Product Benefits Outrank Actual Product
By Eugene Peterson
I am old enough to remember when IBM was first formed. The founders broke off from another company that produced business machines. They were bright people who did some out-of-the-box thinking, who quickly recognized that if they simply produced another similar business machine, they would merely be competing for the same customer where price would be a main consideration. With an eye on the future, they distinguished themselves from their completion by diligently searching and finding what they could do for potential customers above and beyond providing a similar business machine. They listened closely to the client and quickly learned that only 35 percent of the clients were interested in the product and that 65 percent were interested more in what the product could do for them. When they learned not to sell the product, but to sell the benefit that could be provided by the product, IBM became an overnight success and industry leader. They gave people what they wanted and charged a premium for their involvement. Everyone else was selling the product; they sold the benefit of the product. I remember vividly in the early 70s, when I was teaching at Iowa State University, the day I got a new red IBM typewriter. It was stylish, I had my choice of colors, but most important of all, it had a new interchangeable typewriter ball. Instead of individual keys for each letter, it had a rotating ball that contained all the letters. IBM didn’t see the need for another electric typewriter, they saw the need for variable fonts – and supplied the need with an interchangeable typewriter ball that gave this electric typewriter the ability to change and individualize fonts. I was in heaven – I had three font options. It was the typewriter of preference and cost about double the competition, yet there was no competition. IBM recognized that if they did the same old thing everyone else was doing, they would simply be fighting to sell the machine for the lowest price where profits would be marginal, if any. When they learned to find and satisfy customers needs, which was not to just provide another electric typewriter, they were able to charge and get a premium to do so. Another lesson, have you noticed that IBM today does little if any manufacturing? Didn’t they just sell their laptop division to another company? We are fools if we think that price alone, being the lowest bidder, is the key to financial success..