Step 1: Selecting target customers
Step 1: Selecting target customers
A vendor may have many different products, and each product may have several different types of customers. For example, a large vendor like McKesson Corporation sells and distributes drugs, medical supplies and information technologies. Their information technologies solutions include many products for the clinical, financial, supply chain and strategic management functions of hospitals, and for primary care doctors, clinics and other provider organisations. But even a small vendor may have several products that they sell to both general practitioners and to hospitals.
Each of these customer groups will have different goals, strategies and key success factors. For example,
a community hospital may have a goal to reduce the use of acute care services by increasing preventive care using chronic disease management services.
Their strategies (the actions they will take to accomplish those goals) may be to buy local general practitioners' practices, partner with home care, nursing and physio providers, and to connect these groups and individuals with an information system to promote coordination of care.
Their key success factors, the conditions that will determine the success of their strategies, may be their ability to form relationships of trust with local doctors, their ability to get providers to use their information system, and their ability to generate the money to fund these investments.
In this case, the products that a vendor sells to the community hospital must affect one or more of the customer’s strategies and/or key success factors – else there is not a compelling reason for the hospital to buy the product. So the vendor in this case should try to figure out how their product helps the hospital form better relationships with doctors, or makes it more likely they will use the information system, or helps them increase their profitability or generate donations.
The first step is to select a target group of customers to study. Their goals, strategies and key success factors will be different than those of other customers, so you must focus your attention on one group at a time. Some of the things to consider in selecting a target group of customers are:
How large is the group (the more potential customers, the better)?
Do they have similar goals, strategies and key success factors?
Do you have access to key individuals to clarify goals, strategies & key success factors?
Do these customers have the resources to buy your product?
It may appear obvious which customer group you should select, or there may be several good options. Or perhaps you cannot think of any really likely group of customers. It is important to involve your senior management in the selection of your target customer group, because it’s a lot of work to prepare an evidence based value story. You do not want to do all that work and find that others do not agree with the customer group you have targeted.
If you think the answer is obvious, put together a written argument, using Worksheet 1, Section A (at the end of Step 3), including the rationale for selecting this group, and distribute it to your organisation's senior management to review, then meet to make a final decision.
If the answer is not obvious, prepare several copies of Worksheet 1, Section A for possible alternatives, or interview you organisation's senior management to get their thoughts, or distribute blank Worksheets to your organisation's senior management and ask them each to make their own recommendations. Once you have several good options, meet to discuss which customer group best fits the criteria listed above, and select an initial target.