Many companies are all about one thing - keeping customers. However. Tooth and nail. You try to understand their needs and tailor the offer. You want to accommodate them in every way. Worse case scenario, you back off and give a discount. While that may be enough to satisfy existing customers, it shouldn't be enough for you. It won't bring you any new business. You're not breaking into a new market. You're not going to reach new customer groups. Instead, you're gonna be treading the same ground.
If you focus only on existing customers and create increasingly specialised and targeted offers for them, you will soon be stuck in a relatively small market segment. And you won't grow any further. And you don't want that. No company wants that.
You have to get out of this vicious circle. It's possible. And quite easily. Especially if you take the help of the Blue Ocean strategy. You already know the basics.
So take a step aside. Cross the vicious circle (your red ocean) and see what is beyond. You will see tens, hundreds, but more likely thousands of heads that you can attract and get on your side. You will see the non-customers.
What are the three circles of non-customers
According to Blue Ocean's strategy, there are a huge number of non-customers (people or companies that are not yet using your products or services) right at the edge of your market. If you look further afield, you'll see that the number increases with distance. If you can figure out why these people or companies aren't buying from you and what would convince them to buy, you've won. You can create new demand where there wasn't any before and get a mass of new buyers.
The Blue Ocean strategy divides the large group of non-customers into three categories, which allow companies to better identify and reach potential customers who have not yet used their offerings.
1. heading: future non-customers
The first circle of non-customers is the closest you can get to pulling them over to your side and turning them into customers. These are the people who stand on the fringes of your market and are hesitant to enter it or not. They may minimally use your products or services but are not completely satisfied with them and are buying more out of necessity. If they find a better and more profitable alternative, they will leave the market quickly. They will stay and increase their purchases only if it is worthwhile - if they get something extra.
The first circle of non-customers has been turned into paying customers by Uber, for example, which is more convenient for many than a classic taxi. How did he do it? He began to understand the market. He found out what people wanted. What they're missing. And what was driving them away from existing taxi services. Then he figured out a way to eliminate those weaknesses and... success was born.
2. Circle: Refusing non-customers
The second tier of non-customers includes people or businesses who have actively chosen not to use your products or services, even though they know about them and may have considered them. The reasons for their rejection may be varied: cost, complexity, lack of value, or simply that a competing product suits them better. If price is the main factor, the second group of non-customers will choose the more reasonable option.
The key is that these people or companies are aware of your offer. However, after comparing your offer to others and weighing the pros and cons of each, they decide to buy elsewhere. The fact that a second set of non-customers have considered and thought about your offer means that you are closer to winning them over than you may realise.
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Imagine your company offers a sophisticated project management software solution. Your software is full of features, supports automation and integrates with many other tools. Sounds great, right? Except for the many small businesses or startups that have looked at your software but decided not to use it.
Why? They may have found your software too complex and expensive for their simpler needs. Or maybe they felt they would have to learn a lot of new things, which would discourage them from using it quickly and efficiently. Instead, these companies buy simpler and cheaper tools that, while offering fewer features, are more accessible and easier to work with.
To win over the second group of non-customers, you first need to understand what turns them off to your product. If it's price, you can offer a basic version at a lower price with the option to upgrade later. If it's complexity, you can simplify the user interface for basic features or provide better training and support for new users. Even the second set of non-customers is not lost forever.
3. Circuit: unexplored non-customers
The third group of non-customers is the furthest away from your market and includes people or companies who have not yet shown any interest in what your industry has to offer. They either know nothing about it or think it is not relevant to them. The needs of these non-customers have traditionally been met by other industries or methods, and therefore no one in your industry has focused on pulling them over to their side.
Why is this group important? Because it represents a huge untapped potential - it's the largest group of non-customers you could tap into. If you can offer a product or service that is attractive and relevant to this group, you can break into a whole new market.
Find what everyone wants
Let's take a look at one example for all: How the concept of the three circles of non- customers has been used by companies that offer CRM software for customer relationship management.
Many of these companies have long focused on selling licenses to large companies. But this required installing, configuring and customizing the software on-site at the client's location. The initial cost and expense of maintaining the CRM system was high and the whole process took too long. Companies offering CRM software were stuck in their own market and were not looking for opportunities to expand. In doing so, they completely overlooked the huge demand that had formed outside their market - among non-customers:
The first group of non-customers included large and medium-sized companies that used CRM software but were dissatisfied with the purchasing and implementation process.
In the second group of non-customers were medium-sized enterprises for which the costs of CRM solutions were too high.
The third group of non-customers included small businesses and entrepreneurs who did not consider CRM software at all and relied on simpler methods (Excel spreadsheets) or other applications.
It wasn't until San Francisco-based Salesforce noticed these (non)customers and created a cloud-based CRM solution accessible over the Internet for a monthly fee. Its application was simple and affordable for businesses of any size. As a result, Salesforce appealed not only to small and medium-sized businesses, but also became attractive to large companies, which were able to cut costs and save a lot of time because they could avoid lengthy implementation of a complex system. Value innovation has led Salesforce to create a new and fast-growing market and enabled the company to become a leader in the CRM industry.
Get everyone interested at once
The Salesforce example shows how important it is not to focus on just one set of non-customers. Instead, Salesforce identified what all these groups had in common - the need for a simple, affordable and effective c u s t o m e r relationship management solution that could be used from anywhere. By focusing on solving the problems and needs of all three groups at once, the company reached a wide range of potential customers and achieved great success.
The key to winning new customers is therefore to find a common denominator for all groups of non-customers. Try to design a solution that addresses their common needs and concerns. By doing so, you can expand your customer base and reach a much larger pool of potential customers.
Have you been targeting only existing customers and letting other demand lie fallow? Do you now have a clearer idea of who your non-customers are and what they want? If not, do something about it fast. Start with market research, ask questions. You'll see it pay off. You never know what niche market you'll find.