Attract New Customers Without Alienating Your Old Ones

In the pursuit of growth, companies often strive to attract new kinds of customers. But if those new segments have needs, values, and preferences that differ from current buyers', that approach can backfire spectacularly, driving away a firm's loyal base and shrinking revenues. Kohl's, Starbucks, and Bud Light are among the many brands that have encountered this problem. Before targeting new customers, executives need to understand how they'll interact with the old ones. The two critical factors are whether the two segments seek the same or different value from a brand and how sensitive they are to each other's identities. Those factors combine to create four kinds of relationships: separate communities, connected communities, leader-follower segments, and incompatible segments. Each relationship type calls for different management strategies. However, most conflict emerges between incompatible segments. To resolve it, firms need to shift them to another type of relationship by building walls, creating hierarchies, or, in worst-case scenarios, firing one segment.