Is It Time To Change Your Customer Strategy?

28 Jun Is It Time To Change Your Customer Strategy?

The purpose of business—creating a customer—and your customers—at a human level—aren’t changing. 

But for many businesses, it’s time to make a change toward having a deep understanding of their true purpose and their customers.

Customer vs. Consumer

Peter Drucker wrote: “There is only one valid definition of business purpose: to create a customer.”[1. Peter Drucker, The Practice of Management.]

The terms consumer and customer are often used interchangeably but they signify very different relationships. Etymologically, consumer stems from a word that means “one who squanders or wastes,” whereas customer stems from a word meaning “a person with whom one has dealings,” with the implication that it is an ongoing relationship.[

Despite what terms they use, marketers often treat current and potential customers as consumers—someone to constantly try and sell products or services to—rather than trying to create a customer—someone you have an ongoing relationship with through need fulfillment.  

The customer ends up being a number rather than a human, where the goal is to robotically increase how much they purchase in the near future. As Stanley Marcus, of Neiman Marcus, wrote, “Customers are people; consumers are statistics.”[2. Stanley Marcus, Quest For The Best.]

Even when it comes to so-called “customer loyalty programs” the customer is treated like a consumer: the focus is on tactical strategies to sell, sell, sell, rather than understanding why some of their customers are loyal and how to duplicate that behavior. This is why most loyalty programs fail to provide something a customer wants, much less reward the behavior the company is seeking, which should be connected to the business purpose. It’s also why attrition and acquisition are both increasing at many companies: they’re finding better ways to get new customers to buy to the detriment of figuring out how to keep them.

Most businesses aren’t trying to embrace their customers, despite their claims. Instead, they’re trying to find new ways to repackage what worked in the past: mass marketing.

Repackaging Mass Marketing

Marketing often remains focused on selling as a primary goal rather than a byproduct. It’s not because it’s the best way, it’s because it’s what worked in the past. But, mass marketing only worked because the conditions of the time allowed it, not because it was the best way.

We’ve known for a long time that classic ad inventories aren’t working, but instead of taking a huge step back and reexamining everything, most have flocked to shiny new objects with social media being the poster child. Social Media became the shiny thing to flock to not only because it was new and people were and are still drawn to it, but because other companies were doing it too.

But, how effective has it been? Despite the hype of social media, most efforts are either failing or have unprovable results.  Not only that, in many cases, it has a below average effect on company performance despite increased spend. And, many companies aren’t monitoring results, they’re just assuming they’re there.

Most companies treat it as a broadcast medium: that’s where people are spending time and broadcast worked in the past, so it must be working there. Right?

The tactics have changed, but the mindset has not. But, that’s exactly what should have happened, because it’s part of a human’s natural behavior.

Operant Marketing

Not changing is a default tendency.

Operant conditioning is a type of learning where wherein you learn voluntary behavior based on the presentation or removal of positive or aversive stimuli. If marketing strategies worked in the past, you constantly received positive stimuli—profits, increased awareness, etc.—that made it ingrained in your behavior. Whether you realize it or not, it naturally makes you default to behaviors that worked in the past.

Your tactics are probably still getting some results and, in doing so, they’re reinforcing the previous behavior. Knowing that you’ll get some result is better than knowing that you won’t get any if you try something completely new. From a biological model perspective, if an animal learns to push a lever and get food every time and then suddenly only gets food every other time it pushes the lever, it’s still going to push the lever even though the positive response has been halved: it’s better than getting nothing.

This is the same behavior present in pathological gamblers: if it almost works it’s not seen as a deterrent but an opportunity to keep going.

Trying to apply old behaviors to new situations—the default—is common in business but it rarely works, and certainly not as well as it did in the past. Remember what happened when Ron Johnson transitioned from Apple to JCPenney?

Anyone that tries to sell you a cookie cutter version of something that worked before is unintentionally selling you snake oil; they probably believe it will work just as well.

Tactics For Change

Marketing isn’t about selling to the customer; that’s a byproduct. As Drucker observed, “The aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy.”[3. Peter Drucker, Management: Tasks, Responsibilities, Practices.]

But, before we can get there, it’s important to take the time to break old tendencies. Here are four tactics to help you break old patterns:

1. Begin With Awareness. Breaking old cycles begins with being mindful of them. Make a list of tendencies and strategies you naturally default to.
2. What Has To Die. Which of those tendencies are hindering you? Make a list. Next to each item, write down what may happen if they don’t change. Date the list and make a proclamation to never do them again.
3. Rebel. A main reinforcer of habit is seeing other people do the same: if others are doing it, it must be right, right? Become aware of how talks you attend and articles or books you read may be reinforcing old behavior just because others are also doing the same, not because it’s the best strategy.
4. Focus On Change. Don’t feel guilty; operate from a position of strength. Focus on the change that needs to happen rather than what you’re not supposed to do: you already removed those by writing them down. Make a list of things that need to change for you to move forward and what it will take to change them. Also, changing your environment helps create a new mindset: rearrange and/or redecorate your office.

_______________________