29. Peter Drucker in his own words interpreted for small business 1
“The purpose of business is to create a customer”. It sounds slightly strange, but I think it gets to the heart of the matter. Firstly it puts the focus firmly on the most important person in the business, the customer. How do you ‘create’ a customer – don’t they already exist? Well, no. At the extreme end, when the first on-line business began there were no customers for buying on-line: they had to be created in the sense that ways had to be found to make people believe there were benefits in buying on-line and help them to do it, and only when that person bought was a customer created.
And it is in reality no different for an established type of business. A new cafe in the high street has no customers until it creates them – until that point they are somebody else’s customers. By being different, by being appealing you make someone who is quite satisfied with using other cafes want to try yours. The advantage of having this viewpoint of the need to create a customer is it helps you keep customer focused.
A story from the early days of the motor industry may serve to show you what I mean. Henry Ford created the idea of the mass-produced motor car at a time when automobiles were rare and very expensive products that only the wealthy could afford. Ford’s vision was that anyone with a decent job should be able to afford the freedom that a car brings (notice his selling proposition was not just about the practical benefits of the transport method – it was about a whole lifestyle and belief system!). And so he developed the model T Ford which was designed for easy manufacture and came ‘in any colour as long as it’s black’.
The low-cost car led to Ford creating millions of customers for his business worldwide and a whole new market. But having created these customers he believed he had done enough and rigidly stuck to his winning formula. But his customers were steadily becoming wealthier and ‘the same as everybody else’ was no longer enough for many of them. At this time Alfred Sloan at General Motors created his customers from those that Ford had created by providing them with the choice they wanted and could now afford.
So it not just about creating a customer once, but recreating them continually. And in these internet-driven days when customer loyalty is a questionable concept, it is even more important to stay customer focused. Do you really understand why your customers buy from you rather than another supplier? Do you have a clear view of what else if anything your customers might want from you, and what other customers you might attract with your offering? Are there other offerings that your customers might start to find more attractive?