What is your customer strategy?

Your strategic position will appeal more to some customers than others. If you are marketing a Lexus you are likely to appeal to a different customer than if you are selling a Chevrolet. It is even true of products that appear alike on the surface, like running shoes or toothpaste.

It is not just about what price range a customer seeks but also the desired benefits and how well you provide them. Nike is about athletic performance even for the weekend warrior while Adidas has selected a fashion approach—each appealing to a different set of customers. Many companies think the right customers will find them. If you have a good product and it matches their need, won’t they then buy from you?

How to connect with your customers

To get the right customers to buy from you, you need to do three things:

  • First, identify exactly who the right customers are.
  • Second, be clear about what they want that you can offer better than the alternative can.
  • Finally, figure out where to find them and how to speak their language.

Analyze your current and past customers

To decide which customer to target, answer three questions about those you have served in the past:

  • Whom do you make money on?
  • Who do you best satisfy?
  • Who is growing?

Start by figuring out what customer group you make money on as measured by financial contribution. Which customers are you making the most money with now (profit as well as revenue) and what do they have in common? If they are business customers, are they from the same industry? Approximately the same size? If they are consumers, are they from the same demographic or life-cycle group? Do they use your product in similar ways?

Once you figure out who is your most profitable segment, ask yourself why they are your customers. what is it about your product or service that is especially appealing to them and drew them to you in the first place?

Even more importantly, what is their future buying intent? Do they intend to continue to buy from you? Why or why not? You want to make sure that what you do well appeals to their core needs.

Finally, determine the future prospects of this group. Do they belong to a growing segment of the market or not? Just because they are your best customers today does not guarantee they always will be.

Your strategic position must target your primary customer types

Most companies find it difficult to select a primary target segment, but the focus of a clear target is an important strategic decision that reinforces that you know what you do well that has a market. If you are best at making something that no one is interested in buying, you will need to find new ways to use those strengths.

Targeting isn’t black and white, but shades of gray. You need to have a bulls-eye so you can aim your message to the right group, consistently. As an example,
Southwest Airline targets families on a budget, but they also appeal to economy-minded business people. Their strategic position-—value pricing—-is appreciated by those who fly with them and those passengers are generally willing to make the trade-offs required to obtain the value.

Understand your hierarchy of customers

The benefit of understanding the hierarchy of customers is that you can align your resources accordingly. When your strategic position is designed to appeal to your target market, others might find it appealing as well; they become your secondary or tertiary target groups. A primary target for a home equity loan company, for example, may be people who want to fix up their homes; a secondary target for them might be a parent with college-age children who need to finance their education.

Since your budget is limited, chances you have to decide where to spend your dollars. If you know who your primary customers are and understand what matters to them, you can first spend where you will increase their satisfaction and enthusiasm for your offer.

Since your secondary and tertiary targets likely appreciate the same thing, the investment satisfies all audiences. The difference may come in how you reach these different audiences—not in the business model you use to satisfy their needs. As a rule of thumb, invest 80% of resources in the top tier, 15% in the middle tier and 5% in the third tier.

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