Are You Making the Right Sale? What Drucker Taught Us about Customers
Peter Drucker said, "the purpose of a business is to create a customer", and everyone knows "the client is always right". But you don't know what a customer really is. Here's what Drucker meant:
Customers are Profitable Buyers: Shifting from the traditional view, a customer isn't just a buyer but someone whose transactions make us a profit, above the cost of providing the service or product (marginal variable cost).
Profit is Non-Negotiable: Businesses can't ignore profitability or they create buyers, not customers. It's about finding a sweet spot where customer satisfaction fuels profits, guaranteeing sustainable growth.
Aim for Value Creation, Not Just Sales: Businesses should focus on creating long-term value for both customers and themselves. While we may need to serve unprofitable buyers for tactical reasons, remember they're just buyers, not customers.
Every Buyer Thinks They're a Customer: Here's a kicker - only we, the business, know if we're dealing with a customer or a buyer. Everyone wants customer treatment, and that's fair! Our job is to price right, resist undue pressure, and ensure buyers are indeed customers.
Redefine Success: Business success is about effectively serving customers and ensuring economic survival and growth. Creating customers and being customer-centric isn't a strategy; it's a lifeline for business success.
In essence, Drucker's view nudges us to see that understanding and satisfying customer needs and shared value creation is the only ticket to lasting success.