Who is your customer? (Hint: not your partners nor colleagues)

Peter Drucker famously - and accurately - identified that the purpose of a business is to acquire and retain customers. That’s it. Without them, there is no business. Regardless of how great your product or service may be, if you can’t acquire and retain customers, you won’t have a business.

?To accomplish these two seemingly simple yet challenging goals, companies allocate their precious and limited resources. Sales, marketing, product, engineering, operations, human resources, finance, and so on. All focused on helping the organization identify, create, commercialize, and support whatever will profitably obtain and retain customers.

?I’ve had the pleasure of working with hundreds of leaders from dozens of companies, seeking to evolve their organizational cultures to be more customer centric. Without fail, the question of “who is the customer” emerges in these workshops.

?“We sell through distribution partners, they’re our key customer.”

?“I support many internal customer teams within the company.”

?To help address this important question of who is - and isn’t - a customer, I wanted to share a simple framework.

?Whose needs are you addressing as you develop or refine your products or services??That’s your customer. They are the ones who directly benefit from the use of your product or service.?

?That’s it.

?These are the individuals who may use, consume, wear, utilize, eat, etc. your product or service. These are the individuals whose needs you are trying to solve.?These are the individuals your organization needs to focus on.?These are your customers.

?There will be no doubt others who take issue with this simple definition and perhaps want to introduce more layers of “accuracy” (read: complexity). We have the “buyer,” the “decision maker,” the “user,” and so on. And yes, these are indeed realities for many categories of product and services and highly appropriate for commercial teams.?But to drive uniform focus within your company – not just sales and marketing – ?I encourage you to consider my simple definition, it can help create consistent understanding, focus, and alignment.

?When I entered the financial services industry nearly 20 years ago,?I was pleasantly surprised to hear regular discussion of “our customers.”?Unfortunately, the definition of customer within my firm, and largely the entire financial services vertical, is the financial advisor who advised the consumer (or the advisor’s firm). The customer is not the individual who selected our product (through the advisor), the one who goes through underwriting and has a policy issued in her name, the one who pays the firm quarterly premiums. No, the “customer” is the consumer’s financial advisor, the one who the firm pays commissions.

?In what world am I paid to be a customer?

?I have seen this as well in other verticals that sell through distribution (for example, CPG). Because of the power and influence distribution wields – access, prioritization, location and prominence, pricing, etc. – ??manufacturers often view them as their primary stakeholder, their customer. And while they are indeed an important part of an ecosystem, they are not your customer. They are your partner.

?As they grow, you grow. As they decline, you decline. You are intrinsically connected in a mission to deliver a solution to a problem (your product to those that engage with them and whose needs you solve).?This is a partnership, not a customer relationship.?Yes, they will have special needs that you must address and support (seasonal promotions, campaigns, employee training materials, POS materials, etc.), but these needs are not core to your product or service.?They are essential to commercializing your product or service.?And yes, they will have unique insights into their consumers (category share, sales volumes, velocity, segment behavior).?But these insights should be a starting point, not the final verdict, on new product or service features, configurations, or pricing.?To fully understand and evaluate needs and opportunities, you must talk to actual customers, not just partners.

?I also frequently hear workshop participants say “my customers are internal teams,” namely from important support organizations: human resources, accounting, IT, and so on.?While I love the commitment that this sentiment represents, it is again a misuse of the term “customer.”

?A work setting should be a fluid and consistent collaboration of different individuals and teams towards a set of growing goals.?Each individual brings a set of skills, knowledge, and experience and should be respected for their domain expertise. Labeling a colleague a “customer,” while not intentional, introduces a power imbalance that may run counter to the firm’s goals.

?We have all been brought up hearing that the “customer is always right” and while this adage is clearly not true, there is a clear and proper priority placed on the customer - what she says, feels, thinks, prefers, feels, and so on. When we bring this label – and some degree of this customer focus ethos – into the workplace, we run the risk of ignoring our own domain expertise.?We may place an imbalanced focus on what out internal customer prefers, suppressing our own knowledge.?And worse, the supported individual, the “customer,” may try to leverage this power imbalance in pushing for their preferred direction.?How many of us have heard or even been recipients of fellow employees saying “you’re here to support my project, so…”??I know I have.?And it’s inappropriate.?

?Fellow employees are not customers, they are colleagues, individuals with a set of skills and perspectives different than our own that should be respected and valued and heard.

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?Customers are what determines an organization’s success or failure. They are the singular most important element in a company’s present and future.?Having your firm fully understand and embrace this will pay significant dividends if done correctly.?Start with a simple yet impactful definition of who your customer is and share it often, consistently, and loudly within your firm.