There is never a good sale for Neiman-Marcus unless it’s a good buy for the customer. —Herbert Marcus, advice to his son Stanley, 1926
It is a deceptively simple question: What are we getting paid for? Yet 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, because there now exists a plethora of information available on why people buy, how they buy, and the decision process they go through, which businesses ignore at their peril.
In fact, there are least six theories of what people buy that we regularly discuss on this show:
- Simon Sinek—People buy “why” you do, not “what” and “how” you do
- Theodore Levitt: People buy expectations
- Joseph Pine and James Gilmore: people buy experiences and transformations
- Michael LeBoeuf: people buy good feelings and solutions to problems
- Clayton Christensen: People hire a product to do a job
- Kevin Kelly: Generative Value will be more important in our increasinbly technological future.
Economist Thorstein Veblen [1857–1929] posited many theories in his book The Theory of the Leisure Class (first published in 1899), which Maital has drawn upon for some of the above motivations of why people buy.
Veblen referred to a “barbarian culture,” citing that trophies such as property or slaves were signs of successful aggression.
In today’s culture, luxuries are the major signal of status and class, which Veblen reasoned were purchased for two reasons: to show others you are a member of the class above and to distinguish yourself from those below.
A better theory is posited by Michael LeBoeuf, Ph.D., in his book How to Win Customers and Keep Them for Life: Revised and Updated for the Digital Age. He 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]
Successful salespeople do not necessarily ignore features in the products they are selling, but they almost always add “which means” to the end of every explanation of their product or service offering.
For example, “This car has a V-8 engine, which means it will last longer because it doesn’t have to work as hard as a smaller engine.”
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.”
Again, Michael 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; 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.
It also explains why so many people purchase lottery tickets; they are really buying a low-cost dream.
Rogaine does not sell hair (it cannot legally make that claim, since it does not work 100 percent of the time); but it does sell hope, and its advertising reflects this motivation.
Callaway Golf founder Ely Callaway, who introduced the Big Bertha in 1991, priced at $240 to $300, while its competitor Taylor Made was selling for $150, said “We sell the physical and emotional experience of hitting a satisfying golf shot, not increasing your distance by eight yards or that your handicap will fall.”
Focusing on the total customer experience––solving the problem and creating the good feelings––demonstrates not just competency, but distinction.
But the utilitarian view posited by LeBoeuf does not help a firm custom tailor its service offering to its various customers.
