Many executives are reluctant to choose one primary customer group, but this strategic choice defines a business. You must identify your most important customers – those who can unlock the most value in your business.
They may be consumers of a product or service; or they may be resellers or brokers. Choose the best one by assessing each customer group along three dimensions:
- Perspective: The primary customer must reflect a company’s culture and mission, so the energy and creativity of its people can be leveraged to serve the customer.
- Capabilities: The embedded resources that a firm builds up over time (and which are difficult to copy) position a business to serve the needs of certain customers better than others.
- Profit potential: A customer’s ability to deliver profits counts, but it’s not always about who can pay more; becoming a destination for a specific group can deliver profits through volume.
Adapted from “Choosing the Right Customer” by Robert Simons.