The following is a simple question for business owners. Why do your customers buy from you?
I told you the question was simple, but an accurate answer, on the other hand, can be far more complex and perhaps even elusive. To achieve long-term, sustainable success, your understanding of why your customers choose to do business with your company needs to be both correct and substantial.
Many business owners develop a customer value proposition (CVP) alongside their company mission and vision statements. The brief declaration is supposed to document why a customer would opt to buy your product or service over the competition.
While developing a CVP is commendable in its customer-centric approach, it often falls short of its intended purpose due to ambiguity, a lack of self-reflection and sometimes even outright insincerity. Dollars to doughnuts, there is not a single CVP out there that reads, "Our customers turn to us because we deliver lackluster service and a marginally good product."
I would also assume that there are many businesses whose CVPs portray an exaggerated sense of the company's true customer value. CVPs should never be created based on hype or manufactured mantras; instead built from sincere, astute insight.
Bravado and disingenuousness are not the only ways business owners are misguided in their understanding of customer engagement and loyalty. The following are common misconceptions related to the question of why customers buy from you.
"We are the cheapest"
Sure, this value statement might be dressed up as "We deliver the best value," "We are the low-price leaders," or some other cost-based differentiator. But when I hear any form of "My customers buy from us because we are the cheapest," I cringe. Competing on price alone is simply not a good model and is often unsustainable. There is always some other business owner who is willing to run out of cash faster than you are.
Most customers – both B2B and B2C – understand the balance between cost and value. They walk that tightrope in every purchase they make. Contending that cheapest is the key attribute that keeps them coming back shortchanges both your business and your customers.
"We have the best employees"
Forgive me for being a bit skeptical about this assertion as well. Sure, your business may have good employees; but are they really the best? You may provide excellent service, but your competitors probably do as well. Is it truly your employees that keep your customers coming back? With the rare exception of that ultra-charismatic salesperson who charms the socks of buyers, the answer in all likeliness is a resounding no.
That is not to say that hiring for personality and alignment with company values is unimportant. It most definitely is. But to put the onus of success and customer loyalty squarely on the shoulders of your employees is shortsighted.
"We've got the best product on the market"
While possessing a corner on the market is a great position to be in, it does not account for innovations in the marketplace and often fickle changes in consumer preferences. Evolving customer motivations and expectations, coupled with aging business models, have been the downfall of even some of the most successful industry titans.
Consider Blockbuster, that for more than 20 years, was the largest and most successful video rental company in the U.S. Then industry innovators like Netflix and Redbox entered the arena with new and improved ways to provide the same service and completely changed the playing field. While the business's products and services may have been "the best" in their heyday, innovators with more modern and sustainable business models came along and essentially put the video rental titan out of business.
Suffice it to say even the best products and services on the market have competitors nipping at their heels.
So why do your customers really keep coming back?
What you are selling vs. what they are buying
In considering why your customers continue to purchase from you, it is important to understand the difference between what you are selling and what they are buying. This is such a crucial distinction. As Harvard Business School professor and economist Theodore Levitt famously said, "People don't want to buy a quarter-inch drill. They want a quarter-inch hole!"
An accounting firm may see itself as selling tax preparation services, but its customers are seeking peace of mind. Apple offers not just its technology but a modern retail experience. A mechanic sells an engine tune-up, but the customer is purchasing a quieter and safer ride.
As a customer-conscious business, it is essential to sell the hole, not the drill.
Understanding customer loyalty
How do you identify the true reasons why customers buy from you? Get ready for a shocker. You ask them.
While this may sound flippant, you might be amazed by how many business owners never ask the right questions or truly listen to what their customers have to say. HubSpot recently reported that 42% of businesses do not survey their customers or collect any sort of customer feedback. Those that do elicit feedback often do not ask the right questions. And even fewer business owners take any action based on the responses they receive.
Performing a customer survey can be a real competitive advantage for you. You can communicate by phone, on your website, in an email campaign or in person. The platform matters less than posing smart questions that evoke insightful answers. How important do they consider price? How would they rate your customer service? Why do they prefer you over the competition? Create a system for recording the answers you receive, which might be as basic as a spreadsheet or as comprehensive as entering responses into your CRM or other sales and marketing tools. Feedback should not be a one-and-done; make it a habit to speak to your customers regularly.
Then the next time somebody like me enquires about why your customers buy from you, your answer will accurately reflect the true value your business brings to the marketplace.
Innovation is as much about understanding customer needs as it is about passion, and customer feedback is essential to entrepreneurs. Here are four ways to use customer feedback to improve businesses.
A common word of advice for entrepreneurs is to build what they personally want, but this can prove to be a path to failure. After all, it's said that 90% of startups fail, and the number one cause of those failures is that there's no market need.
From Facebook's metaverse folly to the downfall of Juicero, the story of failed projects is littered with tales of companies that just didn't understand their markets well enough. While passion is, in the words of the late Steve Jobs, "the only thing that keeps you going" when it comes to the long journey of entrepreneurship, it isn't enough. It's equally important to understand the wants and needs of your customer base.
This means that customer feedback is essential for entrepreneurs. With in-depth customer feedback, entrepreneurs can better understand their markets and innovate smarter. It can help them develop products that customers actually want and need, rather than products that founders think they need.
Here are four ways that entrepreneurs can use customer feedback to improve their businesses:
1. Use customer feedback to inform product development
It's also important to use customer feedback to inform product development. This means that entrepreneurs need to take the time to read customer feedback and implement changes where necessary.
For instance, Robinhood CEO Vlad Tenev said that many of the company's product priorities are based on customer feedback. This means that the team is actively listening to customers and making changes based on their feedback.
One early feature that helped Robinhood differentiate itself was a "Fractional Shares" option, which allows customers to buy partial shares of stocks. Another more recent example is Robinhood's decision to provide up to a 4% interest rate on customers' uninvested cash deposited in their accounts. This was based on customer concerns about the impact of inflation on their investments.
By actively listening to customer feedback and incorporating it into product development, entrepreneurs can ensure that their products remain competitive and meet customer needs.
2. Leverage communities for direct communication
An obvious question for entrepreneurs is how to collect customer feedback and hone in on what's important. Social media platforms like Reddit, Twitter and LinkedIn can be great places to start. For instance, Twitter Spaces is a feature that allows users to create a chatroom-like environment with a group of people.
This serves as a great way to get feedback from users. Entrepreneurs from Elon Musk to Neil Patel have leveraged such communities to get feedback from their customers. However, entrepreneurs can go further by establishing their own dedicated communities.
One strategy is to build a Discord server, which is a chat application perfect for connecting with customers and building a community. This works especially well for games and software products, as the format makes it easy for customers to provide feedback. This was the approach taken by Utkarsh Sinha and Siddharth Jain, the co-founders of Martian, a Web3 firm that recently raised $3 million. Sinha notes that their Discord server has more than 150,000 members who are providing valuable feedback.
Another strategy is to host online events, such as webinars. This allows entrepreneurs to get feedback from customers in real time, as well as to showcase their products and services. One challenge with this approach is the relatively smaller size of the potential audience, but it can be a great way to build a loyal customer base. Even if the turnout isn't huge, the feedback received can be invaluable.
3. Quickly ship products based on feedback
Another important way to use customer feedback is to ship products quickly. By moving quickly, entrepreneurs can get feedback from customers about their products and make necessary changes or improvements.
If your business is taking in that valuable customer feedback, but failing to act on it quickly, you might be missing out on a big opportunity. This was something that was highlighted by Siddharth Jain. Jain said that working closely with an engineering team was a big advantage for the firm, as it allowed them to quickly ship products and features whenever customer feedback was received.
In other words, while your sales and marketing or customer support teams may be more closely in touch with customers and their feedback, the engineering team needs to be able to act on that feedback in order to make real change.
4. Use customer feedback to pivot
Customer feedback can also be used to pivot. Pivoting is a term used to describe the process of changing the direction of a business. It's a strategy that some entrepreneurs use when their original product or service isn't succeeding as expected.
For example, when the team behind the video game Fortnite found they weren't getting the traction they wanted, they used customer feedback to pivot. They created a version of the game that was free to play, and the rest is history. Today, Fortnite is one of the most popular video games of all time.
The lesson here is that customer feedback can be used to pivot a business, and it's important for entrepreneurs to be open to using it. That doesn't mean blindly following customer feedback, though; it's still important to use your own judgment and expertise to make the best decisions for your business.
Customer feedback should be an essential part of any business's innovation process. By understanding customer feedback and using it to inform product development, leveraging communities for direct communication, shipping products quickly and pivoting when necessary, entrepreneurs can create products that customers actually want and need. This can lead to greater success for the business in the long term.
Cash may be losing its luster as a payment tender, but it's a 'must have' when it comes to rewards program benefits and will be for the foreseeable future.
Cash as a payment tender may no longer be king, especially with the rapid shift toward online shopping and digital wallets. Nevertheless, today's consumers clearly prefer cashback rewards as their loyalty program currency. At the same time, cashback and coupon rewards programs are becoming more critical to consumers: when times are good, saving money is a nice-to-have, but with an uncertain economy and high inflation, cashback rewards and discounts are essential for most consumers.
Rewards for shopping are now expected on everything from groceries to financial services and travel. At the same time, customers seek expediency and frictionless shopping while immersed in their online experience.
However, not all reward programs are created equal or meet consumers' preferences. For one, they want simple, user-friendly experiences. They also want rewards embedded seamlessly within their shopping experience, and discounts automatically applied at checkout.
What they don't want is to detour from their shopping experience or search through a directory of brands to "turn on" an offer.
Long story short: the easier it is to obtain rewards from a loyalty program, the better. Retailers and payment enablers (financial institutions and card issuers) who make their rewards programs naturally accessible and seamless within the shopping journey will achieve the most success in inviting — and sustaining — prized consumer relationships.
The growth of loyalty and rewards programs
Loyalty programs are a win-win for both retailers and consumers. Brands offering rewards programs usually see stronger brand loyalty, better customer retention, lower user acquisition cost, and increased revenue. Consumers, in turn, benefit from lower prices and ease of use, including earning cashback on purchases and using coupons as they check out.
In industry surveys, roughly 83% of consumers say that they are more likely to do repeat business where a rewards program is present than a comparable business without a rewards program, TidalCommerce reported. Almost 2/3 of internet users believe that earning rewards and loyalty points is one of the most valued aspects of the shopping experience.
Consumer expectations for rewards programs, and their online shopping behavior, have evolved to the point they now help drive retail loyalty. While consumers will always find ways to shop, many in the current economic climate now seek more ways to stretch their budgets by participating in loyalty and shopping rewards programs to earn discounts and cashback rewards. In a recent survey commissioned by Wildfire, 90% of consumers say that, because of rising prices, they are more interested in getting discounts, using coupons and earning cashback rewards when they shop.
In effect, shoppers consider rewards to be a key part of their shopping experience, whether directly through a retailer's program, credit card company or even through a third-party program. Third-party programs, including online shopping companions such as PayPal's Honey, Capital One Shopping, the Acorns Earn program and even built-in discount alerts offered by the Microsoft Edge browser and Bing search engine, have gained in popularity. These help direct consumers to coupons, discounts and cashback rewards right as they shop.
What makes using these programs even more appealing to consumers is that they are embedded within the buying process and activated within the natural flow of users' online shopping experience. Another data point from Wildfire's survey indicated that most consumers expect coupons to be applied automatically at checkout during the natural flow of the shopping experience. They also prefer cashback rewards via direct payment, with about half of the consumers choosing it as a credit to their banking account or credit card and about 30% of customers preferring to receive it through a service such as PayPal, Venmo or Cash App.
Cash as reward currency — offered simply
Speaking of coupons, discounts and points, while those shopper incentives might be nice, most consumers prefer cash as their reward currency. In Wildfire's consumer survey, eight out of ten consumers surveyed indicated they prefer rewards in the form of cashback rather than points, miles, or other types of credit.
Many retailers have realized that offering incentives — such as cashback, coupons and shopping rewards — can influence consumer purchase behavior, sales conversion, and even where consumers choose to shop. Over 80% of the consumers we surveyed report they'd be more likely to shop at a store where they could earn a cashback reward on their purchases vs. one that doesn't, and 79% are more likely to complete a purchase when they can earn a reward.
The good news is that many retailers are starting to listen to customers, as indicated by a recent report from Comarch, which shows that almost half of the direct-to-customer retailers currently, or intend to, offer cashback rewards as part of their loyalty program.
How to implement cashback in your loyalty program
What are the takeaways for online businesses seeking to capitalize on the consumer demand for cashback rewards?
The bottom line? Cashback rewards programs drive both top-of-funnel shopper visits and bottom-of-the-funnel sales conversion.
Not a fan of New Year’s resolutions? Here’s something to try instead: gratitude.
Practicing gratitude is simply stating the things you are thankful for. This may seem a little like a fifth grade Thanksgiving assignment, but trust me: it’s a fantastic exercise you can use in your business any time of year.
Here’s how gratitude can help you in business.
1. Gratitude reframes negative situations
If you’re like every entrepreneur on the planet, you likely often focus on what’s going wrong in your business. That late-paying client, the computer that’s on its last leg, the client who texts you after hours and on the weekend . . . you know what I’m talking about.
Considering what you’re grateful for doesn’t erase those stressful parts of running your business, but it can reframe them. Consider:
Late-paying client—I'm so grateful that I have a client who pays me so well!
2. Gratitude puts you in the right place to manifest what you want
Gratitude is high-vibration energy. So is manifesting. If you generate all this positive energy by considering what you’re grateful for, it’s easier to slide into thinking about what you want in the future.
When you want things, you can sometimes come from a state of lack, especially when it comes to money. When you say “I want” something, the Universe hears that you don’t have it and therefore will keep you in that state of lack, especially if it feels a sense of desperation in the wanting.
But once you’re in that state of flow and abundance that gratitude provides, you get out of that place of lack, and the Universe may be happy to deliver what you want, be it a new client or bigger retainers.
3. Gratitude in business builds our connections with others
When we’re truly grateful for the people around us, we can foster better relationships with them. Showing gratitude to a business client by telling her how much you love working with her, for example, could come as a pleasant surprise to her. Down the road, she refers more business to you.
Remember that expressing gratitude needs to come naturally and that it should never be forced. Too often we don’t tell people the pleasant thoughts we have about them, and that’s a shame. By sharing how thankful you are for someone in your world, you foster that bond.
How to build a gratitude practice
Think about what you're grateful for
There are any number of ways you can create a ritual around gratitude. Personally, I list three things I’m grateful for that are coming up in my day each morning, and then I do the same in retrospect in the evening. This helps me see what’s really going on in my life with a positive lens. After I list my morning gratitude, I also state one thing I’d like to manifest in my day. It could be big, like closing a deal, or small, like getting a pleasantly surprising piece of mail.
There are gratitude journals you can use to write yours down. It’s always fun to read them years down the road to see what was going on in your life! You can also use the full moon as an opportunity to list what you’re thankful for.
If I’m feeling particularly overwhelmed, I will sit in meditation and list every single thing I can think of that I’m appreciative of, from the soft, warm cat in my lap to the sunshine outside, and everything in between.
Speak your gratitude out loud
I touched on this above, but it’s important that you share your gratitude with others. Don’t keep it in!
If you have employees, thank them for their hard work. Elaborate on exactly what it is that you are appreciative of, whether it’s them taking initiative in a meeting or simply brightening up the office with their happy personality.
With clients, make a point to make them feel special. This can be as simple as emailing an article that made you think of a client or sending a gift basket for a holiday or birthday.
Don’t overlook yourself!
While you’re telling everyone else how much you appreciate them, don’t forget about the person who makes your entire business and life possible: you!
Rather than berating yourself for mistakes you’ve made, try showing appreciation for all the hard work you’ve put into your business. I’ve even gone so far as to physically mail myself a letter (or sometimes flowers) and thanked myself for specific things I’ve done. When you’re a micropreneur or solopreneur, there may not be anyone else to give you a pat on the back, so you’ve got to do it yourself!
Gratitude benefits your business and your personal life
Expressing gratitude is a wonderful practice in both your personal life and in your business. The more you can see what’s good in your world, the more you can open up to even more success in the future.
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