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.

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Your Parent Or Kid Moved In: Are You Covered?
A record 57 million Americans now live in multigenerational family households — double the number in 1980, according to a new Pew Research Center study. And I bet many of them have the wrong homeowner’s or renters...
 
 
Pandora Looks to Challenge Terrestrial Radio's Dominance in Cars
Pandora Media is one of the largest Internet radio providers in the U.S. with more than 75 million active users. While the company’s active user count has increased at a robust pace historically, it is likely to slow...
 
 
Are General Manager Salaries About To Skyrocket? Will There Be A Front Office Salary Cap?
Are General Manager Salaries About To Skyrocket? Will There Be A Front Office Salary Cap?
It’s January 2026. New York Yankees owner Hal Steinbrenner gets out of his driverless car and triumphantly marches before the gathered press to introduce his prized new free agent. It’s a record-breaking contract—over...
 
 
Volkswagen AG New Coverage: Trefis Price Estimate at $51
Volkswagen AG is the second largest automaker in the world behind Toyota and slightly ahead of GM, selling 9.72 million vehicles globally in 2013. Established in 1937, Volkswagen AG, along with its 340 subsidiary...
 
 
 

Latest from the Network

Paris Jackson asked to reconnect with family
Los Angeles, July 26 (IANS) Late pop star Michael Jackson's daughter Paris, who has returned here from her boarding school in Utah, has been advised to reconnect with her family. After she made an attempt to take her...
Read more on Celebrity Balla
 
UN body concerned about impact of Gaza violence on women
United Nations, July 26 (IANS) The United Nations Population Fund (UNFPA) Friday expressed its deep concern about the impact of the ongoing Gaza conflict on women's health and access to safe births. "Reports of the...
Read more on Politics Balla
 
Kate Upton always wanted curvy figure
Kate Upton has always wanted a curvaceous figure. The 'Other Woman' star, 22, admits she ''begged'' for a shapely body when she first started modeling and was overjoyed when people started praising her sexy shape....
Read more on Celebrity Balla
 
Jenny McCarthy's son reported her to police
Jenny McCarthy's son called the police on her. The former Playboy model admits Evan, 12 - whom she has with ex-husband John Asher - once reported her for texting on her phone whilst she was driving. Speaking on Sirius...
Read more on Celebrity Balla
 
Jennifer Lopez 'danced all night' at 45th birthday bash
Jennifer Lopez ''danced all night long'' at her 45th birthday bash in the Hamptons last night (07.24.14). The 'I Luh Ya Papi' hitmaker spent the duration of her party on the dance floor at Nammos, a Mediterranean...
Read more on Celebrity Balla
 
Scott Disick won't drink alcohol until after birth
Scott Disick reportedly won't drink alcohol until after the birth of his third child later this year. The 31-year-old reality TV star - the long-time partner of Kourtney Kardashian - is determined to stay sober after...
Read more on Celebrity Balla
 
Love the idea of lots of kids: Radcliffe
New York, July 26 (IANS) If Daniel Radcliffe had his way, he'd have "lots of kids" in the years to come. "Maybe because I'm an only child, I love the idea of lots of kids. But it will depend to a larger part on who I...
Read more on Celebrity Balla
 
Kyrgyz ex-president sentenced to life imprisonment
Bishkek, July 26 (IANS) A Kyrgyz military court Friday sentenced in absentia the country's former president Kurmanbek Bakiyev, his brother Janysh Bakiyev and former prime minister Daniyar Usenov to life imprisonment....
Read more on Politics Balla
 
Why Lily Allen goes into shutdown mode?
Los Angeles, July 26 (IANS) Singer Lily Allen has decided to go into shutdown mode after receiving criticism on a social networking site. Allen says this is her way of coping with backlash, reports mirror.co.uk. The...
Read more on Celebrity Balla
 
ASUS MeMO Pad 7 Intel Bay Trail Tablet Shows Serious Android On X86 Value
Low cost tablets have been a goal for a long time now but breaking the $200 mark hasn’t been easy for manufacturers, without sacrificing features and quality.  Then again, what if I told you there’s a 7-inch tablet on...
Read more on Apple Balla