This shows up in business models and strategy all the time.
Trying to get all customers who might buy your product is a sure way to get almost none of them.
Starting with customer motives can help isolate a winning strategy
If the customer you want to serve has many options, doesn't care about quality, and has the means to acquire market information (know all prices), you are serving a cost-focused customer
This means...
... your marketing is focused on how you are cheaper than elsewhere.
Your operational strategy is to run as lean as possible.
Your sourcing and procurement are looking for consolidation and discounts wherever possible.
However, a business running this sales and operational strategy will almost never win a quality-focused customer.
They won't have the service, the infrastructure, the consistency, or the experience a quality-focused customer needs.
Likewise, a company built to acquire customers who need top of the line, will have poor unit economics and extremely high overhead in comparison to the company that services the low-priced customer.
Is your customer looking to make their daily routine better, or to escape their daily routine - beverage, travel, auto, and fashion companies better know. The markets are different
Are you looking to supply high volume, high usage parts to plumbers, electricians, and contractors; or do you want to sell to the homeowner post-install for repairs? Those markets, service needs, and inventory requirements are vastly different.
Not only do you need to think about your customer motives, you need to think about your motives!
What do you want out of your business?
- Do you want to sell someday, or is this business for freedom?
- Are you looking to scale nationally or stay local?
- Do you want a large team executing, or a small team you spend time with every day?
None of these are wrong, but they are different.
Knowing the answers to motives can help you create a business that fits you and your customers, and satisfies both.
What you sell is only part of the equation. How you structure that sale and the business selling it are something else entirely.
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Proximity is a key ingredient in streamlining anything.
Everything has a switching cost. The closer two things are, generally, the lower the switching cost.
Here are some business ways to use this idea, and some alternative ways to think about "proximity".
1. Locational Proximity
The obvious one is how close one task is to another. The closer you can put similar or consecutive tasks, the faster they can be performed using fewer resources.
2. Similarity Proximity
When looking to streamline a process, put like pieces together.
If entering invoices, enter info related to the payment or in an adjacent screen at the same time... even if not needed until a later step.
Most small businesses are family affairs. Even if its just the owner with no other family. There are emotions, family problems, ego-tied actions, and more.
These businesses are great businesses... but be ready. Here are few thoughts to help worker/acquirers in these businesses
1. 70%+ of owner net worth is the business itself.
They feel a lost customer or sale, a mispriced item, a wrong margin, a bad review, or any negative hit as a threat to their financial security and future well-being.
The thought "what if this continues" is always there
2. Owners see the success of the business as their personal success. Some take it to identity.
Realize, when you are talking about the business, you are talking about a piece of themselves, not just an asset they own.
Its more like discussing their heart than their car.