Marketing and sales are always focusing on market segments. Consumer, commercial, demographics, geography, and spending patterns are a few examples.
Operations typically segments by orders, if at all. Even that subdivision is more about shipping transactions than anything strategic. Common operational groupings include domestic vs. international, partial vs. full pallets, and special vs. standard labeling.
To provide optimal service while meeting the goals of all types of customers, operations should consider customer segments in acquisition and use.
If you think the iPhone is intuitive to use, spend some time in an Apple store. For kids who can’t remember life without an electronic gadget in their hands, it is intuitive. But for adults above 50, not so much. The store is filled with the over-50 gang. At least Apple provides a learning environment. Buy an Android and try to get significant help operating it. Check the Internet, you say? One site is supposed to help the power user with a complex question and your uncle, who can’t figure out what his question really is beyond “how do I use it?”
It is the responsibility of sales and marketing to attract customers and orders. It is the job of operations to ensure that the customer gets what they need, beyond a box with product in it. Yet we rarely look outside to truly understand customer segments.
One hearing aid battery company met the packaging requirements of their customer – the retail store – by ensuring the packaging hung balanced, limited theft and allowed maximum display quantities. But what about the person, typically older, who actually uses the hearing aid?
A new product design leader took engineers to visit an assisted living facility. They watched the consumers get out scissors to open the package and pour the batteries inside into a purse or shirt pocket. The resident needs the batteries handy. The fact that that storage can hurt battery life wasn’t known or considered. The consumer simply was trying to hear.
The engineers then watched the residents fumble getting the old battery out of the hearing aid, walk it to the trash so they didn’t get it confused with the new battery, fumble for the replacement, and drop it more than once while trying to insert it right side up in the aid. Clearly the packaging had not been designed with the consumer in mind.
Some hearing aid users are young and have no problem with the current design. But what about the disabled user who needs the help of someone else to handle the hearing aid from start to finish? Is the hearing aid product itself easy for the helper to handle while putting in someone else’s ear?
Consider the service example of doctors’ appointments. The medical profession says that compliant patients fare the best in all medical situations. It would seem that medical operations would focus then, on encouraging compliance. The patient will always be accountable for follow through, or the lack thereof, but the medical profession can provide an environment in which compliance is easier.
“Follow up in three months,” said the specialist. But his department only allows appointments out two months. We now have to call back in a month to schedule the follow up. The doctor explained that they have an unacceptable number of no-shows when they schedule out further than two months, so they’ve abbreviated the scheduling window.
That is an example of having a single system geared to the lowest common denominator – the person who cannot manage their own schedule—at the expense of the compliance goal. As a result, the vast majority of patients leave without having scheduled the all-important follow up appointment or tests. How does that improve health care?
Data analytics could be used to segment patients. And I’m sure there are better ideas, if only hospital operations were interested. The operational change of limiting the appointment calendar does nothing to support compliance but does reduce inconvenience to the medical staff. I wonder what the goal really is?
These consumer goods examples are intended to provide stories that everyone can relate to. But manufacturers of industrial goods can better meet customer needs through understanding categories too.
Visit customers. Understand which characteristics make some need different support than others.
What is more important: to simplify appropriate acquisition and maximize the benefit of your product or service to your customers? This isn’t about your operations, it’s about theirs.
Without this operations-oriented segmentation, your company can lose customers and profits.
Becky Morgan is an operations strategist working with leaders of mid-sized manufacturing companies. Together they ensure the client company can create and deliver new value to the market while being prepared for whatever the market throws at them. Check out her book “Start Smart, Finish Strong: Forging Your Path to Operational Excellence and Long-Term Success in the Manufacturing World” available at Amazon.