Bring any team of senior managers together and ask them who their customers are and you will usually discover a multitude of answers. But any weakness in the clarity and focus on who your business’s real customers are will significantly impact your ability to outcompete others in your market.
Active Knowledge Question:
In crafting your competitive strategy, how do you identify the real beneficiary of your product/service?
Who Is My Customer?
In today’s marketplace, the ability of any business to be successful rests on the value they are able to deliver to their customer. Understanding customer need is vital and the language of customer persona, experience and journey reflects a business’s attempts to gain insights. It is part of the everyday language in a consumer environment.
However, in a B2B environment, we often ‘misplace’ who the real customer is and what their needs are. There is a tendency to focus on the immediate customer and this, almost short-sightedness, can cause a business to miss opportunity after opportunity.
Let’s take, for example, a business that is selling a component for use in machinery, which our customer, a manufacturer, sells into the mining and other industries. It’s a harsh work environment and every hour of loss output can cost the mining company hundreds of thousands of dollars. The component may be a small part of the entire machine but if it fails, significant damage could be caused, and downtime is guaranteed.
The direct customer is the manufacturer as they are the ones who buy the component and pay the invoices. However, I could say that the end user, the mining company, is the customer’s customer. But I think that answer is over-simplifying the reality of where opportunity may lie.
The real customers are everyone who the component touches along its journey. The real customers are the people who install the component, operate the machinery, service the machinery, and all their colleagues.
If you want to understand who your real customers are, then you need to understand the life journey of your product/service and how it impacts and influences everyone along that journey.
What Is Their Need?
Attempts to expand the value consideration to include people who will be impacted by your product may often be challenged in management settings. Their focus is on the direct customer and making the sale, and shifting that focus to someone you don’t even deal with can face a lot of resistance.
However, in a B2B setting, your core value is to find ways to help your customer grow their business. If your product/service not only does what it is meant to do but also inherently allows your customer to grow their business, well, now you have connected with that customer at a more strategic level.
Growth for your customer can come in many forms, being both those that improve efficiency and those that improve effectiveness. This includes, for example:
- Better staff utilisation.
- Better machine utilisation.
- Reduced overhead costs.
- Reduced staff turnover.
- Reduced complexity and stress.
- Improved cash flow.
- Increased sales for that customer.
How may our product/service directly or indirectly assist these outcomes?
Understanding the journey of your product and all the people it impacts and then relating that back to your direct customer’s business opens your eyes to a rich field of opportunities in which to add value. Most importantly, these are opportunities that can be directly related to your customer’s growth.
And of course, one of the best ways to grow your own business is to help your customers grow theirs.
It’s About The Journey
To understand the value proposition that your product/service may bring to your customers, you need to place that product/service into a context. And that context needs to view its life journey and how it is used, and impacts and influences everyone on that journey.
To gain that appreciation, you must view ‘impact’ through the eyes of each person it touches. What are their needs and how may their experience and value be improved?
Think back to our example above, that journey commenced with:
- The manufacturing of the component.
- Its purchase, stocking and installation by the machine manufacturer staff.
- Its function in that machine and how that impacts the operator.
- The service personnel who may need to service or repair the component or the machine.
We are all familiar with the language and process of the customer journey, in which the customer is the focus of the journey. However, in a B2B context, it is often not a person who is the focus. Rather, it is often some other element and you are looking outward to how it impacts those around it, not inward, as is the case in the traditional customer journey.
How Do I Deliver Greater Value?
The way you define your customer will determine the possible value outcomes that you can potentially envisage.
This then carries across to your management team, and then your entire business, a single view of who your customer is and why knowing them is critical. If everyone sees a different customer, then no one will be aligned with the value that you do, should or can deliver.
Stepping out from that view of a one-on-one relationship with the direct customer allows you to consider more clearly how your product/service can deliver greater value. It allows you to see how it impacts your customer’s customers and others impacted by its journey.
You can begin to identify and quantify the increasing value of using your product in that customer’s eco-system and prove its greater value, compared to others you are competing with.
The greater value you are able to provide to your customer’s customer, the more value you are able to deliver to your customer. And the more reasons why they should use your product/service over anyone else.
You can also see opportunities to expand your product/service range by providing value to other businesses in that wider eco-system. While also gaining a greater understanding of how change may impact everyone who is touched by your product/service. Again, another opportunity for your business to grow.
Stepping away from your direct one-on-one relationship with your client and viewing the full journey of your product/service can open a whole range of value and growth opportunities that you would otherwise not see.
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All the best in the success of your business,
Richard Shrapnel
