Customers First? How About
Noncustomers First?
Making a blue ocean shift is about
creating new demand and growing your industry, rather than competing for
existing customers. One of the first steps of the blue ocean shift process is
to identify the demand that exists beyond your industry. These are your
noncustomers: buyers that don’t buy into your industry, product or service yet.
The notion of noncustomers – anyone who
is not a customer – is broad. So how can you identify your noncustomers?
And how can you transform noncustomers into new customers? Kim &
Mauborgne’s three tiers of noncustomers will
help you achieve both.
The Three Tiers of Noncustomers
First-Tier
Noncustomers
The first-tier of noncustomers is the
closest to your industry, they sit on the edge of the market. These buyers
minimally purchase an industry’s offering but are ready to jump ship as soon as
they discover a superior alternative.
Just think how many industries and
services – from credit cards to health insurance – you buy into not because you
want to but because you have to. And if you were given a better alternative,
you would be among the first to go for it.
Do you know your industry’s first-tier
noncustomers and the pain points that make them ready to jump ship? You should.
You could multiply the rate and frequency of their use and create new demand if
you did.
Fast-food chain Pret A Manger did just
that. Pret identified the first-tier noncustomers of the fast-food industry
that bought into it because they didn’t have much of a choice. They craved
healthier and fresher options but needed to have their lunch fast, and at a reasonable
price.
By identifying and understanding the
common needs of these first-tier noncustomers, Pret was able to offer them the
compelling alternative they had been waiting for – restaurant- quality
sandwiches made fresh every day using only the best ingredients, ready to grab
on the go, at reasonable prices.
There are first-tier noncustomers
waiting to be swayed in every industry. In the taxi industry, they were the
regular cab users who immediately switched to the more convenient alternative
that Uber created for them. Or the music lovers who swapped downloading with
iTunes, for streaming any song at any time with Spotify.
Second-Tier
Noncustomers
Second-tier noncustomers are refusing
noncustomers. They have consciously thought about and considered your offering
and then rejected it. It might be because another offering meets their needs
better, or it could be that they simply can’t afford your offering.
A second-tier noncustomer will compare
your offering with another offering, weighing the pros and cons of each. If
cost is the main factor, they will choose the more reasonable option. But often
cost is not the factor that causes buyers to refuse your industry. It can
be as simple as buyers who stick to beer although they’ve considered wine
because the choice offered by the wine industry is just too obscure and
overwhelming.
The fact that second-tier noncustomers
considered your industry means that you are far closer to possibly capturing
them than you realize. So you need to find out why second-tier noncustomers
refuse to use the products or services of your industry.
Look for the commonalities across their
responses – this will lead you to the pain points preventing
them from buying into your industry. Then, identify the pain points you can
overturn to capture your second-tier noncustomers.
Third-Tier
Noncustomers
The third tier of noncustomers is the
furthest away from your industry. They are the noncustomers who have never even
considered your offering as an option. In turn, these unexplored noncustomers
have often not been considered by any player in your industry as a potential
customer. That’s because their needs have always been assumed to belong to
other industries.
Has your company given any thought to
your third-tier of noncustomers at all? You should because the third-tier
represents the biggest pool of noncustomers you could be tapping into.
But don’t assume however that
third-tier noncustomers are simply ‘everyone else’. They are noncustomers who
could benefit from your service or product, but don’t, because they have never
considered it as an option.
Microfinance captured third-tier
noncustomers who previously didn’t have access to financial services at all. By
offering microloans to disadvantaged entrepreneurs and small business owners
with no access to banks or investors, microfinance opened up a whole new
industry to lift people out of poverty.
Jumping from microfinance to the
cosmetics industry, forward-thinking companies saw men as an increasingly
powerful market. Identifying men as their third-tier noncustomers, they created
a growing array of products aimed at men, using traditionally female cosmetics
like mascara.
Once you have a better understanding of
your three tiers of noncustomers, aim for the biggest pool of noncustomers your
company can act on. Go beyond looking at each tier separately. Explore
overlapping commonalities across tiers to capture noncustomers at all three
levels.
Posted by the Blue Ocean Team
https://www.blueoceanstrategy.com/blog/customers-first-how-about-noncustomers-first/
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