What Your Customers REALLY Want
Identifying What Customers Value
Think about the last time you went into a store prepared to buy something, but eventually left empty-handed. What was the reason you, as a customer, did not make that purchase? There are many possible answers to this question; maybe it was too expensive, the quality may not have been to your liking, or you simply didn’t want to wait in that really long line at check out. As business leaders, it’s important we turn this scenario around and ask ourselves a different question. A customer seeks to exchange money for our product or service, but ultimately decides to do business elsewhere. Why? Often times, the basic difference between making and not making a sale comes down to one simple word: value. Value can be defined as the fair or relative monetary worth of something. Regardless of what you sell or what service you provide, customers are only willing to exchange money when they feel there is a sufficient value for them. Let’s take a closer look at what it really means to provide value to a customer.
Value is Not Just a About Money
No matter what type of business you have, be it a chain of boutiques, a family run restaurant, or a large multinational corporation, customers are customers. In order for you and your business to best serve customers in your market, you need to know what it is that they seek. Further, understanding your customers requires you listen to their needs and respond accordingly, targeting specific pain points. We often assume customers are won based solely on price. While price certainly plays an important role in sales, the price a customer is willing to pay is often dependent on the overall value of what you provide. To illustrate this, here are some examples where the value from the customer’s perspective was something other than price.
1. Industry: Oil and Gas
The oil and gas industry is very much about working around the clock – drilling companies make money for each barrel of oil they extract from the ground. Every second they are not drilling, they are losing profits. For this reason, oil companies need to maintain their drilling equipment in ordered to keep their operation moving. The cost of having spare parts immediately available is far less than the amount they lose when they are shut down. A large oil and gas company we recently met with was interested in finding a new supplier for some of their spares and replacement parts. As they told it, their present supplier was a manufacturer of predominantly aerospace parts (aerospace is a very slow industry). An executive of the oil and gas company clearly described their interests. “Our current supplier is good; quality is good. But they move at aerospace speed and that doesn’t work for us.” The executive went on to say that when their equipment went down, they needed part immediately, regardless of cost.
Customer Value: Production Support and Speed of Replacement
“Value [is] the fair or relative monetary worth of something.”
2. Industry: Household Appliances
As told by Kenichi Ohmae in The Mind of the Strategist, a Western appliance manufacturer wanted to expand into Japan, however customers in Japan were not receptive to their dishwashers. The dishwasher, geared towards Western customers, was intended to clean dishes quickly. Struggling to understand the problem, the manufacturer took a closer look at the Japanese market. Upon doing so they realized the problem – their dishwashers were not effective in cleaning traditional Japanese food from dishware. It turns out that Japanese customers had no issue with the amount of time it took to clean the dishes; they just wanted them to be cleaned. In response to this important detail, the manufacturer redesigned the product to include an extra-long soak cycle that cleaned dishes in Japanese households more effectively. The change dramatically improved the perceived quality of the product, and led to success in the new market.
Customer Value: Cleaning Effectiveness
3. Industry: Refueling Stations
Adjacent to every major motorway in the world, there are typically refueling stations located every few kilometers. These refueling stations are all alike, offering fuel, restrooms and snacks for drivers on the road. However, these stations typically charge higher prices than others located just a little further away from the motorway. The reason they can do this is because their location offers convenience to their target customers. Drivers do not wish to stray far from their main route to get a drink or refill the tank, and are therefore willing to pay more.
Customer Value: Proximity to Route
4. Industry: Industrial Products
A large industrial product manufacturer struggled to gain new business over its smaller competitors. While the products among the competitors were similar, the larger company had to charge higher prices to support their larger organization. Thus, customers typically went to the smaller firms because they were less expensive. The advantage the larger firm did have, though, was technical knowledge and engineering capabilities that their smaller competitors lacked. More business was won when the large firm pitched their engineering and technical services along with their products. These services, it turns out, freed up the customers’ resources for other things. It was the combination of product and technical support that allowed customers to accept the higher prices since they could free up internal resources.
Customer Value: Engineering Services and Support
Selling is About Finding Mutual Value
The point here is very simple. While price is certainly an important aspect of sales and business growth, it’s not the only thing that your customer base will consider.
Which of These Might Your Customers Value?
- Your speed of doing work
- Your nearby or convenient location
- Your product is of superior quality
- Your willingness to provide long-term support
- Your technical prowess and expertise
- Your financial strength and stability
- Your ability to become a long-term strategic partner
Understanding what your customers value – beyond price – can often lead to much better business arrangement for both parties. Learn what your customers value by having open and honest discussion about various options and business scenarios you can offer or are willing to consider. By identifying your customers’ areas of pain and concern, you can uncover a value proposition that they will be willing to pay for.
For further reading, take a look at our SWOT analysis discussion which can help you identify special skills and abilities you have that may present value to your customers.