Who’s Driving Your Business?

Driving You Business 560x268 Whos 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.

9 thoughts on “Who’s Driving Your Business?

  1. Great read. I’m very interested why we should stop talking about ‘the internal customer’. Why don’t they exist? Are collegues just the products of our primary customers or are collegues the input needed to produce?

  2. @ Alexander Good questions – something I may need to elaborate a bit upon in another blog. Basic answer: they are your colleagues (and those are not ‘on the market’) – not your customers. They should have a shared purpose: to serve the needs of whoever is your company’s primary customer.

    Interestingly I got a mail today from MD Professor Seán Meehan:

    Seán writes: “Strong customer-focused companies have a clear, relevant promise which they obsessively deliver day-in, day-out. At the same time, they relentlessly drive the market by evolving the offer in the face of market developments and opportunities. Because they meet customer needs better than the competition, again and again, they are able to generate sustainable, profitable, market-leading organic growth.”

  3. Great blog!
    First, it has a strong opening. And I’m loving the example of McDonalds as a real estate company. Very true. (Schiphol Airport is a similar case, since their net profit derived from real estate surpased the amount of profit made from departure and landing fees)

    Second, the remarks about the ‘primaire customer’ opened my eyes. In my work I usually refer to them as ‘internal customers’ but your analysis somehow seems to ‘fit’ better. Thanks!

  4. Hi Roland, thanks for stopping by.

    Good point – I think Schiphol Airport (or Dubai for that matter) are excellent examples too….I’m also pretty sure that generally the store owners at such locations generally have better profit margins than most airlines. ;)

  5. Just started fowlnliog your blog and I love your work. I have 2 little munchkins of my own 2 yrs and 9 months that I think would make awesome subjects!

  6. Now that we have seen the first Olympics where women are allowed to compete for every country we should include a special discipline of Multi Tasking. Men would be allowed to enter too of course, but only if they could fill in the application form while simultaneously trying to arrange for a plumber to visit and whilst balancing a screaming baby on each hip

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