The casualty list of failed companies that focused on pleasing the customers they had as opposed to targeting their customers of the future continues to grow. Meanwhile- in a much more inspiring and interesting story- a company focusing on their customers of the future continues to delight investors and target customers alike.
Consider the case of Harley Davidson (HOG: NYSE) which identified that they were facing an aging demographic that would no longer continue to regularly purchase motorcycles (their existing customers). They also identified low appeal and small purchasing intent from the potential high growth geographic markets, as well as with both younger male and female clients. Strategically speaking this wasn’t a great place to be in- however the important point is Harley was able to determine this and start making the investments in capabilities necessary to attract the new target clientele (younger and in new geographic markets).
Within your own businesses- whether you are selling into B2C markets or serving B2B clientele- I recommend the application of the customer retention matrix created to help you better identify the customers of the future:
When you are developing your customer targeting and retention matrix it is important to consider:
- What future assumptions do you have about the external environment that will change what your customers will want to buy from you?
- What future assumptions do you have about your internal organization that will change where you can best serve customers in a profitable manner?
- What are your costs to serve both now and in the future for customer market segments?
- Strategically- what are your highest priority segments of customers you want to serve- with which products and services?
- What market and customer segments do you need to exit or phase down to achieve your strategic goals?
The colours in the matrix represent the highest priority (red), medium priorities (yellow), lower priorities (blue), and the segments and customer groups you will phase down and/or exit (grey).
Share this exercise with your team and have insightful discussions and reflections on the future. This will determine what your company will look like tomorrow, who your highly valued customers are, and how you be serving them.
The performance of Harley Davidson even compared to the very strong results of the S&P 500 in the last five years, which is impressive- racing ahead and delivering to customers and investors the performance they expect.