As a product manager I try to be as focused as possible on the user and what is important to them throughout the lifecycle. Coming from a marketing background there is always a concern about how to communicate with the customer most effectively.
A commonly overlooked question however is who actually is our ideal customer?
Before we go any further lets identify three key words from the question above:
- Customer – meaning the one involved in the act of purchasing your product. Not a user or another consumer, or a target segmented you aspire to reach, or any other group that comes in contact with it or its messaging.
- Our – meaning the one unique to the value proposition that defines your product. Not that of your competitor, or a substitute, or anyone else you’ve identified as some kind of benchmark.
- Ideal – this might be the most ambiguous and difficult to define, but it is the one that creates the greatest benefit, whatever that benefit is.
Since we are assuming that everyone has limited resources (budgets, human capital, time, etc.) and the duress of competition and social noise to contend with there is an inherent need to use the finite resources wisely to exact the biggest benefit from these customers.
At the core of the question though is defining customer in the first place, which is usually where most companies start and stumble. The biggest mistake most companies make is casting too-wide a net, attempting to grab as many consumers as possible regardless of the quality of their relationship to the product. It is the quantity rules syndrome.
Sometimes the net is big and broad. Companies like these are easily identified as attempting to be all encompassing in a one-size-fits-all mindset. Everyone who could possible come in contact with the product or service is outfitted with the same experience and messaged in the same way. This dilutes the resources and their effect because it cannot effective reach everyone.
However, equally as troublesome is in over-segmentation, which as the capability to mask the problem of the wide-net by creating a great many smaller nets. This gives the illusion of targeting but when taken together attempts in reaching the same sized end-consumer base. Even though each segment is outfitted with its own experience and message the end result is still the dilution because it still isn’t effectively reaching everyone.
Realizing who the customer is then should define who to target and how. I would suggest the one that has the greatest propensity to achieve a benefit to the company, is an important first step in finding them.
When companies are able to reign in the all-encompassing mentality and define core segments that actually consist of target-able customers the move into defining who “Our Customer” might be.
However, another typical error companies make is targeting the wrong segments in attempting to answer who their customer is. Some possible pitfalls that are common are answering individually for:
- Who is the hip, cool, trendy population segment to target for our industry / in general?
- Who is the existing power user of our product / in our industry?
- Who is our competitor targeting? Who are our substitutes targeting?
- Which segment has the greatest disposable income?
- Which segments is perceived most under-served (greatest room for assumed growth)?
Although all of these are good questions to consider, they are extremely broad strokes in reviewing who to target. They are so generic in nature they could be anyone‘s customer, not necessarily your customer when you answer them.
Creating “Our Customer” profiles is much more complex than simply answering a question or two from the above list. It includes a matrix that considers a combination of the business needs and user value synergies, such that a holistic picture of our customer emerges with all of its idiosyncratic complexity.
Don’t be afraid of completely divergent images emerging, some of which appear to be polar opposites of one another in the matrix. This is the goal of the exercise, to determine who of your customers shouldn’t be as much as those who you should be lazer focused on reaching.
The difficult aspect though is for most companies to come to terms with the idea that not ever customer is a good one. The good customers will become the segment from which the ideal subset will come from and are discussed more below.
Bad customers can be easily defined by costing more than their presence benefits. However, for a company with the quantity-over-quality, wide-net mentality, despite the drain on resources and drag on profits they may be difficult to jettison because it means admitting defeat, for example:
- Help desk hogs – increase the cost of retention and decrease the lifetime value when calculated against the base, siphon resources from higher profitability customers or activities, reduce employee satisfaction and yet every effort is made to satisfy them so they don’t defect from financial incentives to new feature development to the simple time in excessive hand-holding.
- Reverse evangelicals – particularly in the socialized marketplace these customers are poison pills tarnishing the identity and reducing the good-will of the brand while attracting customer care and marketing’s retention resources to counter-act the negative message. They draw product teams into creating unnecessary features to satisfy them. All the while their negativity deteriorates your staff’s own view of the product and their work.
- Trial tricksters – These are the single-use consumer acquired during a trial period and never leave. There’s a propensity to believe they can be upgraded to paid customers but rarely take the bait because they only exist for the discount. Additional discounts and trials and features are presented that take product and marketing resources to create but don’t convert simply because these aren’t the right consumers.
Before you can even move to the good and ideal customers you have to give up on putting resources into the bad in the first place. Allocating any, never mind the exorbitant amount many companies do on the perpetually bad customers is the quickest way to sink the ship.
The ideal customer
The ideal customer is the convergence of benefits for both the customer and the company where both gain from the experience. This is done in two parts that are, of course, inherently intertwined.
The easier one to identify for most companies is to start with an inward look and define what benefits they are expecting from the customer. These might include:
- Profitability (and related metrics COA, COR, LtV, ARPU)
More difficult for most will be acquiring and understanding of the outward benefits the company provides. A common mistake is to define a set of features and attribute customer needs to them. It puts the carriage before the horse, and although it may indeed provide you with some ideas it misses the actual value proposition and the deeper emotional insight.
Ask, for what problem does this product solve?
The actual benefit to the customer lies solely in how one answers the question. If you can answer this question honestly, you can then begin to explain why the product solves that problem and use the features as the how it accomplishes that more effectively. If you build your product from the problem resolution mindset in the first place then it creates a product that is then easily marketed through that same view. If not, you can still tailor both the marketing and subsequent product innovation to take on that focus.
How the product solves the problem as a benefit to the customer is the story you need to tell them which will shape how the use of the product affects the required benefits of the company. The ideal customer is one who has their problem most solved by the product and in doing such most positively benefits the company.
Sounds all too simple when broken down like that, doesn’t it.