Creating and Keeping the Right Customer
Peter Drucker, one of the most prolific and influential management theorists of all time, suggested that “the purpose of business is to create a customer.”
Theodore Levitt, scholar, author, educator, former editor of the Harvard Business Review and professor emeritus of the Harvard Business School, took Drucker’s famous quote one step further by saying, “The purpose of business is to create and keep a customer.”
I was once presumptuous to suggest, “The purpose of business is to create and keep the right customer.” And I’m not sure this idea has ever been more relevant. In fact, it’s become a mandate in an economy like this.
I believe it should be the primary marketing focus of anyone in business, because as our culture evolves and the technology continues to blossom, our world is caught up in the irresistible current of those changes. This demands that we look at all the elements involved in this search for the right kind of customer with an ever more critical eye.
I believe this process begins with a working definition of the term “customer,” because it is one of the most pliable and elastic in management theory. Robert Simons, professor of business administration at Harvard Business School, suggests a customer is a person (or, entity—a fleet, for instance) that purchases your products and/or services, thereby creating revenue for your business.
Again, that doesn’t go quite far enough. There are many different kinds of customers, which is why I modified Drucker’s quote by inserting the idea of a right kind of customer at its end. Frankly, it’s dangerous to assume that anyone with a broken vehicle is a customer, or potential customer. The universe that theory creates is far too large and, as a consequence, too unmanageable.
Aside from that, it is neither accurate nor true. Businesses, all businesses, reflect the values, principles and personality of their leadership. As a result, they should attract and retain only those customers who value and share the principles and values reflected in the operation of a business like yours or mine.
Our job is to cast a net wide enough to attract individuals likely to respond to who we are and what we do in a positive way.
But, I take this process one step further yet again by recognizing that not every customer has the potential to become a “client,” someone who has allowed the relationship we share to move beyond its normal, transactional nature, as they come to depend upon our expertise, abilities and council.
Sounds good, but how do you do it?
You start by taking a long, hard look inside your business, determining who that core group of clients might be and what separates them from the rest of your customer- base and from the great unwashed masses of potential customers and clients who drive by your shop every day.
Next, you identify the characteristics that define each group. Is it how much they spend? While it is inevitable that your clients will spend more on average than your average customer, I’m willing to bet it isn’t just a matter of gross dollars spent. It is gross dollars spent, coupled with the shared values, principles and behaviors.
After that, you create a profile for the “primaries” in each group, the individuals who best personify the buying personalities and characteristics of each class of customer or client. So, unless you are a high-volume, low-margin shop, you don’t want to invite just anybody to your business because not everyone will fit the profiles you’ve established for best-in-class customers or clients. You might want to assess each group or individual along three dimensions: perspective, capabilities and profit potential. If you do, you are likely to find your ideal client at the intersection of those three criterion.
Once you have identified your primary customer, it’s time to figure out what it is that really resonates for them. The problem is we all think we know what our key clients want, need and expect from us. But if we don’t test these assumptions regularly, all we are left with are hopeful suppositions. When you know who your primary customer is and what they want, need and expect from you, it’s time to dedicate the resources necessary to win their hearts, minds, pocketbooks and wallets.
None of this comes easily or without cost, which means you will need to ensure your margins are adequate to support these initiatives. You will have to if you want to win the battle to both find and keep the right customers and clients.
Mitch Schneider is a fourth-generation auto repair professional and the owner of Schneider’s Auto Repair in Simi Valley, Calif. He is an industry educator, author, seminar facilitator, and blogger at mitchschneidersworld.com. Contact him at email@example.com.