GROWTH SECRETS: Compelling customers to buy

Achieving high growth is mostly about gaining momentum in the chosen market. Think of this as a freeway. You are really looking for a smooth uninterrupted path. You either want an empty lane or one where the traffic is travelling at an even pace. You will notice that when traffic is interrupted, it starts to backup and ultimately creates a roadblock, often with no obvious reason.

The same thing can happen to growth momentum. If it slows down, resistance builds up along the supply chain which ultimately results in bottle necks and disruptions, which in turn stalls growth.

The greatest source of friction in the growth curve is the decision-making process of the target customer. To the extent that the prospect can choose not to buy, choose to delay the purchase or choose alternative products, the growth rate will be sporadic and slow. Where external events such as economic cycles, man-made and natural disasters and business interruptions impact the willingness to proceed to buy, the rate of sales will be unpredictable and the momentum needed to support growth investment will be lost.

When a product or service is being offered for sale, it has a value proposition to the customer. The value proposition can be composed of many elements of which utility is the one most people focus on but this may not be the one which triggers a specific purchase. In the case where there are close alternatives, other factors such as design, smell, taste, image, ease of purchase, risk in use, after sales help, environmental impact, an association with causes or celebrities, availability, warranties and so on, can influence the purchase.

Few people understand just how hard it is to build a value proposition which compels a customer to buy. Most products are chosen on a whim, can be readily deferred or have many alternatives and substitutes.

Think about these questions:

• What problem are you solving? How important is it that the customer solves that problem?
• Are you satisfying a need or a desire?
• What degree of compliance (penalty or cost) results from not buying?
• What happens if the customer does not buy?
• What alternative to your product or service could they buy?
• Who is required to solve the problem? What happens if they don’t?

Clearly the most desirable position for any firm to be in is for their product to be needed desperately by a set of customers. This does not mean something they desire or would like to have, or even something they want to have. This refers to something they must have and, better still, must have now! You might well argue that few products can ever be so compelling but, in fact, many basic products would fit that need. Each person has a need for food and water, basic accommodation and security. Without electricity, water and sewage services, life in built up areas would be impossible. This is possibly the major reason why these services were initially provided by state owned enterprises and are often regulated. Food is of course satisfying a basic need although there are many alternatives. But the compelling need is still there.

Some conditions do create compelling needs. Virtually all regulations have compliance requirements and associated penalties for non-compliance. Thus a product or service which stops you from being fined or going to jail has a high compelling need to buy. Products and services which neutralise or reduce physical or psychological pain and suffering easily fall into the class of products which have a compelling need to buy.

Potential customers are not always aware that they have a need for a specific product. Many products come onto the market through the use of fear marketing.

For example, they inform you of the millions of bacteria lurking on your tongue or millions of germs hiding in your toilet. Having now made you aware of the danger to your health, they immediately offer to solve the problem with their latest product – which of course will kill all those nasty bugs.

Within the software industry we had the FUD factor (fear, uncertainty and doubt). The sales pitch was to show the customer how much money they were losing by not solving a specific problem and then of course offer the solution. The best products of course uncovered a long forgotten regulation which had severe penalties for non-compliance. My favorite software sector was always payroll as the penalties and disruptions for not getting it right were severe.

It is very difficult to gain growth momentum if the problem you are solving is not serious enough to justify immediate attention. To the extent the customer is willing to live with the problem or is willing to delay solving the problem, the sales pressure is severely weakened. This was the case in the applications software industry. Basically the essential processes were being supported with basic transactions software. However, when value added tax was introduced, these systems all had to be replaced. The customer had no choice but to upgrade or to purchase a new system.

Products which have many close substitutes have real problems creating sales pressure. Almost all basic food and beverage products exist within this class.

There are simply countless products on offer to satisfy basic food and drink needs.

In these markets, the sales message has to move beyond utility to appeal to other factors of value creation. Alternatively, the vendors need to package the product for a specific market – non-spill, high energy, lactose free, etc. The marketing objective has to identify a market with a higher need and to move away from markets with alternative or substitute products.

For many businesses, the task is not to drop the product, it is to find the right customer. In many situations you have a product looking for the right problem to solve. The task of the producer is to find the customer with the most compelling need where the product or service will be truly appreciated. The ideal situation is also where there are no alternatives and no close substitutes. With a high compelling need, the decision time is normally greatly reduced, the sale is not sensitive to price and the customer will be willing to refer you to others with the same need.