WHO'S DRIVING YOUR BUSINESS?

Choosing your primary customer may be the most important management decision you ever make.

And it’s one you really should make. During strategy sessions I often hear “but we don’t have primary a single customer, we have many.” Business leaders often think that they can divide their attention across multiple primary customers. As ambitious and balanced as this may seem: in practice this approach ultimately leads to an unfocused strategy.

I have also talked to managers who feel that they aren’t really working for any customer at all, because “they are not a profit-driven organization and as such they do not have any customers”. When management feels inclined to reason along these lines, perhaps it helps to remind them that it’s not just profit or turnover that needs to be earned: budgets too (which could come from donations or subsidies) ultimately need to be earned.

You can’t mean everything to everybody. But you have to mean something to somebody.

Whatever business you are in at some point somebody has to decide that what it is you are doing is worth his or her money. That somebody may very likely be the person your primary customer. A charity – for example – should consider every now and then whose interests ultimately drive their business decisions. Is it the board, the people making donations or the needy whose quality of life depends the charity? The right answer may not always be obvious.

Focus

Take McDonald’s. Within half a century this giant conquered and converted most of the free world to a diet enriched with burgers, fries and soda. The turbulent growth of McDonald’s – especially during the 1980’s and 1990’s of last century – has become iconic for free market capitalism. Who was its primary customer during these years? It wasn’t the consumer buying their hamburgers. By focusing primarily on meeting the needs and demands of real estate developers, McDonald’s was able to grow at a staggering rate of 1,700 new restaurants per year during these years.

Shift

Even though you should stick with a primary customer for the long run, at some point it may be wise to revise that outlook. At the turn of the millennium the McDonald’s corporation faced a new challenge. Simply opening new restaurants could no longer facilitate further growth: the market seemed saturated and consumers got fed up with eating the same, greasy meals in the same setting over and over again. McDonald’s had to rethink their way they ran their business and in 2003 it declared that from now on: “The consumer would be the new boss as McDonald’s.” This radical shift enabled local McDonald’s managers to develop new, localized and sometimes even healthier menu items. In turn this led steady growth of turnover per restaurant and a solid increase of customer satisfaction.

Choose

It really helps to have a clear picture of and focus on your primary customer. Research by Michael Dahlén seems to support that assertion. Customer focussed organizations are better at developing good strategy and innovation. The latter in particular pays off in greater financial results, greater market success and (perhaps more obviously) greater customer satisfaction. Once you have made it clear who is your primary customer you can proceed to maximize all resources – manpower, money, management attention – to serving his or her needs. The flip side of course is that you can only do so by minimizing the deployment on matters of secondary importance.

One more thing. Whomever you decide should be your primary customer; it cannot be the ‘internal customer’. Those really don’t exist – we all should stop talking about colleagues that way. It’s confusing and distracting.