Customers Your Company Doesn’t Want.

Posted by truecreek on January 13, 2010 under More Dam News | Be the First to Comment

Aiming to please too many different types of customers can be a fatal flaw. Focus on your core audience and don’t waste money on the rest.

By Steve McKee

Do a quick exercise: Take a minute and jot down three types of customers your company doesn’t want. Oh, and this is important: You can’t choose people like shoplifters or “sale-hoppers”—the kind of customers that no business wants.

If you’re like most business leaders, identifying customers you don’t want isn’t easy, especially in times like these. But it can be helpful to consider which of your customers are least important, if for no other reason than to help you focus on the most important ones.

We’re all familiar with the old saying, “you can’t be all things to all people.” Yet in business, too often that’s what we end up trying to be. General Motors is a prime example (and look where it got them). There was a time when each GM nameplate was narrowly targeted toward a certain demographic, leaving other company brands to serve their own slice of customers. But over the past several decades, as each GM brand expanded its lineup to serve as many different customers as possible—sports cars for the sporty, minivans for young families, trucks for working people—they ended up stepping on each other’s toes.

Consider one of those famous brands now slated for the scrap heap: Pontiac. Back in the ’60s and ’70s, Pontiac was defined by drool-inducing muscle cars such as the GTO, Firebird, and TransAm. The Pontiac brand meant power, styling and cool. Its appeal wasn’t for everyone, but it was powerful for some. Since that time, however, Pontiac has introduced a host of new models like the Trans Sport (a minivan), Sunfire (a compact car), Aztek (an SUV crossover), and Vibe (a hatchback). It’s unclear who, exactly, Pontiac has not been trying to serve, which is another way of saying it’s been aiming to please too many masters. And soon Pontiac will be gone, as will several other once-proud brands in the GM stable.

It could be that Wal-Mart (WMT) will learn from the GM example. The company has been attracting a lot more upscale customers of late, for obvious reasons. In the first quarter of 2009, 17% of Wal-Mart’s retail visits were from new customers, and they spent 40% more in the store than the average shopper. Will the company accept their business? You bet—branding is about whose business you’ll seek, not whose you’ll take. But if Wal-Mart begins catering more to those customers’ needs at the expense of its core target of “people who live paycheck to paycheck,” it will be making a mistake.

More about Customers Your Company Doesn’t Want here.

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