Focus on the most profitable customer niches

by Bruce Kasanoff

Most executives who read the above headline notice the word “profitable.” I’d like to suggest that “niche” is much more important.

Unless and until your firm actively starts to understand what separates one customer from all the others, you will be at a disadvantage.

Why? Because you will be “averaging” customer needs. You’ll be thinking about what customers need as an approximation of what each customer actually needs.

But as technology advances, it becomes both practical and essential to get much more specific.

We recommend a process in which management continually re-assesses the most profitable level of granularization to apply to your customer base.

That is, if you have six customer segments, does it pay to go to 12, or even 50? Should you track not just purchases, but also interactions? Are there certain customers that you should track more closely, serve with greater personal attention, or grant special privileges?

These are not one-time decisions. The terrain is constantly shifting, as technology advances and each competitor seeks to leapfrog the others – or as some disappear.

We see a marketplace in which dramatic change is becoming the norm. Identifying, serving and protecting your most profitable niches is the key to succeeding despite this upheaval.