About Getting Obsessed!
Why customer focus is overrated.
Customer obsession is overrated!
There’s so much talk about customer service, and it is understandable. Every business thrives on getting and keeping customers for the longest possible time. This is why some of the most important growth metrics for businesses are the customer lifetime value (CLTV) and Churn rate.
CLTV is a measure of how much revenue one single customer brings into a business over time, on the flip side, churn rate is a measure of the number of customers who stop using a product or service during a given period.
It is important to keep tabs on these metrics frequently as a measure of the health of your business. The customer, therefore, becomes the main centerpiece of all business considerations — the raison d’être.
This has the potential to blindside other conversations business owners should be having, speaking from experience within the marketing industry which obsesses over customer service.
There’s another conversation to have, once the machinery for ensuring your existing customers are receiving the attention they deserve. This is the kind of conversation a CEO or Business owner will find difficult to have if they are overwhelmed with jostling for customers from the same market segments as their competition.
There is a need to continually find new ways to grow beyond your current market into addressable markets unbeknown to you.
A strong focus on these new categories will foster innovation and the opportunity to create uncontested markets with high pay-off possibilities. I’ll call this the culture of having a ‘non-customer obsession.’
The term ‘non-customer’ can be ascribed to Peter F. Drucker, first mentioned in his book, Managing for Results in 1964. It simply refers to anyone who is NOT your customer.
In their book, Chan Kim and Renée Mauborgne pushed the idea a bit further, which they clearly defined the three tiers of non-customers. It’s from this framework developed in their book “The Blue Ocean strategy’’ that I have observed the need for businesses to dedicate a good amount of time focusing on non-customers aside from their current pool of customer base. I don’t see a lot of this happening right now.
I’ll use Uber and Airbnb as case studies to demonstrate the benefits.
Uber
When it launched, Uber’s focus was on ordering black limousines and hiring cars for the wealthy. On the edges of that market were millions of non-customers who never used black hire cars, because it wasn’t affordable.
Uber created a cheaper version to capture non-users, breaking the value-cost trade-off. This was better value than the typical taxi cab could provide and now, even cheaper.
Today, millions of customers who would never have thought of getting on the black limousines are jumping on ‘Ubers’ across the globe, disrupting the traditional taxi industry. As of 2021, Uber’s operations have expanded to 72 countries and 10,500 cities. Worthy of note is that Uber is not a taxi company, but a ride-sharing service.
Airbnb
The Airbnb Company also did something similar within the hospitality industry. Rather than compete in the already crowded hotel market space, it allowed homeowners to monetize their spaces and traveler's to book them, opening a completely new market segment.
Today, Airbnb has listings in more than 220 countries and regions. People stay an average of 2.4 times longer in Airbnbs than at hotels. Again, Airbnb doesn’t own any property, it simply manages an online travel platform.
Bringing It Home
The universe of non-customers offers huge opportunities. But how do we unlock it? We can start by Identifying the segments everyone is targeting and why they’re doing so.
Then look for other non-customer segments that are being ignored right now. Find out if your current or future products can provide value to this segment.
The banking and fintech space, for example, is saturated with numerous apps offering the same features to the same people. A new feature, faster service, or better customer care has now become the expected — not a very good differentiation strategy at this time.
So, how should a Bank make its services attractive to non-customers?
According to a new report released by leading fintech BPC (Banking Payment Context), 57 percent of Africans do not hold any kind of bank account, including mobile money accounts.
Could the secret be in providing simple, cheaper offerings with improved benefits to the unbanked at low-cost operations? An offering that considers the literacy level, cultural nuances, and the level of technology available to this segment.
Mobile phones are ubiquitous and quickly replacing Bank accounts in Africa. But, there’s still some dependency on a network of agents — how can we scale with little human intervention? Should banks begin to acquire (virtual) telecom licenses to help deepen the reach? Perhaps, the unbanked can also get more financially included through accessible services like easier payments, savings, lending, and micro-lending.
On the flip side, there could be cheaper and more convenient ways to offer financial services to its existing customers using new technologies like blockchain or embedded finance.
What are your thoughts on extending banking services to its non-customers (the unbanked)?
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