How to Quit Competing for Customers
This might sound snarky…but the answer is: go for non-customers.
As it turns out, this non-customer approach is integral to building a blue ocean strategy for your business.
When you target non-customers, you are moving away from where your competition is, and you are opening up an entirely new marketing. A blue ocean.
The benefit of creating a blue ocean is that by the time you’ve implemented this, your customers are too far behind to catch up. At least, not for the next decade (which is–seriously–about how long it takes for competition to adjust).
So, how do you get to non-customers?
The credit card processing company, Square, gives us a great model for this.
Here are three types of non-customers (and how you can reach them):
1. Current customers looking to leave your industry
The first “non-customer” is really a type of current customer.
They don’t like how the industry is meeting their needs. Or, worse, the industry isn’t really meeting their needs, and they’re on the fence, deciding whether they may just go without.
The U.S. credit card industry is a great example of this. Think of all the mom-and-pop stores that took credit cards for years. They had to have a merchant account, negotiate (individually) processing fees, and then deal with the technology.
Then along came Square. It is ridiculously easy to set up (in less than a minute), and the card reader is free. All you pay is a flat percentage on sales. That means no wasted time or fees on sales that don’t come through.
By doing this, Square took customers who were on the fence about the benefits of taking credit cards, and made the decision a no-brainer for them.
This group is reached by simply taking a look at the pain points in your current offering. We often assume that customers with us now will stay with us forever. But this is not true. We regularly evaluate how well our offerings are helping.
2. Customers who actively refusing your industry
These are the types who are not on the fence. They’ve considered your industry and then rejected it.
Looking again at the U.S credit card industry. Before Square, a solopreneur, no matter how successful, would likely not have bothered with setting up a credit card merchant account. There’s just too much overhead.
But, again, with a company like Square, the free phone adapter fits in your pocket. It’s nothing to carry that around permanently in your laptop bag for when you need to accept a credit card.
Reaching this kind of non-customer takes extra work, which is why many of your competitors aren’t already doing it.
With the right framework, the work to create a blue ocean can be very productive.
Begin by thinking about who these specific non-customers are. Why are they not using your industry now? And what can you tweak about your delivery or usage that will make your industry an alternative for them?
3. Customers who have never considered your industry
The final group of non-customers are those who have never even considered your industry. Unlike the first group who uses it hesitantly, or the second group who has considered but then rejected it, for this third group, your industry’s never crossed their mind.
For the U.S. credit card industry, this was person-to-person transactions.
But this time, it wasn’t Square moving this blue ocean forward. It was PayPal. (And later Venmo.)
When a group of office workers split the cost of a baby shower and need to reimburse their buyer, they used to have to write checks or find cash with the right change. Or, another example, when a group splits the bill at a dinner out, someone (good at math) would have to manually tally it all up and collect money from the table.
Now PayPal and Venmo (owned by PayPal) offer a free way to digitally move money among individuals. All the headache and wasted time with the old way is now gone.
Before PayPal, cash or check were the only options, and it would have been silly to pass credit cards around, because there was no way to use them.
The question to capture this market is: what groups of people would find using your industry silly?
And then, how can you adapt your product so that they can use it.
When you do that, you create a market of customers that your competitors cannot touch. That’s what a blue ocean looks like.