Just who is the customer? This is a question that comes up in all corners of higher education. Is it the student? Is it their parents? Is it employers? Is it the community and the broader society?
As entrepreneur, this question leaves me more than a bit unsettled! After all, if I don’t know who my customer is, I have no chance of success in the market. How can I deliver what the customer really wants? How do I effectively communicate to the customer what I offer? How do I strategically set prices? How can I deliver the product or service to the customer the way they want it? None of this is possible if I am not really sure who is my customer.
To be fair, it is not just those in higher education who get perplexed when trying to identify the customer. It actually is a common struggle for many entrepreneurs in a variety of different industries.
I spent almost a decade as an entrepreneur in the healthcare industry. I heard the same debate in that industry. Is the customer our patients? The employer who pays for the patient’s healthcare? The insurance and managed care companies that decide who gets what care and how much of it they get? It can get to be very confusing for even the most experienced entrepreneur.
A False Choice
The real answer to the question of who is our customer is actually rather simple – and at the same time incredibly complex.
A customer includes those who choose our product over our competitors, pay for the product, and ultimately consume it. Sometimes this is all the same person. But often, it is not.
For example, think about a product as simple as children’s breakfast cereal. The distributors and retailers choose whether or not to put our product into their stores. They need to be convinced that the product will move quickly off their shelves. Their business model depends on a high volume of sales and rapid inventory turnover. Certainly, the power to make the decision to put our cereal in their stores makes them a critical customer. If we can’t sell to distributors and retailers, our business is quickly dead in the water. But, that is only the first step is selling our cereal. Children need to want our product. They are attracted by brightly decorated boxes, sugary ingredients, and toys inside the box. Children nag and beg their parents to buy it, so they are customers, as well. Finally, the parents make the choice to pull our cereal off the shelf and pay for it. They are concerned about things like nutritional value and price.
So just who is the customer of our cereal? They all are. To be successful in the marketplace of breakfast cereal we need to develop and produce a product that the stores will stock, the children will want, and the parents will pay for. We need to sell to each of these customers in very different ways. In addition, we can’t just choose one of them as our customer – they all have to decide they want our cereal for us to generate sales. To survive in the market, we need to address the factors that lead all of these different customers to want our cereal and communicate with them effectively to let them know we are worth their economic attention.
Multiple Customer Segments
In the vernacular of entrepreneurship, we would describe selling cereal as a business model with multiple customer segments. Success depends on our ability to serve all of the various customer segments, not try to discern which one matters the most. The same is true about higher education.
Traditional academics would prefer to focus only on the most noble definition of who we serve. Our role is to contribute to an educated and enlightened society.
Others, particularly those who teach in the professional schools within universities, view their role to be one of satisfying the needs of the employers who hire our alumni.
Many in university administration put their emphasis on the student as the customer.
The reality is that if we do not pay attention to what attracts students to our schools, what encourages parents or students to pay for the education we deliver, and what make employers want to hire our graduates, we will not remain a viable player in the marketplace of education. We cannot put our emphasis on one segment at the exclusion of all of the others.
It is incredibly challenging to balance the often-conflicting wants and needs of our various customer segments. In addition, higher education has become highly competitive as universities seek to expand capacity. Many experts predict a significant failure rate of institutions of higher education over the coming decade. For example, Clay Christianson of Harvard University continues to predict that up to 50 percent of universities operating today will not be around by 2030 due to demographic and economic changes, decreasing demand for traditional higher education experiences, and technological innovations in alternative education delivery.
To survive, universities must be able to compete. The first step in being a successful competitor is clearly meeting the needs of all of your market segments, no matter how diverse and seemingly contradictory they may be.