The Ragged, Ratty, 25-Year-Old Carry-on Bag and the Human ATM 

Bill has a billion-dollar information publishing business. His responsibilities require him to travel all over the world. For the past 25 years, I’ve been doing most of that traveling with him. We are generally very compatible companions. But there is one thing that irritates the hell out of me.

It’s his carry-on bag – a ratty-looking thing. The leather is discolored. The zipper barely works, and there is a tear forming at one of the corners. He stuffs his laptop and all the paperwork he can fit inside it, and then he carries it around the world… into important business meetings, first-class cabins, and five-star hotels in London and Paris and Madrid.

I’m not embarrassed by it. I’m infuriated with it. Sure, it’s none of my business. But every time I see it, I want to force him to buy a new one. And I have tried to do so on several occasions. He just smiles and explains that he doesn’t need a new one.  “It’s a little worn,” he admits, but it gets the job done.”

I, on the other hand, buy a new bag almost every other time I walk into a luggage store. I want one in black leather, another in brown suede, another that has many compartments, another that is plain. Outside the room where I am working right now is a wall that is literally lined with bags and briefcases. There are probably 30 of them, in all shapes and sizes.

Even in this room, in my home office, briefcases and bags abound. At my feet, there is a hand-stitched leather bag from Italy. On the chair across from me is a high-tech synthetic bag made in Japan. Next to my assistant’s desk sits a canvas bag that was made in France. And in the trunk of my car is my latest purchase – a skinny portfolio that should be perfect for carrying manuscripts on my upcoming trip to New York.

Clearly, I don’t need any more of these things. Yet I am sure that the next time I walk by a luggage store, I will want one.

This difference between Bill and me illustrates one of the most important lessons I ever learned about marketing. It is a psychological principle that every entrepreneur should know:

If you convince a customer to buy your product whenever he needs it, you will have a good and loyal customer, perhaps for life. But if you can persuade him to buy a product from you every time he wants it, well then you have something considerably more.

In the first edition of Ready, Fire, Aim, I expressed this insight crudely. I said it was like turning your customer into your personal ATM. It would have been better to say that if you can get your customers to see your company as a constant source of psychological gratification, you will likely have a much bigger and much more profitable business.

Often, when Bill and I would travel together, we’d pass a store that had bags and briefcases in the window. I would almost always stop to look at them… and then suggest that he step inside with me to get himself a new carry-on.

He’d usually oblige, but never with any enthusiasm. For him, a store that sells such things is about as interesting as a store that sells livestock feed would be for me. And vice versa. (Bill is a part-time cowboy and is very happy to spend his time and money on cow stuff.)

Surrounded by dozens of new bags, I find myself flushed with excitement. “What about this one?” I’d say. “This is great, because there is a space to put a fresh shirt for an overnight stay.” Or, “Look at this! It’s got a place where you can put your newspaper!”

But everything that excites me about these bags, bores Bill. He politely gives me a few moments of his time, but his mind is already somewhere else. Perhaps on our mutual business. (As mine should be.) Or perhaps on his cattle ranch.

This is true of virtually every consumer. We buy what we need only when we need it. But we buy what we want over and over again.

Question: If you were in the luggage business, who would you want as your customer? The guy who has one bag and really needs another one? Or the guy who has umpteen bags and definitely doesn’t need another one?

It’s interesting. When I ask that question at seminars before I tell my little story, most people say they would rather have the guy who has one bag as their customer because he clearly needs the product. But when I ask the same question after telling the story, they get it.

They understand that 90% of commerce is not about what customers need. It’s about what they want. To put it differently, successful sales and marketing is about treating your customer as your boss, not your child.

Even when we are selling rice… or tractors… or eyeglasses, we are selling to wants, not to needs.

By committing to giving your customers a rich and rewarding buying experience, you create for yourself a rich and rewarding selling experience. By creating a commercial relationship that works equally well for both parties – for your customers and for you and your sales team – you are building a business on the solidest possible foundation: mutual self-interest.

Those are the sort of relationships that do not just last, but usually get better as time passes.

Now let’s take this modest but crucially important insight to the next level. It is this:

The likelihood of a customer buying a particular product is inversely related to his need for it.

Thus:

The less a customer needs a product you are selling, the more likely he is to buy it.

And:

The likelihood of a customer buying a second product he doesn’t need from you is at its peak the moment he has just bought the first product he doesn’t need from you.

 So:

 The intelligent marketer/salesperson puts 80% of his energy and talent towards selling multiple versions of products that his customers don’t need.

Okay, let me step back from the above. Just a bit. I confess, I’m a dyed-in-the-wool contrarian. I have no interest is giving advice and creating rules that make perfectly simple sense to those that hear them. In creating rules for entrepreneurship and its many components (such as sales and marketing), I feel compelled to make my case with statements that sound, at first consideration, nonsensical. But I’ve found that all the best insights and successes I’ve had in my entrepreneurial career have come from those.

So, yes, you can make a business by selling people only what they really need. And you can use your own superior moral judgment to dissuade your customers from buying things from you that they don’t need.

But if that’s your idea for building a profitable business, you should have a Plan B. Because the great likelihood is that the sales experiences you will be giving your customers will be, from their perspective, about as much fun as buying bags if you are Bill or buying cattle feed if you are me.

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I love TED Talks like this. Here’s an academician explaining a cognitive bias that is very basic knowledge for any good marketer as if it’s an amazing psychological revelation.

I’m curious… Is this “dilution trick” new to you?

 

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