What We Actually Buy

There is an old phrase in enterprise software sales that got tossed around for a long time:

“Nobody ever got fired for buying IBM.”

It originated in the 1970s and 1980s, when IBM dominated enterprise computing. The phrase captured a specific truth about how IT purchasing decisions actually got made. If you bought IBM and the project failed, nobody blamed you, because you had made the safe, defensible, professionally respectable choice. If you bought a smaller vendor and the project failed, you got fired, because you had taken an unnecessary risk on an unproven option.

The product was secondary. The protection was the product.

The modern version of this phrase is “Nobody ever got fired for buying Salesforce.” Or AWS. Or Microsoft. Or, in services, McKinsey or BCG or Deloitte. The vendor name varies; the structure is identical. The customer is not really buying a product: no no, they are buying career protection. The product is the costume on top of the actual purchase.

This insight is largely the work of Rory Sutherland, who has spent a career arguing (correctly, in my opinion) that almost everything in business that looks irrational is in fact a form of signaling. The expensive watch is not telling the time. It is telling the world that the wearer can afford an expensive watch. The MBA is not (mostly) teaching business. It is signaling that the wearer can be admitted to and complete a competitive program. The giant Tahoe is not a better fit for the family than a Honda Odyssey. It is signaling something about who the driver wants to be seen as.

Your customers are buying signaling. More than you or anyone on your team realizes.

I am going to make a claim now that will sound exaggerated, but I really really really (really) mean it: the majority of what your customer is actually paying for has almost nothing to do with what you think you are selling.

The CEO who buys the $400,000 ERP system is partly buying ERP capabilities. But she is also buying the ability to walk into the board meeting and say “We have implemented an enterprise-grade ERP system.” That sentence does something. It signals scale. It signals seriousness. It signals that the company has crossed the threshold from scrappy startup to grown-up business. Calling it “enterprise” matters more than what the system actually does, because the word enterprise is the product within the product.

The high-growth VC backed company that hires McKinsey for a strategic study is partly buying analysis. But they are also buying the McKinsey logo on the final presentation, which will be shown to investors, to the board, to potential acquirers. The logo is a credential. The credential is what carries the weight in those rooms. The analysis is the medium the credential travels in.

The construction firm that buys the most expensive crane on the market is partly buying lifting capacity. But they are also buying the version of themselves that owns the most expensive crane on the market. Their bidding posture changes. Their hiring becomes easier. Their reputation in the local industry shifts. The crane does craney-type things, but having the crane does much more.

Once you start looking for this, you see it everywhere.

The accountant who specifies a Patagonia vest is not buying outdoor performance apparel. He is buying entry into a tribe of finance, tech, and consulting professionals who all wear the same Patagonia vest. The vest is the uniform of a specific kind of professional, and the wearing of it is a declaration of membership.

(As an aside, I find this fashion development very funny. The original Patagonia mission was to outfit serious mountaineers on hard ascents. They have, somehow, ended up outfitting serious managing directors on the 8:42 to Grand Central Station. I am not sure who is more confused about this: Patagonia, the managing directors, or me.)

The contractor who insists on a decked-out Ford F-350 instead of a used F-150 is not really hauling that much more. He is buying his customers’ perception of him as a serious contractor (and his own perception of himself as a serious contractor). Both perceptions are reinforced every time he steps out of the truck.

The B2B customer who selects your competitor over you, despite your demonstrably better product, may be making the rational choice given what they are actually buying. They are buying career protection. They are buying belonging. They are buying the version of themselves that goes with a name-brand vendor. None of those things appear on your feature comparison chart, but all of them are on the receipt.

This is the deepest part of the irrational buyer problem. The customer who is irrational on surveys, who cannot explain their own post-decision rationale, who refuses to switch even when the math is obvious…all of that is true and important. But the deepest version of the problem is that what they are actually paying you for is not, mostly, the thing on your invoice.

If you do not know what they are really buying, you cannot price it. You cannot position it. You cannot sell it.

You are competing on features. They are buying identity. That is not a fair fight, and it’s hard to win a fair fight but especially if you don’t even know what the rules are, which is why you have been losing it.

But once you know what the fight is, you can win. And better than winning: once you stop hearing the signaling as deception and start hearing it as your customer telling you, in the plainest language she has, who she is trying to become. When you get there, you’re not in a fight at all; you’re in a conversation. And, likely, you’re the only one in the room actually listening.

* * *

We’ve spent three weeks with a customer who wants to want the healthy burger, drives home the Tahoe she swore she didn’t need, builds a beautiful spreadsheet to justify a vendor she picked in minute fourteen, and pays double for the wine the second you tell her it’s the expensive one. She is contradictory, a little mysterious, and completely, gorgeously human.

I want to sit here for one more paragraph, because this is the part of the chapter I underlined for myself. Somewhere in the last twenty pages you may have started to feel a little grim about your fellow man in all this post-rationalizing and Tahoe-buying and coupon-chasing. Please don’t.

This is my favorite part of the my job.

Twenty-plus years of user interviews and survey data and workshop rooms, and the thing that still gets me out of bed is that people are endlessly interesting. They will tell you they want the fat-free burger and order the Big Mac, and both of those things are true about them at the same time, and figuring out how both can be true is not detective work against a suspect. It’s getting to know someone. I have never once finished a round of customer interviews bored. Not once. We are all so complicated and so contradictory and so fun, and the day that stops delighting me is the day I should go do something else.

You’ve done every one of those things. Guess what? So have I. (Well…the Tahoe is metaphorical, at least to me. The wine is not; put me in front of the ninety-dollar glass and I’d have described the finish to your face, confidently, and meant every word.) That’s the thing I most want you to carry out of this chapter: your customer isn’t a puzzle to be cracked or a liar to be caught. She’s you, holding a wallet. Which means the goal was never to outsmart her. It’s to understand her well enough to actually serve her.

Here is the uncomfortable follow-up question: when did you last look at your customer the way a stranger would?

Most of the CEOs I have worked with, when asked to describe their customer, describe someone they have built. Not discovered. Built. The persona is a reflection of what they wish were true, in exactly the same way the McLean Deluxe was a product designed for what McDonald’s customers wished they wanted.

You can’t read the label from inside the jar.

Next week we’ll talk more about some basic tactics to learn your customers…like actually learn them. And more importantly, empathize with them.