Strategy is, or it should be, focused on decisions regarding which clients to target your products or services to. Making these choices is based on three key factors: 1, understanding the key customer needs and 2, linking the benefits that satisfy those need to those that your products/services offer and 3, knowing how you rate in satisfying these needs versus the competitors.
The critical point is that insight into customer needs should be the centrifugal force binding your strategy together. Conventional wisdom will devote energy to understanding functional needs and then describe who they are to size the potential market. Changing expectations from customers together with technological advancements needs a new approach.
Thinking about a broader set of customer needs will help and below is a suggestion of the areas to focus on:
Function as a minimum
You definitely do need to focus on the core functional needs of clients i.e. that a medicine is efficacious, that the cars’ MPG is what it says it is, that your smartphone has wi-fi etc. These are the core needs and ‘table stakes’ for your strategy. Without doing these things a minimum you are not in the game.
Style is the substance
Increasingly however ‘how’ something is delivered just as important.
The rise of on-line estate agents does provide some cost advantages, but also offers a convenience that is the deciding factor for some. The attitude, empathy and responsiveness of your team are also critical, this is not just in the retail and services sector where traditionally people have been seen as the product, but also in the manufacturing sector, where ‘manuservicing’ mentality understands that much of the time the product actually doesn’t sell itself!
How your customers buy may be time-consuming and formal or impulsive and knowing the difference is key. The information, resource required and duration of decision-making can be radically different, so understanding this will help you gear up to anticipating or responding to these needs.
Still within many retail environments, customers like to be given time to consider alternatives and to browse and experiences that support this continue to do well.
Closely aligned to style is timing. Purchase and usage times can be in close proximity, but also can be distinct and separated by months (esp. for genuinely seasonal products). For most industrial markets there are critical capacity planning decisions around resourcing a procurement process and gearing up resources to deliver a contract. One of your competitive advantages may therefore be your sub-contracting relationships and the ability to secure your supply chain on demand.
Think wallet, not cost
Why is cost a need? Well, all customers have a budget (whether conscious or otherwise) and as such this is one of their purchase criteria in additional to function etc. Psychologically a value for money decision is made by comparing a basket of these usage on non-usage criteria.
The key can be not to focus on the actual price but rather the importance customers places on the cost in relation to other things they purchase. By doing this you may find the budget expands to recognise the benefit you bring. By understanding the link to functional needs you may also be able to meet more than one need and thus save a customer money overall.
Location, location, location
It is also essential to consider where something is bought versus used. E-commerce models make the ordering of many products convenient for example, but that doesn’t necessarily customers can be reached easily. There may be markets where the location of buying teams are distant and the logistical challenges of developing relationships and continuing them need serious consideration.
Beware though, the reverse is also true. Just because people and organisations buy a certain way doesn’t mean that can’t change, as proved by the rapid growth of the on-line travel bookings and accommodation sector.
The important thing here is that all these facets should be treated as client needs. Armed with this information you can then find out how important each factor is to customers and how you rank versus the competition. Following this you can then profile the customers demographically, geographically and attitudinally. This will then help you estimate the size of the market as well as make tactical decisions on the communications mix needed to reach them.
See more on: Business Strategy