Customer Segments: who are you really serving?
Customer Segments define the different groups of people or organisations a business aims to reach and serve. Choosing the right segments and understanding them deeply is the foundation of everything else in the canvas.
Customer Segments: who are you really serving?
The Customer Segments block defines the different groups of people or organisations a business creates value for. It is the most important block on the canvas. Every other element exists to serve customers.
A business can serve one segment or many. The discipline is being explicit about which segments you are targeting and making real choices about who you are not serving. That second part is where most teams struggle.
Types of customer segments
Mass market No distinction between segments. Consumer packaged goods, most TV broadcasting.
Niche market A specific, specialised segment. Luxury goods, professional services and specialist software.
Segmented The company serves segments with slightly different needs. A bank might offer standard accounts for retail customers and premium accounts for high-net-worth individuals.
Diversified The company serves two or more unrelated segments. Amazon serves both consumers and enterprises. That takes real organisational capacity to pull off.
Multi-sided platforms Two or more interdependent customer groups that both need each other. A newspaper needs readers and advertisers. One side's value depends on the other side showing up.
How to define a segment
A useful segment definition covers two things: who they are and what problem they face. Demographic, professional or behavioural characteristics tell you who you are talking to. The specific pain your proposition addresses tells you why they should care.
What most teams skip is the third element: why this group is distinct enough to serve differently from your other customers. Without that, you end up with a segment that looks coherent on paper but behaves like several different customer types in reality.
Vague segments like "SMEs" or "young professionals" are almost never useful. We see this in nearly every workshop. Broad segments lead to broad propositions that resonate with nobody in particular.
Questions to explore with clients
- Who are you currently serving, and who is your best customer within that group?
- Are there customer groups you serve today that you would be better off not serving?
- What does your ideal customer look like in detail, covering industry, size, role and behaviour?
- Are any of your segments changing, whether growing, shrinking or shifting in what they need?
- Are you serving multiple segments with the same proposition? Should you differentiate?
- Who are you currently not reaching that you should be?