This article is an excerpt from the book Implementing Value Pricing: A Radical Business Model for Professional Firms by Ron Baker. Published by John Wiley & Sons, Inc. © 2011. Reprinted with permission.
It is a deceptively simple question: What are we getting paid for? Still, many businesses arrogantly assume they know what their customers want and believe they have been giving them exactly that for years. This is a myopic vision, and potentially harmful, as there now exists a plethora of information available on why people buy, how they buy, and the decision process they go through, all of which businesses ignore at their peril.
In his book How to Win Customers and Keep Them for Life, Michael LeBoeuf, PhD, suggests that customers have the following motivations for these various purchases:
- Don’t sell me clothes. Sell me a sharp appearance style and attractiveness.
- Don’t sell me insurance. Sell me peace of mind and a great future for my family and me.
- Don’t sell me a house. Sell me comfort, contentment, a good investment, and pride of ownership [and a piece of the American Dream].
- Don’t sell me books. Sell me pleasant hours and the profits of knowledge.
Advertising giant Leo Burnett used to say: “Don’t tell me how good you make it; tell me how good it makes me when I use it.”
Peter Drucker has advanced the notion the patient knows the symptoms, but the doctor knows the meaning. But both must be listened to for a value-added relationship to develop. Doctors must not complain that the patient did not attend medical school; similarly, it does no good for a company to complain that its customers “just don’t understand the value of what we do.” It is their job to make them understand the value, and they can only do that by understanding—at a very deep and meaningful level—the motivations of why customers select and stay with the providers that they do.
Again, LeBoeuf distilled his summation of customer statements and posited the following overall theory to explain what people really buy:
Despite all of the untold millions of products and services for sale in today’s marketplace, customers will exchange their hard-earned money for only two things:
- Good feelings
- Solutions to problems
This is a good theory, because it has a certain utilitarian streak to it—that is, the idea that individuals spend their time (and money) pursuing pleasure and avoiding pain. It is the old marketing axiom that says you really do not buy drill bits; you buy the hole it makes. Understanding that simple fact could help a company (such as Black & Decker) get into the laser beam business, since they, too, put holes in things.
Professionals are excellent at solving problems. Sometimes they are even too good, because they tend to jump right into the solution without first discovering what the customer really wants and expects, almost completely ignoring the creation of good feelings that are so essential to developing long-term relationships. Simply offering solutions to problems is not enough. The customer automatically expects problems to be solved, which is why they seek out a professional in the first place. More emphasis needs to be placed on the total customer experience.
Focusing on the total customer experience demonstrates not just competency but distinction. But the utilitarian view posited by LeBoeuf does not help a business tailor its service offering to its various customers; that’s why I prefer Theodore Levitt’s theory of what customers really buy: expectations.