Sales: Why Do People Buy?

There are plenty of “sales theories” out there. In my experience most of them are bogus. My all time favorite stupid theory is The Yes Curve.

Before we get in to theory, lets look at two basic subjects: why people buy and how they choose what they buy.

Fundamentally, people buy products because they need or want them. There is a key difference between the two.

Purchases made based on needs are for things people cannot avoid buying. These are purchases that are in some way genuinely critical to the continuance of their every day life. Examples include car repair (if you rely on your car), chemotherapy, and anniversary presents .

Purchases made based on wants are for things people like to buy, but they are not essential.

The vast majority of purchases made by consumers are wants not needs. If you are lucky enough to be selling a product that people genuinely need, your game is radically different from the sales game played by the rest of us.

The rest of this piece targets wants and not needs.

This is simple. People choose products that have value to them. Value is not the same thing as features.

While a Rolex may have some impressive features, it is still just a watch. People buy Rolex’s because the value of a Rolex is important to them. A Rolex’s value comes primarily from the perception that it is a status symbol and an indicator of success.

Louis Vuitton purses sell for hundreds of dollars because of the perceived value in the Vuitton brand.

Apple Macs appeal to certain types of customers because of the lifestyle the Mac represents.

What Starbucks sells is still more or less just coffee. But Starbucks does better than Joe’s Anonymous Coffee Shop because of the perceived value inherent in their products. They have value to their target customers.

Many companies confuse value with features. This is why you will see companies release a product with identical features to a market-leading product. These products almost always fail because they only capture the features and not the values of the market leading product. Need an example? Look at MP3 players. How many iPod clones or killers have been released only to fail dismally? Many had bigger screens, more storage and more features than the iPod, but they didn’t have more value, so the customer didn’t buy them. They stuck with the iPod. By the million. Even though the iPod had problems (batteries dying, less play time, higher price etc).

Customers buy based on perceived value. That’s why figuring out the value of your product or service should be your primary concern.