The key question that we should always ask ourselves when undergoing a marketing analysis or a strategy session is pretty simple:
“Do we know who our customer is?”
In most cases, the answer is “no.”
There are often numerous reasons for this, least among them:
- The business has been taking the wrong stance when trying to understand their business.
- The results that are being focused on aren’t aligned with the true decision maker.
- A lack of consistent revisiting of the mission, customer, and value that clients turn to the business for.
In defining your customer, you are talking about making decisions.
In far too many instances, a business can fall prey to the idea that they are going to be able to serve two masters:
Think about the organization that has built a business on being the high end, luxury version of a service. Then once a certain amount of success or revenue is achieved, the emphasis on the luxury version is undermined by trying to build a discount business that runs concurrently next to it.
This does a number of things including:
- Undermines the brand positioning of the high end version in most cases.
- Eats into the resources of the premium product.
- Typically starts an organization down a path where the high margin, premium business begins to become eroded by the strain of having a sister business that is low margin, value focused.
The old MBA thought exercise follows the loop of, you can choose between quality, price, and service. You can have two of them, but not all three.
That’s a good way of looking and thinking about defining your customers as well.
Your customers are going to buy from you based on their feeling of value towards what you offer.
As we are more and more an economy driven by experiences with a strong customer focus, we are going to find that our customers are buying based on the experience we provide and that we can offer quality and service, but it comes at a price.
Or, we can offer price, but it usually comes at the cost of quality and service.
There seems to be no middle ground right now.
And, anyone that tries to convince you otherwise is likely going to find themselves in the same position as companies like Blue Apron that had cheap food, great quality, and great service, but customer acquisition costs that were far outside of anything that was realistically sustainable and customer retention numbers that were brutal.
So that’s your choice.
Do you want to compete on quality or price?
This seems like an instance where the more things change, the more they stay the same.