Non customers

What Are Non Customers?

Non customers are individuals or organizations who currently do not purchase or use a company's products or services. These individuals exist outside a business's existing customer base, representing a significant segment within the broader target market that a company could potentially reach. Understanding non customers is a critical component of market analysis and business strategy, as they represent untapped potential for growth and expansion beyond current revenue streams. Identifying and engaging non customers can be key to achieving substantial market share increases and long-term viability.

History and Origin

The strategic focus on non customers gained prominence with the development of concepts like "Blue Ocean Strategy" in the early 2000s, though the underlying idea of identifying underserved or unserved markets has existed for much longer. This strategy emphasizes creating new market space rather than competing in existing, crowded markets. A core tenet involves systematically looking at different tiers of non customers to understand their unmet needs and reasons for not engaging with existing offerings. This perspective encourages companies to shift their focus from vying for existing demand to creating new demand, often by addressing segments that traditional market analysis might overlook. The distinction between existing customers and various "tiers of noncustomers" highlights the different barriers preventing adoption, from those on the edge of the market to those who have never considered the industry's offerings.⁴

Key Takeaways

• Non customers are individuals or entities not currently using a company's products or services.
• They represent significant opportunities for business growth and market expansion.
• Understanding why non customers do not engage is crucial for developing effective customer acquisition strategies.
• Identifying non customers involves analyzing the broader market, beyond just the existing customer base.
• Strategic insights into non customers can lead to new product development and innovation.

Interpreting Non Customers

Interpreting the presence of non customers involves more than just noting their existence; it requires understanding the reasons for their non-participation. Businesses must analyze various factors:

• Awareness: Are non customers aware of the company's offerings?
• Perceived Value: Do they understand the value proposition of the products or services?
• Accessibility: Are there barriers (e.g., price, distribution, complexity) preventing them from becoming customers?
• Alternatives: Are they using competing solutions, or no solution at all, because their needs are fundamentally different or unmet by current market offerings?

Through this interpretation, a company can pinpoint specific opportunities to adapt its offerings, marketing, or distribution channels to convert non customers into active patrons. This often involves detailed market segmentation to identify distinct groups within the non-customer pool.

Hypothetical Example

Consider "FlexiRide," a hypothetical ride-sharing company operating primarily in major urban centers, with its primary customer base being daily commuters and occasional travelers. FlexiRide identifies a significant segment of non customers: suburban residents who commute to urban centers but typically rely on personal vehicles due to perceived high costs or limited availability of ride-sharing in their suburban areas.

To address this, FlexiRide conducts a study on these non customers. They discover that while suburban residents would appreciate the convenience, their main deterrents are the higher per-mile costs for longer distances and inconsistent driver availability in less dense areas. FlexiRide then pilots a new service tier, "FlexiPool Suburb," offering discounted shared rides for fixed suburban routes during peak hours, guaranteed by a small network of dedicated drivers. This targeted approach aims to transform this specific segment of non customers into a new customer retention stream, demonstrating how understanding their unique barriers can unlock new market opportunities.

Practical Applications

Non customers are a crucial focus for businesses aiming for significant expansion and maintaining a competitive advantage. Identifying and analyzing non customers has several practical applications across various industries:

• Market Expansion: Companies can identify underserved demographics or geographic regions by studying why people in those areas are not purchasing. This leads to strategies for new market entry.
• Product/Service Innovation: Insights from non customers can reveal unmet needs or overlooked pain points, driving the creation of entirely new products or services. For example, a software company might find non-users are deterred by complexity, leading to the development of a simpler, more intuitive version.
• Strategic Planning: Understanding the entire market, including non customers, allows for more comprehensive strategic planning, helping businesses allocate resources effectively for long-term growth rather than just defending existing market share. The Small Business Administration provides resources to help businesses conduct market research and competitive analysis, which includes understanding the broader market to identify and approach non customers.³
• Regulatory Compliance and Community Impact: In sectors like banking, regulations like the Community Reinvestment Act (CRA) encourage financial institutions to meet the credit needs of their entire communities, including low- and moderate-income neighborhoods, which may represent a significant segment of non customers for traditional financial services. This demonstrates how understanding non customers can align with broader social and regulatory objectives.²

Limitations and Criticisms

While focusing on non customers offers substantial growth potential, it also comes with limitations and criticisms:

• Difficulty in Identification: Non customers are inherently harder to identify and research than existing customers. They do not interact with the company, and their reasons for non-engagement may be diverse and difficult to ascertain through traditional customer relationship management tools. This can lead to inaccurate market research or misjudgments about their needs.
• High Acquisition Costs: Converting non customers often requires significant investment in marketing, distribution, or product modification. The cost of acquiring these new customers can be substantially higher than retaining existing ones.
• Risk of Misguided Innovation: Focusing too heavily on non customers without a clear understanding of their needs can lead to developing products or services that fail to gain traction, diverting resources away from improving core offerings for existing customers. Challenges in market research, such as data quality, evolving consumer behavior, and budget constraints, can further complicate the accurate identification and targeting of non customers.¹
• Market Saturation: In some highly saturated markets, the pool of genuinely addressable non customers may be very small, making the effort to reach them less economically viable.

Non Customers vs. Potential Customers

The terms "non customers" and "potential customers" are closely related but carry a subtle distinction in business strategy.

Non customers refer to the broader group of individuals or entities that are currently not purchasing or using a company's offerings. This group can be vast and may include people who are simply unaware of the product, those who have no need for it, or those who consciously choose alternatives. It is a factual statement about their current relationship with the company.

Potential customers, on the other hand, are a subset of non customers who have been identified as having a reasonable likelihood of becoming customers in the future. This implies that they possess the need, desire, and means to acquire the product or service, given the right circumstances (e.g., improved marketing, better pricing, new product features). Businesses typically narrow down the broad category of non customers to define specific segments of potential customers they can realistically target for customer acquisition.

In essence, all potential customers are non customers, but not all non customers are considered potential customers. The latter term implies a strategic filter and a higher degree of intent or fit.

FAQs

Why is it important to study non customers?

Studying non customers is vital because they represent a significant untapped market for growth. By understanding why they don't currently engage, businesses can identify new opportunities for product development, market expansion, and developing a competitive advantage.

How do businesses identify non customers?

Businesses identify non customers through comprehensive market analysis, which often involves extensive market research. This can include surveys of the general population, demographic studies, analysis of competitor's customer bases, and identifying unmet needs in the broader market rather than focusing solely on existing customer feedback.

Can all non customers become actual customers?

No, not all non customers can or will become actual customers. Some non customers may have no inherent need for a product or service, may be completely outside the realistic target market, or may have insurmountable barriers (e.g., fundamental lack of affordability or accessibility). The goal is to identify the segment of non customers who are also potential customers.