Meet your new market - Editor's Note - understanding the customer

Chief Executive, The, Jan-Feb, 2003 by John R. Brandt

I have good news: Your customers--you remember them, the people who used to buy things from you in 2000, before they went into hiding?--would like to meet you. But be forewarned: They've changed a little--a lot, actually--since then, and it may take a moment for you to recognize them. How have they changed? In all kinds of ways:

* Demographics: The United States is growing ever-more multicultural and multilingual. Customers demand that these demographic differences be respected. This has tremendous implications for product development, packaging (multilingual?) and advertising.

* Gender Roles: Customers have moved beyond cliche roles (career track vs. mommy track, etc.). They expect marketers to understand that within a given week the same customer will be a senior executive, a father, a volunteer, a sports coach and a caregiver to an elderly parent.

* Prioritization: The increasing automation of our time and tasks through the use of day planners, software programs and pocket PCs has created an obsession with To-Do lists. Products and services are now evaluated by customers in simple terms: Does this offer a solution that adds to--or subtracts from--my To-Do list?

* Self-Assurance: Today's customers are clearer about their needs and priorities than customers of old. They insist that vendors market to them with exquisite sensitivity. Vendors must therefore ask themselves four questions:

What is my customer's cultural background, and how does the product respect that?

What are my customer's various roles at work and beyond, and how does the product support them?

When does my marketing reach the customer, and how does its message fit the context of the moment?

What does my customer see him--or herself becoming--and how does my product help that aspiration to become reality?

CEOs who understand these changes realize that they must figure out how to cost-effectively serve a market of one-millions of times over.

Doing that well requires a commitment similar to the one made by Harrah's Casinos, which used data collected through its Total Rewards program (a sort of frequent-gambler card inserted into slot machines that tracks how much is wagered/won/lost), to identify 90 customer segments among its 25 million slot players. Using predictive software, Harrah's can now estimate a customer's worth based on age, gender, game preference and casino location.

This revelation taught Harrah's two things. First, a single customer segment represented lust 30 percent of all customers but 80 percent of revenues--and 100 percent of profits. Second, by targeting promotions to specific customer segments, the company could drive market share from 36 percent to 42 percent--increasing profits by 11 percent in 2001.

Do you understand your customers this well? If so, congratulations: 2003 will be a very good year indeed. If not, what are you waiting for? 2004?

John R. Brandt

President & Editorial Director