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Mar 19, 2008
How To

How to Use Personas to Lift Revenue 500% in 7 Easy-to-Follow Steps

SUMMARY: Imagine if you could promote your products or services to only three types of people. It would make marketing so much more focused.

With personas, you can do that. See how one marketer narrowed his customers into three distinct profiles and saw results, including a 500% increase in products sold in one major category.
Customer personas have been around for a while. You create a profile of a key segment of your customers as if they were one person. For instance: “Bob” might be a white, 38-year-old male with an income between $50,000 and $70,000, a college degree and a golfer who buys your product monthly. Personas be as simple as “Bob” or they could be much more complex.

Personas can help you understand and predict the reactions and desires of your key customers. They can guide your thinking on website design, ad design, messaging, product assortment and almost any interaction with your business. You could ask yourself: Would Bob like this?

The in-depth metrics of online marketing can help to design stronger personas than ever before. Click behavior, referral websites, purchasing behavior, email opening habits -- they can all be used to flesh out a persona.

Jim McLaughlin, Director Business Development, H2O+, started creating personas about four years ago for the skin-care products retailer. “You’ve to go to sort of understand all the other personas to take a balanced approach and try and achieve one objective and not diminish another.”

Here are the strategies McLaughlin and his team used to come up with personas and how they turn to them to guide their marketing and website design decisions.

Mold the Personas

-> Step #1. Start with what you know

You’ve been selling products to your customers for a long time, so you have a good idea already of their likes, dislikes and demographics. Before digging into your data, sit down with your marketing team and brainstorm your customer types. Focus on what you think are the most important demographic and psychographic attributes.

Ask yourself:
- Why do they buy our products?
- How do they find our products?
- How much do they buy?
- How often do they buy?
- How old are they?
- Where do they live?
- Are they male or female?

-> Step #2. Talk to people who interact with your customers

Employees on your staff who regularly receive telephone calls or have direct contact with customers will likely have information on your customers. Ask them to describe five or six typical customers and their characteristics.

People to ask include:
o Customer service reps
o Sales people
o Technical support reps

-> Step #3. Dig into your data

If you’re an online retailer, a great deal of data is available to your team.

You know:
o Search keywords customers use to find your business
o Customer demographic information
o Preferred products
o Order size
o Order frequency
o Click habits

Use all of this data either to confirm or disprove the assumptions you and your team and other employees make about your customers. Look for consistencies.

For example, you might notice that customers who order product A consistently buy more frequently, or customers who buy product B consistently have larger order sizes. These are possible personas. Look into the product A customers and see if there are more commonalities in the data.

“Sometimes the data points are a little less obvious,” says McLaughlin. “We had observed in reviewing sites, top referring sites to our website … that some high percentage, maybe 50 out of the top 100 sites were dot-edus. That’s where we first got the inkling that there was some commonality, that there was some trend there and allowed us to kind of ask a few more questions and kind of fill in the blanks.”

-> Step #4. Identify the holes

After you find commonalities in your data, you can begin to see the skeleton of a persona. Write down what else you need to know about this “person” to get a full understanding of who they are.

“For us, it was ethnicity, which is something you could be afraid to ask, but we needed to know,” McLaughlin says. “We asked a group of consumers, and kind of got a statistically accurate portrayal in terms of ethnic breakdown of our consumers. And that helped us on some of the blanks.”

-> Step #5. Fill in the blanks

After identifying what you know about your customers, you can conduct research to fill in the gaps. You can do this with surveys or even product registrations on your website.

“I would recommend to actually sit down with some of these customers and interview them,” says McLaughlin. “Asked them some probing questions to understand what their makeup is and subsequently run through a usability test on the website and see what they think of some navigational features and the way that the products are merchandised.”

How did McLaughlin get customers to be so forthcoming? “Through the analytics, we were able to identify some people that lived locally … that were big dollar purchasers, frequent purchasers. We loaded them up with some free products and perks and a [facility] tour and sat them down and listened to their concerns and feedback on things. You usually find that if a customer is an advocate that they are very much willing to do this.”

-> Step #6. Name your personas

Once McLaughlin and his team determined their personas’ characteristics, they named them appropriately:
o Julie
o Soo
o Cathy

-> Step #7. Refine personas

Your customer base is not static. It’s going to change, so you need to repeat this process. McLaughlin updates his personas about once a year, and he’s still refining his current personas and discovering others.

“Every once in a while, we kind of find something new and layer it on to the persona,” says McLaughlin.

Selling to 3 Customers
McLaughlin’s three personas guide his marketing efforts. Each has a different makeup, buys different products and has different motivations.

- Persona #1: Amenity referral, aka ‘Julie’
H2O+ started developing hotel-amenity relationships about two years ago. It puts H2O+ branded amenities like shampoo, lotions, conditioners and soaps into bathrooms in each hotel room. The relationships encourage product trials by hotel customers who McLaughlin hopes will then order online.

“Interesting for us, the consumer that we found most often to be doing that definitely had a different profile than an existing consumer. In the case of an amenity referral, her objective is to buy shampoo. While we didn’t have a hair-care section [of our website], it was sort of a sub-category of our spa brand, we created a unique section for hair care, gave it primary navigation.”

- Persona #2: Mandarin Chinese consumer, aka ‘Soo’
H2O+ is popular in East Asia, particularly mainland China and Hong Kong, says McLaughlin.

“[Soo’s] preferences are very different from a traditional domestic customer or an amenity referral. She buys [premium-priced] facial skin-care products, and maybe will venture every once in a while into a bath and body category,” says McLaughlin. “What we’ve learned, though, from some various surveys, interviews, is that a large percentage of them are college students, Chinese college students.”

The facial skin-care products that interest Soo are not typically sold by H2O+ in the United States.

“But understanding we had that consumer, we really augmented our assortment online to include those things,” McLaughlin says. “This is a merchandising decision we’ve made based on a persona, and that certainly paid off for us because we do very well in those products that are very niche ethnic products.”

- Persona #3: Legacy customer, aka ‘Cathy’
Cathy is more likely to have discovered H2O+ in a retail store. She has been a customer for 10 years and comes to the website to get more of all of her favorite products.

“75% of her purchases are in the bath and body category and 25% of her products are in facial skin care,” says McLaughlin. “A lot of times, there are two or three products on her list that she always buys, and eventually she could find another product and go away, just by boredom. What you try to do is get her to try new things. So, in terms of retention for that consumer is to try to cross-sell her, ideally into facial skin care. That gives us a higher average ticket.”

Balancing the Website
H2O+ redesigned its website about 18 months ago, completely changing the aesthetic feel and navigation based on the three personas McLaughlin and his team had developed.

“It’s a tough balance because you’ve identified three consumers -- one of them buys 75% skin care, one of them buys no skin care, yet the other one buys 75% bath. These are very different categories in the way they’re marketed,” says McLaughlin. “We try and balance the communications such that at any given time we are presenting a mix of skin and bath, not that we don’t ever do one or the other. We try to cross-merchandise to the extent we can.”

For example, they might try a bath promotion on their main ad, and their best-selling facial moisturizer is featured in a kicker ad (see hotlink below for creative samples).

“When we do an email, we will try and do -- if we’re doing an email promotion around bath, we’ll do skin-care sampling, maybe it’s a free sample. We’ll try to cross-promote that customer by sampling as well,” says McLaughlin.

Why Use Personas?
Well, that’s easy enough. Because they work.

McLaughlin and his team have seen significant results by marketing to the 3 personas they developed:
- Hair-care product sales have increased from 3% of total revenue to nearly 15%.
- Total number of hair-care products sold has increased 500%.
- Total revenue is up 5% alone by simply catering to the “Soo” persona.

Useful links related to this article

Creative samples from H2O:
http://www.marketingsherpa.com/cs/h2o/study.html


Past Sherpa article: My Shoe Fetish & Why Personas Are Invaluable for Marketing:
http://www.marketingsherpa.com/article.php?ident=29708


H2O+:
http://www.h2oplus.com/retail2002/Catalog.aspx





See Also:

Comments about this How To

Mar 25, 2008 - Shel Horowitz, ethical marketing consultant/author of FrugalMarketing.com says:
Once you've identified personas, it's good to have a way to channel the into different experiences, with custom-tailored messages. I find the "triage homepage" a good tool for this: by asking a question right at the beginning, you can resent tailored information very easily. As an example: www.grassrootsmarketingforauthors.com



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