You may think you know why people buy your products, but I am willing to bet if you take a minute and sit with this question, you’ll be surprised to discover it’s not as clear as you think.

You may be like so many entrepreneurs I know who really can’t explain why people buy their stuff.

And if that’s you, I have two things to tell you that will lift your spirits:

1. You’re not alone.
2. It can be fixed.

And I also have something to tell you that you won’t like very much:

It’s probably your fault you’re in this mess.

I’m not saying you are incompetent or you’re not good at your business, but what I am saying is that there’s a good chance you’re a lot like me and so many other entrepreneurs I know.

When you started your business you probably got started because you’re passionate about serving people and meeting a need.

But that passion can be your worst enemy. Passion leads us to making emotional decisions that result in us churning out mediocre products that don’t serve our clients.

It happens to the best of us.

But in order to truly grow your business and create products your clients want, you have to get a handle on this.

I’m about to get into some upper level business concepts here, so grab a pen and paper and get ready to take notes.

Your very first order of business is to understand why people buy. Why do people purchase something?

When deciding to make a purchase a consumer weighs an offer on a variety of factors that all fall into one of three categories:

  • Operational Excellence
  • Performance Excellence
  • Customer Intimacy

Operational Excellence is things like price.

Performance Excellence is things like innovation or durability.

And Customer Intimacy is all about how well that product meets the needs of the individual customer. Is it one size fits all or is it customised to the customer’s needs?

Now the problem, where most entrepreneurs get hung up, is that they try to be really good in all three areas.

They try to have a good price. They try to have the best features. They try to make it meet as many needs for as many customers as possible.

And you may be listening to me right now thinking that makes sense, and yes…it does…

But it’s wrong.

That assumption — the drive to be fabulous in all three areas — assumes all of your customers care equally about each area.

And they don’t.

You see, each segment of your market is going to give a different level of importance to each area.

Some customers are going to care far more about Operational Excellence factors than about Customer Intimacy. Others will care far more about Customer Intimacy than Operational Excellence.

Consumers decide to purchase when the factor they care about the most is irresistible, and the other two factors are good enough.

Which factor is irresistible will vary based on your market segments.

So let me give you an example.

Let’s say you make kitchen cabinets, and you have segmented your target market into two different segments:

  1. Contractors who have been in business for over 10 years, have a shining reputation, and generate 8 figures a year in revenue.
  2. Consumers who make under $100,000 per year and are installing cabinets themselves because they cannot afford a contractor.

These two segments will not want the same products.

A contractor in this example will care about their reputation for quality. They will value Customer Intimacy far more than they will care about an Operational factor like price because the price gets passed down to their client.

The DIY consumer will care far more about Operational factors like price than Customer Intimacy because they’re on a tight budget.

If you approached a DIY consumer with your high end custom cabinetry package where you go into the home with your computer and your camera and do a digital map of their walls so you can then go build the cabinets which take 4-6 weeks to be finished, the consumer is going to brush you off. The consumer wants the good price of the pre-fab cabinets and is willing to sacrifice custom.

The contractor making over 8 figures with a phenomenal reputation for quality will brush you off if you approach them with your pre-fab cabinets because they value Customer Intimacy far more than they value price.

So what do you do?

If you’re a smart cabinet maker, you offer two packages. You do not try to sell the same package to two different segments because each segment will give different importance to Operational, Performance, and Intimacy factors.

How do you do this in your own business?

You do it by getting very clear on who your segments are, and then asking yourself which metric do you want to be the best and on which two will you settle for being “good enough?”

If the metric you want to excel at does not line up with your segment’s values, you’re going to have to go back to the drawing board.

This is why you must know your market, and you must create or pivot your product with the market in mind. Pick the metric they care about the most to be your focus and resign yourself to accepting “good enough” for the rest.

And one final point I want to make:

Don’t make the mistake of thinking you can be the absolute best in your industry at all three. You can’t. You’ll invariably create a product that isn’t the best at anything and in the end you’ll end up with something that leaves your customers wanting a different product.

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