Lean Canvas Model Section 2- Customer Segments
In this Blog, I will be explaining the 2nd section of the Lean Canvas Model, Customer Segments. This YouTube video will help you as well: https://youtu.be/G1rqF5S8cMI
Customer Segments is a very important part of your business plan. It is important to know, almost from the beginning what types of customers you are trying to attract. This can be very general, such as age, income, level, or other demographic information, or very specific, such as business people, eating lunch out in a downtown area of a city. Customer segments informs other areas of the Lean Canvas Model such as Channels and Revenue Streams, so it is important to be clear. Below are some things to consider.
The location of your business can determine greatly your customer segments. For example, a restaurant in a downtown area away from the interstate may only work for locals. A restaurant close to the interstate may attract locals, but with a billboard, may attract travelers passing by. You may also be able to attract customers from a large geographic area if your restaurant is a “destination.” A business that has a stand out menu and excellent service can not only attract customers from further away, it can also attract customers to nearby shops and restaurants by bringing people in. Customers that come into town for a special meal may want to make a day of it. Another thing to consider with location is Food Trucks. A food truck may choose to go to a downtown area with lots of offices during weekday lunches but go to a shopping area, popular park, or tourist destination on the weekends. This allows a business owner to hand pick customers on a daily basis.
Targeting certain age groups can help a great deal as well. Food is something all age groups need, so this requires some creativity within the Food Service Industry. This happens most of all by targeting certain customers at different times of day. Lets look at McDonalds for example. In the morning from 6-8, it attracts mostly people on the way to work and school. Between 9 and 11, they may target customers in the retired age that may be meeting friends for coffee. Between 11 and 1, the target is people on lunch breaks. From 2-4, it may be high schoolers stopping after school. To attract those customers;
Offer loyalty bonuses for breakfast customers to eat there more than once a week.
Offer free coffee with a breakfast sandwich for the retired group because coffee is a low cost item.
For lunch, most are not struggling, so you may leave that alone.
For the after school group, you may offer coupons as incentives for teachers to give out.
Knowing where your customers are coming from is important as well. If your customers are mostly people on a lunch break, you may need to focus on quick serve items at lunch. If your customers are mainly traveling, clean bathrooms are a must. If your customers are mainly local, regulars are hugely important, so strong service and relationships are vitally important. As I mentioned, target market informs so many business decisions, so establish it early.
Median income of a particular area can have a big impact as well. Cost of living varies dramatically based on area and therefore prices may vary. For example, a full stack of pancakes at IHOP in Anaheim, California is $10.99, while one in Burlington, NC is more than $3 cheaper at $7.29. How much people are willing to pay varies greatly by area. Knowing that information is very helpful. California has a very high cost of living while Burlington, NC doesn’t. The IHOP in Anaheim is also within walking distance of Disneyland. Being close to major tourist destinations such as theme parks or beaches allows you to charge much more. This also however means that your location, employees, bills, and materials may cost more.
It is difficult to think of the segments of the Lean Canvas Model separately, because all parts of a business plan are so very connected, as they should be. But by understanding how a particular section informs other sections, you are able to make the decisions in your planning and in your business that will serve you and your customers the most.
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