All businesses, no matter what they do or sell, have three types of customers:
- Product customers: the people who buy their products/services
- People customers: employees
- Profit customers: the people who have invested in the company and are expecting a return on their investment
But too often, as I will explain, businesses concentrate on having a profit customer-centric strategy at the expense of the other two types of customers.
I spent 25 years of my adult life in a product customer-centric business. Although my fathers and uncles did not call it a strategy—because they had not been told it was one—it was. The easiest way to describe it would be to say that the display of all the merchandise followed what I have titled the Watchband Theory of Display. Let me explain.
‘A salesperson merely had to look at the watch in question to pull out the appropriate tray and show the customer the appropriate selection. ’
My first job in the store, after coming out of the U.S. Air Force in 1954, was to be “vice president of watchbands.” (Don’t all sons coming into a business deserve to have a title other than “born executive, one whose father owns the business”?) I was to take care of the watchbands. Not the watches. Just the watchbands.
The trays for displaying metal watchbands were divided by men’s and women’s, then by whether they were yellow gold-filled or white-gold-filled or stainless steel and then by whether they were expansion or non-expansion watchbands. When someone wanted a metal band for a new watch or to replace a watchband, a salesperson merely had to look at the watch in question to pull out the appropriate tray and show the customer the appropriate selection.
For leather straps, however, the theory had to be applied in a different way. They were not arranged by types of leather, although that would seem logical. First, of course, we divided the straps by whether they were for women’s or men’s watches. Watches that take leather straps vary by the width of the “lugs” where the band attaches, so we sorted the straps by “lug size.” Once the width had been determined, customers could select the type of leather they preferred. Not atomic science but product customer-centric for sure.
Easy to buy
This theory of “editing” merchandise from a new customer’s point of view was used throughout the store in many different ways. It was a strategy of “making it easy for customers to buy.” Add to this, our staff was well trained, experienced and paid. The end result was that we had three different customer-centric strategies that seemed to satisfy the different types of customers.
Why such a theory is not used in all kinds of businesses today is beyond me. Just go into any retail store for the first time and see how easy it is to find what you’re looking for. If you find even the general department, are all the types of like merchandise in one place? Or are they set out by the designer’s names, causing you to look in several places for like items?
Call any toll-free number shown in an advertisement. Does the person answering the phone even know the ad was run and, if so, whom you should talk to about it? Or are you asked to go through a litany of “Press 1,” “Press 2,” etc. without getting where you want to be? Go to any business’s home page and see how easy it is to find what you’re looking for. “Tain’t, is it? Clearly, the organization’s customer-centric strategy is not aimed at you, the product customer. It’s meant for the profit-customer.
Even when a business sets its strategy with the product customer’s needs in mind, the lack of a knowledgeable staff (or even clerks with fancy titles like “sales associate”) negates those efforts. Staffing a business with less than competent people who know little that is going on and less about the products is not having a product-customer-centric strategy.
A display dilemma
One of my clients had a web site dedicated to items related to different religions. The company’s dilemma was that if customers did not know the product’s name, it was difficult for them to find it. My solution called for the watchband theory: displaying merchandise first by each religion and then having a section of all like items, regardless of which religion they “belonged” to. We applied the same theory to other things they were doing. Sales went up, which increased revenue—and inventory turnover—which increased the bottom line.
If you look at it another way, a profit-customer-centric strategy is self-defeating. Almost all “controllable expenses” are—if controlled—anti-sales. If the strategy calls for having less inventory, spending less on marketing and advertising and having less-qualified salespeople (because your cost-cutting won’t attract qualified people), then it could have a negative effect on your business.
When I look at business plans that are developed to gain the interest of investors, I see a lack of real interest in having a product customer-centric strategy. It seems the strategy is to show how the business is profit-customer-centric. While the numbers may look good on paper, on paper is all they are. I see promises made that cannot justify the numbers in the financials and vice-versa.
Too often, a business’ strategy decisions are made by people who do not see their actions as being “selling” or who don’t believe that having a product-customer-centric strategy is important. Thus, those making their strategy decisions take the most comfortable route, which is to report to the profit customers. I call this the “MBA Syndrome,” in that the person who adopts such a strategy does not have to know how product customers use what the firm sells—or what happens to the products after they leave the store or warehouse.
All businesses have to have a customer-centric strategies for each of the three different types of customers. While each may be different, all three have to be coordinated because each affects the others. It is a delicate balancing act to have a profitable customer-centric strategy that promotes ROI that benefits all. While a win-win-win world is really unrealistic, it is something to strive for.