Revenue Journal®

The most accurate economic indicator I have ever found is "primary customer motivation." As I interview customers for clients, I learn what is driving them to make the decisions they are currently making. In times of uncertainty, there is usually one big, fear-based driver. In times of economic growth, more drivers come into play, such as the need for status, the need to solve a problem, the need to change one's lifestyle, and the need to experience something new.

I have also found that journalists and economists don't have a clue about "primary customer motivations" until it's obvious to everyone what is going on. And, you can be sure that if the facts conflict with their agenda, the agenda will overshadow the story. That's why any business owner who depends on the press or economists to "guide" him is always going to be a day late and a dollar short. Instead, if he was personally and regularly interviewing customers (or having someone he trusts do it for him), he'd be finding out what's really going on - six months before everyone else (including competitors).

In any economic situation, these primary customer motivation drivers determine what people are buying and how, as well as what they are deciding not to buy.

Let's look at our current situation. Right now, customers are fearful about their investments. They are being spooked by gloom-and-doom banking industry headlines. They are hearing horror stories from friends or reading them in blogs - horror stories about investment vehicles, such as Auction Rate Preferreds, that have become "illiquid" overnight, a euphemism for "you can get interest, but you can't get your money out." This is frightening to people who had expected to be able to redeem these funds to send Junior to college.

There's also the fall of the dollar and the rise of the Euro (and other currency) against the dollar.

And finally, there's the cost of gas and food, and stories people are reading about food hoarding and restrictions that some stores are putting on people who are trying to hoard rice and other grains.

How does this all affect your particular buyers? Drastically, not at all, or somewhere in between. In other words, if you aren't talking to them right now, you have no idea. NO IDEA.

You won't get it from reading trade journals. Trade journal articles will tell you what your competitors are telling editors (in other words, their PR spin) and what a few customers have cautiously said to a reporter.

You won't get it from reading blogs. Most blogs are written by one person with an axe to grind. Those who comment on the articles are either in agreement, rabidly disagreeing, grinding their own axes, or tooting their own horns.

Only customers will tell you what they're thinking, what's driving them, and what they're afraid of.

For example, trade journal reporters receive free equipment for review all the time; sometimes the "review" version has better performance than the real thing. They then write about that equipment. Potential customers, reading that review, may be impressed with the product's features and performance, but their buying decision is affected by other, more pressing concerns.

Can I afford this right now? Do I really need this right now, or can I get by with what I have? Do I really have the time to learn how to operate and maintain something new? How long will it last? How soon will it be obsolete? Does someone else make a better one? Will the manufacturer be there - with the right answer - when something goes wrong? My own experience with these types of products has been less than reassuring. In fact, it's been a real pain.

These are the questions and perceptions driving the buying decision, which is what we're talking about here. You only make a sale when the customer has decided that he wants to buy.

I can't tell you how many times a CEO has told me, "We're getting great reviews from the trade rags. Our unit beats the competition, hands down. Why aren't we making sales?" Because what is driving customers to buy has less to do with the product and everything to do with the pressures, needs, and concerns of the buyer. The buyer might be deciding to wait, because he knows that in six months there will be a better model anyway. We call this "anticipation hesitation." This is quite common during tight economic times.

In the absence of real data, from real customers, you will apply your own concerns to the hysterics you're reading in the press. If you're in the luxury goods market, you'll assume that people are going to be looking for "value." Sure, some of them might decide that they aren't going to pay outrageous prices. But that doesn't mean they have stopped buying. It just means they're changing what they're buying and how they're buying. The point is, they're still buying.

If you know what they want to buy from you and how they want to buy it, and you shift your business to match their current decision drivers, you will make money. You could even make a lot of money - even now, in a time of economic uncertainty.

The underlying drivers for purchases don't go away. People always have problems to solve. People's needs are never-ending. If you understand what they're trying to do, you'll be able to transform your company so you can meet them "where they are."

Get on the phone! Or call me, and I'll call them. Find out what's driving your customers. Learn how they're looking at your type of product or service. Ask them to describe "the perfect scenario" - how they want to buy your product and how they want to use it. Ask them what their problems are and how they're trying to solve them.

Once you have this information, your course will become clear. Then, it's up to you to have the courage and maturity to actually transform your organization, so your offerings are in sync with customer needs. Next week I'll talk about the art and science of successful transformation.