Let me share an interesting experience with you
Last week I got fed up of lugging a heavy backpack around whilst travelling on business – it was putting a strain on my neck, shoulder and back. As I was busy doing some consulting work with/for a bunch of fabulous people in Ireland I asked Sue to look into some suitable laptop bags with wheels and a telescopic handle. This is the bag she ended up buying for me:
Sue did her research based on my sketchy requirements and offered me two options – two URLs. I clicked on the first link and it took me to this bag. I clicked on the second URL and it took me to another website and a bag that looked remarkably similar to this one. So why did I ask Sue to buy this bag?
The first etailer is practice Sales 2.0 whilst the second etailer is firmly stuck in Sales 1.0. What is the difference you might ask? From my eyes, the customer’s eyes, the first etailer has looked at the sales process through my eyes and designed it such that it is a no brainer for me to buy from this vendor. The second etailer has a product and is simply putting it on display and hoping that someone will buy it.
Who is the first etailer? Amazon. Who is the second etailer? Some online luggage etailer – I think because I cannot even remember the name of this etailer.
Why did I buy from Amazon?
When I was faced with making a simple choice – two similar (but not identical) bags from two different etailers – how did the situation occur for me? The most important question was this one: which bag will perform the service (‘the job’) that I have in mind? I was not looking for a bag – I was looking for a solution to a problem! Amazon provided reviews of this bag. The reviews were from actual users of this bag (including a pilot) and through these reviews I was able to picture how well this bag would do the job. The competing retailer simply provided a list of product specifications – data – that simply had no meaning, no imagery, in my mind and thus did not provide the assurance I was looking for.
What was my other main consideration? Can I count on Amazon to get this bag to me this week when I return to the UK? Notice that I had already favoured Amazon and Amazon would only be selected out (and the competing retailer in) if it failed this test. This was an easy question to answer because I have bought many times from Amazon and it gets my order to me within 2 -3 days. And recently, the next day – when I paid for next day delivery.
So, lets revisit this through the lens of my favoured formula: Customer Value = Benefits – Effort – Risk – Price +/- Treatment
I asked Sue to buy the bag from Amazon because Amazon created more value for me. How? The ‘Treatment’ variable does not matter because I was interacting with websites not human beings. The ‘Price’ variable did not matter because the price of the bags was almost identical – this bag from Amazon was slight more expensive. That leaves three variables: ‘Benefits’, ‘Effort’ and ‘Risk’. I had done business with Amazon before and it has an outstanding reputation (as evidenced in the latest survey) so it won hands down on ‘Risk’ – that is to say no risk in doing business with Amazon versus unknown risk with the competing etailer. Amazon won again on both ‘Benefits’ and ‘Effort’ – Amazon, through the user reviews, did a better job of illustrating the benefits and made it easy for me to find out about these benefits. The interesting part is that for all I know the other bag from the competing etailer may have been stronger on actual ‘Benefits’ – that is to say that it might have done the job better than this bag from Amazon. Yet, I will never find that out because the competing etailer did not do a good enough job of illustrating those benefits.
What are the lessons?
1. We, the customers, don’t buy products we are looking to get specific job/s done through products and services. So go and figure out what the job/s are.
2. You can have the best solution to the job that your customer wants done and lose the sale if you don’t really know the customer’s needs and buying process. So go and figure out what matters to customers (during the buying process) and how exactly they go about buying (notice I made the product decision before the vendor decision, someone else may have done it the other way around). Different customers will buy differently so ensure that you have flexibility in any process / interface that you build.
3. Take the risk out of the buying process – the product and your company. Provide a product selector that makes it easy for the customers to select the best product for the job the customer has in mind. Provide testimonials from credible sources: customer like them, trusted independent bodies like Which? Provide figures on how many of these products you have sold and what kinds of people buy them. Provide easy to understand, no quibble, guarantees. By the way the more important the purchase the more the importance (weighting) of the ‘Risk’ variable: there is more risk in hiring a consultant than buying soap powder.
4. Make it easy for the customer to buy from you – take all the effort out of buying. Look at the buying process from the customer’s eyes and take out all the obstacles. Take out all the industry jargon that confuses customers. Take out the complexity in any decisions the customer has to make – reduce the number of decision and reduce the effort needed to make a decision. Reduce the number of steps. Ask for the minimum information that you need. Make it easy to pay through a number of different payment options.
5. Brand (reputation) matters. I cannot help but think that I was already favouring Amazon even before I clicked the URLs. How do I know? Because I clicked on the Amazon URL first. Why? Because I recognised the brand and have a positive story running around in my mind about Amazon being a great company to do business with. If I have not done business with you before then all I have to go on is your brand (your reputation) – if I have any concerns around your brand then you increase the ‘Risk’ and that may drive me to your competitor or lead me to ask you to reduce your ‘Price’ to compensate me for that risk. So brand is particularly important for winning new customers.
Do you see anything that I do not see? What are your thoughts / experiences?