Customer SegmentsEstimated Reading Time: just 6 min

Customer Segments are the groups of people or organizations that a company aims to reach or serve with its products and services. This is the starting point of Canvas since every business needs profitable customers to survive.

Some questions that are useful to understand the content of this block are
– From whom is the company creating value?
– Who are the most important customers?

Information to collect and test for this section are:
– Demographic Factors (for instance Age, Gender, Level of Education, Job)
– Psychographic Factors (for instance Personality, Values, Attitudes, Interests, Lifestyles)

Something to keep in mind here is that if customers are going to use a product/service, they are going to give up something else (time to use the product, switch from current product, etc.).
So it is important to find out what it is they would be giving up and whether they are willing to do so.

Customer Segments could be built to target them with different degrees of accuracy, for instance:
– Mass Market: the target is a large group of customers with a set of broadly similar needs and problems
– Niche Market: the target is a very specific group of customers
– Segmented Market: target are different groups of customers with different sets of needs and problems, the product/service provided is the same but with slightly different value propositions to meet the varying customer needs
– Diversified Market: as for a Segmented Market target are different groups of customers with different sets of needs and the product/service provided is the same but in a Diversified Market a company uses very different value propositions to meet the varying customer needs
– Multi-sided Markets: target are interdependent customer segments (for instance, a bank that sells credit cards interacts with both the cardholder and the merchants who accept those cards)

There are several databases and websites available that provide useful information to build Customer Segments, for instance:
– Digital Journey and Customer Acquisition: it is useful to check out Google Keyword Planner, Google Trends, Google Analytics, SemRush, SEO Zoom
– UX: it is useful to check out Hotjar and Smartlook
– Interviews: it is always important to ask your customers what they think, and this could be done using SurveyMonkey or Google Forms
– Social Networks: every social network has its Analytics tool Facebook Audience Insights or Twitter Analytics

There are also some Frameworks that help to ease the job such as Buyer Personas Model and Buyer Personas Canvas.

BUYER PERSONAS MODEL AND BUYER PERSONAS CANVAS

A good way to compile this block is to treat it as the place where you summarize who your Buyer Personas are.
Buyer Personas are avatars of a Customer Segment and they transform the hard facts about your target audience into ‘living’ people.
Buyer Personas Model is powerful for marketing, advertising, content creation, product or service development, customer support, public relations, pricing, and sales since it put the focus on the relationship that can be created between the company and the customer.

Buyer Persona Model 1

Picture from xtensio.com

A helpful tool for creating them is Buyer Personas Canvas that is based on 10 blocks
– Buyer Persona (the archetype of our buyers)
– Goals
– Initiatives
– Influencers, Stakeholders, Buying Team
– Buying Process
– Timing
– Buyer Thinking
– Channels
– Why Buy
– Content and Information (they rely on)

Buyer Persona Canvas.png

Learn more by following the links below:
Buyer Personas
Buyer Personas Canvas

Frequently Asked Questions

What books do you suggest about Customer Segments?

These are my favourite books for the ones who want to know more about Business Model Canvas:

1. Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers: the original book written by A. Osterwalder and Y. Pigneur, Business Model Generation is a handbook for visionaries, game-changers, and challengers striving to defy outmoded business models and design tomorrow’s enterprises. If your organization needs to adapt to harsh new realities, but you don’t yet have a strategy that will get you out in front of your competitors, you need a Business Model Generation.

2. Value Proposition Design How to Create Products and Services Customers Want: Value Proposition Design is an essential companion to the ”Business Model Canvas” from Business Model Generation, a tool embraced globally by startups and large corporations such as MasterCard, 3M, Coca Cola, GE, Fujitsu, LEGO, Colgate-Palmolive, and many more.
Value Proposition Design gives you a proven methodology for success, with value propositions that sell, embedded in profitable business models.

3. Lean Customer Development: Building Products Your Customers Will Buy: With a combination of open-ended interviewing and fast and flexible research techniques, you’ll learn how your prospective customers behave, the problems they need to solve, and what frustrates and delights them. These insights may shake your assumptions, but they’ll help you reach the “ah-ha!” moments that inspire truly great products.

4. The Opportunity Analysis Canvas: In The Opportunity Analysis Canvas, Dr. James V. Green shares how to become more effective in identifying and analyzing entrepreneurial opportunities, and building competitive companies. Why are entrepreneurs successful? How can we understand and develop our thinking to be better entrepreneurs? What are the keys to developing winning entrepreneurial ideas?

5. The Long Tail: Why the Future of Business Is Selling Less of More: Our world is being transformed by the Internet and the near limitless choice that it provides to consumers; tomorrow’s markets belong to those who can take advantage of this. The Long Tail is really about the economics of abundance, an entirely new model for business that is just starting to show its power as unlimited selection reveals new truths about what consumers want and how they want to get it. The record business has been transformed by iTunes and Rhapsody; a similar transformation is coming to just about every industry imaginable. What happens when everything in the world becomes available to everyone? When the combined value of all the millions of items that may sell only a few copies equals or exceeds the value of the few items that sell millions each? When a bunch of kids with no profit motive can record a song or make a video and get the same electronic distribution for it as the most powerful corporation?

6. Testing Business Ideas: 7 out of 10 new products fail to deliver on expectations. Testing Business Ideas aims to reverse that statistic. In the tradition of Alex Osterwalder’s global bestseller Business Model Generation, this practical guide contains a library of hands-on techniques for rapidly testing new business ideas.
Testing Business Ideas explains how systematically testing business ideas dramatically reduces the risk and increases the likelihood of success for any new venture or business project. It builds on the internationally popular Business Model Canvas and Value Proposition Canvas by integrating Assumptions Mapping and other powerful lean startup-style experiments.

P.S. by following the links and buying these books, you help biz shakalaka covering its costs and getting

What are the different customer segments?

Customer Segments could be built to target them with different degrees of accuracy, for instance:
– Mass Market: the target is a large group of customers with a set of broadly similar needs and problems
– Niche Market: the target is a very specific group of customers
– Segmented Market: target are different groups of customers with different sets of needs and problems, the product/service provided is the same but with slightly different value propositions to meet the varying customer needs
– Diversified Market: as for a Segmented Market target are different groups of customers with different sets of needs and the product/service provided is the same but in a Diversified Market a company uses very different value propositions to meet the varying customer needs
– Multi-sided Markets: targets are interdependent customer segments (for instance, a bank that sells credit cards interacts with both the cardholder and the merchants who accept those cards)

What is a customer segmentation in business?

Customer Segmentation is a representation of the groups of people or organizations that a company aims to reach or serve with its products and services.
Some questions that are useful to understand Customer Segments are
– From whom is the company creating value?
– Who are the most important customers?
Information to collect and test for this section are:
– Demographic Factors (for instance Age, Gender, Level of Education, Job)
– Psychographic Factors (for instance Personality, Values, Attitudes, Interests)
Something to keep in mind here is that if customers are going to use a product/service, they are going to give up something else (time to use the product, switch from the current product, etc.).
So it is important to find out what it is they would be giving up and whether they are willing to do so.

How do you target customer segments?

Customer Segments are targeted using Channels.
Channels are how a company communicates with his Customer Segments and how it reaches them to deliver its Value Proposition.
Understanding which channel is best to reach customers is key and the main options are:
– Own Channels (physical or digital stores)
– Partner Channels (wholesalers and distributors)
– A Combination of Own and Partner Channels

Nicola Zaffonato Administrator

Business Strategy | Product Marketing | Executive Master eCommerce Management | Business Innovation Master | MSc

I am driven by my personal growth and of people/contexts that surround me.

I followed a professional path in Valentino Fashion Group and Luxottica during which, thanks to the ability to understand different businesses and interests, I was able to succeed in Operations, Merchandising and Retail.

These organizations have exploited my ability to mediate and translate needs/constraints into practice, assigning me to Project Management roles.

Luxottica relied on my ability to analyze, to anticipate things and to imagine/implement solutions by appointing me in Supply Chain Management department and assigning me to the Product Management of IoT solutions for Anti-counterfeiting and Retail digitalization.

During this professional path, I also developed my leadership by managing teams to build Processes, Organizations, Systems and Governance Tools.

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