The usual way to analyse your potential customer base is by some sort of market segmentation. You might want to analyse your customers by product type, demographically, geographically, or some other method. You do this to try and describe and understand what sort of customers you might have and how you might approach them. Whether you do this formally or not, you probably do it in some way or another. And you have probably not thought about why you do it that way for some time, if at all.
The way you segment your market determines what opportunities you discover, what capital and expenditures you make to exploit those opportunities, and what methods of marketing you use to encourage customers to buy from you. Crucially it also determines who you are competing with. So to some extent the way you segment your market can influence who your competitors are and that surely requires some thought.
But that still proposes you have some competitors. If you do not bother with segmenting your market (this is going to upset most marketing people) but consider what job your customer is trying to get done by using your product, then you may end up with a different result.
Here is an example, courtesy of Clay Christensen, top-ranked management thinker and professor at Harvard and key note speaker at the Drucker Forum recently in Vienna. It’s IKEA, which has been trading for over 45 years and has no known competitors. It’s extremely profitable, because it offers a very simple solution – if you want to furnish your new flat or house quickly you can do the whole thing at IKEA. It doesn’t just sell sofas, beds, or cutlery, or lights etc. – it sells the lot. And you can take it away then and there. It also makes the buying experience easy, as you can drop your kids at the crèche, grab something to eat to refuel halfway around, and be out in the day with everything done.
As always, see if Peter Drucker said anything, which he did – “customers rarely buy what the company thinks it is selling”. Think about that. That’s a real epiphany for a lot of people. We’ve talked about this in seminars and blogs on innovation before.
It’s interesting to reflect that the job to be done usually may not have changed over time that much – IKEA’s 45 years in point – it’s just the way its done has sometimes changed as technology or other things have evolved. So as the job to be done can be quite stable over time we just need to look for new and better ways of doing it. Our customers will stay with us and our competitors will disappear. We don’t have to define our purpose by product or customer. And this obviates the need for customer and product life cycles. It gets very neat and tidy very fast once you get this clarity.
We simply need to be clear what the job is that needs to be done. To do that we advocate you go and find out. That doesn’t means simply asking customers (they won’t know, and certainly no focus groups), but actually trying to do that job and experience what the customer experiences so you can see what workarounds they are having to do and what unsatisfactory elements they experience. Those are your opportunities. And those are the opportunities that nobody else is taking.