Strategic Customer Analysis

It is common practice to determine your target customer when developing a business. However, this tunnel vision buyer group mentality leaves money on the table for businesses. To truly optimize profit and revenue a company’s leadership must be well aware of the many buyer groups (purchasers, actual users, and influencers) that can offer opportunity to enter into a new market space with high profit potential.

For example, say you are leather shoe manufacturer who usually focuses on retailers as its main buyer group. Through analysis of your current, similar and alternative products coupled with identifying the pain points of using your product you can realize a low-cost profitable opportunity to reel in your end users; essentially entering into a new market space.

A more effective strategic customer analysis would require you to understand the following:

  • Why buyers choose to buy your product; aka purchase criteria
  • What are the factors that cause customers to become angry with your product or company
  • What are the factors that keep potential customers at bay (you must understand their priorities and create solutions to meet their needs)
  • The preferences of your customers
  • The decision making process of your customers
  • Customer behavior
  • Why they choose to buy at a certain time (holidays, birthday, graduation, et cetera)
  • Time, travel, hassle and money the customer is willing to pay for buying and using your product or service
  • What functional needs need to be met
  • purchasing power

Businesses must also understand what factors motivate buyers to purchase based on price or quality. However, it is imperative that you just focus on the buyer group that has the highest profit potential at a lower cost and your company’s capabilities are able to meet their priorities.

Advertisements

E.O.W (End of the Week) Notable Tip: Redesigning Business Models

Happy Friday!

I hope you’ve had a great week.

Today, I want to discuss business models. As we all know, changes in trends and customer behavior affects profit. Therefore, it is important that leaders stay abreast of trends that could affect their bottom-line and have solutions at the ready. They should also include non-customers into their value chain spectrum for the purpose of realizing profitable opportunities.

“Companies should redesign their business model every 4 to 5 years.”

 

I hope you’ve enjoyed this short tip and as always, “Success is continuous improvement.”

Lean Wednesday Tip: Mitigating High Growth Challenges

“When you have a high growth atmosphere there are sure to be inefficiencies that start creeping up into operational processes. Effective leaders ensure value is maintained and/or optimized instead of lost, they create efficient workflows and make decisions by fact as a way to manage the increased challenges brought on by high growth, and don’t stray away from the profitable target customer.”

The Anatomy of an Effective Strategic Plan

What is a strategic plan? In short, “a strategic plan defines the business the organization¬† intends to be in, the kind of organization it wants to be, and the kind of economic and non-economic contribution it will make to its stakeholders, employees, customers and community.”

To create an effective strategic plan an organization’s leaders must first clearly understand their business and what business they really want to be in. They must also conduct and have SWOT Analysis, customer research (including non-customers), economic, government (industry laws and regulations data), and technology (current and forecasting trends) accurate data available.

Once this information is available and carefully analyzed, leaders must discuss their intention to shift strategy with their team. All company departments should be given the opportunity to share ideas and express concerns. After the Voice of Employee has been acquired the strategic plan can begin.

An effective strategic plan is composed of the following:

  • Vision Statement
  • Mission Statement
  • Key Customer Value Factors
  • Goals
  • Objectives
  • Visual KPI Metrics
  • Contingency and Preventative Plans

To be effective, a strategic plan must be visual and are not meant to be paper documents that sit on shelves nor Word or PowerPoint documents that are only seen once. The CEO (top management) must also gain support from respected and persuasive key personnel that will drive buy-in to the new strategic plan and discourage opposition. Effective leaders align the strategic plan with daily business activities by translating what needs to be accomplished into how it will be accomplished. They give each department clear responsibilities and performance expectations instead of sending out a memo company-wide that this year they want to increase revenue by $10 million. In short, strategic goals are distributed in small batches.

Effective leaders ensure employees are given clear responsibilities and performance expectations; and are given timely rewards for achieving goals. They also ensure that the strategic plan contains clear objectives, provides and utilizes measures of performance, clear due dates and is visual.

Paid Tier Subscriptions based on consumer cooking levels can drive growth for Cooking Delivery Services

Cooking delivery services offer customers the convenience and adventure of trying new meals right at home. However, the offerings are very similar amongst all mayor players like Blue Apron, Plated and Marley Spoon. Fresh packaged ingredients, serving plans and delicious recipes is the main offering package. Blue Apron offers a wine subscription delivery plan and suggests wine per a customer’s meal choice which optimizes its value to customers.

However, there is an under-valued opportunity that I believe will really drive growth for these companies. By developing targeted tier paid subscriptions based on consumer cooking levels, lifestyle (fitness, vegan, et cetera), meal preparation time, dish type and ingredients will help them lure in non-customers and increase revenue.

For example, lets say a cooking delivery service wanted to target people who hate to cook or don’t have time to cook. They could offer a beginner paid subscription based on the consumer cooking capabilities with easy to follow educational video instructions, meal prep time categories, dish types, and lifestyle categories with upgrade options to intermediate, advanced and expert level cooking subscriptions. They could further optimize this by partnering with grocery stores and integrating a rewards system for users who complete and learn cooking skills (badges, coupons, et cetera).

This example demonstrates how understanding the non-customer can help companies realize common value factors between current customers and non-customers. By personalizing the cooking offering customers would be able to choose their preferred prep time, dish type (breakfast, lunch, dinner, et cetera) and lifestyle category, in turn, increasing overall satisfaction and value to the consumer.

The Know Your Customer Technique for Business Growth

I have written blog posts about utilizing the Voice of the Customer (meaning using surveys, forums, social media, and focus groups) to gather and analyze data for the purpose of identifying revenue opportunities and increasing overall client satisfaction.

Customer-centric companies build emotional relationships with their customers and listen to them. They search for the pain points the customers are having by using their product or service. When they identify these pain points they are able to develop products, services, or solutions to eliminate them.

For example, say a cooking delivery service wants to differentiate itself from its competitors by taking a Know Your Customer approach and utilizing the Voice of the Customer to glean insights into critical customer pain points. In doing so, they realize that customers would pay for prepared healthy lunch meals that are similar to the to the meal options available to them near their workplace. By personalizing lunch meals based on local information, user preferences, and proper packaging for ease of travel the cooking delivery service was able to take advantage of an under-valued market opportunity and drive revenue.

In this example, the cooking delivery service decided to realize revenue opportunities by shifting its buyer focus. It decided to target non-customers that don’t really like to cook but want delicious prepared lunch meals that are similar to the ones they buy at work. Companies that continuously drive growth know the importance of understanding their current customers but also the customers that hate them and non-customers. They are driven by the pain points of these customers so that they can take advantage of first-to-market opportunities to develop solutions to these pain points.

The Know Your Customer approach is not something that can be outsourced. It is implored that you see and talk to customers yourself because that is the best way to truly understand how they are and are not using your product or service. It also offers the opportunity to realize new ways to offer value to your customers and non-customers.

Tricks for driving growth and revenue

To drive growth and increase revenue a company must understand current and potential customers and identify uncontested opportunity in the industry. Below are a few tricks for driving growth and revenue:

  1. Gather more information from customers that hate you, are apprehensive about you, or don’t know you to identify opportunities to enter into new markets.
  2. Talk to more customers and answer more customer emails.
  3. Have more lunches with customers.
  4. Focus on products, services or solutions currently not being offered in the industry because realizing an opportunity in this aspect will prompt first-to-market revenue opportunities.
  5. Invest in your most profitable products, services or solutions and do away with the ones that erode profitability. For example, Southwest Airlines differentiated itself by not getting into the food business (low-cost business design) like its competitors instead it focused on providing customers with a great experience instead.
  6. Gain strategic dominance in atleast 2 or more of the following¬† (e.g., branding, patent, copyright, value chain control, 2 year product lead, 20% cost advantage, control distribution, supply control, customer information flow, unique organizational culture, et cetera) “The Profit Zone by Adrian Slywotzky”
  7. Stay abreast of industry and customer behavior and purchasing changes for the purpose of redesigning your business design to meet these new demands.

Bringing Collaboration Into Business Strategy

 Companies that encourage collaboration of data from all departmental functions see improved forecasting and internal/external client data that can be used to achieve strategic goals. Sales, Marketing, Accounting, Production, and Procurement departments should be encourage to share data through cloud productivity solutions like Google Docs/Sheets. business-strategy-clip-art-clipart-strategy-ball-people-NVXx1H-clipart

However, this plethora of information can cause delays in decision making according to a Harvard Business Review article. Data that is analyzed in small batches and matched to critical strategy variables can be a best course of action to reducing the strategy process cycle time.

In other words, matching insights from small data batch analysis with strategic objectives and then proceeding with a strategy implementation framework. For example, say a business wants to increase revenue from 10 million to 20 million this year. When they analyze their data and use the voice of the customer, they realize that the customers that hate them want the software to load faster and integrate a picture feature for all their menu items so that their customers can see how their meal looks like before they order. The company then translates this customer requirement into product specification and increases their client base by 25%, in turn, reaching their goal and making their competitors run for their money.

The production team would also have to manage this new feature to client requirements and ensure load times stay at acceptable levels. A financial impact/financial modeling analysis is also required to provide top management a sense of what would drive the most revenue for the company.

Create a free website or blog at WordPress.com.

Up ↑