When creating a new Business Model Canvas, the first question any business owner must ask is “For whom are you creating value?” The “Who” represents the customer segment.
Sometimes the answer to the question of who is the customer may be a bit complicated. For example, take PayPal. PayPal is an example of a multi-sided platform that connects both buyers and sellers in a financial transaction. It essentially has two customers, each with a different value proposition.
Sometimes the customer may simply be a new segment of an existing market. Take for example Nike shoes. Nike initially targeted the runner which had a very specific set of needs as we discussed in the blog post titled, “Just Do It.” However, Nike has expanded its line to included basketball, football, and baseball shoes as well.
Each customer segment has its own set of value propositions. A company may consider diversifying its customer offering. For example, General Motors developed robots to more efficiently assemble their automobiles. Since its robots could be used for other functions, General Motors sells its robots and technology to other companies.
More personally, my former company created a series of training courses for a computer manufacturing company that used General Motors’ robots to assemble disk drives in a cleanroom environment.
For a list of the five most common types of customer segments see Choosing a Customer Segment Type
Using the Business Model Canvas to lay out a visual representation for each customer segment is a great way to get a simple bird’s eye view and give the entrepreneur the ability to assess which customer segment is the most important.
Do you have a clear picture of the customer segments your business targets?
Next post in the series: Value Propositions
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