Sunday, March 30, 2008

What constitutes "value"?

Are business owners cheap? Or do they just value “value”?

My customary joke is that entrepreneur is a French word meaning, “I don't have a budget for that.” Which means that while they don't specifically budget money for most purposes, they will still invest in new products, projects or services if they can see the value in it.

In a recent column for Tech Data’s quarterly publication, Tech Times, I wrote about attending a Toronto Raptors game with a friend who runs his own highly successful exporting company. His seats are in the third row.

“Harry” told me that he’d had a chance to move up a row, (where you can see and smell the players better), but he turned it down: “I couldn't justify paying an extra $300 per seat per game.”

I found that remark very telling. In my experience, entrepreneurs don't mind spending money to solve their problems and indulge their wants – they just like to receive value. Harry could afford the better tickets, but he can’t justify the cost. He can't see the value in it.

The good news about selling to business owners is that they rarely need to justify their spending to anyone. There’s no boss to oversee their activity or set spending limits. So the key to selling to business owners is to help them justify the purchase to themselves.

How do you do that? By understanding both the personal and financial issues involved in making these decisions.

For instance, business owners are looking for ways to improve their business – as long as these solutions don't make business more complicated. They adore fast returns on investment, but that’s usually less important than not rocking the boat. New LCD monitors that free up desk space are easy to justify. But a CRM system that will upset employees’ routines and take months to master will look more like a problem than a tool for growth.

Another example: the best entrepreneurs aren't risk-takers, they're risk-minimizers. If you can reduce the risk of their purchase, they’re more likely to buy. You can reverse the risk by offering money-back guarantees, rebates, installation assistance, or free service calls for 30 days. Entrepreneurs tend to be skeptical by nature, so demonstrate your faith in your products by assuming some of the purchase risk.

Finally, business owners are looking for respect. They want to be treated as individuals and as peers. So they like custom solutions, special deals, and being able to negotiate terms. Talk down to them and they’ll squawk. And walk.


Michael Walsh said...

I couldn't agree with your article more. I have run into several entrepreneurs who don't have budgets in place but they are willing to spend money on new products, projects or services if they see the value of it. Also, as you mentioned, if it does not take up too much of their time.

Rick said...

Shocking, isn't it?
It's all about them.

Nathan Poling said...

I think you are very right to suggest that you assume some of the risk of the entrepeneur. By promising certain results, or offering money-back offers, you increase their willingness to listen. Great insight!

Dat said...

Fantastic article! I wish I found you 5yrs ago. It would have saved me a ton of money and headaches. It's amazing what the right information, or a different perspective can create such excitement and ultimately change. Not Obama 'change', but tangible change.

david said...

If I were to wager a guess at why, I’d say that users don’t “browse” forms. The interaction style users engage in with forms is different, and requires its own study and design best practices.

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