They both seem like simple—and easy-to-answer—questions.
What am I selling?
What are you buying?
Thrive is a marketing agency, so you might say our customers buy our time, or maybe lead-gen strategies, or web designs, or marketing campaigns. If you’re a heavy-equipment manufacturer, maybe you’d say compactors or cranes, or maybe dozers or draglines or drills. If you’re a lift-and-access-equipment-rental company, maybe you’d say suspended platforms or material hoists.
And all of those answers would be technically correct. Because it’s fairly obvious, right?
Well, sort of. But not really.
Because it’s ultimately someone else who holds the power. It’s actually your customers who determine what it is they buy, which in turn, determines what it is you’re actually selling.
And it’s not always easy to identify the difference between the two.
Most organizations understand this truism on some level, even if they haven’t explicitly thought about it in these terms. In the early days of a business, understanding your product/market fit is something you likely spend a lot of time on. But as the years go by, there can be a complacency that sets in, and an assumption that what it is you’re selling and what it is your customers are buying must be the same thing.
After all, you’ve made it this far, so how could they not be?
In his book People and Performance, Peter Drucker, who published some 25 books on business management during his career as a management consultant, wrote: “What customers think they are buying, what they consider value, is decisive—it determines what a business is, what it produces, and whether it will prosper. And what customers buy and consider value is never a product. It is always utility, that is, what a product or service does for them. And what is value for customers is…anything but obvious.”
Think about that for a minute. According to Drucker, what customers consider “value” ultimately determines not just what a business is and what it produces, but whether or not it will thrive—and perhaps in some cases, survive.
This puts an enormous amount of power in the hands of the customer, and it’s the recognition of this fact that prompts proactive companies to hire behavioral psychologists and business anthropologists and user experience (UX) researchers to identify that value. Companies pay, and pay a lot, to understand their customers’ power.
Taking it even further, Drucker points out that what customers consider value—which is by its very nature subjective, not unlike the concepts of fairness or beauty—is never actually a product or service; rather it’s utility, meaning it’s useful and beneficial in some way that may or may not be immediately apparent.
One of the core functions of business leadership is to continually assess and reassess what that value is so the business doesn’t find itself in a situation where what it sells and what the customer buys are incongruent. A business might be selling customer service but a client might be buying price. Or craftsmanship. Or convenience.
Figuring out the answer to these two fundamental questions is imperative to sustainable success.
For businesses to flourish over the long term, they have to go beyond the easy and obvious, and uncover the motivations behind a customer’s decision to buy. We have to understand that—regardless of who we are, or who our customers are—people buy emotionally and justify intellectually.
I have an IWC watch because I love the way it looks on my wrist and the way it makes me feel when I wear it. I also love it because, twenty years ago, it was the first luxury watch I saw, on the wrist of a successful businessman I admired. I told myself a story about the watch, and about who I would be when I eventually owned and wore one.
That’s purely emotional.
Of course I justify my emotional purchase intellectually by calling it an “investment piece.”
In his book How to Win Customers and Keep Them for Life, Michael LeBoeuf suggests that customers have the following motivations for these various purchases:
What LeBoeuf is pointing out is that, sure, on the surface, I might need a dress shirt to wear with my blazer and slacks, but what I’m really buying is the confidence that comes from walking into a room dressed to impress. I’m buying a feeling—a feeling that’s impacted by the value I assign to the shirt based on how it affects my self confidence.
What you’re selling might be a D1 dozer or a taxi crane, but what you’re really selling is a more comfortable work day for the operator and a sense that you value their experience, which comes from your ergonomic seats and heated joysticks. As master marketer Seth Godin puts it, “We sell feelings, status, and connection, not tasks or stuff.”
It’s worth asking yourself and your team repeatedly and often what it is you’re selling and what it is your customers are buying. You already know the answer is “value,” so you’re halfway to the conclusion. In a sense, though, the work is just beginning.
Because the hard part—and the part that makes running a business so much fun—is figuring out what, exactly, that value is.