1-843-602-9880

Lesson 16

Why I Am Not Trying to Sell You

“In trying to please all he had pleased none.”

-Aesop[1]

Content created by Darin Gerdes. Copyright Great Business Networking and Darin Gerdes.

It has been an interesting few days. On Thursday, I attended the North Charleston Business Expo where I met a woman who tried to sell me her marketing system. I asked questions and found that her system really wasn’t designed for market segmentation. I could pick the geographical region, and I could even limit a few other factors, but I couldn’t really put my business proposition in front of the people who are most likely to buy what I had to sell. When I raised this objection, she replied, “Well, you never know who’s going to buy your product or who know somebody who might buy your product, so you want to advertise to all of them.” While it is true that I do not know who might know somebody interested in what I have to offer, this is a terribly ineffective marketing approach. If that is what marketing means, I should only broadcast and never target anyone.
I walked away from the interchange shaking my head. It was as if she was telling me to ignore return on investment (ROI) and just advertise to everyone. I wanted to lecture her about how this was the least efficient way to market any product or service, but I reigned myself in.
On Tuesday I went to a luncheon sponsored by the South Carolina Christian Chamber of Commerce. I had been thinking about this week’s lesson on buyer personas.  A woman named Alexis sat to my left. I asked her what she did for a living and she told me. She was a marketing specialist for a longstanding concern here in town. I asked her who her primary customers were, and she was clear and concise. She did not hesitate.
Then I asked how well her customers understood marketing. Again, she was on point. She explained that those who had been in business for some time tended to be focused. “But, I have to ask a lot of questions to help the new clients focus on who their customers really are,” she confided. It was the complete opposite of the advice I was given on Thursday.
This has been my experience too. When I sit down to meet with business people, I have found that they generally understand their product, but they often have a hard time understanding their customers. I will ask a question like “Who are you trying to sell this to?” or “Who is your target market?” If they answer “Everyone,” they really do not understand marketing. 
Three Things
I am a management professor. I know a bit about marketing, but I make no claim to be a marketing professor. So, Wednesday, I stopped by a marketing professor’s office and asked, “If you could only tell your students a few things about marketing, what would you tell them?”
His eyes lit up as he said, “it’s all about value.” You have to have a value proposition that exceeds the cost of the goods or services that you are selling. It was similar to our earlier discussion of the Unique Selling Proposition. I took some comfort in hearing that.
Then, he pulled out a chart. It was the 4 Ps we covered in the last lesson. He spent the lion’s share of our time talking about the 4 Ps and he reviewed each part in detail. I was starting to feel pretty good because He was confirming what we had just covered in our last lesson.
Finally, he talked about how you need to know your customer. It was his turn to quote Drucker, who said,
Because the purpose of business is to create a customer, the business enterprise has two–and only these two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are “costs.” Marketing is the distinguishing, unique function of the business.[2]
He spent the next few minutes talking about how important it was to know your customer—his wants and needs. He talked about marketing segments and, without using the terms, he talked about this week’s topic: buyer personas. After our discussion, I decided to expand this lesson to include a bit about market segmentation because market segmentation and buyer personas are intertwined. I will first explain segmentation.
Market Segmentation
Very few products appeal to everyone. Air is free and water is cheap and plentiful (at least in the western world). Air and water are universally desired. After that, you need to think about market segmentation and buyer personas because different products appeal to different customers.
Consider the early days of the automobile industry. 1908 was a banner year. General Motors was founded in Flint, Michigan and Henry Ford introduced the Model T that propelled Ford to greatness. He said,
I will build a car for the great multitude. It will be large enough for the family, but small enough for the individual to run and take care of. It will be constructed of the best materials, by the best men to be hired, after the simplest designs that modern engineering can devise. But it will be so low in price that no man making a good salary will be unable to own one—and enjoy with his family the blessings of hours of pleasure in God’s great open spaces.[3]
He was met with naysayers who said, “If Ford does that he will be out of business in six months.”[4] Yet, he delivered on his promise through technical innovation. Ford made a name for himself with the efficiency gains of the assembly line. In 1909, Ford sold 10,000 cars at $825 per car. In 1914, he doubled workers’ pay to $5 per day.[5]  “By 1923, through a series of continuous process improvements, Ford had used the cost advantages of economies of scale to drive down the price of the Model T automobile to $290.”[6] To put that in perspective using current dollars, when Ford started, The Model T cost $20,000, and through gains of efficiency, he reduced it to $7,000 while he doubled the workers’ annual wages from $15,000 to $30,000.
This was an amazing feat by any standard. By lowering the cost, Henry Ford is most responsible for creating the automobile market. Yet, while Ford focused on efficiency, At General Motors, Alfred P. Sloan was focused on his customers. Within a few short years, GM surpassed Ford as the industry leader. How did he do it?
Ford was notoriously resistant to change (you can get the Model T in any color, as long as it’s black). This did not serve Ford well in a marketplace where customer tastes were changing.
Alfred Sloan took advantage of this by establishing a unique vision for GM; a vision that helped it surpass Ford as the industry leader. In 1924, Sloan came up with an idea – create five separate brands and five price ranges for five different types of consumers. Out of this idea came five of the car makes that we know today. You started with Chevrolet, branded and priced for the first-time car buyer. From there, you could upgrade to a Pontiac. Then to an Oldsmobile and a Buick. By now, the car buyer is pretty much a ‘GM-for-life’ kind of person, which was partly the point – Sloan wanted to keep car buyers in the GM family. And when they were ready to make that final big upgrade in their car-buying lifestyle, Cadillac was waiting for them as the top-of-the-line GM car model.[7]
Sloan thought in terms of market segments. His ambition was, “A car for every purse and purpose,” and he talked in terms of a “ladder of success.” Each brand focused on a different customer segment. Chevrolet and Cadillac salesmen were not confused about their message and they did not present the same value proposition to their customers. Do you have similar clarity?
Segmentation is a way of making sense of the market. No market is monolithic. Take a bookstore, for example. Bookstores attract people that like books but that is where the similarities end. Bookstores create sections within the store because different customers are looking for different kinds of books.
Imagine walking into a bookstore that did not segment. They just put books up on the shelf randomly, not concerned about what their customers wanted to find. It would result in chaos. Or, maybe they did sort, but they sorted by lowest to highest price, color, thickness of the book, or another irrelevant factor. Customers would be lost.
Instead, bookstores sort books by particular genres (and then by author’s last name within each genre). That way, Hank, the retired serviceman can find the military section. Rebecca, the middle-aged mom can find the romance novels. Her kids, Justin and Julie, can read about The Lord of the Rings and The Mickey Mouse Clubhouse. Tom can find The Seven Habits of Highly Effective People so he can be more successful at work. This is how segmentation works.
Buyer Personas
In the last paragraph, I named customers—Hank, Rebecca, Justin & Julie, and Tom. They are not just individuals, but buyer personas. According to Pamela Vaughan of HubSpot:
Buyer personas (sometimes referred to as marketing personas) are fictional, generalized representations of your ideal customers. Personas help us all — in marketing, sales, product, and services — internalize the ideal customer we’re trying to attract, and relate to our customers as real humans. Having a deep understanding of your buyer persona(s) is critical to driving content creation, product development, sales follow up, and really anything that relates to customer acquisition and retention.[8]
To the degree that you can understand your customers, you’re more likely to be able to understand and empathize with their needs. It is likely that there are only a handful of personas who will actually buy your product or service. Chasing everyone else is time poorly spent. According to Moz, “one of the main reasons for using personas is that when you target everyone you actually target no one.”[9]
Let’s go back to the bookstore example. Suppose that you run the bookstore and you know that you get the greatest sales from business books. No other genre even comes close. To improve your sales, you’re going to have much more success enticing customers who are already interested in the business genre. Tom recently purchased a copy of the Seven Habits of Highly Effective People. Since he likes Steven Covey’s books, he will probably also like Leadership and Self Deception by the Arbinger Institute, Turn the Ship Around by David Marquet, and Change Anything by Patterson, Grenny, Maxfield, McMillan, and Switzler.
In this scenario, you should spend all of your time and effort marketing to Tom’s persona. Hank may decide to purchase Turn the Ship Around, but he is unlikely to come back to buy anything else. It’s a waste of time and money to try to reach Rebecca or her kids. Understanding Tom’s persona will help you maximize your efforts in selling to him and people like him.
In business, we use the term personas to describe our efforts to really understand the different types of customers who buy from us. “Personas are specific archetypes of people in the target audience.”[10] The FBI calls what they a similar process “criminal profiling.” This is what the FBI writes about the criminal profiling process. Note the similarities:
As used by the FBI profilers, the criminal-profile generating process is defined as a technique for identifying the major personality and behavioral characteristics of an individual based on an analysis of the crimes he or she has committed. The profiler’s skill is in recognizing the crime scene dynamics that link various criminal personality types who commit similar crimes.
The process used by an investigative profiler in developing a criminal profile is quite similar to that used by clinicians to make a diagnosis and treatment plan: data are collected and assessed, the situation reconstructed, hypotheses formulated, a profile developed and tested, and the results are reported back….
The Crime Assessment Stage in generating a criminal profile involves the reconstruction of the sequence of events and the behavior of both the offender and the victim. Based on the various decisions of the previous stage, this reconstruction of how things happened, how people behaved, and how they planned and organized the encounter provides information about specific characteristics to be generated for the criminal profile. Assessments are made about the classification of the crime, its organized/disorganized aspects, the offender’s selection of a victim, strategies used to control the victim, the sequence of crime, the staging (or not) of the crime, the offender’s motivation for the crime, and crime scene dynamics. . . . An organized murderer is one who appears to plan his murder, target his victims, display control at the crime scene, and act out a violent fantasy against the victim. . . . In contrast, the disorganized murderer is less apt to plan his crime in detail, obtains victims by chance, and behaves haphazardly during the crime. . . . The determination of whether or not the crime was staged (i.e., if the subject was truly careless or disorganized or if he made the crime appear that way to distract or mislead the police) helps direct the investigative profiler to the killer’s motivation.[11]
Your task is far less gruesome but the process is the same. If you really understand your customer, your profiling effort will be just as useful to you in your marketing efforts as the criminal profile is to the FBI.  According to Craig Stull, Phil Meyers, and David Meerman Scott in Tuned In, “By breaking buyers into distinct groups, understanding what problems those groups (or “buyer personas”) have and how to solve them, and then cataloging everything you know about each buyer persona, your hard work becomes easier.”[12]
So how do you go about gathering this data about your customers? According to Forbes,
The first step in defining your buyer persona is gathering demographic information. This can include their income, occupation, interests, gender, level of education, and where they live. Demographic information doesn’t tell you everything about your buyer persona, but it’s a good starting point.
Next, find out what problems your ideal customer is experiencing. What challenges are they facing and what results would they like to achieve? Find out what your buyer values in order to make a deeper connection.[13]
Like an FBI profiler, you must actively reconstruct everything you know about your customers. When you understand them so well that you can create composite sketches, you are well on your way.
As you ask each question, the picture should become increasingly clearer as if you were adjusting the lens on a camera.  Just remember, “For personas to become useful tools, it’s best if they’re based on interviews gathered from salespeople, customer service interactions, and the buyers (customers) themselves.”[14]
It is also good to remember that you can have multiple personas. In fact, as a rule, you will have multiple personas. But, you want to limit yourself to the handful of personas that provided the most return. HubSpot created a worksheet that can help you structure the who, what, why, and how of personas.[15]
Graduate School Personas
In my position as the Director of Graduate Programs in the School of Business at Charleston Southern University, I have an advantage because I see the students in class as their professor. We talk about the kinds of problems that they have at work, and as their professor, I’m aware of the types of students that are successful. Below I offer my marketing personas. Yours will certainly be different, but I offer them as an example to help you think through the process.
Clarence Conscientious
Clarence is in his mid to late 20s. He is married and has children. He or his twin Clarise are likely to live in the Charleston Metro area. Clarence has a family and he is trying to balance his life obligations. The MBA is a personal and professional goal. It’s a personal goal because he wants to be an example for his children. It’s a professional goal because he is going to use this degree to climb the ranks in his current organization. Clarence is not particularly interested in using the degree to jump ship to another organization or move to Wall Street. He knows he will have to work nights and weekends for two full years to complete the degree, and he is at peace with this decision.
Career advancement is critical to Clarence. He has realized that his college degree will not carry him into the upper echelons of his organization. He is a practical student. He sincerely wants to learn what he needs, but he is not interested in thinking great thoughts for the sake of thinking great thoughts. He will dive in with both feet and who maintain a high GPA. Along the way, he will apply what he learns to work projects, and he’ll be pleasantly surprised to be promoted sooner than he thought.
Marty Military
Marty has similar demographics to Clarence with a few exceptions. He is here in Charleston serving in the Air Force or the Navy. He may be former military, but the odds are that he is active duty and that earning a masters degree is a key to promotion.  He is a bit older than Clarence, but not by much.
Like Clarence, Marty is uninterested in contemplating the mysteries of life, but Marty is going to be a model student because the military has instilled discipline and a focus on mission accomplishment. When Marty applies, I mentally adjust his 3.2 GPA to a 3.5 GPA in my head because motivation and discipline are worth the extra few additional points.
 
Emily Everyone is Not a Persona
You will notice that I did not cast the net far and wide. For example, Emily Everyone is age 22 to 78, she is single or married, she has 0 to 10 children, she is rich or poor, and she lives anywhere in the continental United States. Such statements are not helpful in targeting. They only muddy the water.
It is hard not to pursue Emily Everyone because you feel that you are losing the sale. You might, but that’s not necessarily a bad thing. Let me explain.
Imagine you are standing ankle-deep in coins. You have three seconds to pick up any coin that you want, and you can repeat this process as many times as you want, but you have to pay 10 cents every time you pick up a coin whether you come up with one or not (this is called the customer acquisition cost). You see many pennies and nickels. You see a number of dimes. You see a handful of quarters and a few half-dollars. The bigger pieces are harder to identify because they look very similar to worthless game tokens.
What would you pick up? The answer is obvious. You must pursue quarters and half dollars. Anything else is nonsensical. If you pick up a dime, you only break even. If you pick up a nickel, you’ve destroyed half of the value of your original investment. If you pick up a penny, your return is only 1/10th of what you spent. You must make back at least that which you spent, or it would be better to just sit on your money. Unfortunately, many people conduct marketing efforts only thinking about what they gain without considering the cost.
As the Graduate Program Director, I want Marty and I want Clarence in my MBA program. As a professor, I want to teach them in class. But there are other students that I might not want either in the program or in class. I might not actively discourage them from applying because they may turn out to be motivated, but I’m not going to waste effort chasing those students when other Martys and Clarences still exist. Not all personas are positive and you may need to create a negative persona to help you focus:
A negative — or “exclusionary” — persona is a representation of who you don’t want as a customer.
For example, this could include professionals who are too advanced for your product or service, students who are only engaging with your content for research/knowledge, or potential customers who are just too expensive to acquire (because of a low average sale price, their propensity to churn, or their unlikeliness to purchase again from your company).[16]
 
Sandra $tudent Loans
Sandra $tudent Loans is such a student. She is not likely to be successful in her graduate work for a number of reasons. Sandra is likely to be a single female who may or may not have kids. She usually comes from an academically weak college, but because she has a high GPA from this marginal institution, she does not realize how ill-equipped she is for graduate work, and she becomes adversarial when she’s academically challenged in the classroom.
Sandra works in retail and she has never managed others. She does not know what she wants to do, but she knows that she doesn’t want to do this for the rest of her life. Often her choices seem to be to do nothing and watch daytime talk show reruns or go back to school and Sandra seems to be fine with either option. The motivation just isn’t there. The weak college preparation, the attitude, and that lack of motivation takes her 3.6 GPA down to a 2.8 in my mental calculations.
While the majority of our students get some form a financial aid (e.g., student loans, scholarships, tuition assistance, etc.), Sandra seems to be in school for the loan money rather than the education. She racks up student loan debt as much for life-style enhancement as for tuition and she seems determined to obtain all she can before she washes out of the program. On average, she’ll fail out of the program by her third or fourth class.
As the program Director, I want to admit students that can succeed. From a moral perspective, it is unethical to pursue Sandra when I know her chances of survival are slim and she is coming to school primarily for the student loan money. From a business perspective, it is far less profitable to pursue a student that you can only keep for a third of the program.  Knowing the difference between Clarence, Marty, and Sandra helps target our marketing efforts, and targeting is the key to success in marketing.
What About You?
Hopefully, at this point, you have rejected the notion that you can be all things to all people. I understand the desire to “not leave money on the table,” but failing to segment is like running a bookstore that does not categorize by genre. It leaves customers confused. Confused customers cannot understand your value proposition and they are less likely to purchase what you have to offer.
If you still do not believe me, let me leave you with one last example. Suppose you were arrested for a crime you did not commit. You have been falsely accused of criminal fraud. If convicted, you could go to prison for 30 years. Your spouse has bailed you out of jail and you are trying to find a lawyer who will keep you out of jail. Which lawyer do you want to hire?
You have two choices: The first is the best criminal defense attorney you could afford—the one who specializes in fraud cases, and has not lost a case similar to yours in 17 years. The second is the lawyer that can do everything: criminal defense, wills, divorce, and real estate. If you chose the first, you chose correctly. Do your customers choose you for similar reasons?
What is your niche? Who are your customers? If you cannot describe them right now, you do not know your personas well enough.  Time spent on this activity will save you a great deal in time and treasure as you move forward in your marketing activities.
Actionable items:
Now that you understand buyer personas, describe yours. Give each a name and describe as much as you can about them.
Persona #1:  
Persona #2:
Persona #3:  
Persona #4:
Review this month’s Snack Sized Skill about Clothing as a Conversation. How do you think about each buyer persona? What are each likely to be wearing?
Persona #1:
Persona #2:
Persona #3:
Persona #4:
 
End Notes:
[1] Aesop (1912/2009). Aesop’s fables.  Mineola, New York: Dover Publications, Inc. (p. 138).
[2] Drucker, P. F. (1974). Management: Tasks, responsibilities, practices. New York: Harper & Row. (p. 61).
[3] Ford, H. (2008). My life and work. Fairfield, Iowa: Akasha Pub.
[4] Ford, H. (2008). My life and work. Fairfield, Iowa: Akasha Pub.
[5] Davis, M. (n.d.) How the U.S. automobile industry has changed. Investopedia. Retrieved from http://www.investopedia.com/articles/pf/12/auto-industry.asp
[6] Blank, S. (2011, October 26). Apple’s marketing paybook was written in the 1920s. The Atlantic. Retrieved from http://www.theatlantic.com/business/archive/2011/10/apples-marketing-playbook-was-written-in-the-1920s/247417/
[7] Bjornstad, E. (2014, April 29). How Alfred Sloan and GM changed American history. Bell Performance. Retrieved from http://www.bellperformance.com/blog/general-motors-interesting-history-vision
[8] Vaughn, P. (2015, May 28). How to create detailed buyer personas for your business [free persona template].  HubSpot. Retrieved from http://blog.hubspot.com/blog/tabid/6307/bid/33491/Everything-Marketers-Need-to-Research-Create-Detailed-Buyer-Personas-Template.aspx
[9] Personas: The art and science of understanding the person behind the visit. Moz. Retrieved from (2014, January 19). https://moz.com/blog/personas-understanding-the-person-behind-the-visit
[10] Personas: The art and science of understanding the person behind the visit. Moz. Retrieved from (2014, January 19). https://moz.com/blog/personas-understanding-the-person-behind-the-visit
[11] Douglas, J. E., Ressler, R. K., Burgess, A. W. & Hartman, C. R. (1986).  Criminal profiling from crime scene analysis.  Behavioral Sciences and the law, 4(4) 401-421. Retrieved from https://vault.fbi.gov/Criminal%20Profiling/Criminal%20Profiling%20Part%202%20of%207/view
[12] Stull, C., Myers, P., & Scott, D. M. (2008). Tuned in: Uncover the extraordinary opportunities that lead to business breakthroughs. Hoboken, N.J: J. Wiley & Sons. (p. 76).
[13] Gaudett, C. E. (2014, October 28). How to develop your buyer persona and reel in better customers. Forbes. Retrieved from http://www.forbes.com/sites/theyec/2014/10/28/how-to-develop-your-buyer-persona-and-reel-in-better-customers/#76c0a629791b
[14] Lee, K. (2014, March 27). Marketing personas: The complete beginner’s guide. Buffersocial: Thoughts on Social Media and Online Marketing. Retrieved from https://blog.bufferapp.com/marketing-personas-beginners-guide
[15]
[16] Vaughn, P. (2015, May 28). How to create detailed buyer personas for your business [free persona template].  HubSpot. Retrieved from http://blog.hubspot.com/blog/tabid/6307/bid/33491/Everything-Marketers-Need-to-Research-Create-Detailed-Buyer-Personas-Template.aspx