Create New Business from Non-Customers

Do you find your margins being thinned? Are you experiencing a disruption in your industry? Are you selling more and earning less? Are your customers abandoning your service or product for the competitions?

When you want to transcend competition, literally marginalize it and move into a new market, there is a playbook in place. It’s scripted and proven. It’s the Blue Ocean Strategy way.

The premise?  Create new demand and grow your industry, rather than compete 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.

Take a look at this visualization.

You have your current market. We’re trained in many ways as business professionals to hold these folks sacred and perhaps we should. However, they are also trained to ask for discounts, favors, and concessions. All the things that cost your company money, come from your current customers being trained to want more for less. 

You can transcend the competition by identifying and serving noncustomers. It sounds counterintuitive. Hear me out.

In Blue Ocean parlance, there are three tiers of noncustomers.

First-Tier Noncustomers

The first-tier of noncustomers is the closest to your business, they sit on the edge of the market. These buyers minimally purchase your offering but are ready to jump ship as soon as they discover a superior alternative. Not a fun thought. I bet you can picture that customer in your world. 

Ex: The former taxi customer who’s not taken a taxi since ridesharing came to town.

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.

Ex: The Instacart user that migrates from one grocery store offering on the platform to another based on the delivery incentives offered at the time. 

And then the most exciting 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.

By looking at these customers, literally by looking across industry offerings, and weighing what they buy, why they buy, and asking the right questions, you may find tremendous needs being unmet in this vast audience. 

There are ways to systematize the way you find and approach these noncustomers. A process that facilitates cost-effective discovery is available. 

If you need inspiration, think of these examples. 

Herb Kelleher, the founder of Southwest Airlines, knew that if he made air travel affordable, on par with a car, that the business traveler would hop on a plane instead of drive. 20 minute turns at the gate, no-frills, and friendly humorous service would be the primary offerings. Costs were driven down with several innovations, primary of which was the adoption of a single aircraft fleet. The 737. The result? A new no-frills airline industry and dominance of markets that exists in many cities up to today.

Another example, country music. Through the practice of looking across industries, i.e. genres, country music adopted all types of genres, people, races, styles, and sounds. It discovered in the process a huge audience of noncustomers.  

A third example. Used often in Blue Ocean text, Cirque Du Soleil. This marriage of circus and theater literally launched a new industry while at the same time, lowering the production costs of traditional circus acts and drawing in audiences that never would have gone to the theater. The ticket prices, by the way, are far higher than that of traditional circus prices. 

Are you beginning to understand the power of noncustomers?

So how does one find and serve the noncustomer? 

A few tips. A company has to know itself. A company has to know what it offers, what its strengths and weaknesses are, and where, in the market the offerings currently compete or don’t, and why. 

When sufficient answers are provided, again, there is a process for this, the team may move forward with talking to noncustomers. 

There are some new technologies being utilized by my team in identifying noncustomers. 

Once we know how customers are solving problems, where and how, or where they are buying whatever the product is, we may find these noncustomers in mass and serve them compelling ad messages that serve as an incentive to engage with our clients. 

An example. If I’m a new cinnamon whiskey and I want to develop a strategy for building market share in Nashville, I’d be interested in getting intel from the bars and honky-tonks on Broadway in Nashville, TN. How to do so? 

Look at these images. 

 This image represents our ability to match cell phones that were in a   downtown bar to a physical address where that phone “lives”. 

 We may then learn more about the behavior of that “phone”. 

 What might I like to know as a brand? 

 

Perhaps information on how many times they’ve been to the bar would be helpful?

visitor frequency 

 

 

 

Perhaps the time of day they were there?

 

 

With the ability to dive much deeper than this and then feed an ad campaign to those chosen from the data, we have the ability to approach this group of noncustomers in ways never before possible. 

With systematized campaigns targeting these proven visitors to the bar over a 12 month period, it is far more cost-effective to implement Blue Ocean Strategy and expand market share. 

If you’d like to explore Blue Ocean Strategy in a useful way. I’ve provided a way to experience it free of costs or commitment. 

Go to ShermanMohr.com and hit the red button on the home page. You’ll be led to a form where you’ll quickly answer a few important questions about your business and competition. We talk on the phone or on Zoom and you’ll receive a complimentary Blue Ocean “As-Is” Strategy Canvas. This powerful tool and the associated discussion will lead to a better understanding of where your company is and where it needs to go. You’ll benefit independent of any follow-up commitment to me or Blue Ocean implementation. 

Thank you for your attention. If this article brought any value to you, the highest compliment one could make is to share. Please share with colleagues, friends or others if so inclined. 

Sherman G. Mohr is an Insead Certified Blue Ocean Strategists and co-founder of Shared Spirits, a Blue Ocean inspired marketing and technology firm.

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