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Definitions: Segments, Pain & Gain

What Are Customer Segments?

Before we can talk about unmet need, you need to define who you believe are your customers.   The first question is: what market (customer) segments will you address (eventually)?

In any market, there are multiple ways to segment the market – in other words to group customers together.  One grouping method is to group together customers based on their need for different versions of a product.  For example, read Clayton Christensen’s milkshake example here to see a great example of two different market segments (commuters versus parents with children in tow) that both needed milkshakes – but each needed a different type of milkshake.

Another useful way to define customer segments is to group customers according to what sales channel you’ll use to reach them.  For example, it may be useful to segment customers by geography.  Customers in your own city can be reached directly (fliers, community events, etc.) while customers further away will require other marketing approaches.  Similarly, you may reach customers in the US through one sales channel, and international customers through a different sales channel.

What’s the best way to segment your market?  Perhaps the best answer is: find an experienced marketing/sales executive with experience in your market who can give you advice that fits your market.

Is Your Market Multisided?

In some markets, there are more than one type of customer.  Consider Facebook.  Facebook has a lot of users, and the vast majority are “users” who pay nothing.  Then there is another set of customers – advertisers – who actually provide Facebook with revenue.  Both the users and the advertisers are important – and those two categories of customers clearly have different needs.  If you have a two-sided (or three-sided – or more) market, you’ll need to fill out multiple canvases – one for each type of customer!

The Job, the Pain, the Gain

Customers expect a product or service to “do something” for them.  You can think of this as the “job” the customer is “hiring” your product to do.  Associated with doing the “job”, there is usually a particular “gain” the customer is seeking, and/or a “pain” the customer is trying to avoid.

The question is: what do you believe is the unmet need (the “job” to be done)?    And why is it compelling to the customer?  To be compelling, the “job” probably needs to result in reducing or eliminating some “pain”, or delivering on some “gain”.

As a startup, you’re looking for a compelling need – a need that involves significant pain or gain.  Ultimately, you’re looking for an “emphatic yes” from the customer – meaning the need is compelling and they want a solution NOW!