Understanding your customers: Customer personas and the role of AI

70% of consumers say a company’s understanding of their personal needs influences their loyalty. In fact, 83% of consumers are willing to share their data to create a more personalised experience as long as businesses are transparent about how they are going to use it.

Knowing your customer is the key for any successful business endeavour. Successful enterprises often have a clear understanding of what their customers want and the most effective way of delivering their products/services to them. The depth of knowledge is also crucial in knowing your customer’s interests, preferences and buying behaviour and can provide a competitive edge over others.

Source: NoGood.IO

Enterprises that are able to know what their customers want and what they expect can work on creating the right marketing campaigns and delivering a personalised customer experience, thereby creating loyalty and repeat business. The best way to understand your customers is by creating personas that represent the key traits of a large segment of your audience. Customer profiles are typically built using two things – demographic data (bascis of “who” they are) and psychographic data (“why” they buy).

74% of consumers say “living profiles” with more detailed personal preferences would be useful if they were used to curate personalised experiences, products and offers. – Accenture

Customer personas (buyer personas) vs. customer segments

Enterprises use customer segmentation to classify various customers into specific groups so that they can target products and/or communications tailored to the preferences and needs of the identified groups. While segmentation is valuable for making sure the enterprises’ product reaches the right customer, it is not so useful in helping enterprises understand what motivates their existing and potential customers, who they really are and how can the enterprises best connect with them. This is where customer personas play a crucial role. In short, customer segmentation validates the identity of groups, whereas customer personas help enterprises to further, enrich those identities.

Customer personas can also help make business critical decisions like:

  • Guide enterprises while they plan to add new features
  • Support decision making while enterprises plan re branding
  • Act as an input while they are exploring a new market

Role of AI in generating customer personas

AI can evolve personas towards personalisation. As the volumes of customer data continue to grow, the future of customer personas is bound to be AI. Machine learning models are extensively useful to extract insights, patterns, and relationships that can be used to make decisions.  AI is increasingly helping enterprises predict their customers’ future actions with a high degree of confidence and can help evolve customer personas to marketing instruments.

ML models can also determine what messages and mode of outreach would work best for a particular buyer persona. This is done by processing transaction and behavioural data from consumers who share common traits with a marketing persona. AI-powered customer persona creation has the following benefits:

  • Collection of massive data from varied sources
  • Automated creation of rich prospective profiles
  • Allows marketers to fine tune digital experiences
  • AI can continually update these personas in real time
  • AI removes work, costs and workflow bottlenecks
  • AI offers interoperability and scalability

AI is clearly the future of customer analytics. Watch out for my next article on how AI can help us utilise these customer personas for personalised marketing.









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