Five days a week I am in conversations with clients whose expertise ranges from film production to healthcare compliance consulting to environmental activism.

My job is to help demystify the process of designing, developing, and managing web and mobile products.

The challenge is consistently finding ways to translate insider terms (what is Agile anyway?), unpack acronyms, and educate a diverse audience about the same things.

Two nights a week I additionally tackle this challenge in my Product Management classroom.

Do NOT cue the tiny violins.

What I’m setting up here is the importance of being earnest when it comes to customer segmentation.

9 out of 10 new products fail. Why?

Not having a product is almost never the reason that product companies fail.

They fail because they lack customers.

-But isn’t lack of customers a job for sales and marketing to fix?

No.

Lack of enough customers is a job for sales and marketing. But only after you have a proven, repeatable process for selling your product to the right people.

So how do you find the right people for your product?

A Market in the Gap

Most simply, your customer (or group of customers — aka your market) is the person who has the problem your product purports to solve.

For example, if your product is a car, then ostensibly your market is car owners.

With such a big total market opportunity (I mean look at that pie, it’s huge!) it’s tempting to dive right in and start converting everybody into evangelists for your brand.

But a big market unified by a single need on the surface — to own a car — is more like an iceberg.

What lies beneath the water line is a world of sharp differences that can shred your sales and marketing strategy if it’s too one-size-fits-all.

Returning to our car owner universe and using Toyota Prius as the example, we can see how adding just one distinguishing quality — “environmentally-conscious” — brings a much more targeted segment of our market into focus.

You can segment your market by distinguishing qualities of your customer.

But there are always even more customers in the gap. Tesla saw this by encroaching on Prius’ target segment and adding even another qualifier — “values performance and luxury.”

Segment ruthlessly. There are always customers in the gap.

Do this now:

For your product business, write down as much as you know about your target market.

How many more distinguishing qualities can you ascribe to this group? Can you identify a hungry batch of customers in the gap whose nuanced needs are not being met by current competitors or solutions? Why not start selling here?

A brief introduction to Customer Development

Customer Development is a type of validated learning that seeks to confirm problem / solution fit.

For startups, Customer Development is the very first and most important experiment you must conduct.

By getting out from your desk and talking to real potential customers in the world, you can learn a lot about what unites them and what divides them and whether any of “them” are your customers at all.

If you learn to conduct effective interviews and to listen, your customers will even tell you what they believe (oftentimes these beliefs are immovable, so it’s helpful to plan for addressing them in your message) and how they like to buy — essentially providing you the blueprint for your sales and marketing strategy.

“A startup should focus on reaching a deep understanding of customers, discovering a repeatable road map of how they buy, and building a financial model that results in profitability.”  Steve Blank

It sounds so obvious and yet it’s remarkable how often we forget this critical first step — jumping straight to design and features (solution) without first understanding the problem.

Customer Development is lean because it costs very little money and time but saves both exponentially. It is a separate and distinct process that informs product development and precedes sales and marketing.

Do you have an idea or a product you’re looking to start up or scale up? Contact me and let’s discuss it.

Originally published at medium.com on April 7, 2016.