VC Due Diligence: Do You REALLY Know Your Buyer Personas?
This is the second post in a series about the things venture capitalists look for when they perform due diligence of an expansion stage company’s sales organization. To read the intro to the series, click here. To read the first post, click here.
When David Meerman Scott published his book The New Rules of Marketing & PR in 2007, the respected marketing strategist made it pretty obvious that he thought the concept of buyer personas — which he defines as a distinct group of potential customers or an archetypal buyer that you want your marketing to reach — was one of the fundamental pillars of great marketing.
If you can’t clearly define and understand those personas, Scott writes, how can you expect to deliver messaging, content, and product features that will resonate with the people that are most likely to care?
Frankly, I couldn’t agree more.
And it’s not just me. In most cases, when a growth stage company possesses a key understanding of its buyer personas and their buying processes, it makes that business infinitely more appealing to venture capitalists. At OpenView, in fact, it’s one of the primary things we look for when we perform due diligence of a company’s sales and marketing organizations.
Of course, the buyer persona process truly starts with segmenting the target markets that those buyers reside in (something I wrote about in an earlier post). But the buyer persona process is a natural follow-up to segmentation. And when it’s done right, it shows that a company possesses a crystal clear understanding of who they need to engage with, create messaging for, and sell to.
Unfortunately, it’s also not something we see very often during the due diligence process.
The good news is that developing buyer personas isn’t as difficult or time-consuming as you might think. And the byproducts of doing it (stronger knowledge of what drives your target customers to buy, what’s involved in their buying process, and how all of that translates to your company’s go-to-market strategy and competitive advantage) are well worth the effort — regardless of your financing needs or goals.
Need some help getting started?
In this post, HubSpot’s Magdalena Georgieva joins Meerman Scott to discuss four essential steps to identifying and selling to specific buyer personas.
- Pool your personas into a few target groups: HubSpot uses the example of a hotel, whose personas might include an independent business traveler, a corporate travel manager, an event planner, a vacationing family, and a couple planning its wedding reception. Each of those personas is specific enough to market and sell to, without being too large or too small.
- Get to know those personas: Once you know who your buyer groups are, interview potential customers that fall into them. But don’t ask questions about your product specifically. The goal is to understand their buying behaviors and pain points.
- Create profiles for each persona: Give your personas a name and label (for example, Best Buy calls their empty nester persona looking to upgrade their home technology “Helen and Charlie”).
- Develop content and messaging for each persona: Because each persona has its own likes, dislikes, needs, and buying behaviors, it’s important to deliver unique content to them. Employing a one-size-fits-all approach does you no good.
As I wrote in the other posts in this series, if you haven’t previously made an effort to clearly define and understand your buyer personas, it doesn’t necessarily mean that you won’t be able to secure venture capital financing. It just means that a VC may be slightly more skeptical of the opportunity, or will require a deeper dive into your sales and marketing organization — all of which tends to stretch out the due diligence timeline.
So, if you haven’t done it already, start focusing on market segments and buyer personas before you engage with investors. Having that step completed before the due diligence process begins will allow the process to go far more smoothly.
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