Leadership Question 2: Who is Our Ideal Customer and What Do They Value?

Your sales team comes back from a pitch: "The prospect loved our product, but they went with a competitor." You ask why. "Price," they say. You drop your price 20%. Sales don't improve. Another debrief: "They chose a different solution." You ask why. "Better features." You build those features. Still, sales stagnate.

The real problem? You don't actually know who your ideal customer is or what they value. You're trying to be everything to everyone, which means you're nothing to anyone. When asked "Who's your target market?" you answer "Anyone who needs [your solution]." Translation: You have no market. You have a list of people you hope might buy.

According to research on market positioning and focus, companies with clearly defined ideal customer profiles achieve 2-3x faster growth and 40% higher profitability than competitors who try to serve broad, undefined markets. The riches truly are in the niches.

The second of the 7 Leadership Questions in the Waymaker Leadership Curve addresses this directly: "What is our market, who is our ideal customer, what do they value, and what perceptions do we need to build?" This isn't four separate questions—it's one integrated framework for achieving market clarity that drives everything: product, communication, branding, and strategy.

The Problem: Everyone is Not a Market

A few hundred years ago, determining your market was dictated by trade routes—the Silk Road, Spice Route—or by proximity to where people gathered, like the local high street. Finding your customer was simple: set up shop, interact with those who walked through your door. You learned their needs face-to-face.

Today, a simple internet connection opens access to billions of potential customers worldwide. This makes the process of finding, defining, and focusing on a market much more complex—but also much more precise if done correctly.

The challenge every organization faces: achieving true clarity about whom they serve.

Why "Everyone" Kills Your Business

The trap: "Our product is for anyone who wants [benefit]."

• "Anyone who wants to save money" (banking)
• "Anyone who needs transportation" (auto)
• "Anyone who wants to stay connected" (telecom)

Why it fails:

1. Diluted messaging: Messages that speak to everyone resonate with no one
2. Wasted resources: Marketing spend scattered across audiences who don't care
3. Product confusion: Features built for conflicting needs that satisfy nobody
4. No differentiation: When you serve everyone, you compete on price alone
5. Brand ambiguity: You can't build perceptions when the audience has conflicting values

The math: Let's say you have $100K marketing budget:

• Broad approach: Spend $100K reaching 100,000 people with generic message = 0.5% conversion = 500 customers
• Focused approach: Spend $100K reaching 10,000 ideal customers with resonant message = 5% conversion = 500 customers

Same customer count, but the focused approach creates:

• Higher customer satisfaction (product actually matches their needs)
• Better word-of-mouth (they tell similar people about you)
• Lower churn (they got what they expected)
• Premium pricing (you're not competing on price)

Focus leads to compounding advantages. Broad targeting creates mediocrity at scale.

Learn more about how leadership questions drive strategic clarity while management questions execute on that clarity.

What Market Clarity Actually Means

Leadership Question 2 has four integrated components that work together:

1. What is Our Market? (The Broad Definition)

This is the starting point—the broad category you play in.

Examples:

• Retirees (property)
• Technology purchasers (B2B software)
• Gamers (video games)
• In-home streaming (families)
• Healthcare providers (medical devices)

Netflix example: Broad market is "entertainment for individuals and families." Initially defined as DVD rentals, but evolved to digital in-home streaming as the market changed.

The key: Broad market gives you the landscape. It's not specific enough to guide product or messaging decisions, but it sets the boundaries.

2. Who is Our Ideal Customer? (The Specific Profile)

Within the broad market, who specifically are you designed to serve?

Examples:

• Self-funded retirees (within retirees)
• CIOs of enterprise companies (within technology purchasers)
• YouTubers who game (within gamers)
• Moms with children under 10 (within in-home streaming)
• Rural healthcare clinics (within healthcare providers)

Netflix refinement: Within families, ideal customers are "households with multiple viewers who value personalized recommendations and ad-free viewing." This allowed them to build features like profiles, recommendations, and binge-friendly interfaces.

Nike example: Broad market is athletic apparel. Ideal customer is "aspirational athletes or individuals passionate about sports who value high-quality gear that enables peak performance."

Why this matters: Ideal customer profiles guide product decisions, pricing strategy, marketing channels, and brand voice. When you know exactly who you're serving, every decision becomes clearer.

3. What Do They Value? (The Value Drivers)

What does your ideal customer care about most? What drives their buying decisions?

The four value driver categories:

Design (Aesthetic and functional)

• Visually appealing and easy to use
• Example: Apple thrives on design—iPhone and MacBook blend form and function with clean, elegant design

Customer Experience (All interactions with your company)

• From discovery to post-purchase support
• Example: Amazon's fast shipping, easy returns, helpful service keep customers returning

Social (Status and image)

• How the product makes them appear to others
• Example: Tesla purchasers signal they value innovation, sustainability, cutting-edge technology

Economic (Price and ROI)

• Value for money, return on investment
• Example: Aldi uses low pricing as main economic driver for cost-conscious shoppers

Critical insight: Your ideal customer cares most about 1-2 of these drivers. Understanding which ones shapes your entire offering.

Example: Luxury car buyers (Mercedes, BMW) value Design + Social. Economy car buyers (Honda, Toyota) value Economic + Customer Experience (reliability, service). If you try to serve both, you'll fail at both.

4. What Perceptions Do We Need to Build? (The Brand Position)

What thoughts and ideas do you want in your ideal customer's mind about your brand?

David Ogilvy, founder of Ogilvy Advertising: "A brand is a collection of thoughts and ideas in the mind of the customer." Great brands deliberately shape these thoughts.

Nike perceptions:

• For athletes (not casual exercisers)
• Inspires greatness
• "Just Do It" = motivational empowerment
• High-quality, performance-enabling gear
• Social status as serious about athletics

These perceptions align with their value drivers (Design, Customer Experience, Social) and ideal customer (aspirational athletes).

By crafting the right perceptions, customers believe your brand is the best solution for them. This is the foundation for loyalty and advocacy.

This article introduces the Market Canvas framework for answering Leadership Question 2. For complete canvas templates, ideal customer profile tools, and perception-building strategies, get Resolute by Stuart Leo on Amazon.

The Market Canvas: From Broad to Focused

The Market Canvas provides a structured framework for answering all four components of Leadership Question 2 in an integrated way.

How the Market Canvas Works

The canvas moves through four layers of increasing specificity:

Layer 1: Broad Market Definition

• What industry or category do we play in?
• What's the size and growth trajectory?
• What are the macro trends affecting this market?

Layer 2: Ideal Customer Profile

• Within the broad market, who specifically are we designed to serve?
• What are their demographics, psychographics, and behaviors?
• What problems do they have that we can uniquely solve?

Layer 3: Value Drivers

• Which value drivers matter most to our ideal customer? (Design, CX, Social, Economic)
• How do we rank in delivering each value driver?
• Where can we create differentiation through value delivery?

Layer 4: Perceptions to Build

• What thoughts/ideas do we want in customers' minds?
• What perceptions do competitors own?
• What perceptions are credible and ownable for us?

The integration: Broad market → Ideal customer → Value drivers → Perceptions = Complete market clarity.

Real-World Example: Electric Vehicle Startup

Let's see how an off-road electric vehicle company would use the Market Canvas:

Broad Market: Outdoor recreation vehicles (off-road trucks, UTVs, adventure vehicles)

• Market size: $15B annually in North America
• Growth: 8% CAGR driven by outdoor recreation popularity
• Trends: Sustainability, electric adoption, adventure tourism

Ideal Customer: "Adventure enthusiasts aged 35-55 with household income $100K+ who value environmental responsibility but refuse to compromise on performance"

• Demographics: 40-year-old professionals, suburban/rural, families
• Psychographics: Value experiences over possessions, environmentally conscious, active lifestyle
• Behaviors: Weekend trail riding, overlanding, camping in remote areas
• Problem: Want to enjoy off-road adventure without environmental guilt or noise pollution

Value Drivers (Ranked by importance to ideal customer):

1. Social (40%): Being environmentally responsible while enjoying nature
2. Customer Experience (30%): Peace of mind (reliability, service, range confidence)
3. Design (20%): Capable, rugged, functional for real off-road use
4. Economic (10%): Willing to pay premium for right solution, but needs to be accessible (<$50K)

Perceptions to Build:

• "The serious off-roader's electric vehicle" (not a toy, real capability)
• "Environmentally responsible adventure" (enjoy nature without harming it)
• "No compromise performance" (matches or exceeds gas-powered alternatives)
• "Pioneering the future of outdoor recreation" (early adopter pride)

How this drives decisions:

Product: Prioritize range (300km+), capability (true 4x4), and quietness (preserve nature experience) over luxury features

Pricing: Premium but accessible ($45K vs. $60K+ luxury EVs)

Marketing: Outdoor publications, adventure film festivals, trail access advocacy partnerships (not mass media)

Brand voice: Authentic adventurer (not corporate sustainability lecture)

Distribution: Adventure destinations, off-road specialty dealers (not traditional auto dealers)

The result: Every decision connects back to ideal customer, value drivers, and perceptions. No ambiguity, no wasted effort.

Clarity Leads to Focus, Focus Leads to Growth

Here's the counterintuitive truth: The narrower your focus, the faster you can grow.

Case Study: Netflix's Evolution

Phase 1 (1997-2007): DVD Rentals

• Broad market: Home entertainment
• Ideal customer: Tech-savvy early adopters who value selection over immediacy
• Value drivers: Design (easy online ordering), CX (no late fees), Economic (subscription model)
• Perceptions: "Convenient alternative to Blockbuster"
• Result: 7.5M subscribers by 2007

Phase 2 (2007-2013): Streaming Pivot

• Broad market: In-home streaming entertainment
• Ideal customer: Households with broadband who value personalized content discovery
• Value drivers: CX (personalization algorithm), Design (multi-device seamless), Social (cultural conversation)
• Perceptions: "The place for binge-worthy content"
• Result: 44M subscribers by 2013 (6x growth)

Phase 3 (2013-present): Original Content

• Broad market: Global entertainment
• Ideal customer: Expanded to include "viewers who value exclusive content they can't get elsewhere"
• Value drivers: CX (personalization), Social (cultural relevance), Design (production quality)
• Perceptions: "Creator of must-watch original series"
• Result: 230M+ subscribers globally

Key insight: At each phase, Netflix had crystal-clear ideal customer definition. They used data-driven insights to personalize viewing experiences. Their recommendation algorithm became a key differentiator, helping users find content they'd love.

This level of personalization drove:

• Customer retention (hard to leave personalized experience)
• Binge-watching behavior (encouraged by recommendations)
• Higher satisfaction (finding content you love quickly)
• Reduced churn (>93% satisfaction scores)

They knew their ideal customer so well they could predict what content to create before filming began. That's the power of market clarity.

Learn how business model clarity connects to market definition through the 12 Questions framework.

Common Mistakes to Avoid

Mistake 1: Confusing Market with Industry

The Problem: Defining market by industry category rather than customer need.

Example: "We're in the CRM industry" vs. "We serve sales teams at 50-200 person companies who struggle with manual pipeline tracking"

Why it fails: Industry tells you competition. Customer need tells you who to serve and how.

Fix: Define market by the problem you solve for a specific customer, not the industry category you compete in.

Mistake 2: Multiple Ideal Customers Too Early

The Problem: Trying to serve 3-4 different ideal customer profiles before proving you can serve one excellently.

Example: SaaS company targets "SMBs, mid-market, and enterprise" simultaneously. Builds features for all three. Satisfies none.

Why it fails: Different customers have different value drivers and require different products, pricing, and messaging. Spreading resources across multiple profiles means you can't excel at any.

Fix: Start with ONE ideal customer. Dominate that segment. Then expand to adjacent profiles once you've proven success.

Mistake 3: Ignoring Value Driver Priority

The Problem: Trying to be best-in-class across all four value drivers.

Example: Company tries to have Apple-level design, Amazon-level CX, Tesla-level social cachet, and Aldi-level pricing. Impossible.

Why it fails: Each value driver requires investment and trade-offs. Excellence in all four is economically impossible.

Fix: Identify the 1-2 value drivers your ideal customer cares about most. Be world-class there. Be "good enough" elsewhere.

Mistake 4: Perceptions Without Proof

The Problem: Building brand perceptions not supported by actual customer experience.

Example: Company positions as "premium quality" but delivers mediocre product. Perception crumbles on first purchase.

Why it fails: Perceptions must be credible and provable. Customers quickly detect gaps between perception and reality.

Fix: Build perceptions based on genuine strengths. Ensure product/service delivers on what perceptions promise.

From Broad Market to Brand Loyalty

Here's how the four components work together to create customer loyalty:

Step 1: Broad Market → Understand the landscape

• What category do we compete in?
• What are the macro forces affecting this market?
• Where is growth happening?

Step 2: Ideal Customer → Focus on who matters most

• Who specifically are we designed to serve?
• What problems do they have that we uniquely solve?
• Can we reach them efficiently?

Step 3: Value Drivers → Understand what they care about

• Which drivers (Design, CX, Social, Economic) matter most to them?
• Where can we create differentiation?
• Where do we need to be "good enough"?

Step 4: Perceptions → Shape what they believe

• What thoughts do we want in their minds about our brand?
• How do these perceptions align with their value drivers?
• What actions reinforce these perceptions?

The result: When you serve a clearly defined ideal customer, deliver the value drivers they care about most, and build credible perceptions aligned with their values, you create customer loyalty that compounds:

• Higher satisfaction (you built exactly what they need)
• Better word-of-mouth (they refer similar people)
• Lower churn (switching costs are high when solution fits perfectly)
• Premium pricing (you're not competing on price alone)
• Faster growth (focused positioning resonates deeply)

Practical Application: Creating Your Market Canvas

Step 1: Define Your Broad Market

Ask:

• What industry/category do we play in?
• What's the total addressable market (TAM)?
• What macro trends affect this market?
• Where is growth happening?

Output: One sentence describing your broad market

Step 2: Profile Your Ideal Customer

Ask:

• Within the broad market, who specifically do we serve best?
• What are their demographics (age, income, location, role)?
• What are their psychographics (values, behaviors, motivations)?
• What problem do they have that we can uniquely solve?
• Can we reach them efficiently?

Output: Detailed ideal customer profile (ICP) document

Step 3: Identify Value Drivers

Ask:

• Which value drivers matter most to our ideal customer?
  • Design (aesthetics, functionality)?
  • Customer Experience (service, convenience)?
  • Social (status, image)?
  • Economic (price, ROI)?
• Rank these 1-4 by importance to your ICP
• Where can we create differentiation?

Output: Ranked value drivers with competitive positioning

Step 4: Build Target Perceptions

Ask:

• What thoughts do we want in customers' minds about our brand?
• What perceptions do competitors already own?
• What perceptions are credible and ownable for us?
• How do we reinforce these perceptions through actions?

Output: 3-5 key perceptions you'll build + proof points

Step 5: Test and Refine

Validation questions:

• Can our ideal customer articulate the problem we solve?
• Do our value drivers align with what they actually care about?
• Are our perceptions credible based on current product/service?
• Can we reach this customer profitably?

Iterate: Refine ICP, value drivers, and perceptions based on actual customer feedback

Learn the complete canvas methodology in Clarity Canvases: The Workshop Tool for Strategic Clarity.

Experience the Market Canvas in Practice

This article introduces Leadership Question 2 and the Market Canvas framework. For complete canvas templates, ideal customer profile worksheets, value driver assessment tools, and perception-building strategies for each growth phase, get Resolute by Stuart Leo on Amazon.

The book provides:

• Complete Market Canvas template
• Ideal customer profiling frameworks
• Value driver assessment methodology
• Perception-building strategies
• Market segmentation tools
• Industry-specific examples

The result: The capability to achieve market clarity that drives product, communication, branding, and strategy—creating focused positioning that resonates deeply with ideal customers.

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Great brands are like mirrors—they reflect the needs, desires, and values of their target audience. Learn more about the complete 12 Questions framework and explore how market clarity connects to business model design.