I worked in a healthcare organization for about 10 years from 1996-2007. Back at that time the transition between referring to patients as “customers” was just emerging and it was fairly controversial. Marketing and administration favored the approach and logically it seemed to make some sense. But I can recall the debates, conflicts and consternation from clinical staff — physicians and nurses — about the use of this terminology.

At the time, I was firmly on the side of using the term “customer.” After all, I had come from the marketing world with a background in the investor-owned utility industry and a private educational firm, in addition to experience growing up in a family-owned business, so the concept of “customer” was one I firmly identified with.

In hindsight, though, I think the debate should have been much more nuanced. Sometimes patients were, indeed, the customer — but not that often really. An article I recently read in Harvard Business Review, “Choosing the Right Customer,” got me thinking about this more recently. In the piece Robert Simons points out, for example, that pharmaceutical company giant Merck doesn’t consider the patients who use the drugs they provide to be their customers. They don’t even consider the physicians who prescribe the drugs to be their customers!

Who do they believe their customers really are? According to Simons, “research scientists in labs and universities around the world.” These represent their primary customer. He goes on to strongly suggest that other companies reconsider who their “primary customer” really is and says: “…by not identifying one primary customer, companies that consider themselves ‘customer focused’ soon become anything but.”

Interesting — and very important — point. As a Baldrige examiner I often review applications where the customer identified by the organization doesn’t seem quite “right” to me. However, the way the process works, examiners are coached not to be “prescriptive.” This means that it is not the examiner’s role, for instance, to tell the company that they’re focusing on the “wrong” target audience. It’s up to them to decide.

Deciding appropriately, as Simons notes, makes a big difference.

As I look back at my healthcare experience, at that particular time in our market, insurance coverage was the primary driver of where patients sought care. For the most part, among the markets where reimbursement was best, employers drove the choice of insurance packages that would determine where the vast majority of employed patients and their family members received care. Yet, much of our focus at that time was on sending marketing messages directly to the consumer audience.

Sure, some of our patients had personal choice when selecting their care providers — private pay individuals, for instance, as well as Medicaid and Medicare recipients. But, even in not-for-profit organizations, success depends on “following the money.” After all, they say: “no money, no mission.” Medicare and Medicaid reimbursement is woefully inadequate to cover the actual cost of delivering care. Private pay individuals represented a very small percentage of the overall market. Employer-provided coverage drove the majority of the patient traffic to our facilities.

What does this mean for you? It means that the question that you should ponder is: “Who is your true primary customer?” And you should ponder it logically, based on how decisions are being made to drive end users to choose you. Do you know?

The mind-shift that you need to make here is thinking about your customers not as the ultimate end users who receive whatever it is that you have to offer, but as those who are influencing the choices.

So, in a healthcare setting that may be referring providers. In an education setting it may be parents or guidance counselors. In a consulting firm providing services in the business-to-business (B2B) environment it could be any one of a number of potential targets — HR managers, C-suite executives, purchasing departments. For a lot of online businesses — like Amazon.com — these days, a very important customer group may be the various “affiliates” that promote products and services through their own marketing channels, receiving a referral fee for the sales they generate.

I say “may be” because I don’t know. But you could or should. You should have–or have access to–the data that could tell you:

• Which of your customer segments represents the greatest return to your organization in terms of margin
• Considering these customer segments, what are the decision drivers that cause them to seek what you’re offering

For Amazon.com, for instance, managing their affiliate “customers” effectively is a very different mindset than focusing on the end-user purchaser. I have no idea who Amazon.com believes to be their primary customer, but I’d guess that affiliates are close to the top, if not at the top, of that list.

I do know who I consider to be my primary customer, though. I’ve come to recognize that my primary customer segment is my existing customers. In evaluating how new clients come to me I’ve recognized that the vast majority–not all, but the vast majority–come through as referrals from existing clients. Consequently, if I’m trying to determine where to focus the majority of my efforts (because we all have a limited amount of time and money available to us), I’m going to err on the side of focusing on providing the best service I can to existing clients.

What about you? Who’s your “primary customer”?

Recommended Reading:

The Everything Guide to Customer Engagement

Tags: Business development, client, customer, Customer Service, identifying customers, Marketing, Strategic Planning, Strategy, target market

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