BottomUp - Skills for Innovators

Define users and customers through four powerful lenses: demographic, psychographic, behavioural and geographic segmentation. Bring the user's story to life through personas.

Show Notes

Hello, and welcome to the bottom up skills podcast I might pass since I'm the chief executive officer at quality assurance. And welcome to our sixth installment of our design thinking series. And today we're really going to get stuck into a really neat part of the design thinking process, which is really understanding our users, really understanding and defining the different segments within our users and bringing that story to life in personas because.

If you're listening at this six installment about design thinking podcast, you'll notice that previously we've talked a lot about all the quote unquote research where you can just go really deep into the world of, of customers, of users. Um, you can even survey employees. It doesn't matter who the end user is.

Uh, you know, the classic survey and interview combination reveal so much. But at a certain point, you've got to bring it all together. You've got to make sense of it all and defining the user and the user segmentation. Okay. Is a key step in the journey for designers, entrepreneurs, builders, executives.

It's all part of your journey. As you go to build a brand new product and let's face it building brand new products. Wow. That's the fun stuff. Uh, that's going where nobody has gone before. So if you're going to take on such a bold challenge, then it is super, super important that you have a really good grasp on the user.

So I'm going to show you how to do that. Using some design thinking best practices and, um, the more rigor you put into defining the user, the crazy thing is everything. Down the track, what you designed, what you develop, what you build, whether it's digital, analog, how you launch it. What's really interesting is.

It always just comes back to for whom are we building this product? Whom for whom are we building this service? Um, this business, no matter what it is, if you always anchor yourself in the user, the customer and having an enormous understanding and empathy. For the world that they live in rather than the world, or you as a creator live in the world, your customer, the world, your user lives in.

If you know that you can always just come back to that and get yourself back on track. If you get lost on this big adventure of building brands, okay, I'm going to give you a. Two real powerful goodies today, a bit later on, we're going to get into personas. Um, but we're gonna start with this idea of segmentation and there's actually four pillars of segmentation.

And the thing that strikes me so much about small and large, old and new businesses, invariably. I am struck by how much more work they could do to know their customer. And so if you really tune into these four pillars that I'm going to give you, I'm going to give you lots of examples. Um, you can spend a lot of time.

Refining defining, getting to know your customer through these. And this is like an ultimate checklist. And if you know this, uh, if you feel this, understand this about your user, you will, you will intuitively you'll subconsciously start building something to address their problems. And the reason I believe this, so I think end a vast majority of us all want to build a product.

That's great. We all want to build a product that's solving a problem, and we all take enormous pride. When we know the products that we've built can really serve the customer. So let's get to know who that person is. Four buckets here. They are the demographic bucket, the psychographic bucket, the behavioral bucket, and the geographic bucket.

These are all ways to segment your user group. This is a forensic checklist, and I'm going to take you through on how you need to know your customer. Now, um, when you hear, you know, demographics and geographics, I think those are pretty common and pretty straightforward. Invariably, this will be where most companies understand their customer.

Val, generally, no, let's say if we're talking about a consumer brand, a consumer product, then invariably, they're going to know roughly a core age demographic that is. Sort of the pillar, like what age are our customer, uh, dial obviously with that know the gender. So those are the two primary things that sit within the demographics.

The other things that you can add to that is income. You can add location. Um, you can explore education, cultural and ethnic diversity, uh, the family environment and so on and so forth. These are the general demographics by which you know, customers and the classic thing that we often see when we kind of get into demographic segmentation is, um, quite a lot of variants between if it's a consumer brand.

Again. We tend to see quite a lot of variants based on age. Um, if I'm a consumer brand, invariably OTA customers have made a lot of, uh, brand decisions, uh, for marketeers. So they've, they've chosen their favorite brands and it's pretty hard to shift them there. They've also got pretty strongly built rituals, habits, routines.

So it's hard, really hard to get behavior change, whereas younger, uh, younger customers often, you know, A lot of brands spend a lot of time to capture customers in the early days, age demographic, because they know that might be able to build a customer for life. They also tend to, to be a little bit more open to switching and to jumping around and trying and experimenting with different things.

So this is the demographic bucket now. Um, I'm going to jump over to geographic. Yeah, because that's also a factor, the common way of segmenting, um, The obvious one is like, what city, what country? But zip code, what postal code are they in? And that that's, uh, the classics there. Now what's interesting is one of the emerging, uh, sort of filters in geographic customer definition, geographic user segmentation is defining, um, some more contextual geographic items.

The first one is do they live in an urban environment or a suburban or rural environment. So that can be a really interesting. Filter, particularly when we think about lifestyle products. When we think about products that are attached either to living in impoverishment in a more rural setting, I'm sorry, in a more urban setting or whether they have a larger freestanding house, single family home, that would be an example of where you start to get some insights around the geography and the type of urban environment.

Okay, so we've got these two. Now, what I'm going to do later is to show you how these all inter relate first let's continue mapping. We've got the first two demographic and geographic. These are great checklists to go through on how much we know our customer. And I think if you're a consumer brand, you you'll love it.

So, you know, the age and gender, but I challenge you like. How good. Do you understand your customers in terms of either cultural and ethnic diversity or education, um, or household income? Those might give you a richer story as to who your user is and what pains and gains they experience. Just to jump over on the other side, geographically.

Yes. You want to know city country, zip code and so forth. But let's go a little bit deeper next time. Let's see. Um, you know, do they live in urban or rural suburban environments? Um, try and get into those contexts. So they have it. So that's the first two, their third and fourth. This is where it gets really, really good.

And I'll tell you why. This is where you start to get in  from what products, um, they might like and what stories might be. The perfect proposition, uh, for them to purchase a new product and to start a new behavior, let's start with the behavioral segmentation. Behavioral segmentation is so great. It's um, I think it's a little bit new.

Well, in terms of understanding, uh, users, there's a lot of behavioral psychologists, behavioral, economic, uh, experts trying to really unravel this universe. And I think that there is, um, Really two pillars understanding, um, how our users behave. And the first one is what are their purchasing habits? What are their spending habits?

Um, and. This is really important in terms of acquiring new customers, but it's also, if you're building a product, you really need to understand how not only they're going to use the product, which we'll talk about in a second, but we need to understand that purchasing and spending habits because well, often, uh, one of the challenges brands have is what I'm.

What I commonly say is a mismatch on pricing to the need. So what we, what we're talking about, dairies, we might have created a great product too, or at least it's a good product, but the pricing is just way beyond the pallet of. Uh, the user. So understanding their purchasing and spending habits will give you a frame of reference.

It might give you some really interesting insights in the switching costs that they might perceive, obviously, in terms of your customer and their behavioral segmentation, you want to break down, uh, their, uh, user profile. They address the given problem at the moment. Ah, so you might define that in different ways, uh, that we've talked about here.

User journeys, user stories, you know, the status quo. So you want to understand how they behave at the moment. And lastly, you want to understand the kind of relationship they want with brands and products. It's not only the product side that we're talking about here, but it's also the content, the services, the value add that can come through marketing through advertising and the stories that we tell.

So there's a rich, uh, context here that will help you. Not only. A market to customers, sell to your customers, help them use the products and see, and understand and segment them on how they wish to be serviced by any given company. So this is behavioral, segmentation's really understanding habits and behaviors.

Let's go to the fourth and the really interesting one. This one is going to largely affect your marketing. Whereas behavioral is both product and marketing. A psychographic segmentation is all about trying to understand your customer through their personalities, their values, their attitudes, and interests.

So this whole snapshot of a customer psychographic, this attitudinal based frame is so powerful. Because if you want to propose a new solution to a problem, it is so critical to understand their motivations and how they will perceive the proposition. So you can actually do a whole segmentation through asking.

Questions in a survey questions in an interview, and we tackled that in the previous episode, you can fill all of those insights into psychographic segmentation. So what you're gonna do I have at the end of the day, are these four parts you're going to have roughly their age, gender. And basic demographic profile you'll know where they are from the geographic profile.

That's the first two pillars of segmentation, but then you're going to layer and contextualize that with all these goodies from behavioral and psychographic segmentation. Now I've got these complete lists, uh, these checklists of the things that you want to check off, um, you can get all of them. Jump in there. Grab the free design thinking masterclass. You can download all the slides and use them. They can be your checklist, but I want to give you one last little gift here. Is some of these lists become a little bit overwhelming. You have so much data, you have a, it becomes a little bit hard to relate to.

And you know, it just, I mean, it's really hard to process. If you think about those four buckets, one of the reasons that, uh, Most businesses just don't have good behavioral and psychographic data is it's just a lot of work, you know? Um, and sometimes, uh, they may have the data, but they're not telling the story in the right way.

And one of the neat workarounds to this is to create. A persona. Okay. And a persona is like an awkward, typical user whose goals and characteristics represent the needs of a large group of your user base. So for example, you might have a sort of early adopter type user who's very active, highly engaged and represent, you know, 15, 20% of your total user base.

You might have that sort of core user or early adopter. Uh, Persona. And you tell that story, you give them a name, you describe them, like they're someone, you know, and the way you do that is you describe the motivations perhaps where they might work, typically, how they solve the problem now, how they, uh, where they get their news from.

And these personas are just a great way of telling the story of your segmentation. And it becomes really powerful as well because it's relatable. It turns data into, uh, you know, into a persona. It's something that is relatable as if it's your neighbor. Um, and these personas are fantastic. So when you've got those four pillars of segmentation, There's a job to be done and putting that into a shareable, understandable, relatable story.

And that is a user persona. So just the classic archetype of your different segments. So, um, we've got an example in our masterclass that will serve as a good starting point for you. When you go out into the world to build product, to service, to go even build a business. So I hope that you've really got some inspiration.

Maybe you've just had it. Aha moment where you thought we probably need to know a little bit more about the behaviors of our customers or their attitudes. I hope you've found something that will inspire you in this episode of the bottom up skills podcast. That's a wrap.

What is BottomUp - Skills for Innovators?

The volatile, uncertain, complex, and ambiguous world we now live in makes it impossible to innovate from the top down. We must now take an empathic, experimental, and emergent approach to innovate from the BottomUp.

Mike Parsons breaks down all the components of what it takes to discover, build, test, and launch radical new products, services, and cultures. You'll get in-depth instruction on the most effective methodologies, interviews with experts, and case studies. All in under 15 minutes.