Understanding and Serving Your Customers

A Framework for the Customers Course

The Understanding and Serving the Customer (Customers) framework is designed to help you ask
the right questions, in the right sequence, to profitably serve a growing number of customers.

The Customer Framework

Steps and key questions from The Customer Framework

Opportunity Strategy Sales Process People

Simple or
Do we have attractive Should we move complex sales Do we hire hunter,
or unattractive aggressively or funnel or word of gatherer, or farmer
customers? carefully? mouth? salespeople?

A savvy entrepreneur always starts by validating the customer need before jumping into a new
business venture. Without a verified customer need, there is no real opportunity.

Once the customer need and opportunity has been substantiated, the entrepreneur pins down a
strategy to balance the risks, builds a sales process, and then finds the team that will make it
work.

In case after case in the Customers course, you can use this framework to recommend questions,
order your thoughts and direct your analysis. By the end of the semester, you should have the
habits and intuition of a seasoned entrepreneur when it comes to:

 Understanding and valuing customer needs;

 Sizing markets and market segments;
 Setting the right price to attract customers at the right pace;
 Designing an effective and efficient Sales Funnel process;
 Finding the right people to sell your product; and
 Creating the systems and processes to run a sales operation.

Copyright  2010 by the Acton Foundation for Entrepreneurial Excellence. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted in any form without the written permission of Jeff Sandefer or the Acton Foundation for
Entrepreneurial Excellence.

The AFEE curriculum is used in its entirety at the Acton School of Business, based in Austin, Texas, an intense one-year program
taught exclusively by successful entrepreneurs. To learn more, visit www.actonmba.org.
Opportunity: Are our customers attractive or unattractive?
The Most Critical Part of the Customers Framework

Opportunity Strategy Sales Process People

Everything about your sales and marketing strategy, from setting prices to sizing markets to
designing the steps in your Sales Funnel and executing the plan, starts with whether your
customers are attractive or unattractive.

Customers with attractive enough traits make for an easy sales process; unattractive enough
customers an impossible one.

As you answer the questions below, it is important that you put yourself in the shoes of the
customer. Close your eyes. Imagine you are the customer. See the world as your customer sees it.
See, taste, touch, smell or listen – which sense is required to appreciate what we are offering?

Opportunity Attractive Unattractive Customers

Customers  
Is the customer need intense or Intense Need Trivial Need
trivial?
Are customers easy or hard to Easy to Find Hard to Find
find?
Are customers easy or hard for Hard to Lure Away; Easy to Lure Away;
competitors to lure away? Loyal Disloyal
Are there few or many Few Substitutes Many Substitutes
substitutes?
Is it easy or hard to communicate Easy to Communicate Hard to Communicate
the benefit? the Benefit the Benefit
Is this solution low risk to try or Low Risk High Risk
high risk to try?
Will the customer buy once or Repeat Purchase One-Time Purchase
many times?

Strategy: Move aggressively or carefully?

Deciding how much money to risk.

Opportunity Strategy Sales Process People

There are no right or wrong answers to the questions below, but the answers will
determine the level of sales risk in your company. Price low, move quickly and invest
aggressively with a product with a long sales cycle and aggressive competitors and you
have a good chance of losing lots of money. Price high, stage segment by segment and
your risks are lower, but so may be the risk you will be leapfrogged by a competitor.

2
Strategy Low Risk High Risk
 
Are there clear segments and a Clear Segments and Ambiguous Segments
large market? Large Market and a Small Market
Is this a large investment or Small Investment Large Investment
small investment?
Does this product require a long Short Sales Cycle Long Sales Cycle
or short sales cycle?
Are we facing aggressive or Benign Competition Aggressive Competition
benign competition?
Do we move quickly or move Move Quickly Move Slowly
slowly?
Do we plan to price low or price Price Low Price High
high?

The Sales Process: Simple, complex or word of mouth?

Scaling the sales process

Opportunity Strategy Sales Process People

Eventually you have to scale your sales process to grow. The difficulty of this will depend on the
nature of the opportunity and your strategy. Building a large and complex sales funnel quickly is
a huge task.

Sales Process Less Difficult More Difficult

Do we need few or many steps in
the sales funnel?
Do we need to close few or many
customers?
Will customers recruit or
mobilize new customers?
 
Few Steps Many Steps
Close Few Customers Close Many Customers
Yes, they will recruit No, they will not recruit
additional customers

Is gaining interest, communicating benefits, qualifying, closing, or service most critical?

People: Who do we need and how will we motivate them?

Getting the right salespeople “on the bus”

Opportunity Strategy Sales Process People

Running a world-class sales organization means attracting, screening, hiring and motivating the
right sales people. Will you need sales people who can find new customers (hunters); manage
existing accounts (gatherers) or deepen key relationships with major customers (farmers?) Will

3
you hire and train from within or grow by recruiting new talent? Will you motivate mostly with
money or recognition and praise? Pay in salary, bonus or commission?

The difficulty of managing your sales force likely will depend largely on these decisions.

People Less Difficulty More Difficulty

Which is more important:
industry experience or raw
talent?
Do we hire and train from within
or recruit?
Do we need Hunter, Gatherer, or
Farmer salespeople?
Reward with money or reward
with praise/recognition?
Pay when orders booked or
accounts settled?
Pay in salary, bonus, or
commission?
Will compensation be capped or
unlimited?
 
Industry experience
From within
Farmer Salespeople
Compensation tied to
clear, simple objectives
plus a strong culture
Accounts settled
Salary and bonus
Unlimited but tied to
value created
Raw talent
Recruit from without
Hunter Salespeople
Reward with money only
plus conflicting goals and
compensation schemes
Orders booked
Commission
Capped or unlimited with
conflicts

Summary

Once you have explored the questions above, step back. Ask yourself:

 Do I have attractive or unattractive customers?

 Should I move aggressively or carefully through the stages of growing sales?
 Will I need a simple or complex sales funnel or should I use word of mouth?
 Who do I need on the team and how difficult will it be to motivate and manage them?;
and finally
 Which stage of growth is my company in, and what questions should I be asking now?

Every time you face a sales challenge, return to the Understanding and Serving Your Customers
framework for the right questions to ask. When these questions become habits, you’ll know you
are an entrepreneur on the road to mastering sales.

4
The Customer Framework – A Quick Reference
Opportunity
Do we have attractive
or unattractive
customers?
Is the customer need
intense or trivial?
Are customers easy or
hard to find?
Are customers easy or
hard to lure away?
Are there few or many
substitutes?
Is it easy or hard to
communicate the
benefit?
Is this solution low risk
to try or high risk to try?
Will the customer buy
once or many times?
Strategy Sales Process People
Should we move Simple/small or Do we hire hunter,
aggressively or large/complex sales gatherer, or farmer
carefully? funnel or word of salespeople? How do
mouth? we compensate?
Are there clear segments Do we need few or Is industry experience or
and a large market or many steps in the sales raw talent more
not? funnel? important?
Is this a large Do we need to close few Do we hire and train
investment or a small or many customers? from within or recruit?
investment?
Will customers recruit Do we need Hunter,
Does this product or mobilize new Gatherer, or Farmer
require a short or long customers? salespeople?
sales cycle?
Is gaining interest, Reward with money or
Are we facing communicating benefits, with praise/recognition?
aggressive or benign qualifying, closing, or
competition? service most critical? Pay when orders are
booked or when
Do we move quickly or accounts are settled?
move slowly?
Pay in salary, bonus, or
Do we price high or commission? Capped or
price low? unlimited?