I Would Pay 50% More If
4/2/2012 4:33:00 PM
In a recent discussion with a client, he commented that he believes his hardest challenge was that of "identifying product innovations that his customers would recognize and, more importantly, reward through higher prices or otherwise". He went on to say that his firm had delivered what they considered a steady stream of improvements, but without realizing much in the way of reward. It's a very common lament.
I asked thisexecutive if he had ever asked his customers to fill in the blank in the sentence "I would pay 50% more for [name of product] if only it ______________". He said that he had never done so.
In many business settings, working with clients in a variety of industries, I've asked that question in one form or another many times. It's fair to admit that not every answer is constructive, and many are either dismissive or humorous. Being honest, a majority of the answers fall into one of those categories. To give a few examples, among the many such answers that I've heard are the following:
- · if my wife owned the company I was buying from and I could get away with it."
- · if the sales person looked like [substitute here your favorite movie star, as I've heard this response frequently, with different subjects of affection]."
- · if I was a Chinese purchasing executive and knew that I'd get a 50% kickback on the sale."
- · ifafter I bought the product, I could finally break par."
- · if I knew I was getting fired tomorrow and wanted to leave something behind for my successor."
Questions such as this can indeed bring out the creative instincts in even serious business executives.
What is even more interesting than the humor in responses such as those above is the fact that in a significant number of discussions, the response is serious, thoughtful, and incredible fuel for product development and innovation plans. Here are some of the responses that I've heard that fall intothe serious and thoughtful category:
- · if I never had to send out a service tech to do an unscheduled repair."
- · if [that component] lasted as long as system that it's part of."
- · if [that product] helped me to differentiate my product from my competition."
- · ifhalf of them didn't break during the installation process."
- · if my own customers would pay me 51% more for using it."
- · if I didn't have to hire a triple Ph.D. in order to operate it."
- · if I never had to call their 800-number support line again."
None of the above answers were delivered with any humor whatsoever. And it took very little time for the individuals providing these answers to respond. They knew what an improvement would look like, probably as a result of unpleasant experiences contending with the status quo.
In providing these examples to the executive that started this discussion, I emphasized two points that have emerged from experiences asking this type of question.
The first conclusion is quite obvious: It pays to ask. Especially in business-to-business markets, customers care about their suppliers and their products, even if they often fail to show it at contract negotiation time. They have strong opinions as to what is good, bad, and ugly about each product and each relationship. In most instances, they have strong ideas about what they would do if they were in charge of the supplier organization. Inan earlier article, I quoted a customer who characterized the most recent