Considering Buyer Behavior

Buyers come in many shapes, sizes and behaviors. Ideally, our pricing policies and customer handling reflect this. Customer motivations, flexibility and preconceptions – all of which impact how we can best connect with them – can be all over the map! Zig Ziglar, famous sales expert and Baptist Sunday School teacher, said, “Every sale has five basic obstacles: no need, no money, no hurry, no desire, no trust.” These potential stumbling blocks help to shape our message, conveying compelling reasons and practical ways for customers to buy from us. Of course, they don’t always need to be convinced to buy, since it’s often clear that they’re ready to buy from someone. The question is, “Will it be us?” Our task is to demonstrate that we’re best equipped to satisfy their needs in a win/win way.

Our pricing policies influence how buyers interact with us and actually help to shape their behavior, which is why training and discipline in this area is so important. Our sales and order desk people should work to engage and understand the buyer upfront by asking a series of questions to ‘profile’ their objectives, personal perspective and readiness.  Based on their answers, we’d alter our presentation to maximize the fit of our offer.

Understanding the customer’s exact role in the buying process, along with what and why they’re buying, lets us to zero-in on their expectations. This helps us to meet or exceed these expectations, thereby justifying a healthy price for our products or services. Taking the time to initially engage and profile the customer enables us to understand how they’ll buy. Remember, they buy emotionally and justify intellectually. We must satisfy both needs so as not to derail the purchase. Customers don’t like the feeling of being sold something. They like to buy while being confirmed in the wisdom of their decision. Even when our selling offer is fairly standardized, customers want to feel that we’ve tailored something for just for them.

A customer’s experience with us generally involves three dimensions: quality (i.e., brand reputation,  features, durability, fitness for use), service (i.e., responsiveness, delivery, warranty, field support, ‘moments of truth’), and price (actually perceived value). Quality is now a prerequisite for long-term participation in most markets. Without it, you’ll be discounting prices and incurring cost premiums just to stay in relationship with skeptical customers. It’s service excellence that often separates outstanding companies from mediocre ones. Think about companies such as Disney, FedEx, Lexus, Ritz-Carlton, and American Express. They’re all ‘premium’ companies, offering a superior service experience that enables them to set the price in their field. It’s easy to match someone else’s price, but tough to match a well-run company’s service! Consider these results from a Rockefeller Corporation study on why customers defect:

• 4% die or move away
• 14% buy from a friend or a competitor
• 14% are dissatisfied with an aspect of the offering
• 68% believe you don’t care about them

Face it, if everyone were price conscious we’d all be driving Hyundais or Kias. Most people aren’t price sensitive as much as they’re value conscious. Studies show that just 15-35% of consumers consider price to be the chief factor. More than 60% don’t consider price at all and 80% remember the brand, not the price. In every product category, ‘high-involvement’ buyers outnumber ‘price-fixated’ shoppers more than two-to-one.

With this in mind, for pricing to become a core competency in our business we must take specific steps with our team to understand and incorporate the ‘five Cs’ of value:

• Comprehend value to customers (i.e., understand segment-based value drivers)
• Create value for customers (i.e., create/deliver segment-based value solutions)
• Communicate the value you create (i.e., tell them upfront and reinforce it later)
• Convince target customers to pay for value (must profile/know them to do this)
• Capture value with strategic and disciplined pricing based on value, not cost

At the end of the day, what we’re selling is value. If we can’t communicate this value, our team can’t maximize it and capture it with price during each customer engagement. By ignoring what drives customer value, we give the customer the upper hand in negotiations, resulting in lower pricing and profits.

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