Defining Your Customer Can Be Complicated

The definition of a customer is broad.

Customer (noun)

  1. a person who purchases goods or services from another.
  2. Informal. a person one has to deal with.

Source: Dictionary.com

This seems fairly straightforward in some businesses. 

Let’s say you own a restaurant. Your guests would be your customer. You might also include vendors and employees as customers under part two of the definition. But, there’d be no confusion that guests are your ultimate customer. They’re the people who purchase goods or services from you.

This gets more complicated in other organizations.

The nonprofit Goodwill has three primary customers. The people who donate clothing and other items, the people who shop in their thrift stores, and the people who receive jobs and job training.

Organizations like this have to decide how to manage the needs of their different customers. This is especially true when there's an apparent conflict or limited resources. 

There could be trouble if you choose poorly.

The Forgotten Customer

McDonald’s has long had a reputation for poor customer service. Last year, I wrote a post detailing how their problems boil down to three areas:

  • Lack of focus
  • Lack of quality
  • Lack of control

It’s that last part that’s starting to bite them.

Franchisees operate 81 percent of McDonald’s locations. That means most of McDonald’s customers aren’t actually served by a McDonald’s employee. 

Right now, the franchisees aren’t too happy. A recent article on Slate described McDonald’s relationship with its franchise owners as “the bleakest it’s been.”

Rent has increased an average of 26 percent over the past five years. Meanwhile, year over year same store sales are down 4.2 percent.

Now, McDonald’s wants its franchise owners to invest an estimated $120,000 to $160,000 in it’s new Create Your Taste initiative. The Create Your Taste program is designed to allow people to customize the burger they order using an interactive kiosk.

Many franchise owners resent the additional investment. It will take a significant chunk out of short-term profits while making operations even more complicated.

McDonald’s can’t turn around it’s fortunes unless it improves it’s relationship with franchisees.

 

Complicated Industries

McDonald’s is hardly alone. Many industries have complicated customer relationships.

Hotels are a good example. In a typical hotel, one company owns the building, another company owns the brand, and a third company manages the hotel. 

Let’s say the property is getting a bit old and needs some upgrades. The brand might dictate the type of upgrades that need to be made. The building owner has to find a way to pay for the upgrades. And, the management company has to keep guests happy until they all can sort things out. 

That’s are a lot of interests to manage.

Insurance is another example. Many companies have independent brokers who sell and service their policies. They must keep these brokers happy to ensure policy holders receive great service. At the same time, insurance companies must keep tabs on their brokers to ensure they’re representing the company fairly and accurately.

It’s enough to give you a headache.

 

Solutions

Companies can achieve clarity when they have a customer-focused mission or vision.

Take a look at Goodwill’s mission:

Goodwill works to enhance the dignity and quality of life of individuals and families by strengthening communities, eliminating barriers to opportunity, and helping people in need reach their full potential through learning and the power of work.

So, donations are important, but only to the extent that they help fulfill the mission. If a donation isn’t ultimately helping people reach their full potential through learning and the power of work, Goodwill doesn’t want it.

Let’s look at State Farm’s mission for a for-profit example:

The State Farm mission is to help people manage the risks of everyday life, recover from the unexpected, and realize their dreams.

I can tell you from experience that State Farm and their independent agents are aligned around the same mission. In 2001, I traveled to Houston to help my in-laws recover from a flood. My father-in-law's truck had been completely submerged in water and was totaled. His State Farm agent showed up the next day with a check in hand so my father-in-law could buy a replacement.

It required coordination between State Farm and it’s agents to make the same thing happen for hundreds if not thousands of customers who were similarly affected.

Meanwhile, people in the neighborhood who had other insurance companies waited days for their insurance company to lend a hand.