by Matt Weik
Are you a business owner or executive of a company? Are you trying to figure out the reason why people buy from your competitors and not from you? This is a common question that many businesses face, and it really boils down to five reasons. Each of the reasons listed below has its pros and cons. You need to understand each and figure out where you are currently, where your competitors are currently, and how you can grow your business by focusing on one of the reasons below.
When it comes down to it, price is one of the main reasons people buy from your competitors. However, when you live by playing the price game, you die by playing the price game. Playing the price game is honestly one of the quickest ways to race to the bottom. You and your competitor will go back and forth, lowering your prices, shrinking your margins, until one of you finally decides your business cannot survive selling at the price point you are currently at.
Price is one of the worst things to fight over when you’re trying to win customers. Sure, you will have people who are only worried about the lowest price, but when you think about inexpensive things, do you generally assume they are of the highest quality? No, you don’t. So, while price is one of the reasons people buy from your competitors, it’s not always the best long-term strategy to grow your business.
People don’t want to wait for things. Let’s face it, we’re impulsive. If you have a product where people want it now, but you can’t provide that timeline and convenience, you’ve lost them. Convenience is simply a common reason why people buy in general. Look at convenience stores (hence the name) and gas stations. You’re in and out with what you want in no time flat. Getting gas for your car, but you’re thirsty? You walk into the gas station, open up the cooler (or order a customized drink that they make on the spot – more on this in a little) and get yourself a drink.
Traveling is a major reason for impulse purchases. Car rides, airplanes, etc., all create the demand for convenience items. People are willing to pay MORE for an item when it’s a purchase of convenience – they have no other option. It saves them time and effort from having to go somewhere else to make a purchase. If you’re not in front of their face when they are looking for you, they’re buying something else, and you lose out.
You can hear the cash registers ring when people talk about quality. Think about a Rolex watch versus something like a MVMT watch. One is high-end luxury (tons of quality parts, materials, craftsmanship), and the other is a low-quality fashion watch that is less than $100. If you bring a high-quality product or service to the market, people are willing to pay more if they know the value is worth it.
Now, here’s a funny thing to think about why people buy. You can actually have someone who shops based on price for one item, and the same person will shop for quality for another item. It’s true. Why people buy comes down to what they hold a higher value on. Some people may think the shoes they put on their feet are the most important part of their wardrobe and drop $500+ on a pair of high-quality shoes and then look for the lowest price cotton shirt to wear with everything. So, be aware that just because a customer pulls up in a Rolls Royce and wears a Rolex, that they aren’t price-shopping for your product or service.
You can think of this section as the one-stop-shop. If you have a large selection, people will tend to want to move towards your business. Think of Amazon, for instance. They started out selling books and quickly moved into selling anything and everything. Now, people will buy from Amazon just because they can make all of their household purchases from one website due to the immense selection.
Selection can also go hand-in-hand with convenience. Again, using Amazon as an example. You can purchase everything from toilet paper, to energy drinks, to a baseball on one site. Selection is a huge reason why people buy and something you should consider. While you don’t want to be a jack of all, master of none (you’ll never compete against Amazon), you should look to expand your portfolio of products or services. If you sell supplements and only have a protein powder, consider adding a creatine, BCAA, pre-workout, and/or fat burner to your portfolio.
If someone can buy one item from you but needs to go somewhere else for the rest, they are likely to not purchase from you at all and simply buy everything from a competitor who has more of what they are looking to purchase.
The last reason why people buy is due to a personalized service. People want to feel special. They want to own something that not many people do. The mentality is, “I want a product for ME.” You can think of Coca-Cola with adding names to their labels. People like the idea of having their name on something, it makes it personalized.
Or you can think of one-off products that it’s the only one of its kind, or a limited run of a product is made (such as luxury cars) – if you want one, you’re going to pay top dollar for it to merely be able to walk around and say it’s personalized to you and not many others have it (the item is RARE).
You can also look at services this way. I’ll use a personal experience to explain this area of why people buy. Now, this wasn’t the only reason I purchased this item, but it was one of the perks that came along with it. Last year, I bought a new Audi. With the purchase, they provide me with a service where they will come to my home/office, drop off a loaner Audi for me to borrow, take my vehicle back to their dealership, and do all of the service/maintenance on it. I never need to drive to the dealership to get my car serviced. When the service is done, they call to make sure I’m ready to get my vehicle delivered, and they bring it back to me and do the swap again. It’s that personal touch that some people may be looking for.
Regardless, you need to take a look at where you fit into the mix with the five reasons why people buy listed above. Why are people buying from your competitors and not you? What can you do differently? And you need to look at this often as the buying behaviors of consumers change over time. People who may have been looking for a high-quality product could have made some changes to their lifestyle and now are only looking for items based on the price. Be aware of what’s going on in the market so you can quickly make the necessary changes.