Defining a Holistic Customer Throughout the Manufacturing Buyer’s Journey
By Dan Roglin, VP, Strategy
The way we think about customers needs to change because the way customers think about us is changing as our worlds become more interconnected. Manufacturers, Distributors, and End-Users all have different ideas of what a customer is when, in fact, they are all part of the same customer journey. Consequently, we need to think holistically about the customer so we can better understand their needs, and deliver unique value they may not be getting anywhere else.
So, What is a Customer?
It sounds like a silly question. Everyone knows what a customer is. Or, do they?
As Uber and Lyft prepared for IPOs investors were evaluating their auditing statements. They found that Uber and Lyft did not consider passengers their customers, they considered drivers to be their customers. This distinction was made so they could bury marketing costs and other expenses and not drive down reported revenue.
According to an SEC filing quoted in a recent Wall Street Journal piece by Howard Schilit, Uber claims “end-users access our platform for free and we have no performance obligation to end-users, end-users are not our customer.
So, the paying passenger is not a customer, but the driver who is providing the service for a fee is?
While Uber’s and Lyft’s motives are understandable from an accounting point-of-view, it does provoke an interesting question: what really is a customer?
Let’s start with some common definitions of a customer:
- Merriam-Webster defines a customer as “one that purchases a commodity or service.”
- Oxford English Dictionary defines a customer as “a person who buys goods or services from a shop or business.”
- MacMillan Dictionary defines a customer as “a person or company that buys goods or services.”
Considering the Differences Between Customers and Consumers
Consumer Packaged Goods (CPG) companies have always identified retailers as the customer and the end-user as the consumer.
Yet, the average person tends to think of oneself as a customer, not a consumer, regardless of what Kraft Heinz or P&G thinks. This is important because a brand’s value is determined by the end-user. When someone has a bad experience with a product or service, they seldom blame the distributor or dealer that sold it. They blame the manufacturer. This is further amplified when customer (there’s that word again) service is factored in.
Interestingly, when businesses talk about Customer Experience (CX) they are often talking about a consumer’s experience. Consider this:
- Gartner defines customer experience as “the customer’s perceptions and related feelings caused by the one-off and cumulative effect of interactions with a supplier’s employees, systems, channels or products.”
- Forrester Research defines customer experience as: “How customers perceive their interactions with your company.”
So, how should we think about a ‘customer’?
I would suggest a customer is anyone buying something. A manufacturer’s customer is the dealer or distributor who buys their product to resell. The dealer’s or distributor’s customer is the end-user who buys products from them. In a word, the customer is a buyer.
To change with the times, we should think about the customer holistically.
Why is Considering the Buyer’s Journey Important?
When we define a ‘customer’ narrowly – as with a Customer Relationship Management (CRM) system where it is essentially a B2B view – it has a way of narrowing one’s thinking.
For example, a manufacturer may be very successful selling inventory to dealers who resell the product to an end-user. A CRM system can be a very useful tool for tracking, measuring, and analyzing B2B sales. However, that does not take into account other critical “interactions with your company” as Forrester states.
It also doesn’t account for “the customer’s perceptions and related feelings caused by the one-off and cumulative effect of interactions” (Gartner) that occur after the end-user buys the product. Think about examples such as with customer support, technical support, parts & warranty interactions, additional purchases of other products and accessories, and product performance. All of those experiences shape the brand’s perception and value by the end-user.
So, there may be many ‘customers’ in terms of their interactions with the manufacturer/brand. Ultimately, it is one customer that interacts with the brand and is impacted by experiences before, during, and after the purchase of a product or service.
It should be noted too that end-users may appear in a database as an individual with no direct link to a business. They may very well be a business buyer who prefers to use their personal information (residential address) instead of the business they are buying and using the product for. In such cases, the B2B view of the customer is obscured.
Illustrated below is a Holistic Customer view that helps manufacturers think about the customer as a trifecta of B2B customers, end-users (consumers), and distribution customers. This holistic view takes into account all of the interactions that shape the customer’s experience and brand/value perceptions.
As illustrated above, there may be many ways to think of customers. However, it is imperative to remember they are all inter-related and can have a profound impact on each other.