Blue Ocean Strategy for Sole Proprietors: Finding Growth from Non-Customers. This is where blue ocean frameworks and tools begin to pay off and deliver revenue.
“We should not listen to customers and most people, when we’re designing a breakthrough because most people can’t see it. Now, when you’re doing incremental things, customer feedback is awesome. But in general, most people cannot see a breakthrough, whether they’re customers, partners, potential employees, or even potential investors.” Christopher Lochhead
This quote is congruent with the Blue Ocean Strategist’s view toward noncustomers. Blue oceans of uncontested market space do NOT come from current customers.
It sounds contrarian for sure.
Reaching beyond existing demand is a process and requires discipline and courage. Most companies simply compete on their industry’s key factors of competition and don’t go through the steps laid out in our previous posts about blue ocean strategy for solopreneurs.
To reach beyond existing demand, think noncustomers before customers: commonalities before differences: and desegmentation before pursuing finer segmentation.
Few sole proprietors have insight into who their noncustomers are. They are too busy putting out daily fires and serving current customers to think about how to expand into noncustomer markets. This is a big mistake. Take a listen, at your leisure, to Lochhead on Marketing’s 084 Episode on “Do Not Listen to Customers”. It’s basic reality and a fun 5 minutes.
In Blue Ocean Strategy terms, there are three tiers of noncustomers and the distinction between them is proximity to your company’s offer. Hence the reason for Blue Ocean Strategy for Sole Proprietors: Finding Growth from Non-Customers.
The first tier noncustomer is composed of those noncustomers closest to your market. They are buyers of either your offering or someone else’s in your industry. They are not particularly tied to your company. If they are offered an outstanding leap in value, they will become avid fans and their frequency of purchases will increase. Their level of referrals into your company will grow.
The second tier noncustomer is the individual that is the noncustomer who consciously chooses not to buy the offerings from your company or industry. A great example, Legal Zoom. The company captured millions of business owners who consciously chose NOT to use traditional law firms and attorneys for a myriad of non-litigious work. The self-serve tax prep software world is a very similar success story.
The third tier noncustomer is the individual who never even thinks of your company or industry. Think of the plethora of technologies that didn’t exist 20 years ago. Heck, even 3 years ago. While the book, Blue Ocean Strategy, leans heavily on enterprise and large company examples, our role in this series dedicated to solopreneurs/sole proprietors, is to provide examples of what individuals and small businesses have done to grow revenues in blue ocean strategy ways.
A key first step in identifying noncustomer potential is to look at commonalities across all tiers of noncustomers. If this is not as productive as you may want, then and only then, think about key differences among current customers.
So, as a sole proprietor, consider this example. I have mentioned in the past, a home improvement company. They are small, employing perhaps a dozen key contractors who are paid by the gig, not W-2 salaried employees. What might be a commonality among the homeowner who needs his plumbing fixed as opposed to the woman who needs a doorbell installed? When thinking through this question, some pretty natural commonalities begin to appear.
All homeowners want transparent prices. All want quality work and a job that is backed by some form of warranty. These alone won’t lead to masses of new customers.
What might lead to masses of new customers?
In today’s market, digitization of the order and payment process. In the case of this home improvement firm, homeowners have the ability to order the task online. They receive quotes, confirmations, and all billing via an online portal. In this case, value innovation is defined. The technology drives costs associated with these tasks way down while the value to the customer goes up.
There is much more to share relative to Blue Ocean Strategy’s contribution to finding revenue from noncustomers. If you’d like to learn more about how these frameworks may help your business, click here to set up a free call with The Blue Ocean Strategist, Sherman Mohr.