(Note from Art Petty: this is the first post at the new Management Excellence blog. If you are receiving this update via e-mail, please take the opportunity to visit the site and check out the new tools and resources.  And of course, the 160 plus posts on Best Practices in Leadership, Strategy and Sales and Marketing from the former site, Art Petty on Management, are all available at the new site.)

Ian MacMillan and Larry Selden writing, “Change With Your Customers and Win Big” in the December, 2008 Harvard Business Review, suggest that firms should look for advantage during an economic downturn by rethinking how they segment their customer groups.

They offer an example of a retailer of premium priced, private-label organic products who instead of viewing their market segment through traditional lenses, might break it into the following segments;

  • Health-conscious consumers who will stay pay a premium for foods that they perceive as having health benefits.
  • Frequent restaurant goers looking to trim expenses that might consider a line of high-quality carry out foods as an alternative.
  • Companies looking to rein in corporate catering costs that might substitute with the firm’s offerings.

Art’s Suggestions:

Many firms preoccupy on cutting costs and scaling back offerings, when they should be doubling their efforts to understand the unresolved problems of their customers. However, breaking the back of conventional thinking about either what to do in a recession or how to view your customer groups is a difficult task for many organizations.  Start by putting your team to work.

Instead of losing precious time and corporate energy to the collective nervousness that paralyzes organizations during tough times, get your team out into the field and into the market where your customers and their customers are.  Listen, ask questions and most of all, observe.  Where are they struggling?  What might help?  How do they use your products?  How do they use other products?  What unresolved problems can you identify?

Bring your observations back and get some help in what creatives like to describe as “ideating.”  We mere mortals call it brainstorming.  Regardless of the label, get your entire organization thinking about and generating ideas that might help your customer address their issues.  If you are looking for a process, pick up a copy of Tuned In and start with the formula that the authors suggest for creating “resonators,” offerings that solve unresolved problems so perfectly that they practically sell themselves.

The Bottom-Line For Now:

Rethinking your customer segmentation model is a potentially powerful approach for differentiating versus key competitors and for finding new needs that you can fulfill with your core capabilities.  Experiment with the various ideas and strengthen your team’s execution skills in the process.  In additional to the potential tremendous upside from solving customer problems, the energy and excitement generated during this process will convert the organization’s “sense of fear” into a “sense of urgency.”