Why Customer Plans Top Business Plans

UPDATED: October 16, 2015
PUBLISHED: June 27, 2015

Entrepreneurs often spend months writing their business plans, but the documents tend to just sit in a desk drawer. “What a wasted exercise!” says John Sculley, author of Moonshot: Game-Changing Strategies to Build Billion-Dollar Businesses.

“Businesses are all about customers,” the former CEO of Pepsi and Apple explains. “If a company wants to be transformative, writing a customer plan will be much more important than a business  plan.”

A customer plan is a concise document that outlines everything you will do to make your company the best in your industry. It’s written by studying your customers’ habits and needs, not your competition. At its center is a 10x goal—something that will make your company 10 times better than your competition by reinventing a business category and delivering a new consumer experience.

Apple, for example, reinvented photography, allowing consumers to take high-quality pictures with their mobile devices, and Sculley says today’s entrepreneurs are in a position to create innovative, disruptive change, too.

“We’re in an era of infrastructure where great new companies such as Uber and Airbnb are utilizing existing technology to create new services with transformational strategies,” he says. “This is a very good time to be a private company.”

Once you have identified your 10x goal, project its launch within four years by using something that Sculley calls “back-from-the-future planning.” Outline a list of things that need to happen to reach your goal by moving backward quarter by quarter. A business plan makes assumptions about the future, while a customer plan shapes how the CEO and leadership team set priorities by starting in the future and thinking in reverse.

“If you start with your customers and determine everything you need to do to create the best customer experience, you will suddenly look at your business in a different way,” Sculley says.

Businesses can avoid churn by using a customer plan: “It costs five to eight times more to replace the sales revenue from a lost customer than if you hadn’t lost the customer in the first place,” Sculley says. “Sprint is an example of a company that is hemorrhaging customers, and you can see this in its performance. It’s not just how you monetize a customer; it’s how to keep them coming back.”

The best customer plans focus on the possible, not the probable, Sculley says. “If the end result isn’t about growing in new ways from new sources, then you are sustaining growth, not transforming it.”

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Stephanie Vozza is a Michigan-based freelancer whose work has appeared in Entrepreneur and Fast Company.