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Implementing Value Pricing: A Radical Business Model for Professional Firms by Ronald J. Baker

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CHAPTER 6

What People Buy

What customers think they are buying, what they consider value, is decisive—it determines what a business is, what it produces, and whether it will prosper. And what customers buy and consider value is never a product. It is always utility, that is, what a product or service does for them. And what is value for customers is … anything but obvious.

—Peter Drucker, People and Performance, 2007

It is a deceptively simple question: What are we getting paid for? Still, many businesses arrogantly assume they know what their customers want and believe they have been giving them exactly that for years. This is a myopic vision, and potentially harmful, as there now exists a plethora of information on why people buy, how they buy, and the decision process they go through, all of which businesses ignore at their peril.

In his book How to Win Customers and Keep Them for Life, Michael LeBoeuf suggests that customers have the following motivations for these various purchases:

  • Don’t sell me clothes. Sell me a sharp appearance style, and attractiveness.
  • Don’t sell me insurance. Sell me peace of mind and a great future for my family and me.
  • Don’t sell me a house. Sell me comfort, contentment, a good investment, and pride of ownership (and a piece of the American Dream).
  • Don’t sell me books. Sell me pleasant hours and the profits of knowledge (LeBoeuf 2000: 22–23).

Advertising giant Leo Burnett used to say, “Don’t tell me how good you make it; tell me how good it makes me when ...

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