Reaching Non-Customers
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One of the most counterintuitive ideas in Blue Ocean Strategy is that the biggest opportunities are usually not found among existing customers. They are found among non-customers: the people who have never bought from the industry, the people who buy reluctantly and look for alternatives, and the people who seem to be entirely outside the market. Kim and Mauborgne identify three tiers of non-customers. The first tier is people who are on the edge: they buy occasionally but would leave if a better alternative existed. They are the most accessible and often the most revealing. The second tier is people who consciously chose not to use the industry, even though they are aware of it and have the means. Understanding why they refused is a window into what the industry is getting wrong. The third tier is people who have never thought of themselves as potential customers at all. Most companies ignore non-customers almost entirely. They are obsessed with understanding existing customers better, which leads to incremental improvements for people already in the market. But the non-customer question is different and far more generative: why are these people not buying? What would have to change for them to want what you offer? The answers often reveal fundamental assumptions the industry is making that could be questioned to create a new market space. Netflix is one example: the non-customers of video rental stores were people who found the experience too inconvenient, the late fees too punitive, and the selection too limited. Netflix was built by answering the non-customer question, not by serving existing video store customers better.