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.
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.
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).
The solution? Here’s my action list:
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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