I have earlier authored couple of shorter eBooks (downloadable copy available at www.ProductGuy.in/Resources)
- Building New Product – Experiences of a Product Manager
- Pragmatic Guide for GREAT Product Roadmapping
In both those books, I repeatedly stressed that merit of the product is only a partial contributing factor to a sale and there are other non-product attributes that determine the buying decision outcome of each customer. There is always a classic case of good products failing because of improper positioning, irrational pricing, lack of proper messaging to communicate the actual value of the product (ie the perceived value of the product does not match with reality), selling through inappropriate channels etc. I definitely bet most of us would have come across at least few PMs screaming ‘Oh GOD, I have built a wonderful product that perfectly meets customer needs and aspirations, why the HELL product sales are not increasing’.
In case of restaurant where food is considered a product, the ambiance and the location of the restaurant is as important as the taste of the food. In case of B2C, marketing do play a critical role in communicating the value of the product and establishing an emotional connect. In case of B2B, the existence of reliable support system, brand value, and distribution network are other important factors that complement the core product. All those elements apart from the core product that is critical to the success of the product will hence forth be referred as non-product attributes. Both core product and non-product attributes together should provide compelling reasons for customer to buy the product. To determine the list of non-product attributes that would influence a sale it is critical to understand the complete buying process of the customer.
Unless the Product Manager determines and fulfills both product and non-product attributes, success of the product is not guaranteed. So there is an indispensable need to understand or comprehend the psyche of the customer while making a buying decision. Accordingly Product Manager can incorporate those inputs to evolve the product(s) and fulfill non-product attributes in alignment with expectations of the customer. Such efforts would ultimately culminate in delivering more $$$ through successful sale of the product that is rightly embraced by target customers. Even in case of not so better product, understanding and corroborating the buying process can also help Product Manager comprehend the lack of product attributes that is leading to an unsuccessful sale.
The buying decision of every customer is invariably backed by either emotion or logic, sometimes both. Typically in B2B, logic plays a predominant role. The objective of B2B customers is to understand ROI of the product in terms of price of the product vs business benefits fulfilled by the product. In case of B2C, emotion might play a bigger role depending on the nature of the product. For instances, buying decision of cars, mobiles are governed by both emotions and logic (albeit in varying degree). The buying decision might not be purely based on the utility value of the product. However there are certain exceptions in B2C products (probably kitchen accessories – KNIFE) which are bought purely based on utility value.
Price of the product determines the amount of effort customers put towards making a buying decision. Every customer has a price range, generally referred to as a tolerance price. The buying process can be whimsical for any product priced within the tolerance price range. Customers do not really care much about evaluating the products within the range of tolerance price. Probably awareness about such products and ease of availability would be more important to a successful sale. The tolerance price point is not universal and it probably depends on the per-capita income of each individual (in case of B2C) and the % of overall budgetary spends (in case of B2B). Customers might start evaluating a product through a rigorous buying process when they are priced beyond the tolerance price range. The rigorousness involved in the buying process is directly proportional to the price. Customers do not employ same rigor for buying a car and buying a stationary item.
To comprehend customer buying process, I intend to dissect the buying process of a product into stages and identify all possible customer engagement points (both offline and online) at each of those stages. Engagement points are typically touch points that customers leverage to locate the product, know about the product, gather feedback about the product, evaluate the product, throw feedback about the product and finally to buy the product. Dissecting the buying process is critical to identifying the combination of buying stage and engagement point at which customers are quitting the buying process. Later to decipher what causes customers to quit the buying process during that particular combination of buying stage and engagement point. Such efforts can help Product Manager understand the lack of non-product attributes that is causing customers to quit the buying process. Sometimes, the cause could be attributed to lack of product attributes as well (missing functionality, lack of ease of use, unreliability etc). Even in case of not much customer churn, dissecting the buying process can also help Product Managers understand the reasons for successful sale of the product.
This blog post will be followed by a series of blog posts related to ‘Comprehending buying process’
1. Stages of buying process and how to determine engagement points in each of the stages
2. How to facilitate customers to make right buying decisions
3. Identifying cause for customer churn during the buying process
4. How perception plays a critical role in the buying decision of customers
5. How to simplify buying process (especially for B2B products)?
I will drop a blog post on each of the above topics in the forthcoming weeks.