Sunday, December 22, 2013

Are you losing money? Does your business cater to a need or a demand?

How do you know you're not making this major mistake?

Are you sure there is money inside your business model?  How are you sure?

I see a lot of businesses make this mistake.  I'm not sure I have not made this mistake myself...many times!

Sure, that prospect NEEDS what you are selling.  He may truly benefit from it, but that does NOT mean that he wants to buy it from you...or anyone else.

Businesses make this mistake SO often that it's comical, except for the fact I see them spending energy on a business without nearly enough demand, regardless of how "useful" it is.

Need vs. Demand: Explaining the Difference

Need: A NEED is something that will benefit the buyer.  That person needs this product or service you're selling, because his life or business' ability to exist depends on it, or it provides more value than it will cost that person--either in health or wealth.  A need does NOT guarantee any market demand for the product or service.

Demand: The prospective customer is already seeking this or is, at the very least, receptive to it upon being presented.  This person may--or may not--need this particular product or service, but he or she wants it for any one or more various reasons.  There is buying pressure here, a market for this product or service!

It is possible for something that is in demand to be a need, like water in a desert, for instance.

However, a need for something does not guarantee it is a good decision to create and run a business trying to sell it to people or companies.

Of course, sometimes a business seems to miss BOTH of needs and demands.  That is an entirely different topic, but let's just say that's an entirely different level of denial from that business owner.

Examples: Need with Little (or No) Demand

Many times, there is a HUGE need for something, but there might not be enough demand to build a business industry around it.

See: Do People Pay for Marketing?  No, Not Really!

Let's look at some examples:

Life Insurance (Have you ever tried to have a funeral without any money?)

Raw Kale (really good for you, but outside of health nuts enthusiasts, who want to eat this?)

Nutrition Coach (it's better to have an expert guide us to good health, but how many of are willing to pay for it?)

What's the problem with these?

How many people do you know talk about spending time researching to find ways to spend money on any of these?  When nobody really WANTS to spend money on something, there really is not any demand for it, no matter how "good" it is for us to buy it.

No Demand = No Business (regardless of need)

In comparison, when there is demand without any need...

Examples: Demand with Little (or No) Genuine Needs

With many things, there is a HUGE demand for something with no true need...just simply meeting a desire or helping dampen a fear.

Let's look at some examples:

Cigarettes (Is it just me, or does it seem like some people will spend money on these, even when they have an empty stomach?)

Alcohol (although sometimes it's argued that some people are more fun after drinking)

Vacations, Cruises (Have you ever heard anyone say, "I just HAVE to go on vacation."  Have you ever hear a doctor say a patient?)

Bakeries (That guy in my mirror gets tricked by these places ALL of the time, and they don't even have to say anything.)

Christmas Presents for Co-workers You Dislike (have you noticed how many people feel obligated to buy something for that co-worker they can't stand...just so they don't "look" like a jerk themselves?)

Do you notice that each of these provides something in common?  They meet a DEMAND that already exists.  You just have to be the one to serve that demand first or more convincingly than the rest.

When your business sells products or services that meet needs but are not, yet, in demand, then you have to help that person understand that demand.  In other words, you have to LECTURE that person.

Since most people do not like being on the receiving end of lectures, you probably have to do it in a way that leaves them feeling like it was THEIR idea.  Most people are not really good at this.

Even if YOU are, why make yourself work harder.  Just try to find a business model that meets a demand that already exists, regardless of need.

If you decide to continue running a business that only meets needs but no demands, don't be frustrated by people's insensitivity to YOUR needs.

What are you selling?

Key Question #1: Why do people NEED what you're selling?

Key Question #2: Why do people already WANT what you're selling?

Key Question #3: Do people want what you're selling so badly, they're willing to PAY for it?

It's really OK to NOT have an answer for Question #1, but you better have a really good answer for Questions #2 and #3.

Are you sure you're really meeting a demand that people are willing to pay to meet?

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