Core Customers are your company’s biggest fans. They love the products or services your company sells, and they’re willing to pay a fair price for them. Best of all, they can be counted on to make purchases again and again. Core Customers are loyal, easy (and inexpensive) to deal with and stick with your company even after a promotion ends. They’re the famous 20 percent of the customer base that provides the equally famous 80 percent (or more) of profits. Over the long haul, Core Customers are the only ones who truly earn their keep—and they’re the ones who will guarantee a company’s future success.
Must-Have Customers are potential customers who look a lot like your company’s Core customers. They’re already buying products or services that are very similar to what you sell and they’re paying similar prices. Must-Have Customers are the ones you to convert to Core Customers. The only problem is that your Must-Haves are someone else’s Core Customers. Your company simply can not survive long-term unless it’s constantly finding Must-Have Customers, taking them away from the competition, and turning them into Core Customers.
Shared values are critical to developing a relationship with your Core Customers who value the attributes of your company and its product or service. For example, if your key point of differentiation is that you offer personalized, service, that’s what your Core Customers value. If your company offers high-quality merchandise or fast delivery, or no-questions-asked return policy that’s what’s important to Core Customers. Without those shared values, the relationship with your customer is purely transactional. Customers might make a purchase every once in a while, but they can’t be counted on for repeat business.
You also need to know what your Core and Must-Haves rules are for doing business with you. And that means asking them what they think of your products or services. There’s a huge difference between bad research and great research. Bad research yields “nice-to-know” information but nothing relevant that can be acted on. Great research is insightful and provides the basis for effective action.
It’s critically important to confine research to Core and Must-Have Customers. Asking anyone else will taint the data and could send the company down the completely wrong—and potentially very dangerous—path. Be sure to ask “knock-out” questions, such as age, income or gender, as early in the process as possible. Getting all the way through a survey, only to find out that the person isn’t a Core or Must-Have, is a tremendous waste of time and resources.
Be sure to ask the right questions. In order to formulate the questions, it’s critical to have a good idea of the kind of answers the research is looking for. For example, if you want to know why Must-Have Customers aren’t buying from your company, you have to ask them. With that as the goal, the research questions can be structured in a way that will produce information that can actually be used.
Questions that could be asked include:
- What is it about our product or service that prevents you from buying from us?
- What other products or services could we offer that would make it easier for you to buy from us?
One of the important actions you need to do is conduct a yearly audit of your progress. This audit is designed to track how well your efforts are to build sustained, profitable growth. Hopefully, the audit will show that you are attracting loyal Core and appealing to Must-Have Customers. If not, the audit will highlight the specific problem areas that need to be corrected.
Here are some of the questions you need to ask during the yearly audit:
- Do we know our Core and Must-Have Customers’ rules for doing business with us?
- At what rate are Must-Have Customers turning into Core Customers?
- Do we know why our Core Customers are loyal to our products or services?
Robert Gordman is President of The Gordman Group, a consulting firm that works with companies to create actionable, real-world profit development strategies. He is the author of Do You Know What You Don’t Know? and What it Costs You, Secrets of the Super Sweet Spot: Building Sustained Profitable Growth and The Must-Have Customer: 7 Steps to Winning the Customer You Haven’t Got, which was named one of the “10 books you should have read in 2006” by Ad Age magazine. His clients have included senior management of Fortune 500 companies including Berkshire-Hathaway Retail, IBM PC Company US, IBM PC Company Canada, Kmart Corporation, KPMG, Saks Inc., VF Corporation, Weight Watchers International and Whirlpool Corporation. For more information,please visit www.gordmangroup.com.