Defining Value from the Customers Perspective
One of the most difficult things for a business to define is the primary reason its customers commit to doing business with them. Until the business fully understands this value equation it will struggle to compete and never reach its full potential.
Assuming you know all the reasons customers buy from you is also one of the most common mistakes made both by start-ups and established companies. A business can get by for a long time without knowing their true client value. But the moment a competitor figures out what that value equation is, you will be in serious trouble.
Buggy Whip Paradox
Imagine owning the most successful buggy whip manufacturing company in the world. As time passes, the demand for buggy whips dwindles until every one of your competitors eventually goes out of business.
The buggy whip that was once a necessity became a novelty because people started driving automobiles and the need for horse drawn carriages went away. The point is people never bought your buggy whips because they were good; they bought your buggy whips because they wanted to control the horse.
Even if your company was the only buggy whip company in the world making the best buggy whips any carriage driver ever used, you still would be confronted with a market that stopped using horse drawn carriages.
The mindset of a buyer is much different than that of a seller. The buyer tends to be focused on ‘what's in it for me' (WIIFM), whereas the seller tends to focus on the technical aspects of ‘what we do' (WWD), which buyers rarely care about. The buyer has a need they want to satisfy and the manner in which that need is accomplished will always be of secondary value.
Think of these two fundamental basics as radio stations. As long as you market on station KWWD, you will not be heard by your prospects because they are listening to KWIIFM. No matter how frequent or compelling your message, your prospects and will never hear it.
Why People Buy
Think back to your favorite dining experience. What was it about that particular experience that made it so memorable, so special? Can you even remember what you ate? Most people can't, because it wasn't a food experience they were looking for, it was much more than just food.
You can get pre-prepared food at any grocery store or fast food place if food is all you are looking for. I go out to have a romantic dinner with my wife, or to get away from the grind and be taken care of for a couple of hours.
I know any restaurant I pick is going to have pretty good food, that's a given. What I'm looking for is exceptional service, a great atmosphere, pleasant staff, absence of disruptive noise, and something pleasant to look at.
Even when businesses buy from other businesses, emotion is a central driving force. There are no real monopolies in this country, which means every business has a multitude of options when they have a need.
Whether buying office supplies or technology, the decision to buy always comes down to one person being convinced their need will be taken care of. Making certain it happens is what's critical, how it happens is less so.
Once you understand the need your prospect is trying to fill, you can connect with them in a much more meaningful way. You'll be able to connect on an emotional level, and that is where most buying decisions are made.
To discover what your customers value about your business, imagine yourself as your next customer. You probably have a pretty good idea of what you want. What are the questions you want answered before you're ready to make a buying decision?
- What if this doesn't work or solve my problem?
- What is the warranty?
- What is the return policy?
- How hard will it be for me to install/use it?
- What options do you offer?
- What discounts or financing options are available?
I was recently introduced to Wyn Snow, President of Websites 4 Small Business, and was impressed with her grasp of this concept. Unfortunately, the knowledge didn't come easily to her. When she began, she felt she was selling websites. Today she has a different perspective.
Wyn summed up her experience to me. She said "I make websites, and it took me six years to realize it's not the website itself that people need. It's the customers they get from the website."
The Moral of the Story
Failing to identify the value a business provides is a common problem. A clothing store sells clothes, an auto mechanic fixes cars, and a mortgage company provides financing. Why is it so widespread when it doesn't seem all that difficult?
The answer is simple - you're not the buyer, you're the seller. You think about value in ways that few buyers can grasp or will ever understand unless they are in the same business as you are.
Far too many businesses suffer from a failure to communicate. Until you understand exactly what drives people to buy from you and what they value, your business will struggle through ups and downs and will be an easy target for a perceptive competitor.
Have a question for Larry? Ask or leave a comment below!