Don’t Just “Steal Customers” – Create a Whole New Market

Let’s start with this – a business needs customers to pay for their products or services.  Without customers, there is no business.

Or, as Mary Kay Ash put it,

Nothing Happens Until Somebody Sells Something!

In her book, The Mary Kay Way, she wrote of the absolute centrality of the independent sales force, describing how the entire company should be sales-oriented.  And she believed that the company’s attitude can make or break the sales force, and the right attitude could build self-esteem and confidence in the people involved in sales.

So – you need sales people, who can sell to your… customers.

Where will you find your customers?

There’s an interesting drama playing out right now in some states in our nation.  The Governor of Texas, Rick Perry, is taking trips into other states trying to persuade companies to relocate to Texas.  (By the way, some other states are taking the same approach.  And a few states are pretty much letting Governor Perry, and the other Governors, know what they think of this approach.  Read about this here:  Gov. Rick Perry is Trying to Steal Your Citizens).

Now, I’m a fan of Texas – I live here.  But let’s label his approach this way:

“Let’s steal our customers from other places.” 

This is a long followed practice and approach.  New restaurants steal customers from older restaurants.  New car companies entering a market steal customers from other car companies.  New entertainment venues; new movie theaters; new soap or shirt or makeup companies steal customers from other companies.

Now, if a customer is “stealable,” that’s a pretty good signal that the company that loses the customer is not doing a good enough job.  There is likely some deficiency in their product, or their customer service.,  Or, maybe, the company that steals the customer really does have a genuine breakthrough product or service that leaves the older company in the dust.

Or, maybe, the buzz, the panache, the trendiness, is just going the new way.  Here’s an article on the growing success of the Tesla electric car, subtitled:  Daniel Gross on how cachet has a way of developing into a real business.

Here’s an excerpt from the article:

Innovation happens when start-ups get huge—think of Google or Facebook or LinkedIn. But it also happens when giant incumbents decide they want to be part of something new.

But whatever the reason for the customer switch, in each of these examples, the customer really is “stolen” from another “provider.”  The folks who now drive a Tesla did not walk everywhere they went before this purchase.  They drove another car – a now “less cool” car.  So, the Tesla driver is a “stolen” customer.

By the way, this can be seen in practically every arena.  For example, all across America, churches have dwindled, losing “customers” to the newer, more “modern,” more “trendy” mega-churches.  But, if you examine the numbers carefully, the total number of people actually attending religious services is not up – it is probably down.  (People notoriously “over-report” their actual church attendance, so good numbers are hard to come by).

The second approach might be called this approach:

Let’s create a brand new market.  We’re not stealing customers – we are “creating customers.” 

In one sense, all the Smartphone users are “stolen customers” – stolen from land line providers.  Many, many younger folks especially do not have a land line at all.

But, in another sense, this is a whole new market.  Just six short years ago, the average American (the average person in any company) did not know he or she wanted a Smartphone.  But then, Steve Jobs stepped on stage on June 29, 2007, introduced the brand new product known as the iPhone, and a massive new market was created.  Customers, for the most part, were not stolen – they were created.

blue-oceanThis is what the authors of Blue Ocean Strategy get at – you’ve got to create a market where one did not exist before.  To get a customer, you do not look at someone else’s existing customer.  You look at a noncustomer.  From the book:

To maximize the size of their blue oceans, companies need to take a reverse course. Instead of concentrating on customers, they need to look at noncustomers. And instead of focusing on customer differences, they need to build on powerful commonalities in what buyers value.
(Blue Ocean Strategy
:  How to Create Uncontested Market Space and make the Competition Irrelevant by W. Chan Kim and Renée Mauborgne).

These are the two paths.  You need customers.  You either need to steal someone else’s customers, or create a new market.

Both are hard to do.  But the real difference makers, the real future builders, may be the ones who build whole new markets…

One thought on “Don’t Just “Steal Customers” – Create a Whole New Market

  1. Bob,

    This is a valuable addition to this post. Thank you.

    I have written before about needing a “Red Ocean” Strategy: What is Your Red Ocean Strategy? – (Success in a Crowded Market). And, if I had written more in this post, I would have described how it takes a very, very! short time for a company that reaches a new market to have competitors in a hurry. (The new iPhone 5s had the best opening weekend ever for an iPhone rollout. But, the Smartphone market is definitely crowded — very “red” — only six years into the era).

    Thanks for good reminders. Yes, a company has to compete in every ocean, at the same time, pretty quickly!

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s