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      WSJ's The Experts

      Why There Is No Such Thing as an "Average Customer"

      Why There Is No Such Thing as an "Average Customer"

      At some point in your company’s growth, someone will utter the most pernicious phrase in business: “The average customer.”

      By James Allen

      • min read

      Article

      Why There Is No Such Thing as an "Average Customer"
      en

      This article originally appeared onThe Wall Street Journal's The Experts blog.

      At some point in your company’s growth, someone will utter the most pernicious phrase in business: “The average customer.”

      There is no such thing.

      Successful entrepreneurs launch businesses because they see a customer need that isn’t being met. They use stories about specific customers to illustrate how the company is succeeding or failing in that mission.

      Adding more customers usually is a good development, but as the numbers grow, the personal connection with customers may fade and voices from the front line dim. It is a dark day when anecdotes about real customer experiences turn into a mathematical abstraction that is used for making decisions.

      Not only do average customers not exist, they also don’t matter. It is more valuable to identify the best customers (the ones who spend more and promote your business to other people) and the worst customers (so that you can convert them to promoters or fire them).

      It is also more valuable to understand the different needs and expectations of your customer base so you can invest in products that will delight those promoters even more or, if the economics work, develop services that can win over those detractors. If you run a small community bank, the credit needs of a local real-estate developer will differ substantially from those of a dentist or auto-repair shop. An average view of their credit profile will yield little insight.

      How do you avoid the average trap?

      By continuing to have one-on-one conversations with your customers, even as their numbers grow. Keeping the voice of real customers alive in the business means keeping it in front of managers and executives just as much as front-line employees.

      Aggregated data distilled into averages won’t cut it. Everyone in the company needs regular, recent customer feedback that includes verbatim comments about individual transactions. And when customers offer their precious time to provide those comments, managers and executives should call them back and close the loop.

      Obviously, this requires substantial resources and commitment. But such near-real-time customer feedback systems scale up well and keep people focused on what matters. If managers are calling customers back, those stories find their way back into meetings. If a corporate policy upsets customers, leaders hear about it pretty quickly. If front-line employees know right away that a customer was delighted or annoyed, they can adjust their behavior in the next transaction.

      Your customer is the reason you are in business. Shouldn’t his or her voice be in your business?

      James Allen is co-leader of the global strategy practice at Bain & Company.

      Authors
      • Headshot of James Allen
        James Allen
        Advisory Partner, London
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