The ‘Blue Ocean Strategy’ that Leaders Chase is Right In Front of You

Blue Ocean Strategy, by Chan Kim & Renée Mauborgne, came out 16-years ago. The premise of their book was to, ‘create uncontested market space and make competition irrelevant.’ I have seen a lot of organizations chase the ‘Holy Grail’ of uncontested ideas for service or product when in fact the uncontested greatness is usually right in front of them… your most profitable customers. 

Revenues vs Value

The challenge for most clients I work with, is that they do not know which customers are their most profitable, and which ones they are making little or no profit from. The problem comes from the fact that we often chase revenue and not value. 

Your most profitable customers are often your most loyal too. They are the customers that usually are your best source of testimonials, referrals, and references. 

If you are like most organizations that I work with, you will find that the 80/20 rule (or the Pareto Principle) holds true. In other words, most likely 20% of your customer base delivers 80% of your profit.   

The other 80% of customers deliver 20% of your profit and, most often, 80% of your headaches too. 

The 80/20 Rule

Why are the 20% so profitable? They fit your greatness. The value your business or team delivers is the value that they are willing to pay for. This is the Blue Ocean that is right in front of you.   

The other 80% create so much work for you for little return because they don’t see the value in your greatness.   

The mistake most leader make is trying to be all things to the 80% group which causes your team and organization to go off of your greatness and into a Red Ocean (a Red Ocean is one where there are a lot of competitors and you become a commodity amongst the many). 

Moving to a Blue Ocean Strategy  

The solution? Here’s my action list: 

1. Dig into your customer base and analyze which ones are the most profitable, which ones are marginally profitable, and which ones you are losing money on. 
2. Build a profile or persona on your 20% profitable group. What common traits does this group have? Go deep in building a picture of your Blue Ocean customers. 
3. Look at the marginally profitable group and determine if it is possible to move them to your Blue Ocean. 
4. Stop wasting time on your money losing customers – the ones in the Red Ocean. Introduce them to your most despised competitor (so your competitor can lose money on them). 
5. Build processes, structure and systems that serve your 20% even better by understanding the entire customer journey. 
6. Teach every single person in your organization how they contribute to caring for your Blue Ocean customers. 
7. Go after customers that fit the profile for your 20% or into markets that are adjacent to your greatness. Growing adjacently will align with the ‘DNA’ of your organization’s ability to deliver your greatness and attract more customers that value your Blue Ocean. 

Remember your greatness is right in front of you. Chase your most profitable customers. 

Robert Murray is a Vancouver, BC based Business Strategy Consultant, #1 Best Selling Author, International Keynote Speaker, and TEC Top Speaker of the Year for 2018. For further advice, insight and inspiration on how to unlock your inner leader, follow Robert on Twitter, LinkedIn, and Facebook.

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