Moving from Customer Focus to Market Focus
Are you customer focused or market focused? Are you finding that creating customizations for individual customers is eating up an ever-increasing proportion of your budget, leaving you little room to innovate? Are you struggling to scale? Would adding new customers undermine operations because it would derail your intended strategic investments?
If those sound like issues you face—and many enterprise software (B2B) companies and startups face them—you may be customer focused instead of market focused. Being customer focused is supposed to be a good thing. But if you are focusing on a collection of individual customers and you’re not focusing on a market of customers, you have the customer part down, but you forgot the focus.
Creating customer success profiles is a great first step for guiding your transition toward becoming market focused. As Steve Johnson indicates in the just mentioned article, creating these profiles is also the first step in shining the light on an organizational problem.
The profiles are descriptors of individual customers that allow you to discover patterns—the common traits that make bad (unprofitable, distracting) customers bad and good (profitable, strategic) customers good. Johnson’s suggestion of starting with your best customer and your worst customer is a great way to break the writer’s block.
First, identify a few key metrics that characterize your relationship with that customer—net promoter score, revenue from the customer, the cost you incur to serve that customer, etc. For specifics, check out Johnson’s article. As a first step, this really helps you clarify the difference between good and bad, reach agreement within the organization that these are valid measures, and plant the seeds to change your organization by introducing the concept that there is such a thing as a bad customer and that you have a way to avoid them.
The next thing to do is to identify attributes of the customer—the kinds of things you use to define personas and market segments—and the values for those customers you’ve selected. Then start adding customers to your spreadsheet until patterns start to emerge. These patterns coalesce into personas or profiles that represent ideal customers and bad fit customers.
Do you need to update your strategy to shift the focus onto ideal customers? Do you need to change your product so that the ideal customers are more interested? Can you improve profitability (raise prices, lower costs) now that you agree to actually focus on the ideal customers—explicitly at the expense of the bad fit customers?
You can update your positioning, communication, roadmap, and customer-collaborations. Now you’re market focused.
