I have been struggling to understand the canvas by watching a variety of videos. Just now...I watched all the nine cells. Followed! I am preparing one on piggery farming. Following you from Zambia! And I was able to follow value proposition. Thanking you
Hi. I am planning to start up an outsourcing company. I have no education in business or experience in business as such. I am learning on my own. I was struggling to fll the customer segment part in the canvas. This video was very helpful. Thank you for uploading the video. And please upload a video detailing about Outsourcing business. It will be very helpful. Thank you again.
Really great content and I just ordered the books to support this also! My question would be if you were thinking of an area of a business (for instance the checkout part of a physical established store) would you: 1. Write out a BMC for both staff & customer (Multi-sided) 2. Then work out your customer segments (assumption-based or data-driven, probably something like 'Autonomous' and 'Likes to be served') 3. Build out the jobs, values (EG:control/autonomy, great service...) , pains, gains, etc.. 4. Then create a proposition canvas for each customer against each check-out proposition (Served till, Self-CheckOut, Scan & Pay) 5 Then you could change the context of each customer (Add in accessibility need, change shopping mission (big shop/little shop) 6. An then create a VPC for each of the propositions for that customer/context need I'm just worried there are SO MANY types of customers who need to pay for their goods (ALL!), and their missions change (busy, Xmas shop) - but thinking the context is where we develop a customer, but still ladder up to their core values, jobs, pains, etc... Hope that makes some sense! Would love to hear some feedback on the approach I'm trying to do...
Great, simple video. To clarify...if you are not a multi-sided market but have multiple customer segments, do you need a VP for each customer segment and subsequently a different BMC for each customer segment?
Thanks. As far as i understood, we need different canvas corresponding to each customer segment. Then should we re-define all the cells for each customer segment?
Yes - because different customer segments usually have distinct value propositions, which means the solution tends to be different for each one. The challenge is that you don't want to spend time testing 4 or 5 or more different customer segments, so fairly early I'd suggesting choose what you believe to be the 1 or 2 most attractive segments, and limit your testing to those segments. Otherwise, you'll spend all your time testing different segments instead of transitioning to developing a product.
Great Video! If for a product, the users, choosers and who pays the dues are different, then in that case, in the customer segment do we need to identify and put all of them? (since each stakeholder has a specific value proposition they might be interested in.) Or is it just that customer segment broadly defines only the users for the product?
For any customer, there is always the question of how the decision making process works and what the decision making roles are. To interpret what you are hearing from a customer interview, it is important to understand the role the person you are interviewing has in the decision making process. . (See my recent video on "Customer Interview - Compelling Reason to Buy for more on that.) Having an in-depth understanding of what customer segment a customer fits in does require taking into account the inputs from those different roles.
Is it common to define a customer segment by multiple methods? For example, I'm starting a business as a client relationship consultant. I am creating my first canvas and have defined a customer segment by b2b demographics (micro-businesses in the health/wellness industry). I'm also considering further defining my first customer segment by psychographic tendencies, such as business lifecycle characterizations. For instance, business owners who want to move from startup to growth. Or, would it be better to keep it to just one way of defining a customer segmentation? So, ultimately, my customer segment would look like this: Owner/Operators of Micro-businesses (5 or less employees/valued at 250k or less) in the Health & Wellness Industries (spas, wellness centers, yoga studios, solopreneurs, etc.) who want to Grow their startup
I think a more detailed definition is fine. Just remember that the idea of customer segments is to identify a collection of customers who have the same need (the same job to be done, pain to avoid and/or gain to realize). So the next step would be to identify the value proposition that you believe will be compelling to "owners/operators of micro-businesses in Health & Wellness who want to Grow their startup" , and then go test that value proposition! In other words, what do you believe is the job to be done that is shared by customers in that segment - and is that job not being addressed already in an effective way that delivers on the gain they want and/or provides the pain relief they want? Testing you value proposition hypothesis will help you learn a lot about whether the customers see the problem the same way as you do.
Let us take an example of fully automated restaurant startup. In that case, the important segment could be students, local residents, high tech adapters, local business owners and workers. In that situation, is it a wise idea to just focus on one particular customer segment. Let us talk about a situation where I’m using paid engine of growth strategy to attract customers to attract customers. Don’t you think we can target multiple customer segment at the same time? Is it really important to place focus on just one customer segment at a particular time? Given the right strategy, we can target multiple customer segment at the same time. Please enlighten me on this topic. Thank you in advance
My bias is that if you try to be everything to everybody then your branding message becomes very diluted. Startups typically have relatively small marketing budgets, and I'd suggest that it's a good idea to get as much leverage as you can from the marketing budget by focusing on a very clear branding message. So what is it that makes your restaurant unique? Is it a particular type of cuisine? If so, then that suggests you target segment is people who are interested in that cuisine, whether they are a student or local resident or high tech, etc. Or is your differentiation something else? Whatever makes your business unique, focusing on that uniqueness might be a better way to define your target segment.
The part I require help with is Customer Segments which is the first building block of a business model according to the book. The part that is confusing to me is that it mentions "There are different types of Customer Segments. Here are some examples:" it goes on to list 5 different examples which are 1. Mass market 2. Niche Market 3. Segmented 4. Diversified 5. Multi-sided platforms. Questions I have: Are these 5 different examples different ways you can classify different customer segments? Is the "Mass market" example actually a customer segment? Because it says "business models focused on mass markets don't distinguish between different Customer Segments" does that sentence actually not make it a customer segment since it does not focus on customer Segments? Could you consider age, behaviour, or geography different types of Customer Segments?
The 5 examples are what the Business Model Canvas calls the different "types" of customer segments - and then, as you point out, they start with the "mass market" which has no segments at all. Here's by bias/belief: Startups don't do mass markets and they don't do diversified markets. Both of those are for large, well funded companies. That leaves niche and segmented. But even a niche market typically has different segments, so I find the "niche" concept to be not that helpful, since all niche markets have segments (at least geographic segments, if nothing else.) That leaves segmented markets which I would argue is always what a startup is working with - and it's important to select which segment to tackle first. Multi-sided markets are really a different dimension. All kinds of markets are multi-sided, including mass markets and diversified markets - and yes, also many segmented markets. So my model for startups is simple: a startup is (or should be) dealing with a segmented market, and that market may or may not be multi-sided.
hello Steve...thanks for the great content...I am little bet confused regarding the customers vs partners...can we consider any segment who we charge a commission as customer? In designing my BMC I cannot deliver the value without delivery company but I will charge it a commission...Is the delivery a customer or partner?
It's certainly possible for a partner to also be a customer. If you are charging a commission then presumably you are delivering some value to that to justify the commission. So that suggests there is a value proposition for that partner that is worth documenting and testing as if they were a customer!
The idea with the Business Model Canvas is to state who you believe your customer is, based on what you know today, and what problem they have - as a hypothesis. As Steve Blank says - "hypothesis" is a fancy word for your best "guess". But you then test that hypothesis (guess) with customers to find out if you are right - do they actually have the problem you think they have? If they don't, then hopefully, in the customer interview process, you get a clearer notion of what the actually problem is that they have, and can consider "pivoting" to addressing that problem.
If you mean Diageo the alcohol beverage company, I haven't studied them enough to tackle a canvas. But as a large provider they have multiple brands, and it's a safe be that each brand has a focus on a particular customer segment, and hence has its own value proposition and BMC with potentially different channels, cost structure, etc.
Your target market would in fact be a market segment - specifically the market segment on which you will focus. There are always multiple segments in a market, so the question is: which one will you target?
Hi @startupsos I am having a slight problem identifying the market my startup idea falls under, The idea is basically reselling digital products to vending companies and making a profit through mark up. The vending companies could be of different sizes [Small, Medium or Enterprise Businesses]
Instead of starting with the product, I'd suggest starting with: what customer problem (what unmet need) are you addressing and who exactly is the end customer? It's that end customer (that will use the digital products) that will determine the size of your market. What you're calling "vending companies" sounds more like a sales channel to reach your market.
Thank you for explaining all this in plain English!
I would've loved to find your channel 2 years ago. Thanks a lot for this information.
Thanks - I wish I'd been faster!
Your videos are amazing and very helpful. Thank you so much for this.
KG from South Africa 🇿🇦
I have been struggling to understand the canvas by watching a variety of videos. Just now...I watched all the nine cells. Followed! I am preparing one on piggery farming. Following you from Zambia! And I was able to follow value proposition. Thanking you
how is the farm going?
Very well done! Thanks for the clear description of customer segments
Our pleasure!
Hi. I am planning to start up an outsourcing company. I have no education in business or experience in business as such. I am learning on my own. I was struggling to fll the customer segment part in the canvas. This video was very helpful. Thank you for uploading the video.
And please upload a video detailing about Outsourcing business. It will be very helpful. Thank you again.
Kudos to you sir, I've heard it by different people. You explain it perfect!
Thank you kindly!
Really great content and I just ordered the books to support this also! My question would be if you were thinking of an area of a business (for instance the checkout part of a physical established store) would you:
1. Write out a BMC for both staff & customer (Multi-sided)
2. Then work out your customer segments (assumption-based or data-driven, probably something like 'Autonomous' and 'Likes to be served')
3. Build out the jobs, values (EG:control/autonomy, great service...) , pains, gains, etc..
4. Then create a proposition canvas for each customer against each check-out proposition (Served till, Self-CheckOut, Scan & Pay)
5 Then you could change the context of each customer (Add in accessibility need, change shopping mission (big shop/little shop)
6. An then create a VPC for each of the propositions for that customer/context need
I'm just worried there are SO MANY types of customers who need to pay for their goods (ALL!), and their missions change (busy, Xmas shop) - but thinking the context is where we develop a customer, but still ladder up to their core values, jobs, pains, etc...
Hope that makes some sense! Would love to hear some feedback on the approach I'm trying to do...
Loved it. They way you explained is really simplified and made it easy. God bless you!
Thanks Kamran - it's always great to hear about it when a video helps!
Great, simple video. To clarify...if you are not a multi-sided market but have multiple customer segments, do you need a VP for each customer segment and subsequently a different BMC for each customer segment?
Thanks sir very good job good bless you help hands Young Entrepreneur and business
It's my pleasure
very helpful with my school homework...
I'm glad it was helpful - thanks!
thank u king
Thanks sir keep movementum going on...
Will do!
thank you for the explanation, can we have three customer segment?
yes as long you can address them properly
Thanks. As far as i understood, we need different canvas corresponding to each customer segment. Then should we re-define all the cells for each customer segment?
Yes - because different customer segments usually have distinct value propositions, which means the solution tends to be different for each one. The challenge is that you don't want to spend time testing 4 or 5 or more different customer segments, so fairly early I'd suggesting choose what you believe to be the 1 or 2 most attractive segments, and limit your testing to those segments. Otherwise, you'll spend all your time testing different segments instead of transitioning to developing a product.
Great Video! If for a product, the users, choosers and who pays the dues are different, then in that case, in the customer segment do we need to identify and put all of them? (since each stakeholder has a specific value proposition they might be interested in.) Or is it just that customer segment broadly defines only the users for the product?
For any customer, there is always the question of how the decision making process works and what the decision making roles are. To interpret what you are hearing from a customer interview, it is important to understand the role the person you are interviewing has in the decision making process. . (See my recent video on "Customer Interview - Compelling Reason to Buy for more on that.) Having an in-depth understanding of what customer segment a customer fits in does require taking into account the inputs from those different roles.
StartupSOS thank you so much👍👍
Is it common to define a customer segment by multiple methods? For example, I'm starting a business as a client relationship consultant. I am creating my first canvas and have defined a customer segment by b2b demographics (micro-businesses in the health/wellness industry). I'm also considering further defining my first customer segment by psychographic tendencies, such as business lifecycle characterizations. For instance, business owners who want to move from startup to growth. Or, would it be better to keep it to just one way of defining a customer segmentation?
So, ultimately, my customer segment would look like this:
Owner/Operators
of
Micro-businesses (5 or less employees/valued at 250k or less)
in the
Health & Wellness Industries (spas, wellness centers, yoga studios, solopreneurs, etc.)
who want to
Grow their startup
I think a more detailed definition is fine. Just remember that the idea of customer segments is to identify a collection of customers who have the same need (the same job to be done, pain to avoid and/or gain to realize). So the next step would be to identify the value proposition that you believe will be compelling to "owners/operators of micro-businesses in Health & Wellness who want to Grow their startup" , and then go test that value proposition! In other words, what do you believe is the job to be done that is shared by customers in that segment - and is that job not being addressed already in an effective way that delivers on the gain they want and/or provides the pain relief they want? Testing you value proposition hypothesis will help you learn a lot about whether the customers see the problem the same way as you do.
Let us take an example of fully automated restaurant startup. In that case, the important segment could be students, local residents, high tech adapters, local business owners and workers.
In that situation, is it a wise idea to just focus on one particular customer segment. Let us talk about a situation where I’m using paid engine of growth strategy to attract customers to attract customers. Don’t you think we can target multiple customer segment at the same time? Is it really important to place focus on just one customer segment at a particular time? Given the right strategy, we can target multiple customer segment at the same time.
Please enlighten me on this topic. Thank you in advance
My bias is that if you try to be everything to everybody then your branding message becomes very diluted. Startups typically have relatively small marketing budgets, and I'd suggest that it's a good idea to get as much leverage as you can from the marketing budget by focusing on a very clear branding message. So what is it that makes your restaurant unique? Is it a particular type of cuisine? If so, then that suggests you target segment is people who are interested in that cuisine, whether they are a student or local resident or high tech, etc. Or is your differentiation something else? Whatever makes your business unique, focusing on that uniqueness might be a better way to define your target segment.
The part I require help with is Customer Segments which is the first building block of a business model according to the book. The part that is confusing to me is that it mentions "There are different types of Customer Segments. Here are some examples:" it goes on to list 5 different examples which are 1. Mass market 2. Niche Market 3. Segmented 4. Diversified 5. Multi-sided platforms.
Questions I have:
Are these 5 different examples different ways you can classify different customer segments?
Is the "Mass market" example actually a customer segment? Because it says "business models focused on mass markets don't distinguish between different Customer Segments" does that sentence actually not make it a customer segment since it does not focus on customer Segments?
Could you consider age, behaviour, or geography different types of Customer Segments?
The 5 examples are what the Business Model Canvas calls the different "types" of customer segments - and then, as you point out, they start with the "mass market" which has no segments at all. Here's by bias/belief: Startups don't do mass markets and they don't do diversified markets. Both of those are for large, well funded companies. That leaves niche and segmented. But even a niche market typically has different segments, so I find the "niche" concept to be not that helpful, since all niche markets have segments (at least geographic segments, if nothing else.) That leaves segmented markets which I would argue is always what a startup is working with - and it's important to select which segment to tackle first. Multi-sided markets are really a different dimension. All kinds of markets are multi-sided, including mass markets and diversified markets - and yes, also many segmented markets. So my model for startups is simple: a startup is (or should be) dealing with a segmented market, and that market may or may not be multi-sided.
what are the customer segments for a theme park such as fossil fun park
Woooow
is Netflix a multi-sided market?
hello Steve...thanks for the great content...I am little bet confused regarding the customers vs partners...can we consider any segment who we charge a commission as customer?
In designing my BMC I cannot deliver the value without delivery company but I will charge it a commission...Is the delivery a customer or partner?
It's certainly possible for a partner to also be a customer. If you are charging a commission then presumably you are delivering some value to that to justify the commission. So that suggests there is a value proposition for that partner that is worth documenting and testing as if they were a customer!
How do you define who your customer is if you don’t know - you haven’t launched your product so, aren’t you guessing beforehand
The idea with the Business Model Canvas is to state who you believe your customer is, based on what you know today, and what problem they have - as a hypothesis. As Steve Blank says - "hypothesis" is a fancy word for your best "guess". But you then test that hypothesis (guess) with customers to find out if you are right - do they actually have the problem you think they have? If they don't, then hopefully, in the customer interview process, you get a clearer notion of what the actually problem is that they have, and can consider "pivoting" to addressing that problem.
@@Startupsos Thank you so much for your reply!
can u explain Diageo BMC
If you mean Diageo the alcohol beverage company, I haven't studied them enough to tackle a canvas. But as a large provider they have multiple brands, and it's a safe be that each brand has a focus on a particular customer segment, and hence has its own value proposition and BMC with potentially different channels, cost structure, etc.
StartupSOS its very difficult BMC of diageo
Difference between target market and market segment
Your target market would in fact be a market segment - specifically the market segment on which you will focus. There are always multiple segments in a market, so the question is: which one will you target?
Hi @startupsos I am having a slight problem identifying the market my startup idea falls under, The idea is basically reselling digital products to vending companies and making a profit through mark up. The vending companies could be of different sizes [Small, Medium or Enterprise Businesses]
Instead of starting with the product, I'd suggest starting with: what customer problem (what unmet need) are you addressing and who exactly is the end customer? It's that end customer (that will use the digital products) that will determine the size of your market. What you're calling "vending companies" sounds more like a sales channel to reach your market.