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The following is a simple question for business owners. Why do your customers buy from you?
I have told you that the question is simple, but an exact answer, on the other hand, can be much more complex and maybe even elusive. In order to achieve long-term, sustainable success, you must understand both correctly and profoundly why your customers do business with your company.
Many business owners develop a Customer Value Proposition (CVP) alongside their company mission and vision statements. The brief explanation is intended to document why a customer would choose to purchase your product or service over the competition.
While developing a CVP is commendable in its customer-centric approach, it often falls short of its intended purpose due to ambiguity, lack of self-reflection, and sometimes even outright dishonesty. Dollars to donuts, there isn’t a single CVP out there that says, “Our customers come to us because we deliver lackluster service and a marginally good product.”
See also: Who is more important – your customers or your employees?
I would also assume that there are many companies whose CVPs give an exaggerated sense of the company’s true customer value. CVPs should never be created based on hype or fabricated mantras; built instead from sincere, discerning insight.
Showoff and insincerity aren’t the only reasons business owners are misguided in their understanding of customer retention and loyalty. Below are common misconceptions about why customers buy from you.
“We are the cheapest”
Sure, that value proposition could be disguised as “We deliver the best value,” “We’re the low-price leaders,” or some other cost-based differentiator. But when I hear any form of “My customers buy from us because we’re the cheapest,” I cringe. Competing on price alone is simply not a good model and often unsustainable. There is always another business owner who will run out of money quicker than you.
Most customers – both B2B and B2C – understand the balance between costs and benefits. They walk that tightrope with every purchase they make. Claiming that cheapest is the key attribute that causes them to come up short transforms both your business and your customers.
“We have the best employees”
Forgive me for being a bit skeptical about this claim as well. Sure, your company might have good employees; but are they really the best? You can provide excellent service, but your competitors probably do the same. Is it really your employees who make sure that your customers come back? With the rare exception of this ultra-charismatic salesman charming shoppers’ socks, the answer is in all likelihood a resounding no.
This is not to say that personality hiring and alignment with company values are unimportant. It definitely is. But putting the responsibility for success and customer retention squarely on the shoulders of your employees is short-sighted.
See also: 3 Reasons I Love Competition
“We have the best product on the market”
While owning a corner in the market is a great position, it does not take into account innovations in the market and often fickle changes in consumer preferences. Changing customer motivations and expectations, coupled with aging business models, have been the downfall of even some of the most successful industry titans.
Consider Blockbuster, which was the largest and most successful video rental company in the US for over 20 years. Then industry innovators like Netflix and Redbox entered the arena with new and improved ways of offering the same service, completely changing the playing field. While the company’s products and services may have been “the best” in their heyday, innovators came with more modern and sustainable business models, essentially putting the video rental titan out of business.
Suffice it to say that even the best products and services on the market have competitors hot on their heels.
So why do your customers really keep coming back?
What you sell vs. what you buy
When considering why your customers continue to buy from you, it’s important to understand the difference between what you’re selling and what they’re buying. This is such a crucial distinction. As Harvard Business School professor and economist Theodore Levitt famously said, “People don’t want to buy a quarter-inch drill. They want a quarter inch hole!”
An accounting firm may see itself as a seller of tax preparation services, but its clients are looking for peace of mind. Apple not only offers its technology, but a modern retail experience. A mechanic sells an engine tune, but the customer purchases a quieter, safer ride.
As a customer-centric company, it’s important to sell the hole, not the drill.
Related topics: Do you actually understand why your customers buy?
Understand customer loyalty
How do you spot the real reasons customers buy from you? Get ready for a shocker. you ask her
While this may sound flippant, you might be amazed at how many business owners never ask the right questions or really listen to what their customers have to say. HubSpot recently reported that 42% of companies don’t survey their customers or collect customer feedback. Those who generate feedback often don’t ask the right questions. And even fewer business owners take action based on the responses received.
Conducting a customer survey can be a real competitive advantage for you. You can communicate by phone, on your website, in an email campaign, or in person. The platform counts less than asking intelligent questions that elicit insightful answers. How important is price to you? How would you rate your customer service? Why do they prefer you over the competition? Create a system for recording the responses you receive, which can be as simple as a spreadsheet or as comprehensive as entering responses into your CRM or other sales and marketing tools. Feedback shouldn’t be one-off; Make it a habit to talk to your customers regularly.
Then, the next time someone like me asks why your customers buy from you, your answer will accurately reflect the true value your company brings to the market.
