An Interesting Concept: The Leaky Bucket

 "So the question is: How leaky is your bucket? How many holes does your bucket have that are letting your customers constantly pour out." - Jim Palmer

While listening to a long lecture it is evident that you don't retain everything that is mentioned, but certain elements grab your attention or awaken your interest and the 'Leaky Bucket Concept' was one of those which made me revert my attention from studying the intricate thread-work on my t-shirt back to the lecture. 

The name of the concept itself is highly unusual when first connecting it to customer relationship marketing and I wanted to figure out just how a leaky bucket fits into this subject. The theory is quite a simple one, yet it makes alot of sense when looking at it from a customer and business perspective. I hope you enjoy it as much as I did!

The Theory

Imagine a bucket as your business and the water as your customers. Your duty is to fill the bucket with water and keep it full. But then holes start to appear on your bucket, these are problems or issues in your business which makes you lose your existing customers. A leaky bucket will allow the water in the bucket to seep or drain out. In the same way when problems occur in your bucket, you will start losing your customers and this is not desirable. 

 The argument is that there are two solutions available in this situation. One is that you can keep on filling the bucket steadily so that it stays full even though water keeps draining out. This eventually means you can keep on attracting new customers to your business to make up for the ones you lose. The second option is to keep on filling the bucket but to mend the holes at the same time so as to stop the leak. This means you have to mend the problems and issues whilst attracting new customers since losing existing customers will not be beneficial in the long run. 

In the beginning I was wondering how this was relevant to business but right now I have a whole new respect for this concept and one that I will not forget easily.

References:

Palmer, J. (n.d.). The Leaky Bucket Theory. Jim Palmer | The Newsletter Guru | Customer Newsletters. Retrieved November 14, 2012, from http://www.thenewsletterguru.com/the-leaky-bucket-theory/

Catering to Consumer Needs or Wants: Which is most Important??

"Customers don’t always know what they want. The decline in coffee-drinking was due to the fact that most of the coffee people bought was stale and they weren’t enjoying it. Once they tasted ours and experienced what we call 'the third place'.. a gathering place between home and work where they were treated with respect.. they found we were filling a need they didn’t know they had."

 

Howard Schultz, Chairman and CEO Starbucks

As a business student the very first lesson I was taught was to differentiate 'Needs' from 'Wants' when it comes to Marketing. Needs are identified as the essentials people require in life and wants as the differing ways to fulfill these needs. Accordingly I also remember being taught in Economics that needs are quantifiable and limited in number whereas wants are unlimited and keep on changing with time. Therefore the importance is automatically placed on understanding the ever changing wants and catering to these in order to survive in the market. This strategy is evident clearly in the electronics industry.

This is an idea I didn't challenge until recently when I read through an article written by Gijs van Wulfen, titled "The best innovators are need seekers" (2012). Reading through it I realised that catering to a want is a necessity to adapt to the changes in the market place but catering to a need establishes a new line altogether in the market. Wants will change but needs will remain, therefore the ones who identify the needs, even those which are hidden, have a definite advantage. Wulfen states the following as examples. LinkedIn is created due to identifying businesses needs to increase new customers by expanding the business network and The Bed Bug Detector for a consumer who needs to identify whether a bed is bug free of even those that cannot be seen by the eye. 

Another thought is that firms which understand their customers and aspects such as who buys, what they buy and how they buy will benefit if they cater to their customer needs. For example in the education industry customers who look for a degree which can be achieved at a low cost and in the fastest time as possible will opt for institutes catering to those aspects. Those preferring quality and a proper college life will opt to universities of a differing caliber.(Customers and their expectations, 2012)

In conclusion I would like to form the opinion that we shouldn't take needs for granted just because wants seems to be the ones ever changing, demanding constant attention and monitoring. Needs are the basis and wants are born out of them, therefore paying close attention to needs is far essential when it comes to the end use. 

References: 

 Customers and their expectations . (n.d.). The Times 100 - Teaching business studies by example. Retrieved November 13, 2012, from http://businesscasestudies.co.uk/business-theory/marketing/customers-and-their-expectations.html#ixzz2C4uP2D5f

Wulfen, G. v. (2012, November 12). The best innovators are need seekers | LinkedIn. World's Largest Professional Network | LinkedIn. Retrieved November 12, 2012, from http://www.linkedin.com/today/post/article/20121112071156-206580-the-best-innovators-are-need-seekers