• Personas: Allow you to paint a picture of who your audiences are - great for internal education among a broad range of internal stakeholders. Personas leverage quantitative data but also heavily uses qualitative data to support narrative empathy-building with customers. I've found Personas to be especially helpful in a b2b context - you can leverage LinkedIn to cultivate keyword trends and definitions across job types, which can be further useful for account-based marketing and sales training / enablement.
• Segmentation: JTBD and Persona work can be layered into (broad) segmentation analysis, which can go even deeper. In fact, the inputs we receive from the JTBD are critical so that we have confidence in some of the underlying assumptions. Segments should be constructed with the key differentiating inputs and contextual information already in hand, so they can be powerful and easily relatable across for teams to execute on. 

It's helpful to think of personas as fictional representations of buyers and users that tell the story of the top decisions, needs, and motivations that must be present for your product to retain customers.

Segments tell the story of how developing clear use cases and meeting requirements make your product relevant in a market. Certain segments are more valuable because with them you're growing margins: the same marketing budget invested in these segments results in steadier growth and greater retention over time.

Overarching both, the ICP tells the story of why focusing on the right segments will (a) shape market perception in your favor in a category and (b) give you the market insights you need to stay valuable and relevant when personas change and segments shift.

I take a three-dimensional approach to customer segmentation. Within any given "traditional" segment (industry, size, geography, etc.) I look at three things: What problems my client's product solves, the stakeholders involved, and what incentives those stakeholders are responding to. 

@Greg Hollander is absolutely right that these often fall flat, but I would expand upon the reasons for that happening. With personas, what I often see is an incorrect assumption that the interests of the customer as a whole, and those of individual stakeholders, are in alignment. On the segmentation side, I think there is too much bias towards segmenting by traditional metrics, instead of segmenting by problem. 

Greg is also 100% right in his assertion that information must be gathered internally and externally. I learn sooooo much talking to my clients' sales/marketing/product teams AND their customers. Combining what I'm hearing in both arenas really helps develop a picture of "what's really happening" from an observer's standpoint.