Startup Lesson 22: Know your market segments

When you get that idea, delve into customer discovery, and start your venture into the startup world, one of the questions you ask and answer a bunch of times on the business model canvas is “who’s your customer?”  Once you’ve answered that, then you have to determine your customer segment(s).  Believe it or not, your product/service does not apply to “everyone” in the market. I mean this in the same manner as I meant in this post that you never say “We don’t have any competitors”, because you do.

So, who are your customers?  Let’s firm one thing up first: customers are who pays you money. Users are not necessarily customers.  Take Facebook & Twitter for example. Their users are not (always) their customers. Their customers who pay them money are advertisers. Their users are individuals who post and tweet and share pictures. Big difference.

Now that you know who your customers are, or, said otherwise, who your “market” is, figure out if there are different segments in this market.  I’m advising an entrepreneur with a very cool mobile location idea, and we’ve just learned – again, through customer discovery – that there are 3 very distinct market segments. They all look and act alike, but there’s only one of the three where his product fits appropriately. “But I’m sure all the others will use it, too!” he said.

Remember this, as you have the idea and trudge through customer discovery and completing your business model canvas: you. are. wrong.  At best, you’re guessing.  Even if you’ve done a thousand interviews with potential customers/users (he has), you’re still guessing at the solution to the problem that you perceive.  You’re not sure of anything.

That’s why we go through the process. So we’re not guessing as we drop thousands or millions of dollars on a product for a market segment that doesn’t want it.

What do you think about that?

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