Hello! This is my first newsletter about customers. We’ll look at other things as well, but it’s mostly about customers. Let’s set the stage:
If we wanted to build out a simplistic model for a business, we could start by adding in various stakeholders and then explaining the relationships and the way money and commitments flow between those stakeholders. We might start by adding the shareholders, the people who own the business. They’re putting their capital—their money—at risk in hopes that the business will be successful. Next we’ll add employees, the people who work for the business. They want to get paid for doing work. Lastly, we’ll add customers. The employees are going to deliver a product or service to customers in exchange for the customer’s money, and if there’s more money in the business at the end of the year than what the business had at the beginning of the year, the shareholders will be happy¹.
Let’s sum up the relationship in terms of money: Shareholders invest money in hopes of generating a return on their investment. Employees receive money in exchange for their time and work for the business. Customers give money in exchange for a valuable product or service.
It’s of course more complicated than that—there are other stakeholders like suppliers, governments, lawyers, etc—but I like this as a basic model to explain the motivations of the stakeholders of a business and to figure out how it runs at a basic level.
The other reason I like this model of shareholders, employees, and customers is because it will offer guidance on where to focus. I’m especially interested in knowing where to focus when money is involved, which is of course always. Everyone is worried about money. Shareholders want to make more money and may be worried they’ll lose all their money if the businesses they’ve invested in no longer exist. Employees want money in exchange for work and may be worried about not having money if they lose their job. Customers are worried about…wait, what are customers worried about?
What are customers worried about? What do they care about? What do customers find valuable? What’s going to generate a return on investment for them if they’re doing business with us? What passions—anger and fanaticism among them—drive them to make decisions?
The question of what customers care about is the most fundamental question for any business. They’re the only stakeholder consistently putting money into the business in the form of revenue. Employees take money out of the business. Shareholders put their money in, but they’ll want (more of) it back. In order for the business to survive and continue to serve the interests of its shareholders, employees, and customers, it must focus on what matters to customers. Customers are where the money comes from.
Every business exists because of its customers, yet so many businesses seem to lose sight of their customers and what their customers care about. Why? This newsletter exists to answer that question, over and over and over, and I suspect I’ll never run out of things to write about because 1) business really care a lot about money, and the only place they can get it is from customers and 2) businesses are really good at not focusing on customers. And that includes me.