Should Your Customer Base Be Wide Or Tall?

May 30 2014, 12:12pm CDT | by

Why It Can Make Sense To Limit Your Clientele…

There are two common ways to think about your customer base: it can be either wide, or it can be tall.

Wide means that you have many customers who all make small purchases.  Think about snack companies—they sell millions of candy bars to millions of people, each of whom buy a few.  It’s a very wide customer base.

Tall, on the other hand, means that you have strong relationships with a small number of customers.  Think about a consulting firm that only has a half-dozen clients, or the manufacturers of heavy industrial equipment.  Each customer counts for a lot.

Either strategy can work, depending on your market and your product.  Automobile companies are one example; some make huge numbers of cheap, affordable cars that are meant to be sold to millions.  Others specialize in expensive, handmade vehicles that have a much smaller market where each customer is worth much more.

There’s a lesson to be learned here, and it goes against some very conventional marketing wisdom.  Namely, this:

“You always want as many customers as possible.”

I say, baloney!

Sure, if you’re going wide, then you do want as many customers as possible.  And in the 20th century—the golden age of mass production—going wide was the name of the game.  That, I think, is where this basic assumption about the nature of marketing came from.

But we don’t live in the 20th century any more.  It doesn’t always make sense to go as wide as possible with your customer base.  In fact, and especially for entrepreneurs, it usually doesn’t.  Can you compete with the Walmart of your industry?  Probably not, if you’re just getting started.

Instead, you need to exploit the weakness of the wide customer base.  People are all different, but a mass-produced product has to satisfy everyone.  That means an inevitable dumbing-down of whatever the product is.  That’s your opening.

Find a group of people who are dissatisfied with the current offering (it’s easy, now that we have the internet).  Figure out a way to give them what they need, and forget about everyone else.  Then, focus your marketing efforts like a laser beam on that sub-market and you’ll be able to charge a premium for your product.  That’s how you build a tall customer base, and that’s where growth lies in today’s market.

With this model, it’s okay to have a small number of customers.  Instead, focus on deepening your relationships with them, finding new ways to create value, and building new systems to generate revenue from your existing client base.  You’ll be able to afford to specialize in ways that larger companies can’t, and that’s where you’ll have the advantage.

You don’t always have to get as many customers as possible.  Go tall instead of wide, and you’ll open up all sorts of new opportunities that aren’t available to everyone else.

 
 

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