You know inherently that customers are not all the same. I have written in the past about the importance of segmenting your customers and working to understand the needs of each segment so you can identify how much they might value your product (or not). A recent example in the car market illustrated that failure to understand customer needs can result not only in incorrectly pricing products, it can result in losing sales completely.
In prior blog posts, I have discussed the strong brand preferences of certain car buyers, specifically those who occasionally take their cars to the racetrack. At a track event last month, one particular Corvette aficionado (let’s call him Ike) was very pleased to report he had put down a deposit on a new 2015 Corvette Z06, with 650 horsepower and an 8-speed paddle-shift/automatic transmission. The price of the car was a little over $90,000. Ike was expecting delivery in early June. Interestingly, he ended up not buying that car, because the dealer either did not understand his needs, or did not understand which Corvette best met those needs.
Ike loves Corvettes and he never really considered any other brand, however he wants to drive on the track several times each year. As the delivery date for the car he ordered drew near, Ike began to learn about Corvettes with automatic transmissions overheating after a few laps. The 8-speed transmission shifts quickly, especially during performance driving when speeds change often and significantly. All of that shifting heats the transmission fluid, and apparently the transmission cooler located near the rear of the car does not sufficiently cool it. Shifting with paddles rather than running in automatic would not stop the overheating. For someone who wants to drive on the track, transmission problems after a few laps are not acceptable. More research indicated that the 7-speed manual transmission did not have any issues with performance driving.
Ike did not change his mind about wanting a Corvette, but he realized the manual-transmission Z06 was a better answer for him. When he discussed it with the dealer who had accepted his deposit, he learned he would have to order a new car which would take months to be delivered. Having already waited months for the first car he ordered, Ike did not want to double his wait time. Instead he looked for and found a dealer who had a stick-shift Z06 that would be delivered in a couple weeks. Ike got his deposit back from the first dealer and purchased his car from the 2nd dealer. All of that could have been avoided had the first dealer spent the time to understand Ike’s needs.
Although the Corvette Z06 is a high-performance car for a small niche market, most performance car buyers do not drive their cars on the racetrack. The transmission is therefore not usually an issue. By not taking the time to find out how Ike planned to use his car and matching the features to Ike’s needs, the dealer ultimately lost a sale. A few simple questions early in the process and a little effort to identify the best configuration would have allowed the dealer to retain Ike’s business.
Whether you are selling products or services to consumers or other businesses, it is important to remember that customer needs are not all the same. The desire to sell quickly and reach quotas can be strong, but should not cause you to take shortcuts. Take time to understand what your customer needs and why. Then make sure the product or solution you offer is the best fit. You can appropriately price to the value you bring, and you can keep a happy customer.
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