In today’s world many business models are different from the traditional one and the definition of customer, needs discernment
“Who is a customer?”
Whenever I ask delegates in my session that question, I almost always get one or both of these responses. “The customer is the end user of a product or service” or, “The customer is the one who trades his money for the product or service.” Whereas both have elements of truth in them they are also narrow and misleading. Understandably, the responses are borne of a mind filled with academic theory of who a customer is and 20th Century thinking when there was no internet. The business world however is a bit more complicated; therefore businesses must be clear who their customer is as this will determine the most effective way of selling to him.
And so to the latter response, I ask, “Do you all have a free email address?” “Of course!” the class responds indignantly. “And do you consider yourselves customers of Yahoo and Gmail?” I prod. Pin drop silence follows. I can almost hear the minds creaking for what seems an eternity, but is only a few seconds, before insightful understanding spreads across their faces and a bust of laughter follows. “Yes, we are.”
As for the former response it’s even more intriguing. If the business model of a company is distributor dependent, for instance, it follows therefore that the distributor becomes a key customer. Most FMCG companies fall in this category. What about the end user then? Well, he’s also a customer, only different from the distributor.
And there-in lays a world of difference that will either profitably propel the sales activities of an institution or rapidly repel the institution from the customer-clearly defining who its customer is, and consequently, selling to that customer in his language and laying business emphasis and resources in commensurate manner.
In today’s world many business models are different from the traditional one. In the former example of email addresses, Yahoo and Google have invested massive resources to get the full attention of (read, sell to) a non-paying customer (you and I), so that they can have a leg to stand on when selling to the paying customer (advertiser). In similar fashion, a newspaper costs much more than the 60 shillings you bought it at and most probably 60 shillings is the unit cost of printing it; much as you are the target market, what keeps the media house that prints it afloat isn’t your 60 shillings, but the advertisers who will pay to appear in it, for you to read about them. In this case, both are paying customers and each serves a different but complementary purpose.
In the case of the FMCG, the distributor is an intrinsic part of the business model and for this reason many businesses invest heavily in their distributors. This distributor will of course further sell to the retailer and then she, the end user who buys from his local kiosk. That’s the theory-in practice however, having sold to the distributor, the FMCG cannot sit on its laurels. The end user is still a customer it must reach out to (sell to). This it does via advertising, promotions, and merchandisers (that’s the aisle attendant who attempts to get you to try the new sausage). In fact the merchandiser is a classic example of selling to both customers. The distributor (supermarket) has already been sold to by the FMCG, but the FMCG has still gone ahead and planted a salesperson in the distributor’s premises to sell to the end user.
Know your customer isn’t a term reserved for the financial world to reduce fraud; every business must know its customer to survive, let alone thrive