Customer Segmentation is the practice of grouping different sets of like people (customers or potential customers) based on distinct needs and/or characteristics. Segments are generally developed by doing large-scale research, and are defined using demographic information like age, race, or location, or psychographic and behavioral information like interests, opinions, values, lifestyle, risk aversion, or life stage. Customer segments don't provide insights into a consumer, but more insights about groups of consumers within a larger marketplace. These groups can help a retailer differentiate between the different types of customers that exist, and what those customer groups might be interested in.

Personas are fictitious characters created by a retailer to mimic a real customer. They are made based on Profiles, which include foundational demographic information that is collected through research with real people. These profiles are a direct representation of a customer group that shares similar values, behaviors, and goals. Personas begin with those basic profiles, but then are given names, faces, personalities, and families, to paint an accurate picture of precisely what that person would want and need in real life. Personas add the emotional and behavioral component -- the warm, fuzzy stuff. Once complete, they can help determine need state or end goal for a particular consumer, so that your brand knows precisely how to target them, and what will resonate.

While segments and personas are both tools for grouping current and potential customers, they provide two separate use cases for a business. Used together they can paint a comprehensive and complete picture of how a business should market to it's customers, and once they've grabbed the customers' attention, how best to target them to relate to their wants and needs. Segments are primarily used to help determine whether a brand or product will resonate in the marketplace. It's great for helping dictate a brand's marketing messaging, content strategy, and product targeting. The use of segments is to initially attract a customer to your brand. Using personas can help your brand keep a customer around once they're interested, and ultimately encourage them to convert. Personas allow a brand to have true insights into the psychological and emotional wants and needs of their consumers. By designing personas, brands have a detailed character and associated story that they can apply in real life scenarios, influenced by wants and needs of real people.