I dare to say that many of the successful companies I have met lack knowledge about why their products are bought – specifically which perceptions about the company, the product, and the brand that actually differentiate them from competitors and drive sales.
If you ask a typical CEO or Marketing Manager, chances are high that words like “leading”, “quality,” “broad product range,” and “technology” will be mentioned as the most important factors why customers buy – and in the worst cases “too high price” will be presented as a key reason why the market share is what it is. Typically, these are not the factors that actually drive sales.
It’s just as problematic when you ask customers (in the wrong way). They tend to lie – that is they say what’s expected or what benefits them. Price is a classic example; it’s an argument that buyers frequently use, but it’s very rarely the decisive factor in choosing a supplier.
In most cases, other factors motivate customers to buy or to justify a premium price. As an example, for many customers it’s usually enough if the quality of the product or service is simply “good enough”. We make decisions based on completely different parameters – at least if we are to believe the research about sales-driving factors done by Johan Anselmsson and Niklas Bondesson, two of Sweden’s leading brand personalities.
Together, they’ve studied both how consumers buy (B2C) and how companies buy (B2B). Some interesting insights:
- Quality is generally an overrated concept. In most mature industries – where buyers know and understand why they should purchase a product or service – quality is merely a hygiene factor that rarely differentiates a company.
- Instead, a driver like status/prestige often rank higher on the list of factors that actually drive sales. When the buyer (consciously or not) feels the brand has a genuine enhances their social status, it is a far more important driver than specific product features or service parameters – whether you’re selling electricity or steel.
- But perhaps even more important is “sense of belonging.” This irrational experience of a brand providing social meaning to a purchase has been understood and leveraged by many successful brands. Scania and CAT are just two examples of brands whose customer engagement borders on cult-like devotion.
“Sense of belonging” also means offering social security in brand choice – by showing that others have made the same decision. To a large extent, we buy what our friends buy, listen to the same music, watch the same movies, and read the same books. As advertising guru Rory Sutherland puts it:
“Most people, in most buying processes, don’t spend energy optimizing every decision. Instead, they try to avoid making bad decisions – or ones that make them look bad.”
One of the brand’s most important purposes is to confirm the decision to purchase. Regret is a powerful emotion, and people are willing to pay a lot to avoid it. Moreover, most B2B decisions aren’t made by individuals. They are compromises – a “lowest common denominator” of the group. The choice lands on what everyone can accept, not what one or a few prefer.
The big challenge
Decision-makers in Swedish industry rarely understand the connection between people’s knowledge, opinions, and emotions—and what actually makes them want to buy or pay a higher price. Put differently: companies may know whether their brand is known, but not if it’s known for the right things.
Almost all traditional brand studies deliver irrelevant results. They can’t explain why a brand is or isn’t purchased, making it difficult to prove that branding work contributes to business success.
The solution
A different mindset and a new way of researching customer purchase motivations. After many years of research, Johan and Niklas have developed a model that can, with high accuracy, identify the kinds of parameters that truly drive sales in a given industry and market. It also pinpoints which associations with a given brand are most favorable to build on or reinforce in order to maximize market share and/or price premiums.
Unlike traditional customer satisfaction and image surveys – which only tell you what people know or think – this model reveals which of those thoughts and feelings matter most to maximize your sales. Be prepared to be surprised. During over 15 years of collaboration, working with around 30 companies, many executive teams have gained entirely new insights into their customers and markets.
If you want to learn more about this unique study and how it can give you fantastic insights about your customers, reach out to ulf.vanselius@comprend.com and we will show you the theory behind and some successful examples.