Why knowing your customer is crucial for business growth.
Every small and midsized business leader tells me they know their customer. They are sure that’s why they succeed. But, unfortunately, most don’t know the vast majority of their customers very well, and they are surprised when business turns south on them. They try to raise prices, or cut costs, and they are surprised that customers leave. Or they try to expand into new markets, and they never attract a strong customer base.
The problem is we get too involved in perfecting our Value Delivery System for the customers we had in the early stages. We offered a Value Proposition those customers wanted, and our initial Value Delivery System made their lives better so they bought. But as time passed we keep perfecting the Value Delivery System when customer needs change, and we know longer have a viable Value Proposition.
This podcast explores how Starbucks and Dominos failed at international expansion because they assumed their Value Delivery System used in the USA would be desirable offshore. But the needs, and the alternatives, in those markets were different enough that there was no Value Proposition to pull customers to them.
This podcast also delves into how trends drive changes in customer needs, requiring we develop new Value Delivery Systems and new Value Propositions. In Japan government policies and businesses have tried to cling to historical norms, and now the population is in freefall, real estate is a disaster, there are insufficient workers, too many tourists and the economy is so bad the Yen is at its lowest level in decades. If you don’t manage for trends your business will eventually become obsolete.
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