As a logical and data-driven business advisor, I have long focused on facts, technology, and quantifiable pain in guiding entrepreneurs. Yet, these days, I am seeing overwhelming evidence that customer buying decisions, especially with consumers, are often based on emotional and psychological factors, including passions from others, your experience, and social relationships.
For example, my dictate that entrepreneurs need to find a “painful” problem to solve (such as high cost, low productivity) to attract customers, doesn’t really account for many successful startup businesses today, including top social media platforms, dating sites, and new fashions. I now offer the following additional guidelines for how to attract customers and position your product:
Find the latest social trend, or even create it. Consumers seem desperate these days to not be left behind as the crowd moves on. They depend on their favorite social channels and peers on social media to make emotional decisions for them, rather than rely on any kind of “cost-benefit” analysis. I see this even extending into business-to-business.
For example, the sharing economy is a trend that has resulted in many successful businesses, including Airbnb and Uber. I more often hear of Airbnb rental decisions based on “local flavor” and “hospitable hosts” than any cost advantage or special features.
Nurture relationships with popular social influencers. Most consumers now use their online access from smartphones and tablets to interact with social networks, product reviews, and monitor the videos of culture influencers around the world. These perceived authoritative sources create a community who follow their lead, based on psychology.
Most experts agree that these people now create and grow more trends than classic push advertisements. By focusing your marketing activities on key individuals known to wield influence in your target customer market, you can deliver a more “authentic” message.
Play to exclusivity, uniqueness, and personalization. Everyone wants to be different, somehow, to stand out in the crowd that they choose to join. Your challenge is to positively influence decisions on your offering by defining its availability as limited, selectively offered, and guaranteed to improve status. All of these tend to override cost and usability.
Facebook, as an example, credits its early success to initially limiting membership exclusively to Harvard students, and gradually expanded access to other colleges and the world. Other startups use technology to provide personalized products to all customers.
Build positive relationships with potential customers. Customers more than ever want to do business with people they know, respect, and trust, and implicitly allow these factors to override cost and other features. For you, this means get out there and meet your customers, build a relationship via social media and commit to a purpose beyond profit.
Blake Mycoskie, founder of TOMS shoes, set a higher purpose of donating a pair of shoes to the needy for every pair sold, and found that the return was far greater than the cost of donated shoes. Other studies have shown a return of up to 400 percent for this approach.
Highlight benevolence to customers and society. Every business leader tries to deal fairly with everyone, such as refunding a return from a dissatisfied customer. But these days, it can pay big dividends to go above and beyond to make people happy or benefit society. Your customers will feel obligated to pay it forward, and repay you with loyalty.
At every Ritz-Carlton, employees are authorized to spend up to $2,000 per guest to solve a guest issue or improve a guest’s stay, no matter what the cause. If I experienced that kind of benevolence at any business, I would be an advocate and loyal to the utmost.
Declare your values and unfailingly practice them. Consumers have a long memory, and will test your consistency, based on prior experiences and feedback from peers. A single bad or inconsistent experience will jeopardize their brand loyalty, and a history of positives will generate real “value” that rises above cost and other decision criteria.
Yet don’t assume that any of these will override the basic need of every business to be self-sustaining via revenue to meet expenses over time. I still find entrepreneurs who are passionate about doing good and satisfying customers, but forget to focus on a business model that generates a financial return. The objective of every business must be to do both for all to win.
*** First published on Inc.com on 04/01/2021 ***