I have been working on a novel for several years now, and was finally brave enough to hand it over to my writing group for critique and several of the group members have come back saying my characters don't feel real and that they struggled to tell them apart. The book is based on something that happened to me a few years back and the characters are based on the people who were involved in that event. Obviously I've changed names and in some cases melded two people into one to protect their identities, but I feel like they are quite distinct. But maybe that's because I know they are?
My question is, how do I make characters more realistic and distinct? Do you have any tips that might help me?
There are lots of things you can do to make your characters feel like real, well rounded humans who exist in your story world as individuals. You say your characters are based on real people, so think about who these people are and what makes them THEM. Everyone is a product of their upbringing and influences and experiences, so to create realistic, well rounded characters, you need to think about their lives before your story begins and what brought them to that place at that time.
People are not perfect either, so giving your characters flaws will help to make them feel more real. Some people have a temper and fly off the handle at the smallest thing. Others may have a bleak or cynical view of the world and respond negatively to everything. Some people are trusting to a fault and find it difficult to accept it if someone disappoints them in some way. There are so many different flaws people can have, and often one thing leads to another, layering flaw upon flaw.
People also have different ways of speaking, so dialogue can be a really good way to make characters distinct. Some people have pet phrases or words they use (or misuse) constantly while others may speak more (or less) formally. Giving each character a unique voice can go a long way toward distinguishing them from each other. Again, think about their backgrounds when writing their dialogue. Someone who is very religious may not use real swear words, but make things up when they need an expletitive. Someone who grew up speaking another language may have a different rhythm to their speech than someone who is native to English.
As well as distinct speech patterns, people have specific mannerisms. Some people bite their nails when they're nervous, or pick at their cuticles. Some people keep their hands in their pockets to hide the fact their fingers tremble. Someone with bad teeth (or who used to have bad teeth) might raise their hand to their mouth before smiling. All these small gestures can be incorporated into your characterisation and will help to make the inhabitants of your story feel real and well-rounded.
Also, look at the way they react and interact with other characters. In a group, people respond differently to different people. They may be more or less guarded, use different body language or speak differently. If there is a power dynamic within the group, this will be be particularly obvious in the way those with less power act toward those they perceive as having more.
It is also important that each character has a purpose. Even when the overarching goal is the same for a group, every individual has their own wants and needs that will dictate the way they respond to events and how they go about working toward that shared goal.
Go through your manuscript with an eye out specifically for these things and you will probably find multiple opportunities for deepening and expanding your characters. You may also want to write some back story for each of them so you know where they're coming to your story from. This never needs to be made public, but can be a useful tool in fleshing out your characters.
I hope that's helpful