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The following is a simple question for business owners. Why do your customers buy from you?
I told you the question was simple, but an accurate answer, on the other hand, can be far more complex and perhaps even elusive. To achieve long-term, sustainable success, your understanding of why your customers choose to do business with your company needs to be both correct and substantial.
Many business owners develop a customer value proposition (CVP) alongside their company mission and vision statements. The brief declaration is supposed to document why a customer would opt to buy 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, a lack of self-reflection and sometimes even outright insincerity. Dollars to doughnuts, there is not a single CVP out there that reads, “Our customers turn to us because we deliver lackluster service and a marginally good product.”
Related: Who Is More Important — Your Customers or Your Employees?
I would also assume that there are many businesses whose CVPs portray an exaggerated sense of the company’s true customer value. CVPs should never be created based on hype or manufactured mantras; instead built from sincere, astute insight.
Bravado and disingenuousness are not the only ways business owners are misguided in their understanding of customer engagement and loyalty. The following are common misconceptions related to the question of why customers buy from you.
“We are the cheapest”
Sure, this value statement might be dressed up as “We deliver the best value,” “We are the low-price leaders,” or some other cost-based differentiator. But when I hear any form of “My customers buy from us because we are the cheapest,” I cringe. Competing on price alone is simply not a good model and is often unsustainable. There is always some other business owner who is willing to run out of cash faster than you are.
Most customers – both B2B and B2C – understand the balance between cost and value. They walk that tightrope in every purchase they make. Contending that cheapest is the key attribute that keeps them coming back shortchanges both your business and your customers.
“We have the best employees”
Forgive me for being a bit skeptical about this assertion as well. Sure, your business may have good employees; but are they really the best? You may provide excellent service, but your competitors probably do as well. Is it truly your employees that keep your customers coming back? With the rare exception of that ultra-charismatic salesperson who charms the socks of buyers, the answer in all likeliness is a resounding no.
That is not to say that hiring for personality and alignment with company values is unimportant. It most definitely is. But to put the onus of success and customer loyalty squarely on the shoulders of your employees is shortsighted.
Related: 3 Reasons Why I Gladly Welcome Competition
“We’ve got the best product on the market”
While possessing a corner on the market is a great position to be in, it does not account for innovations in the marketplace and often fickle changes in consumer preferences. Evolving customer motivations and expectations, coupled with aging business models, have been the downfall of even some of the most successful industry titans.
Consider Blockbuster, that for more than 20 years, was the largest and most successful video rental company in the U.S. Then industry innovators like Netflix and Redbox entered the arena with new and improved ways to provide the same service and completely changed the playing field. While the business’s products and services may have been “the best” in their heyday, innovators with more modern and sustainable business models came along and essentially put the video rental titan out of business.
Suffice it to say even the best products and services on the market have competitors nipping at their heels.
So why do your customers really keep coming back?
What you are selling vs. what they are buying
In considering why your customers continue to purchase from you, it is important to understand the difference between what you are selling and what they are 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 selling tax preparation services, but its customers are seeking peace of mind. Apple offers not just its technology but a modern retail experience. A mechanic sells an engine tune-up, but the customer is purchasing a quieter and safer ride.
As a customer-conscious business, it is essential to sell the hole, not the drill.
Related: Do You Actually Understand Why Your Customers Are Buying?
Understanding customer loyalty
How do you identify the true reasons why customers buy from you? Get ready for a shocker. You ask them.
While this may sound flippant, you might be amazed by how many business owners never ask the right questions or truly listen to what their customers have to say. HubSpot recently reported that 42% of businesses do not survey their customers or collect any sort of customer feedback. Those that do elicit feedback often do not ask the right questions. And even fewer business owners take any action based on the responses they receive.
Performing 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 matters less than posing smart questions that evoke insightful answers. How important do they consider price? How would they rate your customer service? Why do they prefer you over the competition? Create a system for recording the answers you receive, which might be as basic as a spreadsheet or as comprehensive as entering responses into your CRM or other sales and marketing tools. Feedback should not be a one-and-done; make it a habit to speak to your customers regularly.
Then the next time somebody like me enquires about why your customers buy from you, your answer will accurately reflect the true value your business brings to the marketplace.