guest blogger product management

Importance of Customer Segmentation when Building New Products

Guest Post by: Madhavi Marka (Mentee, Session 7, The Product Mentor) [Paired with Mentor, Nis Frome]

There is no such thing as placing too much importance on your customers. Customers are the oxygen for any business model. One of the primary goals of any business strategy is to identify and meet needs of the customer. Customers differ widely from each other in various aspects. To better serve customers, it is important to group customer into segments based on their needs, behaviors and attributes.


Customer segmentation is the practice of dividing customers into groups based on common characteristics so that companies can build products to each specific group effectively and appropriately. For business-to-business products, companies segment customers based on wide factors such as industry, company size, location etc. For business-to-consumer products, companies segment customer based on the demographic, geographic and psychographic data.

The following steps are involved in the process of customer segmentation when building products:

  1. Identify the data that needs to be collected
  2. Collecting the data from various sources
  3. Analysis of the data
  4. Incorporating the analysis into product decisions

Data can be collected by interviewing customers, surveys, focus groups etc.


Customer segmentation is a powerful tool for product managers and marketers to draw an accurate picture of the customers. Defining target customer base helps with creating the roadmap. Knowing specifically what customer want, helps companies to build and deliver the precise solutions that meet customer needs. Once you know your customer, products can be offered at right locations and right price.


Study your customers beyond the basic profile information. Ensure to use all the available data to identify and act on customer triggers. Interviewing and maintaining customer lifecycle highlights details that are not obvious from the profile.


Key to building successful products is to understand the pain points and ensure that product offering provides solutions to the issues identified by the customers.


Methods and practices that have worked in the past might not always work in the future, so challenge your assumptions by consistently reframe existing data and insights to make sure the best decisions are made on the available data. A really powerful framework is to continue asking ‘why’ until you get to the root cause. Then you can evaluate the chain reaction of effects.

Establish effective communication on customer segmentation among relevant departments such as product management, marketing, sales, customer services etc. so that product decisions are not made in silos.



Customer segmentation helped knowing our customer needs better and focus our efforts in bringing the right features to the market. Leveraging the insights from our customers and insights from competitive landscape, helped with defining the target customer base in terms of the organization size, behaviours, partnership with 3rd party vendors. However, target customer base and roadmap should be continuously reviewed and redefined as the features are added and product expands.



About Madhavi Marka

MadhaviMadhavi is working as Product Manager at Transplant Connect. In her role, she enjoys working with clients to solve their problems and optimize workflows.




More About The Product Mentor

TPM-Short3-Logo4The Product Mentor is a program designed to pair Product Management Mentors and Mentees around the World, across all industries, from start-up to enterprise, guided by the fundamental goals…

Better Decisions. Better Products. Better Product People.

Each Session of the program runs for 6 months with paired individuals…

  • Conducting regular 1-on-1 mentor-mentee chats
  • Sharing experiences with the larger Product community
  • Participating in live-streamed product management lessons and Q&A
  • Mentors and Mentees sharing their product management knowledge with the broader community

Sign up to be a Mentor today & join an elite group of product management leaders!

Check out the Mentors & Enjoy!

Jeremy Horn
The Product Guy

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