How to choose your first customer segment

Choose your first customer segment by comparing a specific problem in a specific setting. An industry label is usually too broad to guide early product work. “Manufacturing” contains many jobs, constraints, buyers, and purchasing processes. “Procurement coordinators onboarding small local suppliers at a single-site manufacturer” gives you something you can investigate.

Your first segment is a working focus, not a permanent declaration about the company. The task is to choose where another round of research or a small product test is most justified, while preserving the reasons you might change course.

The framework below is original. Its worked example uses a fictional supplier-onboarding product; none of the example segments or proposed problems represents verified customer evidence.

Describe the situation before the company category

A useful segment definition combines four elements: the person doing the work, the situation that triggers it, the constraints around it, and the outcome they need.

For example: “An operations coordinator at a small agency who needs to collect new subcontractor details before a project starts, without a dedicated procurement team.” That description is still a hypothesis, but it can guide recruitment and questions.

Compare it with “SMBs that need automation.” The broad version includes too many unrelated workflows and already assumes that automation is the answer.

GOV.UK’s research guidance connects the groups you study to the questions you need answered. Use that relationship to decide which distinctions between potential customers actually matter. Read the research planning guidance.

Separate three kinds of attractiveness

A segment can be easy to reach, interesting to study, and commercially promising to different degrees. Keep those dimensions separate.

Research access concerns whether you can reach relevant people and understand their work. Problem fit concerns whether the particular workflow has an unresolved need your team could address. Commercial fit concerns whether there is a viable path to adoption and payment.

An accessible group may be a good place to learn without becoming your initial customer base. A group with a serious problem may have purchasing constraints that make your current product unsuitable. Record both facts instead of collapsing them into a single “good segment” judgment.

Build an evidence matrix

Create a column for each candidate segment and a row for each uncertainty. Begin cells with “unknown” when you lack evidence. Unknown is different from weak demand.

The weakening examples are questions to investigate, not universal rejection rules. An infrequent event can still matter greatly. A long buying process can be acceptable for some businesses. Interpret the evidence against the business you are actually trying to build.

Apply the matrix to a fictional comparison

Suppose the supplier-onboarding founder is considering three starting contexts:

• Small agencies: An operations generalist coordinates new subcontractors.
• Single-site manufacturers: Procurement staff coordinate new local suppliers.
• Small nonprofit organizations: An administrator coordinates vendors for programs or events.

Do not fill the matrix with assumed pain scores. Instead, write the next evidence needed for each context.

For agencies, investigate what happens when a subcontractor joins an active project. For manufacturers, investigate which checks are required before an order can be placed. For nonprofits, investigate who gathers information and who authorizes payment.

The same phrase, “supplier onboarding,” may hide different tasks. If the work differs substantially, you may be evaluating different products rather than three audiences for one product.

Include the alternatives customers already have

Competition includes doing the work manually, assigning it to someone else, using a broader system, or accepting the delay. Ask what people actually choose and why.

The SBA’s market research guidance includes demand, alternatives, market context, and competition across segments. Use secondary research to understand that context, then investigate the specific workflow directly. Read the SBA’s market research section.

Avoid interpreting a spreadsheet as proof of an opportunity. A spreadsheet may be inexpensive, understandable, flexible, and sufficient. Your research needs to explain what is unresolved, not merely identify something that could be rebuilt in software.

Keep users, beneficiaries, and buyers visible

The person doing onboarding may experience repetitive work. A manager may care about project readiness. Finance may require accurate payment information. Another role may approve a software purchase.

For each segment, sketch the path from the task to a buying decision. Which role can describe the problem? Which role can approve a change? Which role might block adoption for a reason your product does not yet address?

If you have interviewed only one role, mark the other perspectives as missing. Do not let a friendly user’s enthusiasm stand in for a completed buying path.

Choose a next test using explicit conditions

Before comparing your notes, write the conditions for moving forward. These might include a recurring unresolved situation, a coherent set of requirements, access to people who can test a proposed change, and a plausible purchasing route.

Use qualitative judgments with evidence attached. A numeric score is only helpful when its meaning is clear; adding several guesses does not make the result more reliable.

A decision note can be short:

We will focus the next round on [segment] because [observed evidence]. The largest unresolved issue is [uncertainty]. We will test it by [action]. We will reconsider if [counterevidence]. This decision does not establish [limits].

Revisit the segment when its explanation changes

You may discover that company size was a poor dividing line, while transaction complexity or responsibility for the task mattered much more. Update the definition accordingly.

Keep rejected and deferred segments in the record with the reasons. “No reachable participants yet,” “existing tools appear sufficient,” and “requirements exceed our scope” imply different next steps.

The useful output is a focused research and product agenda with a defensible reason behind it. That is enough to decide whom to speak with next without pretending you have already proven the market.