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“The right moment to get a map is before entering the woods”

What role do expectations, segmentation, and buyer personas play in the process of customer satisfaction?

Being customer-oriented means developing a mindset that puts customers with their needs and expectations at the center. Ideally, one should not even start conceiving a product, or worse, creating a company without having reflected on this point, without having a clear understanding of what customers expect from us.

Expectations and the “comprehension gap”

The reality is quite different. All companies start with a product or service and try to offer it to the market. This is natural and cannot be avoided. Companies are always driven by the entrepreneurial idea, a belief that there is space in the market for a new product or service. If not entirely new, at least made differently. An alternative, compared to what already exists.

The problem is that even when some analyses are done before the startup, generally they focus on the existing competition and try to create a product or service that is better than that of the competitors. The culture of starting from the customer is difficult to develop.

This is partly because entrepreneurs have the presumption of understanding how to create a product or service. And also because, objectively, analyzing the needs and wants of thousands and thousands of people is not easy or it is too expensive. It would require a huge investment and it would require management and data analysis skills that most of us do not possess.

The consequence is that even though we all say that the customer and their needs and expectations should be at the center of our activity, it’s one thing to say it, and another thing to know them deeply. This is the first gap that prevents us from reaching customer satisfaction: the comprehension gap.

It means that for various reasons, usually they are true optical illusions, we cannot understand or misunderstand what the customer expects from us. And obviously, starting in this way makes it difficult to satisfy them downstream of all the processes we will activate. If the first step we take is in the wrong direction, it will be difficult to reach the right destination.

So what do we do? How do we simplify something intuitively difficult and costly? How do we overcome the objective difficulties inherent in understanding customer expectations?

We need to study it.

And to do this, we can follow 2 approaches: top-down and bottom-up or, to use the terminology of a dear friend and colleague (thank you Giorgio!) knives and glue.

Understanding expectations, approach #1 – Knives (top-down)

We start from the market as a whole and through successive approximations, we apply filters that cut away part of the individuals who make it because they are not interesting for our organization.

These filters are our “knives”.

So first of all, we need to ask ourselves what are the boundaries of our relevant market. Or the market that we can physically reach thanks to our structure (first knife) and eliminate everything else.

What will be the real extension of our market?
How many customers can physically come into contact with us?

If we have a physical point of sale it’s one thing, if we have a physical point of sale and a website it’s a slightly different matter. If we have a mailing list, we add elements. And what about social media?

Okay, you got it.

Then we must consider that the market is made up of people and people are not all the same. So we have to find criteria (second knife) that help us to separate those who are our potential customers from everything else. What can these criteria be? We could use a demographic criterion (for example, males vs. females, or young vs. less young, etc.), or focus on income brackets (for example, wealthier vs. less wealthy) and educational qualifications (for example, graduates vs. non-graduates), separate people based on their approach to life (hedonists vs. …) or even based on their relationship with us (not yet customers, first-time buyers, returning customers, loyal customers).

Ideally, we should find a combination of these criteria that helps us to isolate groups of customers (segments) that we can consider homogeneous in terms of expectations and evaluate whether to develop offers addressed to them.

So summarizing

  • Evaluate the size of our relevant market
  • Classify customers based on parameters that help us identify groups characterized by homogeneous expectations
  • Build a representation (for example, a table) that shows these groups as crosses of variables (segmentation)

This, in summary, is segmentation, which should be the basis of every attempt to decode the expectations of our reference market. But it is not very easy to do, there are a series of steps that are not immediate from a conceptual point of view, and it requires the application of non-trivial mathematical-statistical skills.

As a result, too often it is given up and people are satisfied with dividing the market based on very easily applicable parameters (geographical, dimensional, gender-based), presupposing, illusorily, that behind these parameters there are customers who think in the same way.

Understanding expectations, approach #2 – Glue (bottom-up)

An alternative way to approach the issue is to start from the end. If the goal is to create homogeneous groups of customers, let’s try to describe these homogeneous customers as if they were real people. Starting from what we know, from the data we have because we can find them within our customer database (they are customers who already buy or have bought in the past) or in the corridors of our offices in the conversations that take place daily and in the anecdotes that are told.

This is simpler. And if you’ve heard of Buyer Personas, well, it’s an elegant and fashionable way to talk about the result of the approach we call glue. It is about defining 4 or 5 profiles of typical customers, different from each other, and then going by similarity considering them as centers of ideal clusters of similar customers.

In describing these typical customers, we can follow very simple patterns, remembering that when we have the data we must use the real one, when we don’t have it we can safely try to make reasonable estimates. The rule, in this case, is to try to create realistic representations, also giving a name to the person, and trying to find a picture online that represents them so that every time we work on that type of customer, we have a real person in front of us

  • Who has a name and a face
  • Who has a family and a life
  • With real concerns
  • With objectives
  • etc. etc.

If we can describe our customers in this way, it will be easier to design products, services, content, and actions. We will be doing it for a real person with their strengths and weaknesses, fears and objectives, etc. etc. It doesn’t matter if this specific person doesn’t exist. However, there will be many people who resemble them, and every time we do something for them, we will also be working for everyone else.

If we start from our customer database, we refer by definition to people who are part of our relevant market. People we know. And above all, importantly, who know us.

Next step: how to design value

This is the conceptual connection between expectations, segmentation, and buyer personas. Understanding customer expectations is probably the most important theme for working on customer satisfaction. Segmentation and buyer personas are two alternative techniques for aggregating homogeneous customers in terms of expectations and therefore creating the conditions to achieve it.

The two techniques have pros and cons. Segmentation is probably more rigorous but to apply it well we need a set of resources and skills that probably the typical company does not possess. The technique of buyer personas can also be applied by investing very little, at least in an initial phase, but it presupposes a culture of data and information that needs to be designed and built.

Regardless of the technique used to classify customers and understand their expectations, the next step is to design value, and how we will satisfy them.

We will talk about this in the next episode.