How Do I Divide My Local Market Into Customer Groups?

By Bill Stilwell · Last reviewed October 16, 2026

The short answer

Customer segments are groups inside your market that need different things or buy in different ways. Split your market into 2 to 4 groups based on need, situation, and how they buy. Then pick one group to serve first and build your offer, prices, and pages around it.

What this means

The outline asks you to divide the market into meaningful groups with different needs or buying behavior.

“Meaningful” is the key word. A segment only matters if the group needs a different offer, a different message, or a different price. Age or income alone is often not enough. Need and situation usually matter more.

Common ways to split a local market:

By situation: homeowners, landlords, property managers, new movers
By need: emergency repair, planned project, recurring upkeep
By buyer type: households or businesses
By budget: basic, standard, premium
By who decides: the person who pays may not be the person who calls

Example: a house cleaning business finds three groups. Busy two-income families want weekly cleaning and care most about trust and the same cleaner each time. Landlords want move-out cleans fast and care about price and speed. Older homeowners want help every two weeks and care about safety and a friendly, steady crew. Same service, three different offers.

Why it matters

One message rarely fits everyone. A page that tries to speak to all groups often speaks to none.
Prices and terms differ. Landlords may expect invoices and net terms. Families may want card on file.
It sets your first focus. A new business has limited time and money. Picking one segment first keeps you from spreading too thin.
It shapes your pages. Each strong segment may need its own service page with its own words (see 13.4.2 Service Pages).

Who this applies to

Every business with more than one kind of customer. A very narrow business, like a commercial kitchen hood cleaner, may have only one or two segments. That’s fine. Write them down anyway.

How to do it

List every kind of customer you’ve talked to or expect to serve (see 7.3.1 Customer Interviews).
For each kind, write their main need, their situation, how urgent the need usually is, and how they like to buy.
Group the kinds that share the same need and buying style. Stop at 2 to 4 groups.
Estimate the size of each group from your market size work (see 7.4.1 Market Size).
Note how each group searches. Write down the words they’d type into Google (see 7.3.8 Search Behavior).
Score each group on size, value per job, how often they buy, and how easy they are to reach.
Pick one group to serve first. Name a second group you’ll add later.
Write a one-line offer for the first group.
Save the table and revisit it after your first 20 to 30 customers.

What proof to keep

A segment table with need, situation, buying style, size, and score for each group
The interview notes that support each group
Your chosen first segment and the reason, with the date

Keep these in your business planning folder next to your market size worksheet.

Common mistakes

Segmenting by age or income only. These rarely change what you sell. Start with need and situation.
Too many segments. Eight groups is a list, not a plan. Keep it to a few.
Picking the biggest group by default. A smaller group that pays more or buys often can be a better start.
Writing one page for everyone. If two groups search for different things, they often need different pages.
Never checking. Your first real customers will show which segment actually buys. Update the table.

When to get help from a pro

Most owners can do this alone. A Small Business Development Center (SBDC) adviser or SCORE mentor can review your table. Ask:

Are these groups really different, or am I splitting hairs?
Which group would you start with, given my budget?

Bill’s note

[Bill: add a short story or opinion here. For example, how SiteSmarty’s customers split into groups, or a client who grew faster after focusing on one segment.]

If you’d rather have this done for you, SiteSmarty builds service pages and Google Business Profiles around the customers you want most.

How I did this for SiteSmarty

[Date I did this:]
[What I actually did, step by step: the groups I found and the one I picked first]
[What it cost and how long it took:]
[What surprised me or what I’d do differently:]
[Screenshot or photo to add, with private info blurred: my segment table]
[Result so far:]

Questions people ask

How many segments should a small business have? Usually 2 to 4. Fewer is fine if your market is narrow.

How do I pick which segment to start with? Look at size, value per job, how often they buy, and how easy they are to reach. Pick the best mix, not just the biggest.

Should each segment get its own service page? If the groups need different things or search with different words, yes. If they want the same thing, one page can work.

Do segments affect my Google Business Profile? Indirectly. They shape the services and description you list, which helps the profile match what people search for.

Audit check

Question: Has the owner defined 2 to 4 customer segments by need and buying style, and picked one to serve first?
Pass looks like: A dated segment table with need, situation, buying style, size, and score, plus a named first segment and a one-line offer for it.
Fail looks like: No segments. Segments by age or income only. Ten groups with no focus. One generic page for every type of customer.
Evidence to collect: The segment table, interview notes, and the first-segment decision.

Where this fits

Do this first: 7.4.1 Market Size, 7.1.4 Ideal Customer

Do this next: 7.4.3 Seasonality

Sources

U.S. Small Business Administration, "Market research and competitive analysis" (checked October 16, 2026)
Google Business Profile Help, "Tips to improve your local ranking on Google" (checked October 16, 2026)

This page explains general rules and Bill's own experience. It is not legal, tax, or insurance advice. Talk to a qualified professional about your situation.