Why Business Models Fail When They Ignore the 'Hidden Customer'

Let’s cut to the chase. Businesses fail when they misunderstand who their customers really are. The most dangerous version of this mistake is ignoring the hidden customer. This is the person or group that actually drives your sales, even if they are not your obvious target.

When you design your products, pricing, and marketing only for the customer you see, you risk missing the one who is truly making the decision, influencing the purchase, or creating demand.

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The Hidden Customer Theory Explained

A hidden customer is not a mysterious figure. They are real people whose influence is critical, but often overlooked. Sometimes they are the actual buyer when your target audience is the end user. Sometimes they are the gatekeeper. Other times they are an influential community that shapes how others see your product.

• The hidden customer could be:

• A parent buying a toy their child will use

• A procurement manager who decides which software the staff gets

• An online community of enthusiasts whose opinions drive others to buy

• A fan base that keeps a brand alive long after the mainstream loses interest

Ignore them, and your business model will eventually show cracks.

Lego and The Adult Fans of Lego (AFOLs)

Lego is one of the best-known examples of a company that nearly ignored its hidden customer. For decades, Lego focused almost entirely on children. The marketing, the product design, and the in-store displays all targeted kids and parents buying for kids.

The company did not initially recognize the value of AFOLs (Adult Fans of Lego). These were grown men and women who bought Lego for themselves, built intricate models, and formed large online and offline communities. They were not a small niche either. They were a loyal group with significant spending power and the ability to influence younger generations.

When Lego faced financial trouble in the early 2000s, it was partly because the brand had drifted away from what made it special. They tried to chase trends in video games and action figures, but they overlooked the fact that their most passionate, vocal, and high-spending customers were not eight-year-olds, but adults who never stopped building.

Once Lego started engaging with AFOLs — through dedicated product lines, special events, and recognition of fan creations — the business recovered. The AFOL community became brand ambassadors, content creators, and product testers. Today, sets designed for adults are a significant part of Lego’s sales.

The lesson is simple. If you do not know who your hidden customers are, you may miss your most profitable growth opportunities.

The Hidden Customer Theory in Action

When Apple launched the iPhone, the obvious customer was the smartphone user, but the hidden customer was really the app developers. Without developers building engaging apps, the iPhone would have been just another touchscreen phone, so Apple created an entire ecosystem with tools, revenue-sharing, and a large marketplace to attract and retain them. The same dynamic plays out in other industries. Many school lunch providers see the school district as their customer, but the real influence often comes from parents, whose feedback to school boards can make or break a program. If a lunch service pleases administrators but not parents, contracts get cancelled. Streaming platforms like Netflix, YouTube, and Spotify focus on serving viewers, listeners, and subscribers, yet their hidden customers are the content creators whose work keeps audiences engaged. Without creators producing new and compelling material, these services lose their edge, which is why they compete aggressively to attract and retain top talent.

In each of these cases, the hidden customer holds leverage that can make or break the business. They may not be the largest group, but they often have the most influence over purchasing decisions, product adoption, and long-term loyalty. Recognizing who they are and building your model around their needs is not just a smart move — it is essential for keeping your primary audience engaged and your business competitive.

Why is ignoring the hidden customer costly?

If you do not know who your hidden customer is, you risk spending resources on features or products that do not move the needle. Hidden customers often have outsized influence, and winning them over can turn them into powerful promoters, while losing them can quietly erode large parts of your audience. Marketing can also miss the mark if it speaks to the wrong audience, impressing the end user but failing to persuade the actual decision maker. And if you neglect your hidden customer, competitors will happily serve them instead, and once they switch, winning them back is difficult.

How do you find your hidden customer?

To find your hidden customer, start by mapping the decision chain. Write down every person or group involved from awareness to purchase, and identify who influences the decision, who approves the spend, and who uses the product most. Listen in unusual places like forums, comment sections, and events where your product is discussed, because the loudest and most passionate voices may not be who you expect. Look at your data — sales records, referral sources, and customer support tickets can reveal who engages most with your brand, and sometimes your biggest spenders are not your largest audience. Finally, ask directly through surveys with simple questions such as who recommended your product, who else was involved in choosing it, and who they talk to about it.

Identifying your hidden customer can take some effort, but the payoff is worth it. Once you know who they are, you can align your products, messaging, and service to meet their needs in a way your competitors may overlook. This sharper focus not only strengthens your relationship with them but also creates a ripple effect that benefits every other customer you serve.

How do you start serving your hidden customer?

Once you find them, you have to deliver real value. That means more than sending them a thank-you email. It means integrating their needs into your business model.

• Create dedicated offerings just for them

• Recognize and reward their contributions

• Invite them into product development

• Build communities where they can connect and share

• Give them insider access to new releases or special content

When you serve your hidden customer well, they often become your most powerful advocates.

The Big Takeaway

The hidden customer is not a nice-to-have audience. They can be the difference between a struggling business and a thriving one. Lego learned it with AFOLs. Apple built an empire by supporting developers. Streaming services live or die based on creator loyalty.

If you want a business model that lasts, find your hidden customer, listen to them, and give them a reason to stay with you. The sooner you do it, the harder it will be for competitors to take them away.