Attracting Customers

There are 4 basic ways of creating a customer

i) creating utility or purpose, ie focus on the needs of the customer

ii) pricing

iii) adaptation to the customer's social and economic reality

iv) delivering what represents true value to the customer rather than cost to the supplier

The last one is the most important

"...how the customer pays depends on what makes the most sense to him. It depends on what the product does for the customer. It depends on what fits his reality. It depends on what the customer sees as "value" ..."

Peter Drucker, 2001

Peter Drucker elaborates by observing that the foundations of a successful organisation must have customer-based values and customer-based decisions. It will be from these foundations that management policy and management strategy increasingly will have to start, ie the customer must be the starting point.

"Consumerism" demands that business starts out with the needs, the realities, the values of the customers. It demands that business defines its goal as the satisfaction of customer needs. It does not ask, What do we want to sell? It asks, What do our customers want to buy? It does not say, This is what our product or service does. It says, These are the satisfactions the customer looks for, values and needs"

Peter Drucker 2001

Part of this involves understanding where mindsets of the customer groups are in relation to buying

Group
Customer Mindset (around buying)
% of customers
1
buy now
3
2
thinking about buying
7
3
not thinking about buying and realise they have problems
30
4
not interested at the moment and don't realise that they have a problem
30
5
not interested and don't realise they have a problem
30

(source: Mike Noone, 2019)

The above explains the mindsets potential customers have, ie

- those in groups 1 & 2 are in the demand-chasing sector; with a selling focus. There is much competition for these small number of customers, ie 10%; with the resultant lower margin, etc.

This is the area most firms focus on as it appears to be the easiest, ie captured market.

- those in groups 3, 4 and 5 are in demand-creating sector; with a marketing focus, ie these prospects may find value in your solutions. You need to know what they need to think, believe and feel eager buy your products or services. There is less competition and a bigger potential market in these groupings, ie 90%.

Another way of expressing this is

"...To compete and win in this world, we need to operate at the pace of the customer, in real time, all the time..."
Stephen Lewis as quoted in Cognizant, 2017

As the customer becomes better informed, demanding better value, more choice and faster product turnaround, organisations will need to become more customer-focused, ie learning about individual buyers and tailoring products and services to suit their needs. Furthermore, in general the market is becoming more and more fragmented and consumers more individualistic.

A customer-focused organisation is continually gathering unfiltered customer insights and is an organisation that strives to:

- connect with existing and potential customers and anticipate their present and future needs, ie service counts

- translate customer needs into a competitive advantage, using a faster cycle time and a generation of breakthrough products and service

- focus on building sustained relationships

- effectively manage a portfolio of brands

- continually grow shareholders value

Customer intimacy is linked with customer focus, ie need to know and have a good understanding of your customers and their needs (now and in the future). The Web is helping build stronger relationships with customers and allowing a greater capacity to satisfy their needs. With the development of inexpensive, powerful computing technology, organisations are able to interact with customers more cheaply and easily than ever before. Achieving this requires a change in mindset in handling customers: changing the relationship between organisations and customers from essentially mass-marketing to one focusing on the needs of individual customers has resulted in empowering customers online so that the balance of power in the relationship has changed to favour the customer. This means re-configuring the way organisations do business, ie product design, manufacturing processes, distribution processes, etc. Techniques are now available to make things happen in real time such as dynamic, immediate feedback. The Internet has increased the speed and intensity of how things happen.

Never under-estimate the impact of emotions on customers decision-making. Most decisions are based more on how people feel (emotions) rather than what they think (rational analysis).

Never under-estimate the impact of emotions on customers decision-making. Most decisions are based more on how people feel (emotions) rather than what they think (rational analysis).

 

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