A Question for Start-Ups: Why Will You Have Customers?
In my role as Adjunct Professor at the Fuqua School of Business at Duke University, I have the opportunity and the honor to work with talented faculty and exceptional students. It's always a pleasure to me to get to North Carolina.
After a recent session with MBA students, my colleague Professor Christine Moorman and I received the following question from a class participant: What is the value of segmenting customers and devising a profile of customer needs when you are a start-up and have "no customers?"
The student continues:
My mentored study project is at Duke Integrative Medicine -- a year-old organization trying to focus on shifting the paradigm associated with treating medical symptoms to one of treating the whole person. As a virtual 'start-up', the organization's marketing efforts are integral to the program's success, and yet the marketing strategy is unclear. As I see it, there are two populations this group is trying to reach: The healthy people (who have a desire to 'age gracefully'), and the 'sick people' (who are referred by Duke physicians as a supplement to their 'traditional' treatment). I would love to help this group develop a customer segmentation system -- a way to identify who their customers are, to then better offer products to meet their needs.
Prof. Moorman noted in her response that segmentation is valuable when differences exist and those differences are meaningful in distinguishing customers on the basis of factors that will predict customer involvement with the firm. It is simply a way of focusing the firm on the best prospects.
We may want to add that in order to start a business, a nascent company must first analyze the need for the business -- in other words, confirm there is a market. This research will define the potential and likeliest customers, and that can serve as the beginning of differentiation based on value -- and on need, which is more important to this new organization right now. Why will you have "customers?" And in the two general categories you named, what needs will different people be meeting (besides medical, generally)? Now that you have been up and running for a year, you have the luxury of comparing your actual experience to the projections before you started, and now setting up more accurate projections.
What do you entrepreneurs out there recommend?
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