Sunday, 31 October 2010

Business Models - Pain or Urge?

No matter how good the business plan there needs to be demand for what you sell or plan to sell. This is the "Why Buy?" aspect of our business assessment methodology, summarised in the diagram to the left.

Marketeers talk about “Needs” and “Wants”. But for someone to reach into their pockets, as a consumer or in business, there must be something more than that.

In my experience the “need” has to be stronger – it has to be a real “pain” that the person cannot fix for themselves.

For example::
  • Headache
  • Toothache
  • Blocked drains
  • Have to submit a tax return by a deadline
  • Sales running behind target
“Pain” can also be in the form of an “urge”, not just a “want”:
  • Show off a new car
  • Buy those new shoes
  • Attend that show
  • Win a league table
  • Or why do so many celebrities and politicians get caught with their trousers down?

Business to Consumer (B2C)

You’ve only to walk down a high street and see what’s on offer. Is each shop to solve pain or satisfy an urge?. Starting at the west end of our high street we have a job agency, a housing agency, replacement windows and then a whole host of shops from mother and baby, to opticians, chemists, clothes and food.  Most of these are to deal with a pain of some kind. The proliferation of mobile phone shops caters for our urge to communicate, to look good with the right new model, and now satisfy the urge to be entertained. Even Anne Summers tried to get a look in.

Boots the Chemists of course fixes pain, and also offers more for urges. Hence placing pain killers at the back, and the more exciting products near the door. You have to walk past these twice.

The successful on-line businesses always offer something that solves a pain or urge, that people will bother to look for.

Business to Business (B2B)

In B2B, there's a whole army of suppliers of products and services, beyond what a business needs to buy in to sell. Is the stationery cupboard empty? Or is the pain that no-one has the time or inclination to keep it stocked? There's many types of professional services, all catering principally for a pain - the need for tax advice, legal advice and insurance cover, for example. But I have to wonder whether it is the urge for status that means the big firms get business when there are many smaller firms offering quality and much better value. There's room for both.

The danger for a business is their customer or client will try to do it for themselves. Of course this can be a very expensive strategy for them, as it is likely that something important is overlooked, or the wrong corner cut through inexperience.

The Extra Dimension

It’s interesting to spot a shop that seemingly serves neither pain nor urge. That must be the gift shop then. Now there’s a pain solved. Especially on Christmas Eve!

Indeed there’s also another dimension. For time management, the two key aspects are importance and urgency. But urgency tends to triumph over the merely important. If something is important but isn’t urgent it likely won’t get to the top of someone’s to-do list, be they in business or as a consumer. If it's not urgent, the sales cycles and costs will be excessive. This means less profit, and having to wait longer for it.

Those businesses that fix an urgent pain or satisfy an urgent urge (!) will more easily thrive, even in tough times. Yes there will still be marketing to do when there are other offerings in a highly competitive market, and there’s pricing to get right. But at least people will buy, and they’ll do so quickly.

How to Assess a Business?

One simple test is whether you can imagine people urgently typing something into Google to find you – what’s called a “search term”. Something like “optician” or “blocked drain”. You can then use Google Adwords or similar, and benefit from search engine optimisation. But if you can’t think of a search term, or you don’t think it will be used urgently, that isn’t necessarily the end of the world . However it will certainly make sales and marketing generally harder. 

“Word of mouth” is an important source of business. But someone telling someone else about your business is only ever a bonus. More likely is someone will have an urgent problem and ask a friend for a recommendation. So the other simple test is do you see people asking for help with what you offer? And will the person answering think of you, either because of fantastic service they’ve experienced, or otherwise a good profile?

Even if these events are unlikely, then all’s not necessarily lost. Yesterday I was at Brands Hatch, where there happened to be a truckers convention. By 8pm all but one of the funfair sideshows had closed down. The one still open had a scalextric-style model racing circuit. Being on the roadway between the lorry park and the bar, each group of truckers didn’t stand a chance walking past when asked if they wanted to race each other. What red-bloodied male in a group would say no? So something like position, and the cheek of the stall holder, can get quick business.

So In Conclusion

The point is there has to be something that will provide the impetus for a customer or client to make a purchase of what you are offering. Limited time offers can help, but what is the inherent driver?

So pain or urge? Either. And urgency helps!


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