Archives for March 2019

Customer Buying Principle #2: Customers don’t understand value until you give them choices

A few weeks ago, we talked about the first customer-buying principle. Today, we’ll focus on the second principle.

Recently, my friend Jim was building a new house. Knowing my background in the heating and cooling industry, he came to me and asked what he needed to do to this new house to make his basement comfortable.

For those of you in markets that don’t have full basements, you need to know that basements are typically cool and damp. Jim wanted his basement just as comfortable as every other room in the house. I gave him some suggestions and told him what to ask his builder. A few weeks later, Jim came back and told me that his builder had given him a price of $8,000 for a heating and cooling system, and he wanted to know if I thought this was good price. I advised him to get a second price.

Comparison _ShoppingJim talked to a second contractor and got another price of $18,000. I asked Jim which option he chose, and he told me he went with the second, more expensive price. I said, “Jim that’s a $10,000 increase in price. Why would you spend $10,000 more for a system in your house?”  He responded, “You don’t understand, I’m putting a full apartment in the lower level of my house and my mother-in-law will be moving in with us.”

Well, that puts a different perspective on why he wanted this this area of his home comfortable. The second builder also discovered that Jim also has three teenage daughters, and he hasn’t had a hot shower in four years.

This brings us to the second customer buying principal — customers don’t know the value of many things and need to have something to compare it to. They simply don’t know if the price is fair or not. In Jim’s case, he didn’t know if $8,000 was a good price. But, once he got a second price, he found out that the first price was missing many of the options that he wanted in his home. Even though the second option was $10,000 more, there was more value in that system then there was in the lower-priced system.

Think of it this way: How often do your customers purchase your products or services over the course of a lifetime? Chances are it’s only a few times. As a result, they don’t know the value. They don’t know if it’s a good price or a bad price. They always need something to compare it to. If all you offer your customer is your lowest-price option, they’re going to want something to compare to. If all you offer your customers your best, most expensive option, they’re still going to want something to compare it to. Give your customer something to compare that way they can make up their mind as to which option has more value.

Watch for my next blog post in which we’ll talk about the customer buying principle number three

Customer Buying Principle #1: Customer preferences are shaped by the options they’re presented

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You just followed up on a quote to a customer for a new system that you were proposing to install. Unfortunately,  you learned that the customer decided to go with your competitor’s quote. You’re thinking to yourself, “I don’t know what these customers want anymore! I quoted the system that I thought they wanted, and I even lowered my price more than I wanted to, but I still lost the job!” You may be feeling like you just can’t make any money in this business anymore.

We’ve all been there, and we’ve all had these exact same thoughts on occasion. What do customers really want today?

When talking to your customer, you need to understand that there are five principles that going to the buying pattern. Every customer will go through all five of these steps as they make a buying decision. It doesn’t matter if they’re buying a car, a dinner out with their spouse, or a pack of bubble gum. Buyers will always go through all five principles. The only thing that differs is how fast they will move through the five. The more expensive the purchase, the longer it will take to go through all five principles. If you’re buying a car, you’ll be very deliberate as you go through these five principles. If you’re buying a pack of gum, it will happen very quickly. If you understand these five principles, it has to change the way that we communicate with our customers.

Options -300x 184The first principle is that customers’ preferences will be shaped by the options they are presented. Think about it. If you’re looking to buy something that you don’t have a lot of knowledge about,  you will ask other people. The first person will give you an opinion, and you’ll start to form yours. Then you’ll talk to another person, who may give you a differing opinion. That will change your opinion. The more people you talk to and the more research you do, the more your opinions will be shaped and formed. The same thing happens with your customers. As they see different options, it changes their preferences.

Keep this in mind as you’re putting together your proposals for your customers. Remember your customers cannot buy what you don’t offer them. If you offer products or services but don’t tell your customers about them, you will never sell those products or services. If your customers truly knew what they wanted, they wouldn’t be asking you for your expert advice.

During the sales process your job is to educate and inform the customer. It is during the stage that they will start to form their preferences in which option they will be purchasing. Ask questions and listen carefully to find out what’s important to them. Don’t prejudge your customer and assume you know what they want or need. Doing so will only prevent you from helping the customer purchase what they want and need from you.

Stay tuned for the next post in this series, when we will address customer buying principle number two.

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