How knowing who your customers are (and aren’t) drives business success
I teach Fundamentals of Marketing at a local university, and one of the first concepts the students encounter in the textbook is the target customer defined as “those to whom the product is directed.” For college students, this is still fairly abstract and the early stages of learning are around the importance of understanding the customer and giving them the broad strokes of demographic, lifestyle, behavioral, and value differences. Many businesses also continue to have only a nascent understanding of this concept, which is fundamental not only to marketing, but to new product development and strategic planning.
The starting point comes with asking some fundamental questions:
1. Who are the customers who are currently attracted to my offering? How do we better serve them and draw in more people like them?
2. Who do we want to attract as new customers, and what products and experiences will appeal to them?
Initial success can come from a great offering
Sometimes a product or service is sufficiently unique and in demand that knowing the customer does not initially seem important to sales. Henry Ford’s famous line about “any color so long as it is black” speaks to the efficiency of serving a large, diverse market as a near monopoly. And there are many other examples of businesses who have customers eager for their offering before it is even available. Several years ago I worked on a consulting project for a high end supermarket brand. These specialty stores had aisles of fresh and unusual produce, wonderful meats and seafood, an in-store bakery, and ranges of cheeses. When a new store would open, it would be mobbed for the first few weeks then experience a sharp drop off in customers. The company wanted to avoid this “J-curve” for future openings, and also position itself well against competitors. At the beginning of the project, they described their target shoppers as women between 25–40. It quickly became apparent that this target was based only on who they thought their shoppers should be, based on their image of a working mother who valued high quality food for her family.
Maintaining success requires attention to the right customer experience
In the course of the project, we dove into area demographics, conducted in-store surveys, intercepted shoppers, and did shop-alongs with customers in the most recently opened store. The analysis of all this data challenged the starting assumptions in several ways. While high quality food was appealing and affordable to the 25–40s, the store itself didn’t fit the kind of shopping experience that fit into a busy woman’s (or man’s) life on a weekly basis. The store was laid out in a long windy path that created a unique sensory experience as the shoppers were led through the different sections, but that also made it difficult for an individual to run in and out quickly with a targeted list of one or two items needed for dinner. Many shoppers who had the time and inclination for a longer trip found they could not mark everything off their list since the store did not stock items such as paper towels, diapers, or cleaning supplies. While these conditions did not suit the frazzled parent, we learned that the area near the store included a lot of middle aged and retired professionals — individuals and couples over 50 who had the time, income, and inclination for leisurely shopping and gourmet food.
Based on these findings, the store made changes to appeal to both of these groups. While they didn’t start stocking diapers, they increased signage that permitted individuals to take short-cuts through the store and made other physical changes that enabled quick stop shopping easier. They also did more to welcome the older shoppers that hadn’t been on their radar, changing the mailers with offers that were sent out to the neighborhood to appeal to a different demographic.
Pursuing a new strategy can mean shifting the customer base
This distinction between the customers you have and the customers you want is important in the B2B world as well. Recently I worked with a company that wanted to move customers to more online interactions, and present itself as a more digital company. While a majority of newer businesses being established in the United States are digitally savvy and prefer more digital vendors, the majority of the company’s existing customers were older, more established companies that were comfortable with the status quo. In fact, many were wary of digital payments and online support.
As they made this digital transition, the company’s primary focus was on moving the existing customers to the digital platforms and hoping the shift itself would attract new, more digitally savvy customers. However, the digitally oriented customers had different product needs, and would require different solutions and different marketing efforts. In order to be successful with both existing and new customers, the company needed to more clearly separate these two groups to provide the appropriate products and experiences for each. More explicit customer segmentation efforts helped the company to see these differences and start to change their focus around how to approach them.
Who are your customers?
Ultimately, customers are people, and people are complicated. Broad brushstrokes help give us manageable groupings, but we need to be sure that in defining groups of customers we base it in a reality of who they are rather than who we want them to be.