Understanding your customer needs is considered to be one of the most important things you need to do before you start a business. Yet this is something a lot of businesses overlook. Or even if they do, they only look at in the most superficial sense, without it having any real impact within the operations of the company. But how are you supposed to attract your consumer base, if you haven't thought about who your consumers are and what they consider important?

When you try to appease everyone, you end up creating a product/service that drains resources and makes it difficult to compete within the market.

According to Barry Cross; an expert in innovation, execution and operation strategy and the author of "Simple: Killing Complexity for a Lean and Agile Organization"; this is the most common pitfall that even the mightiest fall into.

In the highly global and extremely competitive world we are in, differentiating is the only way to stand out from the masses. But to differentiate, you first need to target a specific consumer base.

The Different Types of Consumers

In his study published in 1954, consumer behavior researcher Gregory Stone, identified consumers to be of four types: Personalizing, Convenience, Ethical and Economizing (cost-efficient).

Now try to think of some of the more popular brands and you’ll see that they have catered their products, operations and marketing to one or more specific group of customers.

For instance, McDonalds is a popular brand that everyone knows about and their consumers can be identified as falling under either convenience or economizing or even both.

McDonalds have catered to their convenience- seeking consumers by opening thousands of branches around the world (37,855 branches at the end of 2018, to be exact!) at convenient locations.

They have also catered to their economizing consumers by keeping their prices extremely low and affordable for everyone. However, when they tried to cater to the other two segments by releasing their semi-customizable premium line called “Signature crafted”, it failed and the line is now discontinued!

The McDonald Signature Line

Not only did the new premium line not attract the other two markets, it also hurt their existing markets since the new burgers took longer to prepare which slowed their service time for everyone. It no longer became convenient to buy at McDonalds.

By not focusing on what their consumers considered important, McDonalds were losing consumers who were already loyal to their brand.

This is why instead, they’ve returned to only focusing their operations to be more efficient in delivery convenience and economical value instead.

Even more than 60 years later, Stone’s classifications of consumers remain relevant, for the most part. Your consumers should fall under not more than 1 or 2 of these categories, if you want to provide a specialized product/service.

At Tap, our consumers can be classified as convenience-seeking. Our target customers are SMEs and micro businesses who are busy launching their business and growing it, so when it comes to payment they want the most convenient solution possible. We’ve made it a priority to cater to this with our easy integration methods, 24/7 live chat support and with our systems that are built to fit the unique needs and demands of every business, regardless of size or operations.

Achieving Operational Efficiency for Your Customers

Once you’ve identified exactly who your customers are, it becomes easier to understand how to maximize the efficiency of your operations since you now know what your customer would be willing to pay for.

This will help you “trim the fat’ within your operations and to allocate your resources to where it’s most needed. To make the company more lean and efficient.

Launching a lean initiative is usually seen as cutting costs and firing employees, however that’s not what it means at all.

Cutting costs tend to reduce the quality of the product/service that you sell, which leads to the cheaper alternative being less efficient as well for consumers.

Instead, lean is about reducing waste and allocating resources carefully to maximize the efficiency of operations.

This doesn't mean that in a lean initiative you don't cut costs at all. There are good cost-cutting as well, which you should encourage. This reduces wastes, eliminates customer anxiety risk or even reduces complexity in a process-flow so that your employees can complete it with minimum mistakes.

Agility, speed, and flexibility are all highly necessary for successful strategy and execution in companies across all industries and sizes. However, it's difficult for a business to be agile without being efficient and lean within their operations.  

Moreover, when a company is starting out, limited resources are always the biggest challenge. This means that it becomes more important than ever to maintain a lean approach where every resource is used thoughtfully and for a specific purpose.

But What Can be Counted as Waste?

Anything that doesn't add value or anything other than the minimum amount of equipment, materials, parts and labour that are essential to production can be classified as waste.

For a company to reduce or eliminate waste, the first step would be to examine the current operational flow in every department while also considering your consumers.

Go through each department, while asking the question “Would the consumer be willing to pay for that?”. This will help you identify and eliminate products, services and processes that gets in the way of delivering value to your consumers.

For instance, if a business has identified their consumers to place more importance on convenience, every department needs to consider “How to make this more convenient for our consumers?”.

This needs to be the priority and if any business flow or processes does not help make things more convenient for customers, it needs to be scrapped or restructured.

This could also mean that you need to channel your resources towards making the entire process as convenient as possible, such as an easier on-boarding process, or quicker assistance or easier tech depending on the department. In such cases, having a wide product line for customers will actually do more harm than good, because that increases the number of options which may not be considered convenient to customers.

When every part of the business focuses on a singular purpose it allows the company to work more efficiently and reduce complexity.

If your business is product-based, the most common types of wastes are in these areas:

  1. Overproduction or excess inventory
  2. Time spent waiting
  3. Defects or scrap
  4. Too many product varieties

If your business is service-based, however, the most common types of wastes are in these areas:

  1. Excess governance
  2. Complex or confusing customer processes such as registration
  3. Waiting lines

Taking the time to identify the waste in your company or the bottlenecks will help you understand how to reduce or eliminate them and better restructure the use of your resources.

Organizational leaders must choose a path and stick with it. They need to remember what solution they are trying to solve for their consumers and stay consistent with it in their entire business model. You must always think about the consumer, no matter what path you take since this will help you prioritize your business processes and products according to what they would be willing to pay for.

Do you agree with this? What type of consumers does your business target? We'd love to hear your thoughts on the matter!