Who you actually serve.
WHY IT DETERMINES STRATEGY
Everything else follows from who you are serving.
WHAT TO ESTABLISH
Who your best customers are What they have in common What problem you solve for them What they would use instead What they actually pay for
WHAT DEFINES A BEST CUSTOMER
Profitable Stays Refers others Values what you do well
WHY PROFITABILITY MATTERS IN THAT LIST
Large customers are frequently unprofitable and the business does not know.
WHAT TO ANALYSE
Margin by customer, after the cost of serving them.
WHAT COST TO SERVE INCLUDES
Delivery Support and communication Credit Special requirements Disputes
WHAT THAT ANALYSIS TYPICALLY REVEALS
Some demanding customers consume more than they contribute.
WHAT TO DO ABOUT THEM
Reprice, reduce what is included, or release them.
WHY RELEASING CUSTOMERS IS LEGITIMATE
Capacity spent on unprofitable customers is unavailable for profitable ones.
WHAT TO ESTABLISH
Which segment you are actually good at serving.
WHY
Businesses frequently serve several segments adequately and none well.
WHAT TO CONSIDER
Concentrating on one.
WHAT THAT PROVIDES
Deeper understanding, better fit, clearer reputation.
WHAT IT COSTS
Revenue from segments you stop pursuing.
WHAT TO TEST
Whether the chosen segment is large enough to support the business.
