Jeff Leitner writes about the questions that you should be asking when you start your business. They include: What is the pain that you are trying to relieve? and What one thing are you trying to sell?. Both of these are great questions, but I would like to add another to your list. It is, at once more basic and for some of us, it is a no brainer. But be careful, the answers might surprise you.
The question is Who is your customer? Yes, who are you trying to make your products or services for. The reason it is important is that if you truly know who your customer is, you can design the company’s products and processes to support that customer to the best extent. Let’s take a look at some examples to see where this could go.
Pharmaceutical companies – The customer is the patient who needs the medication, right? Well, if that is the case then why do they sell to the doctors, who do not buy the product, but authorize (through prescriptions) others to purchase the drugs. I’d have to say that the doctors are the customers. They pharmaceutical companies do everything they can to influence the doctors and dabble in consumer education, hoping that the patient will be able to demand a certain drug from the doctor. But the doctor is still the customer, because the buying power remains with them.
Physicians – While we are on the topic of medicine, who are your typical physician’s customers? It seems you have two choices, either the patient or the insurance companies. Based upon the way that most doctor’s offices are run, it is obvious that the insurance companies are their main customer. Everything that the physicians do is designed to make sure that the insurance company gets what it needs. The patient is the one who allows the doctor to get paid, but the gatekeeper is the insurance company. Concierge care (I love that description) has started to catch on in wealthy areas. Basically, the doctor does not take insurance and charges an annual membership fee to his or her patient base. Does this exclude people who must use insurance to cover their health needs? Yes, of course. But it allows the doctor to change the customer relationship from the insurance carriers to the patient.
Google – Who is Google’s customer? Good question. Google sold over $22 Billion worth of services in the last 12 months. Most of that came from advertising. So, of course, Google’s customer would be the advertisers who pay for the services. Not so fast. I would venture that the users, not the advertisers are Google’s customers. Most of the new things that Google rolls out are enhancements to the user experience and they are focused on making the world’s information available to everyone. If they added an additional advertising service, they might increase revenues a little, but if they stopped providing excellent search (and other) services, the advertising would dry up very quickly.
This is all critical as you are building your business. If you design your business around the wrong customer, you will never see the full benefits that you could be getting. Think through this question (and Jeff’s above) as you start to build your business plan. There are significant benefits for not taking the easy road and just picking the customer that everyone expects. You may be able to garner a much more substantial or lucrative (see physicians above) customer base from a group of folks who are not supported by other organizations.
I would love to hear about more cases where you believe that the customer is not exactly the end user. Contribute in the comments.