During the early days of Hubspot, co-founder and CTA Dharmesh Shah would bring a teddy bear named Molly to important meetings. Molly represented one of the company’s key buyer personas. Hubspot is passionate about building products that make it easier for marketers to succeed, and Molly helped meeting participants focus on the goal: serving Hubspot customers and potential customers.
Hubspot has gone on to become a $2.25 billion company used by tens of thousands of customers across the globe. Creating buyer personas helped Hubspot find success, and it can help your organization achieve better marketing and sales results. Here's how to develop buyer personas capable of helping key decision makers in marketing, sales, and product make smarter decisions.Create Strong Data-Collection Rules
Creating better buyer personas requires data analysis, but if your database is "dirty," it will be impossible to create accurate personas. The first step is to ensure that good data governance is in place. Salespeople should be required to answer specific pieces of information about each deal before advancing it in your company CRM. Information related to industry, job function, company size, company revenue, business location, and how they discovered the product or service is critical to the next step of this process.
When possible, this information should be automatically filled in using a data-enrichment tool, or through rule-based fields in your CRM. Automating data input reduces the number of mistakes salespeople make when entering information.
When it is not possible to automate data entry, it's best to rely on drop-down fields rather than text fields in your CRM. Text-based fields make it harder to analyze data about your customer. It's preferable to have salespeople select from a list of predefined options while providing a text box for salespeople to elaborate on a specific point if needed.
Segment and Analyze Existing Contacts
Before building better buyer personas, your team must understand how current prospects and customers are serving company goals. Once that knowledge is in place, it becomes much easier to build buyer personas, since you and your team will be confident that the personas are aligned with future company goals. Below are a few types of analysis you should conduct before building personas.
The best way to begin segmenting data is by industry type. You can easily collect this information, so it should be present in your CRM. This category that can influence other important metrics like deal size or cost to serve. Analyze the number of industries represented among customers and prospects, then categorize these industries into statistically significant groups. If you only rely on a set of industries listed on LinkedIn or via tax codes, it can create too many industries that end up dividing contacts into small and therefore insignificant groups.
- Deal Size
Before creating a persona, it can be advantageous to know which personas provide the most revenue. That's why it's a good idea to analyze customer and prospect data to see which industries yield the biggest deals. It also makes sense to see which industries produce the greatest number of deals, and which industries contribute most to total revenues.
- Cost to Serve (CTS)
How much does it cost to serve customers of various deal sizes from various industries? Who are your most profitable customers? What is your break-even point for each industry? Those are a few of the questions you’re trying to answer when calculating CTS.
Note that there are several different ways to calculate this (and the next item, CAC). Essentially, you can either use a "fully weighted" model to determine CTS, which takes into account fixed costs, like rent in addition to salaries, or you can choose not to. Either way, understanding CTS will help you know which customers become "problem customers" and which customers cost your business less.
- Customer Acquisition Cost (CAC)
Similar to CTS, there are different ways to calculate CAC. As with CTS, a good approach is to do a fully weighted CAC calculation, including salaries and overhead for your sales and marketing team. Once complete, segment CAC costs by industry.
- Market Size
This analysis will help you understand where the most opportunity is concentrated in your industry. Is capital for a tool or service offered by your company more concentrated among big or small businesses? Are these organizations located in a specific geographic area? Are these companies in a specific industry?
Is it better for salespeople to speak with prospects from a specific department? Do the most profitable prospects hold a similar role within the organization? Understanding these answers will help your marketing team know whom they should target to provide the best possible leads to sales.
Interview Customers/Prospects from ICP
Once this analysis is complete, and you have determined one or more ideal customer profiles (ICPs), your marketing team needs to begin interviewing customers and prospects who fit the profile. During the interviews, you'll want to understand what content interviewees consume to learn more about their industry. You'll also want to understand how they select products or services, and who needs to be involved in the decision-making process to make a deal.
Operationalize Findings Among Marketing and Sales
The process of creating better buyer personas can be challenging, given all of the data you and your team will want to collect to be sure you're targeting the right people. Once the analysis is complete, the most important phase begins—operationalizing findings. It's important that the sales, marketing, and product teams (if they exist at your company) understand the relevant conclusions. From there, these teams need to create a plan of action to incorporate findings into their overall strategy.
Last Word—Making a Significant Impact
The only way to be sure that your business is working to attract, sell, and serve the right customers is through a process like the one outlined in this article. Once your team has analyzed the data and operationalized the findings, these better buyer personas can make a significant impact on several business units. This impact can help ensure that everyone is working to engage and serve the right buyer personas.