flevyblog

Flevy Blog is an online business magazine covering Business Strategies, Business Theories, & Business Stories.
MANAGEMENT & LEADERSHIP STRATEGY, MARKETING, SALES OPERATIONS & SUPPLY CHAIN ORGANIZATION & CHANGE IT/MIS Other

Who Is the Customer and Why Are They Different?

Editor's Note: Take a look at our featured best practice, Digital Transformation Strategy (145-slide PowerPoint presentation). Digital Transformation is being embraced by organizations across most industries, as the role of technology shifts from being a business enabler to a business driver. This has only been accelerated by the COVID-19 global pandemic. Thus, to remain competitive and outcompete in today's fast paced, [read more]

Also, if you are interested in becoming an expert on Customer-Centric Design (CCD), take a look at Flevy's Customer-Centric Design (CCD) Frameworks offering here. This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. By learning and applying these concepts, you can you stay ahead of the curve. Full details here.

* * * *

Editor’s Note:  The author is an expert and practitioner of the growth strategy framework, Delta Model.  The Delta Model is based on the teachings of MIT professors Dean Wilde and Arnoldo Hax.  It aims to change your strategic thinking, identify new sources of revenue, and transform your overall organization.  This article is based on the business principles taught in the Delta Model framework.  You can download a free overview of the Delta Model here.  To learn more about the Delta Model, please have a look at the author’s documents on Flevy here.

* * * *

customersWho is the customer?

This is a very central question. The most obvious answer is that the customer is the one who pays. The relevance of this answer is evident, since it identifies who is directly responsible for generating our economic benefits. Therefore, we have to include the buyer as a critical element of our customer base. However, often we shouldn’t stop there, because the customers of our customer, is either as important as, or even more important than, the buyer. We need to relate to that base for two reasons. First, we would like to help the customers to do a better job with their customers. Second, final consumers could be the most critical element in the economic chain. If they stop buying, everything stops. For example, think about the auto industry where are two critical types of customers: dealers and consumers.

Moreover, if we regard the Extended Enterprise as the most relevant entity, we might expand the definition of the customer to include all of the remaining constituencies, meaning particularly suppliers and complementors. In the broadest sense, the relevant customer is everybody who should be the focus of a differentiated value proposition, because that is the foundation of a well-articulated strategy. Having said that, in most of what I write, the customer will be identified as either the buyer, or the consumer, or both.

Why are customers different?

This is also a very critical question, because it will define the segmentation criteria that will be used in our analysis and that will lead to the development of the value proposition. The conventional way of segmenting the customer is using demographic characteristics, such as age, levels of income, geographical locations, and the like. Another conventional way is to group them according to some generic business characteristics, such as size, vertical markets, levels of profitability, and others. We have found that, with very few exceptions, these criteria are not the most appropriate to characterize the differences across customers. They are useful in segmenting the “markets” but not the “customers,” which is quite a different task. Remember that each resulting customer segment will be the subject of a distinct value proposition.

Suppose that you choose to segment the customers by the size of the enterprise, say large, medium, and small, and even worse, either explicitly or implicitly assign priorities accordingly, meaning that large customers are better than medium-sized, and those in turn are better than small. Two fallacies result from this. One is that we will be treating all large customers the same. From a strategic point of view, that seldom makes sense. We are indiscriminately putting together customers that could have very different needs for support. Second, the priorities might be totally wrong. In fact, it is often the case that large customers are the least desirable ones, because they are totally self-sufficient and, therefore, they tend to commoditize us. On the contrary, medium and small companies can offer us great opportunities for the development of exciting value propositions based on the Total Customer Solution option.

Who is the most attractive customer?

The test of the value proposition that we have just completed provides the basis to address the question, “Who is the most attractive customer?”

It is…

The one who has the greatest gap between its needs and capabilities, and we are in a best position to close that gap.

  • The one who receives the highest value added.
  • The one who has the most positive attitudes towards us.
  • The one with whom we can jointly define a unique sustainable high value-added proposition leading towards an unbreakable bonding.

If these conditions are met, these customers should also be the most profitable.

225-slide PowerPoint presentation
[NOTE: Our Design Thinking presentation has been trusted by an array of prestigious organizations, including industry leaders such as Apple, MIT, NASA, Ford, Boeing, Fujitsu, Syngenta, Palo Alto Networks, and Mercer, to name just a few.] Design Thinking is [read more]

Want to Achieve Excellence in Customer-Centric Design (CCD)?

Gain the knowledge and develop the expertise to become an expert in Customer-Centric Design (CCD). Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. Click here for full details.

In the modern Digital Age, advances in technology and communication, combined with the explosive growth in data information, have given rise to a more empowered global customer. Recent economic and political events highlight the need for organizations to understand how consumers view the world and the most important attributes for their purchasing decisions.

Thus, increasingly more organizations are seeking to invest and focus on Customer-centric Design. A clear understanding of customer needs and behaviors across the organization will help drive profitable growth strategies and provide the confidence to invest in opportunities at a time when staying within budget can be extremely difficult.

Learn about our Customer-Centric Design (CCD) Best Practice Frameworks here.

Readers of This Article Are Interested in These Resources


56-slide PowerPoint presentation
Customer Experience is fast becoming the key business battleground in many markets. In order to be successful it is critical that all business create a Customer Experience Strategy, an all encompassing view of how they will deliver superb experiences to their customers. Having such a strategy [read more]


 
143-slide PowerPoint presentation
 
 
35-slide PowerPoint presentation

About Enrique Suarez

Enrique Saurez is an international strategy consultant, a professor, and an advisor at the Harvard Innovation Lab. He is an expert on the Delta Model Framework, an innovative growth strategy framework for small and midsize businesses. You can learn more about Enrique and see his Delta Modal training materials here on Flevy.

, , , ,



Complimentary Business Training Guides


Many companies develop robust strategies, but struggle with operationalizing their strategies into implementable steps. This presentation from flevy introduces 12 powerful business frameworks spanning both Strategy Development and Strategy Execution. [Learn more]

  This 48-page whitepaper, authored by consultancy Envisioning, provides the frameworks, tools, and insights needed to manage serious Change—under the backdrop of the business lifecycle. These lifecycle stages are each marked by distinct attributes, challenges, and behaviors. [Learn more]

We've developed a very comprehensive collection of Strategy & Transformation PowerPoint templates for you to use in your own business presentations, spanning topics from Growth Strategy to Brand Development to Innovation to Customer Experience to Strategic Management. [Learn more]

  We have compiled a collection of 10 Lean Six Sigma templates (Excel) and Operational Excellence guides (PowerPoint) by a multitude of LSS experts. These tools cover topics including 8 Disciplines (8D), 5 Why's, 7 Wastes, Value Stream Mapping (VSM), and DMAIC. [Learn more]
Recent Articles by Corporate Function

  

  

  

  

  

The Flevy Business Blog (https://flevy.com/blog) is a leading source of information on business strategies, business theories, and business stories. Most of our articles are authored by management consultants and industry executives with over 20 years of experience.

Flevy (https://flevy.com) is the marketplace for business best practices, such as management frameworks, presentation templates, and financial models. Our best practice documents are of the same caliber as those produced by top-tier consulting firms (like McKinsey, Bain, Accenture, BCG, and Deloitte) and used by Fortune 100 organizations. Learn more about Flevy here.
  


OUR CORE OFFERINGS
Flevy Marketplace: Top 100
· Strategy & Transformation
· Digital Transformation
· Operational Excellence
· Organization & Change
· Financial Models
· Consulting Frameworks
· PowerPoint Templates
FlevyPro (Subscription Service)
KPI Library
Streams (Functional Bundles)
Flevy Executive Learning (FEL)
PowerPoint Services

FREE Resources

About Flevy
Management Topics
Marcus (AI-Powered Consultant)
Partner Program
LinkedIn Influencer Marketing
FAQ / Terms / Privacy / Blog
Contact Us: support@flevy.com



CONNECT WITH US!
       
TOP 100 TRENDING TOPICS
Acquisition Strategy
Agile
Analytics
Artificial Intelligence
Balanced Scorecard
Best Practices
Big Data
Breakout Strategy
Business Continuity Planning
Business Plan Financial Model
Business Transformation
CMMI
COBIT
Change Management
Cloud
Communications Strategy
Company Financial Model
Competitive Advantage
Competitive Analysis
Consulting Frameworks
Continuous Improvement
Core Competencies
Corporate Culture
Cost Reduction Assessment
Customer Experience

BROWSE BY FUNCTION
Strategy, Transformation, & Innovation
Digital Transformation
Operational Excellence and LSS
Organization, Change, & HR
Management Consulting

Customer Journey
Customer Service
Cyber Security
Data Privacy
Decision Making
Digital Marketing Strategy
Digital Transformation
Digital Transformation Strategy
Due Diligence
ESG
Employee Engagement
Employee Training
Enterprise Architecture
Growth Strategy
HR Strategy
Hiring
Hoshin Kanri
ISO 27001
ITIL
Information Technology
Innovation Management
Integrated Financial Model
Kaizen
Kanban
Key Performance Indicators

ADDITIONAL RESOURCES
Business Strategy Frameworks
Case Studies
Consulting Training Guides
COVID-19 Trend Data
Digital Transformation
Financial Advising Services (FAS)

Knowledge Management
Leadership
Lean
Lean Manufacturing
Logistics
M&A (Mergers & Acquisitions)
Manufacturing
Market Research
Marketing Plan Development
Maturity Model
McKinsey PowerPoint
McKinsey Templates
Operational Excellence
Organizational Change
Organizational Design
Performance Management
Post-merger Integration
Pricing Strategy
Process Improvement
Process Maps
Procurement Strategy
Product Launch Strategy
Product Strategy
Project Management
Quality Management


Free Resources
KPI Library
Lean Management
Lean Six Sigma Training Guides
Marcus Insights
Operational Excellence

Real Estate
Remote Work
Restructuring
Risk Management
Robotic Process Automation
SWOT
SaaS
Sales
Scrum
Service Design
Six Sigma Project
Social Media Strategy
Strategic Planning
Strategic Thinking
Strategy Development
Supply Chain Analysis
Sustainability
Target Operating Model
Team Management
Total Productive Maintenance
Value Chain Analysis
Value Creation
Value Stream Mapping
Visual Workplace
Workplace Safety


Product Strategy
Small Business Owner
Startup Resources
Strategic Planning
Strategic Planning Process
Value Innovation Strategy


© 2012-2024 Copyright. Flevy LLC. All Rights Reserved.