Do you know how to decide who your target customer is? In this article we give you some suggestions to help you answer this question. We will also talk about how to deal with competitors after having analyzed what the customers want.
What kind of customer do you want to serve?
You must choose which type of customers you want to serve to identify which will be your target customer. Wanting to serve everyone is a mistake, just like it would be to cover all the needs in your customer segment, or trying to imitate every new idea. There are many companies living a “herding behaviour”, following the leader’s steps and comfortable in vulgarity.
Reflect on which customer segment your company has a great potential to create a unique offer that covers a type of unattended need. Once discovered, be willing to renounce on the other types of customers that don’t have such a need for that service.
Insurance company Progressive discovered a poorly-served collective. Those with an alcohol abuse or risk behaviour history had great difficulty in being accepted by insurance companies. They tackled this collective, which had few alternatives, and which, in turn, allowed them to charge higher premiums. Thanks to their ability for handling information, they were able to identify segments within this collective that didn’t pose such a risk, like drivers with a drinking history but also parents with small kids.
In order to add real value to your target customer, you must step in the customers’ shoes and understand their behaviour. Try to understand the psychological reasons behind their purchases. You must feel how they feel. Don’t project your feelings to the market. Think about their concerns, needs, preferences, thoughts, hopes, relationships and daily routines. It is important to see them in action. How are your customers? What are their personalities like? Whom do they identify with? What are their hopes? How do they see themselves?
When Gillette decided to approach the Indian market, they asked the product design team to spend a few weeks living with the potential users. The designers resisted because they thought that they didn’t have anything more to learn about shaving razors. Upon returning from the trip, one of them, an Indian-American, acknowledged that by watching an Indian shave in his village, without any water nearby, he realized that he had a completely wrong idea of the optimal design for a shaver for India. He understood that he had to design parts that allowed for larger spaces between blades so that, while shaving without water, hair would not get stuck between the razor blades and hinder the shaver’s functionality.
Try to think like customers do. Don’t focus only on the features of the product or service, but in the benefit to the customers, on how they perceive it, on the psychological value. What do customers really value? What touches their core?
Target Customers are your strategic assets
I recommend that you see your customers as strategic assets and innovate around them, not around your products or services. Instead of thinking about the product used by the customers, think about the problems they have to address. Customers don’t buy a drill, they buy a hole, they don’t buy a service, but a solution. We don’t have to think about the service they want but about the solution they’re after. It requires empathy, understanding the feelings of a type of users and their frustrations. That’s why many business models have been born out of users’ frustrations.
Dropbox is an example. It was founded in April 2007 by Drew Houston, a 27-year-old man. The idea came to him while on a bus, when he realized he had forgotten his pen drive. He decided to program a service for synchronizing and sharing files between computers on the Internet. This way, he could always have access to the latest version of documents.
Every job has a functional, emotional and social dimension. How do I help customers do their job? You must decide who will be and who won’t be your customers. Ask yourself: Who are my direct customers? Who are my final customers? What issues do they have? What can I do to address these issues? How do these customers use existing products to satisfy their needs? What can make me different in a way that makes these customers interested? And ask them: What makes you buy this product? What’s it missing? Why don’t you recommend it to your friends? To make customers be your fans you must give an overabundance of the feature they value the most. Focus your efforts on attracting and engaging fans – those who can be most interested and loyal. They will help you spread the message among their peers. Turn them into your army. It’s about closing the space between problem and solution. But be careful, you must solve real problems, not ones created by you.
Maybe you can create a new class of customers that didn’t exist before, like FedEx did when they developed a new market for those who wanted their packages to arrive in just one day, guaranteed.
Curves, the fitness-club chain, realized there was a type of customers, women, that didn´t have their needs covered when practicing sports, and created a solution for them. In traditional chains, with sophisticated machinery, customers worked out looking at television screens, without any interaction with others. The rooms were full of mirrors for customers to admire their figures. Muscular customers intimidated a segment of women who didn´t feel fit enough to show their bodies in that environment, or to follow aggressive fitness programs. Curves designed exclusive centres for women that didn´t need saunas, swimming pools or large installations, so they could be smaller and closer to home. The machines were simple, arranged in a circle to encourage conversation between them, in an intimate space, without any mirrors, only for women and with basic fitness programs. Many women felt attracted to this type of gyms. Since the required investment was smaller, subscription fees were also smaller, 70% cheaper than a traditional gym, allowing the centres to become popular for a collective that used to reject them because of price or of the distance to and from their homes.
What are your competitors doing?
After analyzing what the customers want and your capabilities, you must look at competitors and alternatives to see if there is something that will make you different in the eyes of those customers.
Naturally, the strategy is to satisfy the target customer and gain a profit while doing so, that’s why you must ask yourself if the customer is willing to pay the price you have to charge in order for it to be profitable for the company. Thus, it’s about creating value for your target customer and being capable of capturing value for yourself as well.