Why People Buy

Selling products or services, it is important to understand why people buy. Marketing, sales, operational infrastructure, and customer service should be crafted with the consumer purchasing perspective.

First, we need to distinguish between why people buy, and why people buy from you. Typically, consumers make a decision to buy, before making the decision on which one to buy, or who will make the sale. Most organizations continually refine the process of studying consumer demographics to understand position in comparison to the competition. In other words, the organizations study why a consumer will buy from them, as opposed to the competition. Design, features, marketing messages, and sales plans are organized to differentiate from the current competition. To take a step ahead of the competition, focus first on the fundamental moment of truth, the point at which the consumer makes the decision that an investment or purchase is worthwhile. Before you can answer the question of "why you", you must first answer the question, "why buy"?

Prestige, Luxury, and Style

Some purchases are based on luxury, style, and prestige. This applies to products from watches to cars, and collectors items to homes. It is easy to see examples of jewelry, watches, and other personal items as purchases based on prestige. Jewelry and watches can be a personal expression of style, achievement, a gift from a loved one, or the result of a special occasion. Some cars are purchased to accommodate a family, or to get better gas mileage. Some cars are purchased to make a statement, to convey status, or as an investment to show credibility and confidence. When the commitment is made to invest in an expensive timepiece, a luxury automobile, or prestigious real estate property, the decision to buy is typically based with this intent, well before there is a decision on who to buy it from.

Quality, Reliability, Durability, or Reputation

The decision to buy based on quality, durability, reliability, or reputation is often preceded by an experience that raises this as a concern. These considerations may also apply in the decision process for items like watches and cars, but typically not for the same consumers. Therefore, it may be necessary to understand the intent of the consumers in the market to which you are selling. While BMW and Mercedes have reputations for quality, reliability, and durability, the 'ultimate driving machine' is recognizably more a statement of luxury performance than a reassurance to avoid roadside assistance.

There is much more focus on durability in the Home Appliance market, for example. The lonely Maytag Repair Man is not trying to convince you that he represents a stylish washing machine, he is reassuring you that his brand is built to last. Once the decision is made to invest in a new washing machine, there are many selections with a wide variety of features. There is opportunity to upgrade for conveniences, for appearance, and for style. However, selections based on appearance are typically made after the consumer has already limited the playing field to a finite number of brands with a reputation for durability. Even the selection of brand is made after the decision that it is necessary to replace a home appliance, typically because the existing item is no longer reliable or must be replaced. Unlike a watch or jewelry, it is not very common for appliances to be replaced as a fashion statement.

Save Time or Money

Sometimes the consumer compelling reason to buy is based on the opportunity to save time or money. This can be just as pertinent to business and commercial sales as it is to individual consumer sales. Saving time, or making more effective use of time, can often be quantified in quality and monetary terms. There is also opportunity to save money by investing in energy conserving devices. Quite often, reducing expense or conserving time are not the catalyst to start the process of thinking about the buying decision, but rather contribute to the timing of the buying cycle. When confronted by a potential need to buy, the opportunity to save time or reduce cost can be compelling motivation to take action.

Sales, Marketing, and the Web

Once you have identified the contributing factors that compel consumers to make a purchase in your market, then it is time to reflect on your message and how you will reach out to those consumers. Your message of 'why people should buy from you', should be framed in the context of this moment of truth, the moment that consumers make the decision to buy. This is a distinctly different direction than beginning your planning based on what you have to offer and want to promote from your own features and benefits. On the contrary, begin with the perspective of that precise moment in time that your prospective consumers flip the mental and emotional switch to relinquish monetary funds for the products or services in your market. What are your customers feeling and thinking about at that precise moment? Your marketing and sales messages should be empathic to that moment of truth, and to those customers. If you are struggling to identify that moment of truth, talk to your current customers and find out why they made a decision to change or buy.

Design your web site to welcome consumers at the moment of truth, and to give them your compelling and empathetic reason to buy. Your messages and images should be based on what the customer is looking for in a provider of goods or services. Your web site is not a place to shout your features to the heavens and hope that customers will be hypnotized by your exotic and unique advantages compared to your competition. On the contrary, if the message on your web site clearly identifies customer needs at the moment of truth, then your competition becomes irrelevant. Use your web site and your marketing materials to identify with your customers and create a relationship through demonstrating awareness, compassion, and commitment to that pivotal moment in the purchase process.

Beyond Sales

It is more than marketing messages, web sites, and sales. The awareness, compassion, and commitment to your clients must resound in every aspect of your organization and delivery. Whether you are providing goods or services, the manner in which support and customer service is delivered to the individual consumer must be consistent with the message conveyed before the sale.

If the message before the sale is based on luxury and prestige, then rest assured that your clients are expecting to be treated with luxury and prestige after the sale. The operational functions and customer service must be designed to deliver exceptional personalized treatment and consideration.

If the message before the sale is based on quality, durability, and reliability, then service after the sale is expected to live up to the same merits. It is inevitable that some products or services may experience unexpected failure or defect. The response to defects in material or workmanship should be as reliable as the product is purported to be, and should mirror the same standards of quality. The quality of customer service has much longer lasting impact on a reputation for customer service than any marketing message or brochure. Quality customer service and operational expertise can be the foundation of a reputation for reliability, and the backbone of integrity with existing and future customers. Reliable service is a compelling reason to buy.

Beyond These Examples

These are just a few examples of compelling reasons that consumers decide to buy. The purchase of services may be predicated on product failure, a convenience to replace personal workload, or a strategic decision to outsource a business function. A business decision to buy may be based on periodic timing to implement changes, end of lease, or financial stimulus. There are many scenarios, but it is important to understand the perspective of your customers and the reasons that they buy. There may be multiple contributing factors, and it may be necessary to prepare several different messages to accommodate the different perspectives. Find the most common reasons that your consumers decide to buy, and then work on your marketing, sales, and customer service delivery to match that moment of truth.

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Words of Wisdom

"Normal is getting dressed in clothes that you buy for work and driving through traffic in a car that you are still paying for - in order to get to the job you need to pay for the clothes and the car, and the house you leave vacant all day so you can afford to live in it."- Ellen Goodman

"There's a whole segment of the population with a mentality that bases good times on where they can go and what they can buy." - Jeff Foxworthy

"Certainly there are things in life that money can't buy, but it's very funny, did you ever try buying them without money?"- Ogden Nash

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About the Author:
John Mehrmann is a freelance writer and President of Executive Blueprints Inc., an organization devoted to improving business practices and developing human capital. www.ExecutiveBlueprints.com provides resource materials for trainers, sample Case Studies, educational articles and references to local affiliates for consulting and executive coaching. http://www.InstituteforAdvancedLeadership.com provides self-paced tutorials for personal development and tools for trainers. Presentation materials, reference guides and exercises are available for continuous development.

Year of the Customer

The rules have changed. The Internet has made it easier, faster, and more convenient for consumers to compare prices, quality, features, and previous customer experiences. With a suddenly level playing field for brand comparison of commodities, what is the new differentiation? Trust, confidence, and relationships the new differentiation. How well you connect with customers in marketing, sales, and customer service excellence are the essence of success.

Relationships are most important at either end of the spectrum, high price luxury, and low cost commodity. Most organizations rapidly acknowledge the importance of relationships for high price luxury items. There is an expectation that customers who pay more will receive a better customer service experience. It is expected that marketing and sales efforts will be more selective and personalized for the discerning consumers who are willing to pay a premium for a product or service. It is assumed that the relationship is part of the total package and price of purchase. So why is it so important to focus on relationships at the low cost end of the spectrum?

A consumer electronics manufacturer conducted a survey of existing customers to gather statistical information. When the results were returned, the manufacturer discarded the initial results as unbelievable and inaccurate. The survey was modified and conducted again, but the results were the same. After the third set of results were calculated, the customer opinion could not be denied. According to the customer survey results, nearly 65% of consumers who purchased the most expensive televisions indicated that price was more important than features in determining which product to buy. At the high end of the price spectrum, where product cost the most and the gap in prices was most significant, the most significant consumer buying decision was based on price and the perceived anticipated support associated with that price tag. By contrast, 78% of consumers who purchased the low priced commodity products indicated that features and anticipated support were more important than the price. Once the average selling price eroded to commodity level, the variation in price became less significant, and the importance of value became increasingly important to the consumers. The value of relationship and support was assumed with the premium price tag, but became the primary differentiation as the prices eroded and variation in cost decreased. How often to organizations mistakenly believe that relationships mean less to the consumers who invest in lower cost commodity items?

The value of a relationship is just as important when prices erode. Perhaps this is due to the phenomenon that relationship marketing, relation ships in sales, and relationships in customer service become less evident as the price diminishes. Simply being the lowest cost commodity is not enough, and it certainly is rarely a strategy to protect profitability. To preserve profitability and combat competition, develop and sustain relationships with your most loyal customers, not the most expensive ones. Expensive customers are those consumers that cost the organization the most money that is not offset by equivalent revenue. Demonstrating appreciation and reinforcing customer relationships does not require a significant monetary investment, but it does require a significant investment in integrity, honesty, and commitment.

There is a distinct difference between loyal customers and consumers willing to pay a premium price. It is not safe to assume that a consumer who pays more is also more likely to be a repeat customer. Technology, style, fads, and limited time discounts can play a significant role in the decision making process for consumers who are willing to pay premium prices. Loyalty exists in consumers who are willing to make repeated purchases, ignoring or distrusting the competition, and continually investing in your products or services. Loyal customers create repeatable business, and typically influence other individuals to try your brand. Loyal customers can be found at premium prices, and at rock bottom commodities, if a relationship is established with the consumer.

How can you influence loyalty and create the opportunity for your customers to bring friends, family, and peers flocking to your doors? It is all about establishing and maintaining relationships through communication, and acting with authenticity as a trusted advocate. Marketing relationships, sales relationships, and customer service relationships are the keys to sustainable growth. Measure the cost to acquire a new customer compared to the cost of keeping an existing one. Identify the financial value of a repeat customer, especially one that remains loyal for a lifetime of purchases.

2008 is the Year if the Customer

2008 has been cited as the year of the customer according to the third annual New York Stock Exchange CEO Report. With this in mind, it appears essential for companies to take focusing on and utilizing customer-related metrics seriously. The following statistics illustrate the current state of attention.

• 2/3 of the 140 business executives and marketing professionals surveyed, include metrics in marketing plans
• only 8% track or measure share-of-wallet
• less than 10% measure customer lifetime value, customer advocacy or customer tenure
• 78% track leads to conversion, but only 25% track and measure rate of customer acquisition
• only 25% measure marketing's impact on business goals.
  

--VisionEdge Marketing/CustomerTHINK

Recognizing the importance of relationships is the first step to success. This is not a new paradigm shift, but it is merely a fundamental truth has become more evident with the increased consumer awareness available through Google, Yahoo, MSN, Blogs, and social media. The importance of relationships to sustain loyal customers and repeatable sales is a reality that has existed as long as sales and customer service have been around. The difference is that the value of the relationships can now be communicated, quantified and measured more rapidly than ever before.

The second step after recognition and acceptance is to create the metrics to measure the business on acquisition, conversion, loyalty, and advocacy.

Once metrics have been established, create strategies for developing Relationship Marketing, Relationship Sales, and Relationship Customer Service for advocacy, loyalty, and sustained profitable growth.

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Words of Wisdom

"Assumptions are the termites of relationships."- Henry Winkler

"Relationships of trust depend on our willingness to look not only to our own interests, but also the interests of others." - Peter Farquharson

"Quality in a product or service is not what the supplier puts in. It is what the customer gets out and is willing to pay for. A product is not quality because it is hard to make and costs a lot of money, as manufacturers typically believe. This is incompetence. Customers pay only for what is of use to them and gives them value. Nothing else constitutes quality."- Peter Drucker

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Read why marketers must really tap into customer metrics.
http://www.customerthink.com/article/marketers_must_tap_year_customer