What are You Selling?

What do your customers buy from you?  Obviously, customers buy what you are selling.  If you go to McDonald’s or Burger King, you are buying the hamburgers.

Not always.  The customer may simply be buying the convenience of a quick-serve meal or buying a familiar meal in a strange location.  If you review the subtleties of fast food restaurant advertising, the most successful ads promote the quick-serve and high-familiarity aspects of the restaurants, not the food itself.

Your customers’ purchasing decisions may be based on a number of factors indirectly related to the product itself, such as:

  • Availability/Helpfulness of Employees
  • Brand/Corporate Reputation
  • Location
  • Price
  • Quality
  • Shipping Charges
  • Warranty

Uncovering these other purchasing decision factors is critical.  You may think that your customer’s decision is primarily based on price, while in actuality it is based on the availability of employees to ring up the sale.  Thus, instead of decreasing your prices, you might be able to raise your prices to pay for more employees or to increase your margins.

Asking your customers “what/why do you buy from us?” could be the most revealing question on your survey.

Bonding, Customer Bonding

Richard Cross and Janet Smith developed a theory of Customer Bonding.  Similar to Maslow’s Hierarchy of Needs, consumers move through 5 stages of boding to become loyal customers.

1.  Awareness.  Consumers learn of your products/services, brand, and company.  They may or may not be customers.

2.  Identity.  Consumers recognize and acknowledge your brand message.  They begin to bond with the values and emotions that your brand projects.

3.  Relationship.  Consumers have become customers and are participating in your relationship-building marketing activities, i.e. reward programs.

4.  Community.  Your customers interact with each other on message boards or in-store special events.  They are “living your brand.”

5.  Advocacy.  Customers are actively referring other consumers to you (creating buzz or word-of-mouth marketing), and you are rewarding them for those referrals.

Cross and Smith propose that the 5 Stages provide the general strategic framework for your markeing program and that various tactics, e.g. advertising or CRM systems, should be used to support migrating consumers through the 5 Stages.

Water + Soil + Sun + Fertilizer = Growth

The search for customers will inform all of your business processes & initiatives, as well as help create effective business strategies.  Growth is only possible when you recognize how and where your market is shifting.  Viewing your customers as strategic partners, not just as revenue streams, is the first step in that process.

For a company to grow, it must constantly assess 1) who are its present and future customers and 2) where are those customers.  Discovering and targeting new customer segments should be done, at the very least, on an annual basis during your annual strategy session.  More nimble companies will be able to uncover segments as the market shifts — daily, weekly, or monthly.

How do you find these new audiences?  You can start with your existing customers:  shadowing them and understanding their purchasing processes.  To find utterly new audiences, you must READ and MEET.

You must read:  1) general business publications (Business Week, Wall Street Journal), 2) your industry publications, 3) publications not directly related to your industry or function, and 4) international publications (The Economist, Trendwatching). 

For over 4 years, I have read a daily e-newsletter about media buying trends and a monthly e-newsletter about grocery store purchasing patterns.  Both have been invaluable for spotting future trends and economic hiccups.  Forcing your mind to compare trends in other industries and your own hones your creative and brainstorming skills.  Fundamentally, purchasing decisions are the same.  Learn from your colleagues in other functions or industries.

Brainstorming and other creative exercises will become more productive and effortless if you have exposed yourself to a wider variety of information and case studies.

Never forget your existing customers and your past customers.  Why did a customer leave you or purchase less from you?  Always begin your research with your existing customer base — possibly using a neutral third party to ask blunt questions and to receive frank responses.  The open yourself to identifying and locating new customers.

Knowing what Lurks in the Hearts of Your Customers

Do you know how your customers use your products/services?  Have you seen them actually employ your products/services in their real world situations?  Usability labs can eliminate the most obvious logistical or technical flaws, but they are still a fake environment.  So companies like Procter and Gamble utilize Customer Shadowing to innovate and to connect with customers.

Observing your customers can help you ascertain:

Design Flaws — Are customers using the product/service according to instructions?  Have they misunderstood the best way to maximize performance?

Alternate Uses — Are customers using the product/service to meet other needs (a la baking soda)?  Can you re-market the product/service to introduce other customers to that use?  Can you create a new product/service? 

You then apply the information captured by the Customer Shadowing process to your R&D  projects — maximizing their revenue potential, minimizing your risk.

O, Customers – Where Art Thou? Who Art Thou?

When Pete Townshend asked:  “Who are you?”, he was asking both himself and his audience.  Townshend understood that both struggled to answer that simple question while realizing that it is ultimately unanswerable.

On a less philosophical level, companies and their customer ask themselves “Who are you?” in an attempt to fulfill needs.  The customer needs a specific product/service.  The company needs to supply a necessary product/service to survive.  Unles the two communicate, neither will be satisfied.

Communication is more than conducting surveys or correlating purchasing data with demographic characteristics.  Surveys and data analysis memorialize the past.  Customer needs are ever-changing, so companies must institute in-depth, grass roots techniques to monitor those changes. 

The easiest way to increase your business is to streamline your purchasing process.  Do you know how (or where) your customers buy your product/service?  Are you creating purchasing barriers?  An onerous purchasing process leads to lost sales.  We all have experienced website shopping carts that seem to require government security clearances and pints of blood before you are actually allowed to buy your items.

On a B2B level, a purchasing manager at a Fortune 500 equipment manufacturing company told me that he would easily purchase 20% to 30% more materials from his existing suppliers if they streamlined their purchasing process. 

By simply asking your customers how to streamline your purchasing process, you could boost your revenues and win greater customer loyalty.  In today’s uncertain economic times, you must maintain strong relationships with your existing customers.  If you don’t, companies searching for cost savings could decide that you are too expensive.  Who knows where the new customers are?