WHAT FACTORS DRIVE CUSTOMERS’ PURCHASING POWER? (PART 1)
Many companies make the mistake of thinking their customers make purchase decisions based on one or two purchase factors that they think are key purchase criteria, such as price or product availability. But this is rarely the case. Customers usually base their purchase decisions on a constellation of factors. One company, for example, may purchase a computer system because of its confidence in a trusted reseller, while another company in the same business might choose a different system because of its compatibility with its existing equipment, or because of the availability of specific features. The following steps are the keys to determining what drives customers’ purchasing power:
Step1: Describe Your Customer
The better you understand your customers’ business, the better prepared you will be to understand their needs and concerns. And the better you understand your customers’ needs and concerns, the better prepared you will be to identify the key factors that drive their purchase decisions.
Step 2: Identify your customers’ key purchase factors
Many of customers’ key purchase factors are reasonable and logical but some may be based on misinformation or personal bias. It is important to understand that regardless of how you feel about your customers’ purchase concerns, your customers’ conception or misconceptions will ultimately determine whether or not they purchase your products. So if you want to move your customers’ purchase forward, you must qualify their needs and verify their concerns.
Key Purchase Factors
Purchase decisions are also influenced by business concerns, such as the ability of your product to help reduce operating expenses, and personal concerns. The most common personal purchase concern is the impact that a proposed product or solution will have on individuals’ jobs in a customer’s business. For example, if implementing your product will necessitate learning new skills, individuals in your customer’s business may be concerned about losing their jobs to better qualified workers. Depending on the products or services that you are selling, your customers might base their purchase decisions on one or more of the purchase factors in the Customer Purchase Factors table below.
|Customer Purchase Factors||1 (Not very important)|
2 (Very important)
|Functionality and ability to solve problem||5|
|Confidence in consultant or system integrator||5|
|Reputation of manufacturer or supplier||4|
|Viability of supplier||3|
|Range of products available from supplier||2|
|Past experience with supplier||3|
|Reputation of supplier||3|
|Sixe and viability of supplier||3|
|Perceived quality of products||4|
|Specific capabilities or functionality||4|
|Quality f products||5|
|Utility of products||4|
|Style of products||3|
|Compatibility with existing equipment||1|
|Availability of products||4|
|Quality of sales/personnel rapport||2|
|Product maintenance schedules||2|
|Quality of user support and training||3|
|Sales presentations and demonstrations||3|
|Proximity to supplier and support||4|
|Price of products||3|
|Other – Easy transition to w system||4|
|Other – Scheduling conflicts||5|
|Average values may be computed from a customer survey to create a “typical” customer profile.|
Step 3: Identify the business terms that are of greatest importance to your customers
After you have identified your customer’s purchase factors you will need to qualify how important each factor is to your customer. The process of prioritizing your customer’s purchase factors is an inexact science, and of course different customers will be concerned about different purchase factors. But as you gain more experience selling to different customers, you will be able to build a fairly accurate profile of your “typical” customer. The time that you invest qualifying and prioritizing your customers’ purchase factors will enable you to target your market story to the specific issues that your customers are most concerned about.
Step 4: Use your understanding of your customer’s purchase factors to identify key customer benefits
After you identify your customer’s key purchase factors, you should be able to “map” each purchase factor to specific benefits that may be realized by purchasing your product. For example, if your customer is interested in tracking slow-moving inventory items, you might map this concern to your product’s ability to generate an inventory report that covers purchase usage. Focusing on customer benefits, rather than product features, will enable your marketing story to be more persuasive and will help you move business forward more easily.
Step 5: Document your customer’s purchase process
The better you understand you customer’s purchase process, the easier it will be for you to anticipate your customer’s concerns and influence their purchase decision. As you review your customer’s purchase process, you should try to identify opportunities to influence your customer’s purchase decision at each step of their purchase process. For example, you might advertise in a trade publication to help potential customers “anticipate or recognize need” for your product, and schedule a product demonstration at a trade show to help your customers “analyze and evaluate available solutions.” Put yourself in your customer’s position and think about the things that you can do to move them through each step of your purchase process.
Further reading continues in Part 2
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