The Real Growth Opportunity The 3 Tiers of Noncustomers

Most businesses spend their time fighting over a shrinking pie. The three tiers of noncustomers represent groups of buyers who sit outside your current market but offer the most significant path to untapped growth. Instead of obsessing over your current clients' minor preferences, you'll find much larger opportunities by identifying why others avoid your industry entirely.

Traditional marketing focuses on segmenting current customers into smaller and smaller groups. This usually leads to more competition and lower margins. Real growth comes from reaching beyond existing demand to pull in people who haven't yet bought what you’re selling. When you find the commonalities among those who aren't your customers, you can create an offering that makes the competition irrelevant.

Moving Past Existing Demand

The three tiers of noncustomers is a framework from the book Blue Ocean Strategy by W. Chan Kim and Renée Mauborgne. It challenges the assumption that you should only focus on your existing fan base. In the authors' research, they found that while 86% of business launches were incremental improvements within red oceans, the 14% that created new market space generated 61% of total profits.

This concept matters because most industries eventually reach a saturation point. You can't keep stealing market share from rivals forever without destroying your profit margins. Understanding these three groups helps you identify where new demand is hiding and how to package your product to unlock it.

Why Soon To Be Noncustomers Are Waiting To Jump Ship

Soon to be noncustomers sit right on the edge of your market. They use your product or service out of necessity rather than preference. They’re essentially waiting for a better alternative so they can jump ship and leave your industry behind. If you can identify their core frustrations, you can transform them into loyal, high-frequency buyers.

Pret A Manger found its growth by looking at this group. Before they arrived, professionals in London were forced to eat in slow, sit-down restaurants for lunch. These buyers were noncustomers in spirit; they wanted healthy food but couldn't afford the time or cost of a formal meal. By focusing on the common need for speed and freshness, Pret created a "browse-pick up-pay-leave" cycle that takes just 90 seconds on average.

Capturing Refusing Noncustomers Who Voted Against You

Refusing noncustomers are people who have considered your industry’s offerings but consciously decided against them. They've seen what you do and voted no because your product is either too expensive, too complicated, or simply doesn't fit their lifestyle. They satisfy their needs through other means or simply go without a solution entirely.

JCDecaux looked at the outdoor advertising industry and saw plenty of these people. Municipalities and many businesses refused to use billboards because they were only visible for a few seconds as cars whizzed by. By creating "street furniture" like bus stops with built-in ad panels, JCDecaux gave these refusing noncustomers stationary, downtown locations where people had time to read. This move allowed JCDecaux to maintain operating margins as high as 40%, far exceeding the industry average.

Tapping Into Unexplored Noncustomers In Distant Markets

Unexplored noncustomers are the farthest away from your current business. They’ve never been targeted or thought of as potential buyers by anyone in your industry. Most companies assume these people's needs belong to a different market altogether. However, there is often massive latent demand hidden in this group if you can remove the barriers to entry.

For a long time, tooth whitening was a service only unexplored noncustomers of oral care brands could get from a dentist. Most people never considered that they could do it themselves at home. When oral care companies finally targeted this group with low-cost, easy-to-use strips, the market exploded. They realized that people didn't necessarily want a medical procedure; they just wanted a brighter smile.

Three Steps To Find Your Next Market

Identifying these tiers isn't just an academic exercise; it's a practical way to find your next major revenue stream. You can begin this process by looking at who isn't buying from you today.

1. List the reasons for rejection. Identify why each tier of noncustomer stays away from your industry. Focus on the big "pain points" like price, complexity, or inconvenience rather than minor features.

2. Find the commonalities. Look for the shared frustrations that link different tiers of noncustomers and your current customers. Creating a solution for a shared problem is much more powerful than tailoring an offer for a single segment.

3. Desegment your market. Stop looking for ways to split your customers into smaller groups. Instead, work to provide a leap in value that appeals to the broad mass of noncustomers, even if it means stripping away traditional industry features.

What Critics Get Right

Critics of this approach often point out that reaching for the third tier of noncustomers is incredibly difficult. It requires a high level of intuition and often significant investment in educating a market that doesn't know they need you yet. If you misjudge the commonalities among noncustomers, you risk building an expensive product for a market that still doesn't exist.

Others argue that focusing on noncustomers can lead to neglecting your core base. If your current customers feel abandoned while you chase new markets, you might lose your existing revenue before the new stream arrives. It's a delicate balance that requires maintaining your current operations while simultaneously innovating for the future.

Growth comes from identifying why the majority of the world is not buying from you. By looking at the three tiers of noncustomers, you can stop fighting over existing demand and start creating your own. Map your industry's three tiers on a whiteboard this afternoon to see exactly who you've been ignoring.