Who are your primary customers? Harvard Business School professor Robert Simons says that’s the most important question of your strategy –— and the hardest to answer.

Simons says that many firms make the mistake of defining their customers too broadly. To succeed, you have to target your resources at the people who really drive the most value.

“Resources are limited…and the more people we call customers, the more we’re diffusing resources and attention over all kinds of different entities and constituents that are not really at the core of the business,” he explains.

In this episode, you’ll learn how to accurately define your primary customers — using factors like your firm’s culture, your core capabilities, and where you get the most profit. You’ll also learn how to allocate resources for secondary and tertiary customers.

Key episode topics include: strategy, customer experience, competitive strategy, resources, profits, value, core customers.

HBR On Strategy curates the best case studies and conversations with the world’s top business and management experts, to help you unlock new ways of doing business. New episodes every week.

· Listen to the original HBR IdeaCast episode: Identify Your Primary Customer (2014)

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