ARTICLE

How to Create a Customer Strategy in 8 Steps

1. Define the right competitive space

A customer strategy should start with a definition of the competitive space in which you operate. Too narrow a definition and it will leave you blind to future disruption e.g. hotels and the rise of peer to peer rentals (Airbnb), too wide a definition and it will be difficult to focus or defend.

It is important to consider the category or brand from the perspective of the customer actually buying your product or service. For example, does Camelot (National Lottery) see its competition as other scratch card operators? Or is it actually competing for attention with other products also promising small moments of escapism e.g. cigarettes, chocolate and alcohol. 

2. Be clear about what your category does for people

To develop an effective customer strategy, you need to be clear about what your category actually does for your customers. You need to understand both the motivations / needs of your customers today as well as how you think they will evolve in the near and mid-term.

Fever-Tree is an example of a product innovation that simply found a better way to deliver against category motivations. They seized upon the growing motivation for increased provenance, flavour sophistication and premiumisation in gin, and brought enhanced quality and botanicals to a previously moribund category, going on to build a billion-dollar brand.

3. Understand what solutions are available to people

In any given category it makes sense to build a good understanding of the full range of available and emerging solutions – including taking a good look at what is happening in adjacent categories. Solutions matter because businesses crystallise money at the point a customer or consumer chooses their specific solution.

We’ve seen countless examples over the last 10-20 years of seemingly unassailable brands losing their ascendancy amidst the failure to understand the significance of a new type of solution. Think Blockbuster and Netflix, HMV and Spotify, and more recently, mainstream lager and Brewdog. Understanding what emerging solutions are available and how your customers are using them is a good place to start.

4. Map motivations against solutions in order to find the opportunities

The previous two posts have discussed how to identify what motivations exist for your customers, and the solutions available to them to fulfil those motivations. By mapping these two influences together (both current and future) it is possible to break down the customer challenge into 4 discrete quadrants and use this as a platform from which to identify and size future battlegrounds.

We’ve created a proprietary tool called the Big Framework for Growth (BFG) for this purpose. It is a useful tool when thinking about how to grow a category or brand. When overlaid with commercial value, satisfaction/dissatisfaction levels, growth trends, and brand heartlands, it helps brands to identify where to focus.

Lee Manning-Craik and Simon Garnett share The Big Framework for Growth, a proprietary board-level decision-making tool that reveals the biggest current and future opportunities for growth.

5. Know how the money is moving

Knowing how the money is moving in your category is central to any effective customer strategy, because when behaviour changes, money moves. Start this step by building your foundations. Size your overall category and then seek to determine where the money sits and how it relates to specific motivations and solutions. Also look at what the trends are; what behaviours are growing. Are there any that are shrinking? 

Following the 2009 financial crisis Tesco suffered significant share loss, simply because it didn’t recognise quickly enough the permanent change in shopper behaviour i.e. the demise of the fortnightly shop and the shift towards the discount retailers. It took considerable time and effort and the melding of different data for us to prove to them unequivocally that shopping had changed for good.

6. Understand what the critical success factors are for usage 

It is important when developing a customer strategy to understand how to win your your target customers. This requires you to have clarity on what matters most to them i.e. what is perceived as critical, what is a nice to have and what has the potential to act as a real driver of choice? What matters in any category is to build a firm understanding of what constitutes a Point of Parity (POP) – those attributes that allow you to enter a consideration set – vs. Point of Difference (POD) – those attributes that help your particular product or service to be chosen.

Our work for Pladis on Mini Cheddars, revealed that Mini Cheddars’ ‘real cheese’ credentials were a hugely important driver with customers (who were often buying for children) and yet when we looked at the packaging this wasn’t being highlighted anywhere. We were able to help them significantly increase sales simply by better signposting the real-cheese credentials on-pack.

7. Be clear on where difference is meaningful 

There is little point having a segmentation you can’t service or unwittingly turning your newly conceived demand spaces into a series of straitjackets. We’ve seen really sophisticated clients be occasionally stymied by having too many demand spaces cut by too many consumers, with the result that they’ve been unable to identify the bigger commonalities that present real opportunities to scale.

Look at volume and value as the two key determinants of difference e.g. a smaller segment in terms of occasions might be disproportionately large in value terms. Really try to understand what drives consumer choice and behaviour in your category.

Forge co-founder Karl Miley shares best practice for creating Demand Spaces.

8. Clarify what will have the greatest impact on influencing behaviour

The final step on the journey towards developing an effective customer strategy is making sure that we are clear not just about what we could do, but what we should do.

Understanding what it will take to win, means you can make clear decisions about where to invest your resources. Revolut decided to invest in a Bitcoin trading platform because they knew it would appeal to the customers they particularly wanted to attract. Despite the recent bad press, Boohoo has taken fast fashion to a new level, turning catwalk shows into clothes you can buy in just a few days – and in the process spawning a whole category of copycats – because they know this matters disproportionately to their customers.

This will also be very important as we emerge from Covid-19. How significant will changes in behaviour be and what level of investment should be made to address them?

Forge Co-Founder Steven Melford shares how we use Stanford University’s behaviour change theory to prioritise brand and marketing investments.

Thank you

Thank you for reading. If you are interested in finding out more about these steps you can read our whitepaper How To Create a Winning Customer Strategy

Photo by Blake Wisz on Unsplash

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