Decision Vision Episode 55: Should I Change My Customer Profile? – An Interview with Andy Goldstrom, Midcourse Advisors
Why is developing a customer profile so important? How should I develop a customer profile? Andy Goldstrom, Midcourse Advisors, answers these questions and much more when he joins host Mike Blake on this edition of “Decision Vision,” presented by Brady Ware & Company.
Andy Goldstrom, Midcourse Advisors
As Managing Partner at Midcourse Advisors, Andy Goldstrom and his team grow companies profitably and do it fast. Andy is an expert with B2B companies and is a sought-after business partner and speaker.
Early in his career, Andy started and built a division of a real estate brokerage company that generated 30%+ margins and grew from 1 to over 500 employees. After that, he took over an existing national recycling company and grew the top line from $70M to $100M and profit from $10M to $17M in 3 years. Both businesses were both designated as Inc. 500 companies, the fastest growing privately help companies nationwide, and subsequently sold to Fortune 500 companies at high multiples. Most recently, he served as Global Director at a major investment bank, where he grew service capabilities over in 70 countries while saving $12M annually.
In each case, Andy led sales teams that competed efficiently and effectively to win an extraordinary amount of business. In addition, he reduced cycle times and increased the frequency of incoming sustainable business, creating incremental value that was monetized when the companies were sold.
He started Midcourse Advisors as a way to give back to the B2B services community and now offers his knowledge and experience to organizations looking for ways to grow and improve.
For more information, go to the Midcourse Advisors website.
Michael Blake, Brady Ware & Company
Michael Blake is Host of the “Decision Vision” podcast series and a Director of Brady Ware & Company. Mike specializes in the valuation of intellectual property-driven firms, such as software firms, aerospace firms and professional services firms, most frequently in the capacity as a transaction advisor, helping clients obtain great outcomes from complex transaction opportunities. He is also a specialist in the appraisal of intellectual properties as stand-alone assets, such as software, trade secrets, and patents.
Mike has been a full-time business appraiser for 13 years with public accounting firms, boutique business appraisal firms, and an owner of his own firm. Prior to that, he spent 8 years in venture capital and investment banking, including transactions in the U.S., Israel, Russia, Ukraine, and Belarus.
Brady Ware & Company
Brady Ware & Company is a regional full-service accounting and advisory firm which helps businesses and entrepreneurs make visions a reality. Brady Ware services clients nationally from its offices in Alpharetta, GA; Columbus and Dayton, OH; and Richmond, IN. The firm is growth minded, committed to the regions in which they operate, and most importantly, they make significant investments in their people and service offerings to meet the changing financial needs of those they are privileged to serve. The firm is dedicated to providing results that make a difference for its clients.
Decision Vision Podcast Series
“Decision Vision” is a podcast covering topics and issues facing small business owners and connecting them with solutions from leading experts. This series is presented by Brady Ware & Company. If you are a decision maker for a small business, we’d love to hear from you. Contact us at firstname.lastname@example.org and make sure to listen to every Thursday to the “Decision Vision” podcast. Past episodes of “Decision Vision” can be found here. “Decision Vision” is produced and broadcast by the North Fulton studio of Business RadioX®.
Visit Brady Ware & Company on social media:
Intro: [00:00:01] Welcome to Decision Vision, a podcast series focusing on critical business decisions brought to you by Brady Ware & Company. Brady Ware is a regional, full-service accounting and advisory firm that helps businesses and entrepreneurs make visions a reality.
Mike Blake: [00:00:20] Welcome to Decision Vision, a podcast giving you, the listener, clear vision to make great decisions. In each episode, we discuss the process of decision making on a different topic from the business owners’ or executives’ perspective. We aren’t necessarily telling you what to do, but we can put you in a position to make an informed decision on your own and understand when you might need help along the way.
Mike Blake: [00:00:39] My name is Mike Blake and I’m your host for today’s program. I’m a Director at Brady Ware & Company, a full-service accounting firm based in Dayton, Ohio, with offices in Dayton; Columbus, Ohio; Richmond, Indiana; and Alpharetta, Georgia, which is where we are recording today. Brady Ware is sponsoring this podcast? If you like this podcast, please subscribe on your favorite podcast aggregator and please consider leaving a review of the podcast as well.
Mike Blake: [00:01:04] So, today, we’re going to talk about whether you should change your customer profile. And I’m excited about this topic. I mentioned this topic for a number of reasons. Number one, as it happens, it’s very timely. I just came back from a strategy meeting at our global headquarters in Dayton, Ohio, where the valuation practice of Brady Ware got together and we decided, in effect, our strategy for the next five years.
Mike Blake: [00:01:36] And in the nine hours that we had that meeting, about eight of them talked about defining what our customer profile is going to be going forward. And I think that’s so critical because unless you figure out what your customer profile as all the other things that you want to talk about in terms of marketing and staffing, investment, and other strategy, none of those are going to be right unless you understand what your customer profile is going to be.
Mike Blake: [00:02:06] It’s that central, it’s that foundational to your business strategy. And therefore, you know, we decided that if that’s all we accomplish in that particular day, then that was going to be a win for us. And I’m not leading up to a big announcement or anything like that. But, you know, we will probably, in about four to six weeks, as we flesh out the strategy. But the strategy part is not time well-spent unless you’ve identified that customer.
Mike Blake: [00:02:39] The other neat part about going out to Dayton was I discovered something that I did not know because I do not pay attention to college basketball that much, now that Georgetown has somehow managed to be irrelevant in college basketball. But the Dayton Flyers, I don’t know if I ever realized it, Dayton Flyers are ranked number six or seven in the country. I have no idea. So, anyway, good for Dayton out there. And by the way, what a cool name, the Flyers.
Mike Blake: [00:03:04] Of course, with the Flyers because that’s where the Wright brothers originated, even though they did their flight in North Carolina. So, a shout out to the Dayton Flyers. We’ll be rooting for them when the tournament shows up. But, you know, the customer profile is so foundational. And, you know, when companies—every company, I don’t think there’s a company in the world that is satisfied with selling. Every company believes that it can sell better than it’s currently doing.
Mike Blake: [00:03:31] I think most companies look at revenue and sales and says, you know, look, when I wake up in the morning, that’s one of the things that I worry about. It’s one of things that I worry about going to bed the night before, too, is sales. And if you don’t have that customer profile right, everything else just doesn’t matter. And that requires, quite frankly, deep thought and requires some understanding of what that customer is going to be because you’re literally going to build everything around that.
Mike Blake: [00:04:01] And in spite of having a big powwow about this, I’m not the expert on that. But instead, we’ve brought in somebody who is an expert on this. And that’s my friend, Andy Goldstrom, who is managing partner of Midcourse Advisors. Midcourse Advisors are business strategists and growth experts for small and medium-sized service businesses. They help leaders focus on the right pursuits and execute effectively using proprietary tools and methodologies that enable them to scale their businesses and grow rapidly.
Mike Blake: [00:04:29] As managing partner of Midcourse Advisors, Andy and his team grow companies profitably and do it fast. Andy’s an expert with business-to-business companies and is a sought-after business partner and speaker. Early in his career, Andy started and built a division of a real estate brokerage company that generated over 30% margins and grew to over 500 employees from one. After that, he took over an existing national recycling company, grew the top line from $70 million to $100 million in revenue and profit from $10 to $17 million in three years.
Mike Blake: [00:05:02] Both businesses were designated as Inc. 500 companies, the fastest growing privately-held companies nationwide and subsequently sold to Fortune 500 companies at high multiples. Most recently, he served as global director at a major investment bank, where he grew service capabilities in over 70 countries while saving $12 million, annually. He started Midcourse Advisors as a way to give back to the business community and now offers his knowledge and experience to organizations looking for ways to grow and improve. Andy, thanks for coming on the program.
Andy Goldstrom: [00:05:33] Thanks so much for having me. And good to see you after we met several years back and have been in touch.
Mike Blake: [00:05:39] Yeah.
Andy Goldstrom: [00:05:39] I appreciate being on your show.
Mike Blake: [00:05:42] So, before we get started, have you just published a book or is a book about to come out?
Andy Goldstrom: [00:05:48] I have a book coming out. I’m just working on the right promotion.
Mike Blake: [00:05:53] Okay.
Andy Goldstrom: [00:05:53] I got all the content in place, but it’s got all the basics about how to grow your business lessons from an Inc. 500 person, an executive. And it has some things about customer profile in it that can be used, tools and methodologies and anecdotes and case studies and all the rest.
Mike Blake: [00:06:14] And when do you think that book will come out?
Andy Goldstrom: [00:06:16] Probably in the next 60 days.
Mike Blake: [00:06:18] Okay.
Andy Goldstrom: [00:06:18] And when we reference my website, you can see a link for it.
Mike Blake: [00:06:22] And do you know what is the title of the book? Do we know that yet?
Andy Goldstrom: [00:06:25] We’re trying to finalize that.
Mike Blake: [00:06:28] Okay.
Andy Goldstrom: [00:06:29] Yeah. Right now, it’s called the Ten Deadly Sins of Growing Your Business.
Mike Blake: [00:06:35] Oh, nice.
Andy Goldstrom: [00:06:36] Yeah. So, I’ve got 10 themes. The only thing I’m trying to struggle with and I’m getting feedback from experts is that if you Google that, you get a lot of other junk.
Mike Blake: [00:06:47] Okay. I guess that makes sense.
Andy Goldstrom: [00:06:49] Right? So, I just want it to be poignant and on point. Title is an important thing.
Mike Blake: [00:06:54] Okay.
Andy Goldstrom: [00:06:54] So-
Mike Blake: [00:06:55] Well, good luck with that.
Andy Goldstrom: [00:06:56] Thanks.
Mike Blake: [00:06:56] And make sure we know about when the book is launched, so we can publicize it.
Andy Goldstrom: [00:07:00] I will. Absolutely.
Mike Blake: [00:07:03] So, you mentioned in your book, in fact, you deliberately discuss or separately discuss customer profiles. So, let’s get the vocabulary right. What is a customer profile? Is it the same thing as what people call a customer avatar?
Andy Goldstrom: [00:07:16] Sure. The first thing I just want to do is step back. When you talk about customer profile and when you had your meetings in Dayton, you had gotten to a specific point, knowing that you were serving the customer in certain markets and you knew you were doing accounting work and valuation work and other work. So, there’s a bigger picture than just the customer profile to successfully grow a business, but the customer profile is foundational.
Andy Goldstrom: [00:07:40] So, you need to know your industry and your target market and your customer segment before you even get to your customer profile. But when you get to that point, it’s really a representation of your ideal customer and it’s defined. It’s something that allows you to target, given that you have limited resources. And the thing that happens is most companies don’t do a really good job and it inhibits them from reaching their goals, which is a credit to you and your company in terms of how much time you’re spending on the, trying to get right.
Mike Blake: [00:08:16] Well, you know, we hope we got it right. Now, we got to execute.
Andy Goldstrom: [00:08:19] Yeah.
Mike Blake: [00:08:19] So, it all looks great on the whiteboard. We’ll see how it turns out in practice, but-
Andy Goldstrom: [00:08:23] And you mentioned the avatar.
Mike Blake: [00:08:25] Yeah.
Andy Goldstrom: [00:08:26] So, an Avatar is kind of a physical representation of it. I teach at Georgia State in addition to doing my consulting and we call it a persona. And it’s a physical representation with a name to it, so you can kind of feel it and look at it. So, for instance, as an example, just if someone’s a really avid tennis player and you know that they’re going to buy premium products because they love tennis so much and they want to differentiate their game and have every advantage possible, that avatar might be Peter, the professional tennis player or something like that. So, you actually can have a physical look as an avatar in terms of what that target customer could be or what that customer profile would look like. And then, obviously, there are a lot of different characteristics associated with that person.
Mike Blake: [00:09:17] It’s interesting. I never thought of it from a physical manifestation perspective, but that makes sense. And I know you specialize in service businesses. Do you go through that process with service businesses, too? Can you do that with professional services in terms of building a customer avatar like that?
Andy Goldstrom: [00:09:33] Absolutely. So, I’ll give you an example. I worked with a company that was a generalist type of company and they weren’t growing as fast as they want. They happened to be in the real estate services space, which is one of the things I focus on. I work with companies outside of that, but I’m focused on my customer profile. And they had expertise and background and hung out in technology areas, like where you sometimes spend your time, Michael.
Andy Goldstrom: [00:10:05] And so, we said you have to create an avatar or a customer profile based upon what that technology company leader looks like and what he looks for and what he cares about. And so, we developed a profile on that and it was Tom, the technologist. And literally, it was an opportunity to understand how they need flexibility in what they’re doing, how they care about vision, how they want to be able to grow their business quickly and how they care about all the technological aspects in the wiz bank things. And so, that kind of profile and being able to address their needs specifically knowing what they’re like compared to a corporate executive is very important.
Mike Blake: [00:10:55] So, you obviously agree, we think a customer profile is important or critical, but can a business theoretically be successful without one? Is that what we would think of as a mass market? For example, does Procter and Gamble have a customer avatar for Tide? Do they make Tide? I think they do.
Andy Goldstrom: [00:11:17] I think that’s right.
Mike Blake: [00:11:18] So, for some of us, that’s truly mass market. You know, do they have a customer profile, do you think or do they just make a product they think is really good, position it and distribute it in a certain way and sort of off they go? What do you think that looks like?
Andy Goldstrom: [00:11:33] No, they definitely have an avatar and it might be broader. But when they first started making Tide, it wasn’t as mass market or broad as it is. So, when you get a certain appeal, you can expand it. The example I use is McDonald’s. McDonald’s actually has brand ambassadors to focus on specific customer profiles for their specific type of food that they sell. So, they actually have somebody who just focuses on salads, you know, and people who just focus on burgers and literally, the customer segment that would be more in line with that.
Mike Blake: [00:12:15] You know, that’s interesting. I’d like to drill down on that for a second because I would not have guessed that, but I guess that perhaps makes sense because when McDonald’s—I find McDonald’s fascinating. I worked there as a kid. I used to think the way they produce things is just so cool.
Andy Goldstrom: [00:12:30] The whole story about, you know, the mass customization and the way that-
Mike Blake: [00:12:35] Yeah, it really is fascinating. But anyway, when they first introduced salads, that did not go well for them initially, right? Because it’s very confusing to the market, right? Because I think they didn’t have a customer avatar for that. And it sounds like what you think they discovered is maybe they have multiple customer profiles.
Andy Goldstrom: [00:12:58] They do. But they started from a foundational element and a base. And if you’re a new company, you really can’t afford to spread yourself too thin.
Mike Blake: [00:13:06] Right.
Andy Goldstrom: [00:13:06] And if you’re an existing company that’s starting something new, it’s just as important.
Mike Blake: [00:13:12] So, what are the pieces or components of a customer profile?
Andy Goldstrom: [00:13:18] Sure. There are several pieces. The key thing, what’s really important is it needs to be data-driven. So, it’s not something where you talk to your friend or you see something on TV or you just have something in your gut that tells you this is what my customer could look like. You really have to do the research to understand it, to inform your decisions. And, you know, Michael, when you post on LinkedIn, you have all these data charts and data, and I think you do it because it’s interesting, but you also do it because it can inform—you know, it’s sparks curiosity, but also informs how people make decisions.
Mike Blake: [00:14:01] And it also is indicative of my ideal customer profile.
Andy Goldstrom: [00:14:04] That’s right.
Mike Blake: [00:14:05] Right? If you like to guess, you’ll need to pay me to guess.
Andy Goldstrom: [00:14:09] Right.
Mike Blake: [00:14:09] It’s like when, you know, I tell my son, “Go tell your mother something”, right? And then, he just screams at the bottom of the staircase, like I could have done that. I wanted to go up the stairs and do that. The same thing, you don’t need to pay me to guess, right? But I’m trying to build a brand that suggests that we’re data-driven.
Andy Goldstrom: [00:14:27] That’s right.
Mike Blake: [00:14:27] I’m glad you picked up on that. I might be doing something right.
Andy Goldstrom: [00:14:30] Right. Absolutely. So, let me answer your question. Common elements are demographics. So, if it’s a B2C, it tends to be income, gender, marital status, things like that. For B2B, it’s the size of the opportunity, the industry and the location. You have to focus on customer needs. And it’s interesting. Customer needs are both perceived in latent needs. And it’s really interesting. A latent need is so important in terms of getting somebody to buy. And a perceived need is something that a customer knows, a latent need, they might not know or might not be out in front, but it’s something that drives their purchasing behavior.
Andy Goldstrom: [00:15:11] And the example I’d like to give best is just a phone, like the iPhone, you know, the perceived need is it’s a communication tool, right? It’s a way I can look up things on the internet, call my friends, text whatever. But it’s actually a security blanket for people. That’s their latent need. They feel a sense of connection and they need it. And when they don’t have it, it’s a problem. So, when people buy, you have to understand both the perceived and the latent needs when you’re looking at your customer profile.
Mike Blake: [00:15:43] Steve Jobs is so good at that, by the way. I mean, he was the Mozart of understanding that latent need, wasn’t he?
Andy Goldstrom: [00:15:50] He created a market, which is hard to do. He created several markets.
Mike Blake: [00:15:54] More than once.
Andy Goldstrom: [00:15:54] Yes, he created several markets. And so, yeah, he was the master at that for sure. Other elements are attitude. So, it’s the values and beliefs of the customer profile or the customer. Behaviors, which are use cases, meaning how they will consume the product or service and then, their purchase preferences, like what information? Do they need to understand what they’re buying? What channels are they going to find in order to be able to purchase it via online or store or in-office or somewhere else and how frequently they may purchase. So, if you understand all of those things in a data-driven way, you can actually put on a whiteboard, you know, with the customer in the center, all the different elements that influence their buying behavior and understand what your customer looks like.
Mike Blake: [00:16:48] Now, when you say data, that can scare some people. And it doesn’t even have that much to do about understanding how to do basic math, but data can also be very expensive, right? Some of the things you’re talking about on the surface sound like you’ve got to hire a marketing research firm to do surveys and focus groups and all those things can be very expensive. Is that true? Do you have to go that way or are there ways you can get data that is at least sufficient, where you’re not making multi-thousand-dollar investments in specialized studies?
Andy Goldstrom: [00:17:26] Sure. It depends on the scale and the size of the product or service that’s being implemented. There are a lot of resources that are available that don’t cost any money that are just on the net. PricewaterhouseCoopers has information. You look for companies that have traded and see what the profile of that competition looks like. There’s a lot of opportunity to find things on the net. At Georgia State where I teach, they’ve got a myriad of resources. You can find it through the SBA. There are a lot of different ways to do it.
Andy Goldstrom: [00:18:03] There certainly are paid resources where you can hire, you know, a professional firm that collects that information and does that all day and night and is an expert in that. And if you have the resources to do it, that might not be a bad thing. But ultimately, the data is not just looking up facts and figures. It’s actually engaging with prospective customers to get feedback on what their beliefs are and why they would buy something and what their feedback is. And there’s a term called ethnography. You ever heard of that term?
Mike Blake: [00:18:39] I have.
Andy Goldstrom: [00:18:40] There you go. Well, ethnography is direct observation and interviewing of potential customers, suppliers and partners, right? And if you are trying to get data or feedback from potential customers and you’re doing it on the phone or you’re doing it via email, you’re not going to get—the quality of the feedback you’re getting and the context of the feedback you’re getting isn’t going to be as good.
Andy Goldstrom: [00:19:09] And I can assure you that whether it is Procter and Gamble or McDonald’s or, you know, some of the other small to medium companies that I typically consult with or the students in my class, they get in front of their ideal client to be able to actually understand that feedback. And they draw on some other sources of information in order to understand the income brackets and things of that nature in order to do it. And they typically say you need 10 to 12 quality interviews or discovery sessions in order to develop a pattern or have enough of a sense. And certainly, you know, some companies go well beyond that.
Mike Blake: [00:19:55] Interesting. So, what you’re talking about resonates with a couple of things. One, Atlanta has an interesting technology market. You know, we’re not Silicon Valley, but we’re very deep in a few areas, right? And the venture market, in my view, has improved tremendously over the last 10 years or so. But one of the practices that is very much involved here, I think, more so than other places is something called customer discovery, where investors want entrepreneurs to have gone out and talked to lots of potential customers. In fact, in the Georgia Tech and Emory entrepreneurship programs, you cannot graduate without having actually gone out and talked to potential customers, even for a hypothetical venture. They make you develop that skill.
Andy Goldstrom: [00:20:49] I do that with my students, too.
Mike Blake: [00:20:50] You do, too.
Andy Goldstrom: [00:20:51] Absolutely.
Mike Blake: [00:20:51] Okay. And what a valuable skill and valuable asset that is. And it’s interesting that that intersects with a recent experience of mine. In preparation for the strategy meeting that I described, I read twice Michael Porter’s book on competitive strategy. And Appendix B, I think, of that book is entirely dedicated to the practice of interviewing customers and developing customer profiles, which I did not expect. I didn’t think it would be that granular.
Andy Goldstrom: [00:21:24] It is. And the way you ask the questions is really important. As an example, you want them to be open ended and not be yes or no answers.
Mike Blake: [00:21:34] And I think it might have actually been the most useful part of the book I read. I’m so glad because normally, I’m so happy I got to the end of a book that I skipped the appendices. For whatever reason, I didn’t this time. And I’m really glad because that is so chock-full—because conducting a customer interview is not walk into an office and just start asking questions.
Andy Goldstrom: [00:21:58] Appendices are where you get most of your charts, right, Michael?
Mike Blake: [00:22:02] They are.
Andy Goldstrom: [00:22:03] There you go.
Mike Blake: [00:22:03] They are, yeah. Especially in academic papers, for sure. So, what are some signs that maybe you have a customer profile that’s not working?
Andy Goldstrom: [00:22:21] The signs that it’s not working is you’re not getting traction.
Mike Blake: [00:22:25] Okay.
Andy Goldstrom: [00:22:25] Right? So, if you have initial traction with innovative customers who can validate, you can solve their problem, then you know you probably have the right customer profile. And a lot of people don’t because they’re not data-driven or they’re too broad in their customer profile that they’re focused on. And so, you know, results speak. And there’s actually something called the law of diffusion of innovation. Long, interesting, impressive set of words that I believe in, but I haven’t put together, that kind of tells you where your tipping point is relating to having that kind of traction. And it’s why people accept new ideas.
Mike Blake: [00:23:09] I love that. So, like calculus in it.
Andy Goldstrom: [00:23:12] It does. It does.
Mike Blake: [00:23:12] When you work it through. So, you’re talking dirty to me now. But I think where I want to get to is I think executives and entrepreneurs sometimes fall into the trap of thinking that they’re failing to get traction not because they have the wrong customer profile, but because they are not executing approaching that customer profile well or correctly or maybe they don’t have enough resources, right?
Mike Blake: [00:23:42] So, theoretically, maybe you do have exactly the right customer profile, but the thought process goes, “You know, we know who our customer is, but we just don’t have the right salespeople. The salespeople aren’t doing their job. Marketing is not doing their job. We don’t have enough money to get in front of those customers”, et cetera. You’ve heard all these things before, right? And this is a hard question, but that’s what we’re about on this podcast. The hard question is how do you know if your failure to gain traction is in fact the result of poor execution versus having the poor, the incorrect foundational customer profile?
Andy Goldstrom: [00:24:21] You’re right. It is an excellent and complex question. And it could be something else, right? Your sales team might not be executing well. Even though you have the right customer profile or avatar, you might not be executing once you get the sale, which impacts your reputation and ability to sell. So, there are a lot of different aspects to it. And all you have to do is be able to measure with certain KPIs about each stage of that process to get the appropriate feedback.
Andy Goldstrom: [00:24:59] And certainly, if you’re not getting any inbound interest, if you’re not getting good feedback on what your product or service could be, if there’s not a problem that you’re solving, you’re not going to pass go. You’re not even going to get started. And then, there’s the question that you have to measure, is, okay, a sales cycle is a multi-stage process, right? You have to have marketing and good salespeople and a good value proposition and good references. And they all have to work together. But if you don’t have the right target, none of it matters.
Mike Blake: [00:25:30] And the main part of it goes back to what we just talked about a few minutes ago, which is maybe you just ask the question, “Why did I think I had the right customer profile? Did I do the work that you just talked about in terms of actually going out and talking to 10, 15 customers? And did I do so in kind of a rigorous way?” You revisit how you got to the customer profile.
Andy Goldstrom: [00:25:55] The first Inc. 500 company I was with, I joined in 1995 and we grew really quickly in a period of time and became an Inc. 500 company in 2001. And we didn’t have all these tools, a business model, canvasses and customer profiles and avatars and things like that. We just had good common sense to be able to see a need in the marketplace that we could solve, there were changes going on in the marketplace. Getting some customers who were lead innovative end users who were willing to give us feedback and also pay us for the service even though it wasn’t fully fleshed out yet.
Andy Goldstrom: [00:26:46] And so, in essence, we were doing those things in a less structured way. And it provided validation along the way. Now, there are amazing tools and methodologies that are used in corporations by consultants who understand this stuff. It’s taught in schools. And if you use it right and do the right due diligence, you’re reducing your risk. And being an entrepreneur or being somebody who’s an intrapreneur in a bigger company, who’s trying to target a new business, what you’re trying to do is you’re trying to peel the onion back and reduce the risk in each stage.
Andy Goldstrom: [00:27:26] And so, if your customer profile is right and you were talking about discovery that investors in Atlanta are looking for, if you’ve done that discovery correctly, you’re reducing the risk and you go on to the next stage in terms of—and if you’re looking for investment along the way, like beyond friends and family to angels and series A and series B, you have to have reached certain milestones in terms of revenue, customers, discovery that you’ve done in order to get to those platforms.
Andy Goldstrom: [00:27:58] And then, the best companies are ones that actually start with a narrow solution to a problem via a product or service and then, they build on it modularly. So, an example is like Salesforce. Salesforce started out with like a free type of app or free system, where you could manage certain aspects of your CRM, but then, they have higher level premium services that you can choose based upon the number of users or the sophistication that you want. But it’s built on the same chassis, just like an Infiniti is, you know, built on a Nissan chassis.
Mike Blake: [00:28:42] Now, let’s move up from the startup into maybe a more mature company. At some point, presumably somehow, whether they do it analytically or reluctant with, they had a customer profile match and a successful identification, can a customer profile change? Is it possible that, you know, once a company reaches a more mature stage, they see sales growth drop off or maybe even retrench? Is it something that executives need to look out for, as maybe your customer profile can change over time?
Andy Goldstrom: [00:29:18] It can almost change overnight. So, you really have to stay with the times. And the reason things change overnight is innovation, communication channels, time and social systems have all been compressed. And the communication channels have been compressed because of the internet. The social systems have been compressed because of social media. And time has been compressed because of technology. So, what happens is trends change and preferences change and you need to keep up with that. Some of the big trends are relating to demographics, millennials and baby boomers on both sides of the spectrum in terms of their needs and in the size of that demographic.
Andy Goldstrom: [00:30:08] Technology and regulation are all changing. So, an example of a trend that, you know, could change very quickly or has changed is people weren’t as concerned about their health. You know, they cared about their health, but they weren’t as concerned. And, you know, there’s a big push and it’s not so new anymore. But all of a sudden, things change when people really cared about organic and pure products and, you know, there are a lot of vegetarians and vegans. And I think, you know, Amazon purchased Whole Foods for a variety of reasons, including distribution. But one of the reasons was to reach that audience, which is growing.
Mike Blake: [00:30:49] You know, one of those areas where I’m seeing it, we’re recording on Valentine’s Day today, although this will be published probably closer to St. Patrick’s Day.
Andy Goldstrom: [00:30:57] Happy Valentine’s.
Mike Blake: [00:30:58] Happy Valentine’s Day and happy St. Patrick’s Day coming up and whatever else is coming up. But you know, one of the things I sort of had to do in order to purchase for my wife is she’s big into the fair-trade chocolate now, which is harder to get, right? Organic chocolates, not hard to get now. But then, you got to make sure that it’s fair trade, which is an up and coming trend.
Andy Goldstrom: [00:31:23] Sure.
Mike Blake: [00:31:24] I’m not sure that’s overnight, but these customer profile things, I think, change the way a lot of things do. The change is very subtle for a long period of time. And then, it seems to sort of change overnight. Organic food was definitely like that. You know, this meat alternative, Beyond Meat and so forth, I think, looks like that. And fair trade may be the next thing which will delight me because I spent more time looking for fair trade chocolate than I think the whole of my Christmas shopping this year. So, it can’t happen fast enough.
Andy Goldstrom: [00:31:56] Did you find it?
Mike Blake: [00:31:57] I did eventually. Yes.
Andy Goldstrom: [00:31:58] Okay.
Mike Blake: [00:31:58] I did. And in a nick of time because my wife is actually on—she and my children left on vacation today. So, I had to come through it last night and I did. It was a buzzer beater.
Andy Goldstrom: [00:32:08] Good for you.
Mike Blake: [00:32:11] We touched on this a little bit, but I want to come back to it because I think it’s important to hit. Companies can evolve into multiple customer profiles, too, right? It may not be that your customer profile is wrong, but you may need to add to it, correct?
Andy Goldstrom: [00:32:26] You do, but there’s a method that you need to evolve in order to do that.
Mike Blake: [00:32:33] Okay.
Andy Goldstrom: [00:32:34] And again, whether you’re in a startup or whether you’re an established firm, you don’t just all of a sudden cater to try to cater to everybody. And so, what you usually try and do and what we teach and what I work on with my clients is getting a beachhead strategy. So, it’s what’s a use case for a particular customer that you can focus on in that first year? Use the law of the diffusion of innovation, where you can actually get some market share and prove up and get some cash in the door.
Andy Goldstrom: [00:33:10] And then, you can grow from there to other use cases to other types of customers with other different profiles. And that could work. In the chocolate case, for instance, there are some people who eat chocolate because it’s a snack. There are some people who eat it because it’s healthy for them. They have these, you know, health bars now Clif Bars and other things. And some people want to give it as a gift, right? And then, there are different customer types along those lines depending upon their age bracket.
Andy Goldstrom: [00:33:42] So, you can’t be everything to everybody out of the gate, but if you focus on one of those uses and one of those age brackets to get started, to get traction, then you can leverage and go from there. And that’s the best way to do it. There’s a client I have in town that is a technology company that does app development and they do training. So, they’ll train people how to be app developers or to have the newest, latest and greatest to do it. And they also develop apps. They were trying to go out to both customers and the message got mixed and diluted.
Andy Goldstrom: [00:34:24] And so, they didn’t know, their customer base didn’t know what they really were and this company itself didn’t know where to really put its resources into because they thought that the growth area was the one that was the low-margin business, which isn’t necessarily a good play. But they thought that that was where they wanted to put their emphasis and they really had to pick and choose one. And when they did, which was, “We’re an app developer”, their business took off.
Mike Blake: [00:34:55] Now, when a customer profile changes, it can be an existential threat to the company if it comes as a surprise to you and you don’t act upon it, right? I mean, you know, Microsoft was putting a lot of trouble because, you know, Steve Ballmer just blew it on mobile. And it caused them a lot of problems, I would argue Major League Baseball has some issues because their customer profile is primarily White and older. And that’s not the way the demographics of the country are currently going. That’s something they’ve got to figure out. Is customer profile so important that if it changes on you, do you agree that it actually could be a company killer?
Andy Goldstrom: [00:35:43] No doubt.
Mike Blake: [00:35:44] And if so, once you make that discovery, let’s say you’re kind of late to the game, say, “Crap. My customers just flat out changed. They don’t want a beef anymore. They want to eat something that’s not beef”, right? But all I do is I raise cattle, right? How do you go about kind of a crash course, if you will, to basically kind of save the company if you’re late to the game and you make that realization or by that point, is it already too late?
Andy Goldstrom: [00:36:20] The answer is it depends.
Mike Blake: [00:36:22] Okay. Yeah.
Andy Goldstrom: [00:36:22] Right?
Mike Blake: [00:36:22] I figured.
Andy Goldstrom: [00:36:22] So, you’re talking about baseball. I’m a big baseball fan. Grew up as a stats guy and loved baseball. And you saw what happened here in Atlanta. Atlanta saw that the demographics were changing and they actually moved their stadium to where the demographics were more applicable to them.
Mike Blake: [00:36:39] Yeah.
Andy Goldstrom: [00:36:39] Now, not everybody can pick up and change like that. That was an expensive proposition for them, but it seems to have paid off. But for other businesses, you want to be in the growth area, not the mature area of a business. And so, if you’re trying to make a pivot, you can certainly make that pivot, but you don’t want to change your business. You want to find customers that are a better fit for what you have. And so, if it’s a new business, hopefully, you can do it right the first time and adjust along the way.
Andy Goldstrom: [00:37:16] But if it’s an existing business, find new customers that are a better or closer fit. And the reason, primarily, is you’ve got all this investment and knowledge in your existing business, don’t try to be something that you’re not just because you’re trying to chase something, because you’re not going to have the knowledge or the relationships or the understanding to be able to actually solve that problem. So, find a problem based upon where you are and what you have and you can make subtle adjustments to it, but don’t try to be something that you’re not all of a sudden.
Mike Blake: [00:37:48] So, interesting. What I take away from that is one, option for a company that finds that their customer profile has shifted and maybe their business can’t necessarily shift with it as easily. Let’s take the beef example. All right. Maybe that means you get out of mass-market beef, but then, you switch to a niche market of organic or Kobe steaks or something that is lower volume, but higher margin, something like that as, you know, a ham-handed example.
Andy Goldstrom: [00:38:20] Sure. You know, if you’re Burger King, which came out with, I guess, the Impossible Burger first and was the one that kind of made the name, their distribution channels and the way that they serve their customer didn’t change. So, they had a lot of things in place. All they had to do was get the raw product to be able to serve it. Most other customers don’t, you know, have a bigger change than that.
Mike Blake: [00:38:46] I’m going to be really interested to see how Burger King does with that, because I actually like an Impossible Burger, but I’m not sure what the use case is because if you bother to look at the nutritional information, it’s for the most part unhealthy for you in a different way than conventional beef.
Andy Goldstrom: [00:39:06] It’s still just caloric, is it?
Mike Blake: [00:39:08] It is just as caloric. It is a lot less cholesterol, but it is massively higher in sodium, right? So, it’s a different kind of-
Andy Goldstrom: [00:39:17] So, we talked about latent needs.
Mike Blake: [00:39:19] Yeah.
Andy Goldstrom: [00:39:22] People who care about animals and don’t want—you know, some people are vegetarians because it’s for their health, but some of it don’t want animals to be killed.
Mike Blake: [00:39:31] And also environmental, right? We’re now hearing that-
Andy Goldstrom: [00:39:33] So, it’s an environmental thing so that’s serving a latent need that they’re trying to cater to as opposed to just people who just want to eat supposedly healthier.
Mike Blake: [00:39:42] Right. But I don’t see that that in their commercials yet, right? Maybe that’s their next phase. Right now, it’s, “Hey, this is just as good as any other Whopper, so you might as well have one.” But I don’t see the—I guess they’re just saying, “Well, if you’re just inclined to eat vegetarian, anyway, here it is.”
Andy Goldstrom: [00:40:02] Businesses don’t typically promote latent needs, but they need to understand them in order to capture the business.
Mike Blake: [00:40:11] Interesting. So, I’m being blatantly unfair, by the way. This is off-the-cuff questions for Andy. I’m asking to analyze a strategy of a multinational corporation real time. So-
Andy Goldstrom: [00:40:23] And I haven’t had an Impossible Burger yet, but I’ve heard it’s good.
Mike Blake: [00:40:28] Now, I’m getting hungry. So, how long do you think it takes to develop or maybe redevelop a customer profile?
Andy Goldstrom: [00:40:39] Depends on the size.
Mike Blake: [00:40:40] Does it have to take years?
Andy Goldstrom: [00:40:41] No, not if it’s done right.
Mike Blake: [00:40:44] Okay.
Andy Goldstrom: [00:40:44] So, you know, in my classroom, we’ve got people, young students, some of them are as old as 27, 28 because they’ve worked full time and they’re going back to school or, you know—but some of them are 18, 19, 20 years old who actually go through what we’re doing and are actually able to launch a business that I stay in touch with them. And they’ve actually launched fruitful businesses. One is launching a supplement product for gamers.
Mike Blake: [00:41:21] Okay.
Andy Goldstrom: [00:41:21] That’s specific to gamers. There’s another one that has an app that actually connects people to hold them accountable at the student level, where when it comes to health or getting somebody who can study with you or go to the gym. And they went through a process over several weeks as opposed to months and years to actually validate that that used the right tools or methodologies and did that.
Andy Goldstrom: [00:41:46] And when I work with my clients, it’s the same kind of thing. It doesn’t require push—you know, you don’t have to be Sisyphus. We’re not trying to push the boulder up the hill. You really can do it relatively quickly. And obviously, if you’re in a larger corporation, there are more stakeholders to please. That doesn’t mean the work needs to take longer. It just means that there are more stakeholders who you need buy-in from.
Mike Blake: [00:42:12] And it’s worth emphasizing. You have students that are doing this.
Andy Goldstrom: [00:42:15] I have students that are doing this and doing it well. And some of them, it’s just a practical exercise in class that instead of it just being a textbook kind of thing, which makes it more real, but some of them are actually pursuing these business opportunities and have been successful at it, believe it or not. And it’s exciting. And then, what I do with my clients, you know, it’s just as exciting because frankly, there’s more at stake.
Mike Blake: [00:42:46] Yeah.
Andy Goldstrom: [00:42:46] You know, they have families to feed. They have house, you know, mortgages. And they don’t have unlimited resources in terms of money or time or cash. And so, making the right choices and the right decisions along the customer profile route or how they manage their money or how they operate as they grow is really important. And I take a lot of pride in how I work with customers to do that.
Mike Blake: [00:43:11] And we are running out of time, so we’re going to have to wrap it up. This is a topic that, you know, probably deserves a lot more treatment than we’re able to give it in the span of one episode. But if people want to contact you to learn more about this topic, can they do so? And if so, what’s the best way to do it?
Andy Goldstrom: [00:43:28] Sure. Well, Michael, thanks for your time. I hope, you know, we covered enough, that people that were listening actually understand how important it is. And maybe it piques their interest or reinforces what they’re doing correctly or makes them think a little bit harder about what they need to do in order to really hone in on, you know, who they’re approaching and how they’re marketing their services or products.
Andy Goldstrom: [00:43:52] I can be reached at midcourseadvisors.com. My company is named Midcourse because it’s kind of the mid-course of a journey of a company, where adjustments need to be made. And my email address is email@example.com. And my phone number 770-633-2260. And you can find me on LinkedIn. And be happy to talk to anybody, to share, to learn about their perspectives and share any background I have.
Mike Blake: [00:44:19] Well, that’s going to wrap it up for today’s program. I’d like to thank Andy Goldstrom so much for joining us and sharing his expertise with us. We’ll be exploring a new topic each week. So, please tune in so that when you’re faced with your next executive decision, you have clear vision when making it. If you enjoy these podcasts, please consider leaving a review with your favorite podcast aggregator. It helps people find us so that we can help them. Once again, this is Mike Blake. Our sponsor is Brady Ware & Company. And this has been the Decision Vision podcast.