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Business Model Canvas: Customer Segments - YouTube
Channel: StartupSOS
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so in the last video we provided an
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overview of the business model canvas
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today we tackle the first section of the
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canvas customer segments hi I'm Steve
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Morris and I use this startup SOS
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channel to provide practical advice to
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first-time entrepreneurs and today our
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topic customer segments so what is a
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customer segment well customer segments
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are simply ways to organize your
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customers into different groupings
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different groupings based on the idea
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that they have a slightly different need
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or possibly they need to be reached
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through a different channel a different
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channel for both marketing to to create
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awareness and to create leads and maybe
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a different channel for sales to
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actually collect orders now when it
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comes to different needs we have a very
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simple example in a previous video the
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milkshake example there's a link to it
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up here that does a very simple very
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effective job of describing customer
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segments and how different segments in
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something as simple as a milkshake
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market different customer segments can
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have very different needs that result in
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different feature requirements and
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certainly different messaging
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requirements on the marketing side and
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that's what makes customer segments so
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important for a start-up realistically
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when you're an early stage startup you
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have very few resources you cannot send
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marketing branding messages to a bunch
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of different segments or you're going to
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confuse the market you just don't have a
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big enough budget so it generally makes
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sense to really focus in on one customer
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segment so you can really focus in on
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the features exactly for that segment
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and really focusing your messaging in on
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that segment and focus your sales
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channel in on exactly that segment nail
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that segment and then go after the next
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segment and the next segment so the idea
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is focus on a first segment but over
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time you'll address more so over time
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you're addressing a big market which is
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certainly when investors want to hear
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but most smart investors want to hear
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that initially you are laser focused on
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a first segment instead of trying to you
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know
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boil the ocean and the everything to
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everybody which is pretty tough for a
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start-up to do
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so the overall moral of that story is
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it's a really good idea to choose one
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segment as your first segment to focus
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on so that's part of the challenge in
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filling out that first segment of the
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canvass is to list the different
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customer segments in your market the
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segments you'll eventually be addressing
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and then choose the one that you want to
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address first because frankly the rest
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of the canvass the value proposition in
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particular will depend on focusing on
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that one
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segment so you'll want to choose one
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unfortunately customer segment is even a
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little more complicated for a lot of
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entrepreneurs because you can also have
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a multi-sided market
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what does multi-sided market mean well
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it means that you're addressing two or
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more fundamentally different kinds of
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customers so simple example a social
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media play let's say a Facebook there's
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at least two sides to that market on the
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one hand are the users the users that
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are using the social media site Facebook
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users who aren't paying anything but
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have to get value out of the site to
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show up at the site in order for the
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second part of the business model to
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work the second customer segment which
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is advertisers the ones who actually are
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paying the revenue to Facebook so you
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have advertisers who pay and users who
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don't pay but need to be offered the
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value that they're seeking on the site
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two very different kinds of customers
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now that's just a two sided market think
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of something like a grocery store or you
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could be selling through a wholesaler to
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distributors to a whole chain of stores
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down to an individual store and then
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finally to the customer Wow that's maybe
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a five sided market at least so markets
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can get pretty complicated the challenge
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is you need to be worried about every
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side of those multi-sided markets if
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you're a Facebook you have to provide
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the right value to both the advertisers
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and to the users likewise when you're
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selling a food product through a grocery
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chain you need to be aware of the value
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proposition at each stage in that value
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chain because everybody needs to get a
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win through the process so not only do
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you need to understand customer segments
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and choose one to focus on
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but you need to understand how many
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sides does your market have and my
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suggestion is develop a canvass a
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business model canvas for each side of
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your market because each side of your
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market really is an entirely different
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value proposition so your action steps
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for filling out your canvas take a look
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at the market segments in your market
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identify what they are how big they are
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and decide which one will you focus on
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first now how do you decide what you
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know to a great extent there's no wrong
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answer
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choosing one is better than not choosing
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you might choose one because it's easier
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to to reach through a distribution
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channel you have access to or one that
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requires a simpler version of the
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product that you can get to market first
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or maybe there's a segment of your
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market that has a more compelling need
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its customers that are going to buy
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faster maybe you address that one first
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so there are a lot of different
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rationales you can have for choosing
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which segment but my suggestion is
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choose one and once you've identified
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the segments chosen one segment then ask
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that question is this really a
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multi-sided market are there different
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types of customers that you have to deal
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with and if so start developing a canvas
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for each side of the market that wraps
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up this discussion of customer segments
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any questions please leave a comment
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would love to try to answer questions
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you have if you haven't subscribed yet
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please do that down in the corner and if
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this is helpful please like it and share
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it and stay tuned because this is just
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the first segment of
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we have a lot more coming up in this
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playlist and the link to the playlist is
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right below here that's it for today
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thank you very much for watching
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