Maybe it is time for a paradigm shift in our approach to targeting customers as the authors of Blue Ocean Strategy¹ suggest. They call it desegmentation. It is all about looking to your non customers for real business growth. Not only does it offer increased revenue but also the potential to reduce costs.

Customer segmentation has been a long accepted marketing practice in an attempt to increase market share and revenue. Today we are faced with more competitors in the same market place vying for the same customers' dollar. Basically the size of the market stays the same but the number of competitors increases. So we target a segment of the market that we believe best match our product / service offering in an effort to increase our revenue. It works but for how long?

With increasing competition in the same market there is in reality only a finite amount of revenue and market share to be gained. As we continue to compete to increase our market share the costs involved grow exponentially. This can severely impacting on our return on investment and profit. It is a spiral that is all too familiar to us all. So before you rip out all of your hair why not stand back and consider looking at your non customers?Your first reaction will be "non customers are non customers for a good reason they have no need for our product or service". But if you ask yourself why they don't need our product or service you might discover some fascinating insight into your market. Better still you may actually find brilliant new ways to innovate your product / service offering.

Innovation does not necessary mean huge R & D investment. It could be a changing the attributes that you focus on or a matter of repositioning your service or offering, even some minor adjustments to the package as you may be offering superfluous add ons that are adding to the cost.

W. Chan Kim and Renee Mauborgne divide non customers into three categories:

"Soon to be" non customersThese customers will only use your product or service because there is no alternative and are ready to abandon the market as soon as a better alternative becomes available."Refusing" non customersThese are the customers who either refuse to use or cannot afford to use your product or service."Unexplored" non customersThese are the customers who have never been targeted or even thought of as a potential source of business. They are the group that needs are fulfilled outside of your market.By targeting these new segments in your market you have the opportunity to develop short, medium and long term strategies to sustain your business growth.

What is the first step? Simply go out and talk to these people find out why they do not use your product or service. You could discover that your total product / service offering can be reduced and your focus could be realigned.

A good example of this approach is internet banking. Bendigo Bank seems to have asked the question "Why don't more people use our internet facilities?" This institution has come up with the answer - "security". So they have introduced their security tokens.

This strategy seems to be aimed at the "soon to be" non customers who are ready to move away from internet banking because of the increasing perceived threat of cyber thieves as well as those "refusing" non customers who would not use this facility because of the security issues. Instantly it has created a point of differentiation that previously did not exist.

So what have you got to lose?

Go out and talk to your non customers and see how they can make your business grow.

Want to know more take a look at Blue Ocean Strategy

¹ W. Chan Kim and Renee Mauborgne 2005 Blue Ocean Strategy. How to Create Uncontested Market Space and Make the Competition Irrelevant Harvard Business School Press.