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As documented by Emmet and Jeuck in Catalogues and Counters, Sears identified a massive underserved segment and built an operation specifically designed to serve it, including a money-back guarantee that built trust with skeptical rural buyers. The contractor application: identify the customer segment the dominant operator cannot or will not serve well, build an operation genuinely designed for that customer, and own that segment before expanding.” } }, { “@type”: “Question”, “name”: “How does a contractor find an underserved customer segment?”, “acceptedAnswer”: { “@type”: “Answer”, “text”: “Start with your dominant competitor’s constraints. Call their office as a potential customer describing a small job or an outer-suburb address and listen to how they respond. Review their website for minimum job sizes, service area limits, and the customer types their messaging targets. Pull your own job history and identify where your close rates are highest and your margins are strongest. 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Law 3 told you to own one category before you claim another. Law 7 goes a level deeper: the strongest position is not just owning a category but owning the specific customer segment the dominant competitor chose not to build for. That is what Richard Sears did in 1886 with a crate of unclaimed watches in a railroad depot in rural Minnesota, and it is what built the largest retail operation in American history within twenty years.

Redwood Falls, Minnesota, 1886

Richard Warren Sears was 23 years old and working as a station agent for the Minneapolis and St. Louis Railway in Redwood Falls, Minnesota, when a crate of gold-filled pocket watches arrived unclaimed at his depot. The Chicago jeweler who had shipped them did not want them back at full return freight. Sears bought them at a discount, sold them by telegraph to other station agents up and down the line at a markup, and cleared a profit in a matter of days. He did it again with the next crate. Within a year he had quit the railroad and moved to Minneapolis to sell watches full time.

The insight underneath the watches was not about watches. It was about the customer at the other end of the telegraph line. The station agents in rural Minnesota, Iowa, Kansas, and the Dakotas were the only reliable connection between small-town and farm-country Americans and the manufactured goods concentrated in Chicago, New York, and other large cities. Those rural Americans needed goods badly. They were served badly. The general store in a town of 400 people carried a thin, overpriced selection because the storekeeper had no competition and no incentive to do otherwise. Marshall Field’s customers in Chicago could walk into a palace of retail abundance. A farm wife in western Kansas had what her local general store chose to stock.

Sears saw that gap and built a business inside it. He partnered with Alvah Roebuck in 1887, moved to Chicago to be closer to suppliers and the railroad infrastructure, and began building the catalog that would eventually reach 532 pages and offer everything from farm equipment to eyeglasses to prefabricated houses. As Boris Emmet and John Jeuck document in Catalogues and Counters: A History of Sears, Roebuck and Company, published by the University of Chicago Press in 1950, the catalog was not primarily a sales tool. It was a trust instrument. It told the rural customer: someone in the city actually wants your business, is willing to take your order by mail, and will send you exactly what they promised at a price that is not designed to exploit your lack of alternatives.

Marshall Field built a palace for the city.
Sears put a door in every farmhouse in America.

Law 7: Serve the Customer Nobody Else Will Serve

Find the customer segment every competitor ignores or cannot profitably serve.
Build the operation that wins them. Own that ground completely.

The dominant contractor in your market made deliberate choices about which customers to pursue. Those choices were probably correct given their business model, their crew size, their overhead structure, and their target revenue. The same choices that made them dominant in the main market created blind spots: customer segments they cannot serve profitably at scale, geographies that do not fit their routing, job types that do not match their crew mix, or service tiers that are below their minimum job size.

Those blind spots are not accidents. They are engineered into the dominant operator’s business model. A contractor with 14 trucks and $8M in annual revenue has a cost structure that requires a minimum job size to make the economics work. The $800 service call and the $1,200 repair are probably below their threshold. The homeowner in a modest zip code who is not a candidate for a full replacement is probably outside their target profile. The small commercial property manager with six units and a limited budget is probably not in their pipeline.

For a smaller operator, those discarded segments are not scraps. They are a market the dominant competitor has voluntarily left uncontested.

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Sears and the Customer the Cities Left Behind

Emmet and Jeuck’s history of Sears is the most thorough academic treatment of the company’s founding period, drawing on the company’s internal records and the broader retail history of the late nineteenth century. What their account makes clear is that Sears’ competitive advantage was not primarily price, though his prices were lower than the general store. It was not primarily selection, though his catalog eventually dwarfed anything available in small-town retail. It was trust backed by a guarantee.

The rural American consumer of the 1890s had been burned by mail-order fraud repeatedly. Catalog operations that took money and sent nothing, or sent goods of a quality far below what was advertised, were common enough that rural customers were deeply skeptical of mail-order as a channel. Sears understood that his entire business model depended on cracking that skepticism, and he built his guarantee accordingly: satisfaction or your money back, no questions asked. He absorbed the fraud and the returns because without the guarantee, the rural customer would not take the risk, and without the rural customer, he had nothing.

By 1900 Sears, Roebuck and Company was the largest mail-order retailer in the United States. Marshall Field’s, Wanamaker’s, and Macy’s were larger in absolute revenue, but they were serving urban customers who could walk through a door. Sears owned a market that those operators had no mechanism to reach. The railroad network that Richard Sears had understood from his station agent days became the delivery infrastructure for an operation that eventually served millions of households that no department store could touch.

Three Details Worth Carrying

Sears did not try to out-Marshall Field Marshall Field. He did not open a store in Chicago and compete on the same terms. He went where Marshall Field was not, built an operation optimized for that customer, and held the position. The choice to serve a different customer was the entire strategic foundation.

The guarantee was the product, not the catalog. The rural customer needed to trust the channel before they would use it. Sears’ money-back guarantee was not a marketing tactic. It was the foundational infrastructure of the business model. Without it, the segment was unreachable. With it, the segment was uncontested.

The segment was chosen because it was large enough, not just because it was available. Rural America in the 1890s was not a niche. It was the majority of the American population. Sears identified an underserved segment and verified it was large enough to support the business he wanted to build before he committed to serving it. Availability without scale is a dead end.

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The Contractor’s Underserved Segment

Every mature contractor market has a Sears opportunity. The question is not whether it exists. The question is whether you have looked for it with enough precision to find it and enough commitment to build for it.

The dominant contractor in your market made their segment choices based on their cost structure, their crew capacity, and the customers who produce the highest revenue per job with the lowest friction. Those choices are rational. They are also expensive for the segments that fall outside the selection criteria.

Consider what the dominant operator in a $15M HVAC company has probably optimized for: new residential construction contracts, full system replacements in established neighborhoods, and commercial maintenance agreements with property management firms. Their minimum job size is probably $2,500 or above. Their crews are optimized for full installs, not service calls. Their dispatch schedule is probably backlogged because they are working off a large base of recurring commercial clients. They are good at what they do. They are also structurally unable to serve a significant slice of the market well: the homeowner with an aging but functional system who wants a quality service technician and not a replacement pitch, the small commercial landlord who cannot get on a large contractor’s schedule, and the rural property owner 45 minutes from the metro center who gets told their address is outside the service area.

The operator who identifies one of those segments and builds an operation genuinely designed to serve it, with pricing, scheduling, marketing language, and service protocols all calibrated to that specific customer, does not need to beat the dominant operator in the main market to build a strong, profitable business. They need to own their segment completely enough that the dominant operator cannot profitably dislodge them without restructuring their own business model.

What Owning a Segment Actually Looks Like

It looks like a contractor in a mid-size Ohio market who decided five years ago to specialize in service-only HVAC: repairs, maintenance agreements, and diagnostics, no new installations. The dominant competitors in that market were all install-heavy. They took service calls as a customer retention tool, not as a revenue focus. They staffed for installs. Their dispatch for service calls was often slow because service work was not their priority. The service-only contractor built his entire operation around fast service dispatch, transparent flat-rate pricing, and a maintenance agreement program that now covers 600 households. He does not compete for installation contracts. He does not want them. His segment is uncontested because the dominant players have structurally deprioritized it.

That is the Sears model applied to a trades business. Different customer. Different operation. Uncontested ground.

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Four Segments Worth Examining in Most Markets

These are the segments most consistently underserved by dominant contractors in residential and light commercial markets. Not every one will be viable in your specific market. The exercise is to assess each against your market’s competitive landscape and your own operational capacity.

Segment 1: The Service-and-Maintenance Customer

The homeowner who wants quality maintenance and responsive repair, not a replacement pitch. In most HVAC, plumbing, and electrical markets, the dominant operators have optimized for installation revenue. Service and maintenance exist to retain customers for future replacements. An operator who builds around the service customer, fast dispatch, flat-rate transparent pricing, maintenance agreements with actual value, and technicians trained not to pitch replacements on every call, occupies ground that install-heavy competitors cannot easily take without restructuring their cost model.

Segment 2: The Small Commercial Property Owner

Owners of small multi-unit residential buildings, strip retail, and light commercial properties who cannot get reliable service from residential-only contractors and do not have enough volume to interest the large commercial contractors. This segment typically needs contractors who understand commercial systems, can work around tenant schedules, and can produce basic documentation for property management purposes. The dominant residential contractor cannot serve them well. The dominant commercial contractor does not want them. The gap is consistent across most mid-size markets.

Segment 3: The Outer-Suburb and Rural Customer

The homeowner 30 to 60 minutes from the metro center whose address falls outside the service area of most established contractors. This is the most direct Sears parallel. The rural and outer-suburb customer is not being served poorly. They are often not being served at all. An operator who maps the outer ring of a metro market and builds dispatch capacity to serve it, with pricing that accounts for drive time, can own that geography entirely simply by being the operator who shows up when called.

Segment 4: The High-Specification Residential Customer

The homeowner who wants premium quality, detailed documentation, and a contractor who communicates at a professional level throughout the project. This customer exists in most markets and is consistently underserved because the dominant operator’s volume business is optimized for speed and throughput, not for the project management overhead this customer requires. An operator who builds for this segment, higher price point, slower pace, detailed written communication, and professional presentation, occupies a position the dominant operator’s business model is structurally unsuited to compete for.

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The Reversal: The Segment Too Small to Hold

Sears chose rural America as his segment. In 1890, that was roughly 65 percent of the American population. He chose a segment that was large enough to build the largest retail operation in the country, not a segment that was merely available.

The failure mode for contractors applying Law 7 is choosing a segment based on availability rather than size. The segment that no competitor serves may have no competitor serving it because there is not enough revenue in it to justify the operational cost of serving it well. A contractor who builds an operation around a segment too thin to sustain a $2M business will be stuck below the revenue threshold where the operation can support adequate staffing, marketing, and capital investment. He will own an underserved segment. He will own it in poverty.

Before you commit an operation to a segment, estimate its size. The Echelon Intel Report methodology gives you permit pull data, housing stock counts, and business density by geography. Those numbers let you answer the size question before you answer the operational question. A segment with 8,000 households in a 15-mile radius that the dominant operator has abandoned is a viable segment for a $3M to $5M operator. A segment with 800 households is a specialty, not a business foundation.

There is a second version of this reversal: the operator who identifies a genuine underserved segment but cannot resist also competing in the main market. He builds for the Sears customer and then spends half his marketing budget chasing the Marshall Field customer anyway. He ends up thin everywhere instead of strong somewhere. The Law requires a commitment to the segment choice, not just an identification of it.

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Five Moves You Run This Week

Move 1: Map the Dominant Operator’s Minimum Job Size (30 minutes)

Call your dominant competitor’s office as a potential customer. Describe a small job: a repair call, a service diagnostic, a minor installation. Listen carefully to how they respond. Do they take the booking readily or do they find reasons to redirect to a larger scope? Most dominant contractors in install-heavy trades have informal minimum job thresholds that their dispatch team communicates in the first conversation. Identifying that threshold tells you where their floor is and what falls below it.

Move 2: Pull Your Last 24 Months of Jobs and Find the Pattern (60 minutes)

Go through your job history and tag each job with a customer type: residential standard, residential high-specification, small commercial, rural or outer-suburb, service-only. Look at which tags appear most often in your highest-margin jobs, your highest close-rate leads, and your best customer relationships. The segment you are already best at serving is often the segment closest to your Law 7 opportunity. The data is already in your job history.

Move 3: Estimate the Segment Size (45 minutes)

Pick your most promising candidate segment from Move 2 and estimate how large it is in your market. Use permit pull data, housing stock counts from county assessor records, or business density data for commercial segments. You are looking for a rough number: how many households or businesses in your service area fit this customer profile? Run a back-of-envelope revenue estimate. If the segment contains 6,000 households and you can realistically reach 3 to 4 percent of them per year at your average job value, does that math support the business you want to build?

Move 4: Write Your Segment Positioning Statement (30 minutes)

Write one paragraph describing the specific customer you are choosing to serve and why your operation is built to serve them better than any competitor. Not a mission statement. A specific description of the customer profile, the gap the dominant competitor leaves, and the operational choice you are making to fill it. This paragraph belongs on your website as your positioning statement and in your own head as the filter for every marketing and operational decision. If a new lead or a new service line does not fit the paragraph, it is not your customer.

Move 5: Identify One Operational Change That Signals the Commitment (30 minutes)

The segment positioning statement is a declaration. An operational change is a commitment. Identify one concrete change you will make this month that signals the business is genuinely oriented toward this segment. If you are choosing the service-and-maintenance customer: launch a maintenance agreement program this month. If you are choosing the outer-suburb customer: expand your dispatch radius and update your service area page. If you are choosing the small commercial customer: write a service page targeting small commercial property owners. One change. This month. A declaration without an operational change is a wish, not a strategy.

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Back to the Catalog

Richard Sears never opened a store to compete with Marshall Field. He did not need to. He served the customer Marshall Field could not reach and could not serve at the price point the rural market required. The catalog was not a second-best version of a department store. It was a purpose-built instrument for a specific customer that the department store model had no mechanism to serve.

The dominant contractor in your market is Marshall Field. His business model is correct for the customers he chose. The choices that made him dominant also made him blind to the customers his model cannot serve. Those customers are real. They are spending money with someone. Often that someone is a contractor who picked up the phone when the dominant operator did not, or drove to the address the dominant operator would not add to their route, or took the job that fell below the dominant operator’s minimum.

Build for that customer deliberately. Build a guarantee they can trust, an operation calibrated to their specific needs, and a marketing voice that speaks directly to the gap they have been living with. Own that segment completely before you add the next one. Sears did not try to be Marshall Field and a mail-order company at the same time. He chose the catalog customer and built an empire on the ground that a palace of retail could not reach.

Marshall Field built a palace.
Sears put a door in every farmhouse.
Know which one you are building.

The customer nobody else will serve
is waiting for the first contractor who shows up with a guarantee.

Own the segment the dominant operator wrote off.
That ground does not need to be defended. It just needs to be claimed.

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The map was always there.
This is just the first man drawing it for you.

Disclosure: Kore Komfort Solutions is an educational publisher. Some links in this article may be affiliate links, meaning KKS receives a small commission if you purchase through them at no additional cost to you. This does not affect which products are mentioned or recommended. All analysis and recommendations are editorially independent.

Frequently Asked Questions

What is the business lesson from Richard Sears and Sears Roebuck for contractors?

Richard Sears built the largest retail operation in America not by competing with Marshall Field in Chicago but by serving the rural American customer that department stores had no mechanism to reach. As documented by Emmet and Jeuck in Catalogues and Counters: A History of Sears, Roebuck and Company, Sears identified a massive underserved segment and built an operation specifically designed to serve it, including a money-back guarantee that built the trust necessary for rural customers to buy by mail. The contractor application is the same: identify the customer segment the dominant operator in your market cannot or will not serve well, build an operation genuinely designed for that customer, and own that segment before expanding.

How does a contractor find an underserved customer segment?

Start with your dominant competitor’s constraints. Call their office as a potential customer describing a small job or an outer-suburb address and listen to how they respond. Review their website for minimum job sizes, service area limits, and the customer types their messaging targets. Pull your own job history and identify where your close rates are highest and your margins are strongest. The intersection between segments the dominant operator deprioritizes and segments where your existing customers already cluster is usually where the Law 7 opportunity lives.

What are examples of underserved customer segments for contractors?

Four segments are consistently underserved in most residential and light commercial contractor markets: the service-and-maintenance customer who wants quality repair work without a replacement pitch, the small commercial property owner who is too small for large commercial contractors and too complex for residential-only operators, the outer-suburb and rural customer outside the dominant operator’s service radius, and the high-specification residential customer who wants professional project management and detailed communication at a premium price point. The viable segment in any specific market depends on local competitive dynamics and the contractor’s existing operational strengths.

How does Law 7 connect to Law 3 of the Contractor’s Campaign?

Law 3 established the principle of owning one category before claiming another. Law 7 adds a dimension: the strongest category to own is one defined not just by what you do but by who you do it for. A contractor who owns the service-and-maintenance category for a specific customer segment, the one the dominant operator’s business model cannot serve well, holds a more defensible position than a contractor who simply declares a service category and competes for the same customer the dominant operator is targeting.

How do you evaluate whether an underserved segment is large enough to build a business on?

Estimate the segment size in your service area using permit pull data, housing stock counts from county assessor records, or business density data for commercial segments. Run a conservative revenue estimate: if you can realistically reach 3 to 4 percent of the segment per year at your average job value, does that math support your revenue target? A segment with 6,000 qualifying households at $3,000 average job value and a 3 percent annual penetration rate produces $540,000 in annual revenue from that segment alone, which may be a foundation or a supplement depending on your target. The calculation should be done before you commit the operational changes the segment requires.

What is the risk of choosing too narrow a customer segment?

The primary risk is choosing a segment based on availability rather than size. A segment the dominant operator has left unserved may have no competitor serving it because the revenue potential is too thin to justify a focused operation. The second risk is choosing a segment but continuing to chase the main market simultaneously, which produces thin positioning everywhere instead of strong positioning in the chosen segment. The segment commitment must be backed by operational changes, not just a positioning statement, to produce the concentrated local advantage that makes the strategy work.