I have a cell phone and I drop about $100/month on service. Yet, I refuse to spend $600 on a snowblower.
Why am I willing to spend twice as much on a phone but not spend a dime on a snowblower? This silly example illustrates a dichotomy on spending that everyone feels: Namely, my cell phone contributes to my life and my business (by keeping me connected and up to date) while a snowblower doesn’t really contribute to my life or my business. (well, it keeps the snow off my driveway but I don’t consider that a very valuable contribution).
Every customer weaves these same ideas into a type of “mental income statement”. Some expenditures feel like expenses and that’s all the customer sees. Some expenditures provide so much value that the customer sees the positive impact on the bottom line. (Note: Both are expenditures but one provides enough value to SEEM like it has a greater contribution to the bottom line).
So where does your business fall on this “mental income statement”?
- If a customer can justify the expenditure, they gladly hand over their money to pay for whatever you’re selling.
- If a customer can’t justify the expenditure, they seek out alternative solutions — perhaps a cheaper solution from a low-cost provider or perhaps a DIY solution or perhaps they just go without.
So the question is: How can you get a customer to justify the expenditure?
The answer is simple: Provide value. But don’t just provide a little bit of value. Use your sales and marketing (and post-sale communication) to show how the benefits your customers get from your product or service far outweighs the time/money/effort costs that the customer is putting into the purchase. And, of course, overwhelm your customer with your great delivery.
Provide enough of a benefit so that when your customers think of you, they don’t think of you as an expense or a cost but rather as something so valuable that it contributes to their bottom line.
This inspiration for this post came from Andrew Sobel’s blog post Are you part of your client’s growth or just a cost? It’s a great article, go check it out. Sobel asks some similar questions as I do above and then gives some tips for moving from being an expenditure to a significant contributor to your customer’s bottom line.