Do Organisations know who their Customers are?

You inquire CEOs about what sort of companies they head. More often than not, answer you get is, they head, 'a Customer-Focused Company’. But, you find them fumbling at your second question of who their customers are? Most of the time, you might have noticed, you get generic answer to this specific question.

Reasons could be many.

One general reason could be overwhelming ‘use to misuse’ of the world ‘Customer’. However, the specific reason which I see is the  hurry on the part of CEOs to make quick bucks, covering as much catchment of customers - relevant to irrelevant, as possible.

Coming back, this fumbling you can see in an entire organisation, where you even come across the word, customer being used for interdepartmental relations; by employees of one department to the employees of another department. More difficult it becomes for me to even understand about their intention for this ‘misuse’. On one hand companies insist on departments, calling each other as customers and on the other hand, they insist on building a culture of collaboration among departments and their employees. Collaboration with Customers, can you digest this proposition??

If I look at the understanding about the word ‘Customer in business perspective, customer is generally defined who can add value to revenue. It thus means who can help in increasing sales. But such short-sighted interpretation leads to confusion among not only employees but also ‘real customers’. What I call ‘Diffusion of Confusion’. More is the diffusion in a company, more will it have confusion. This confusion eventually, erodes the basic perspective of doing business i.e. increasing revenue.

It is therefore suggested that every company first, therefore should take the cognizance of the importance of identification of set of people who will not only increase the revenue but help a company in unlocking the most of the value in a business. Until, a set of people which can be defined as ‘Primary Customer’ is not identified by companies, who can continually provide unlocking business opportunities to them, companies will only be successful for a while and will only falsify their claim of being ‘Customer-Focused’

I am quite often been asked, whether there should be only one ‘primary’ customer or it could be more than one.  My response generally to this query that too with a rider is, a company can have as many primary customers as it can deal with it & unlock value residing in the relationships but first, companies should check their resources & competencies. There are instances wherein, companies have identified up to 4 primary customers, but it is suggested that a company should have only one primary customer.

Whatever be the number of Primary Customers, a company choose; it must remain focused on those selected primary customers. Any inconsistency will only dilute its business perspectives and reputation the market.

The advantage of being focused on selected few customers, will help spread the understanding at every link of entire value chain. Starting from suppliers to buyers. This will lead to building unparallel Customer Loyalty, which will help in creating wealth ultimately.

Further, once primary customer is identified, it will help in continuous value adding interactions with each other. A company and its customers. This interaction will help in knowing the exact needs of customer and fulfillment of the same by the company. End result, unlocking of value and better revenue.

To become customer focused, a company should look at three facets of self and its primary customers. These are company perspective in the market, its capabilities and finally, profit potential from its identified set of people as primary customer.

The company perspective usually provides insight about a company’s liking and disliking, its nature, its culture. I will say in sort, it is ‘soft part’ of a company. For example, you may hear about a company that it is frugal in nature or it provides superior experience or like for Apple, it is perfectionist.

Capabilities on the other hand, give indication about a company’s competencies to provide desired product value, as desired by customers.

The third facet predicts about a customer’s profit providing ability. Every customer cannot provide value to a customer. For example, customers for high end luxury products are different than utility oriented customers.

Also, companies need to keep in view that within the same market and industry, different primary customers may value different things. This could spread from low-price to service quality to convenience to technology to specific attribute in a product.

Conclusively, it can be said that to become a Customer- Focused’ Company, companies need to work hard initially in identifying their primary customers or otherwise, calling themselves  as customer-focused will only remain a tag for them and not value adding connotation.