Do your customers have more money than time?

Posted by: John Tozzi on August 4, 2008

Wired editor Chris Anderson, who is writing a book on the economics of free, has an instructive post on his Long Tail blog. Here’s an excerpt:

At some point in your life, you will wake up and discover that you have more money than time. And you will then realize that you should start doing things differently, which means not walking four blocks to find an ATM that doesn’t charge a fee, driving for miles to find cheaper gas, or painting your own house.

Entrepreneurs need to ask, “Do my customers have more money than time?” Because I think very few companies can sell to both groups -- those who have more time than money, and those who have more money than time. So decide who you’re selling to, and then run your business accordingly.

For example, if you’re selling to people short on time, having a real person answer the phone is more important than whatever you save by using a phone tree. But if you’re a retailer selling to people short on money, long lines won’t send your customers to a higher-priced competitor.

Here’s the thing for small businesses: If your only competitive advantage is low prices, I think that makes you pretty vulnerable. Because you can’t always control your costs, and you can’t control your competitors’ prices. Here’s what you can control: the quality of your products, your customer service, the value you deliver to customers. If you sell to people who care more about those things than the price tag, your customers won't flee the instant you don't have the lowest price anymore.

Of course, it isn’t black and white -– consumers exist on a spectrum between those who only care about price and those who don’t care at all. But if you’re a business, you should know which side of that spectrum you're trying to sell to.

Reader Comments

curious

August 5, 2008 1:32 PM

Is it not true that if you have a lot of money you will have more time for yourself and so will everyone else, for you?

Scott Fox, Author of Internet Riches

August 5, 2008 2:41 PM

I think this is a great point.

The points of view of these 2 market segments create very different shopping and purchasing behaviors.

The differences need to be reflected even in web site design: customers with less time want to get to the purchase areas quickly and are less concerned about details; those with less money need more details and reassurance that the product meets the needs of their limited budgets.

Wes Ball, author of The Alpha Factor

August 6, 2008 10:29 AM

I agree with Scott. Each of these two segments create very different shopping behaviors.

The key is in understanding the emotional factors behind the buying process each desires. Too many marketers get lost in thinking that "value-creation," which includes price, product performance, and other "hard" factors will aid in attracting one or the other of these segments. In fact, it will only confuse them and harm long-term loyalty from either segment.

There are two emotional factors to the buying process that drive all decisions: 1) how I feel about myself when I buy or use a product ("self-satisfaction") and how I think others feel about me using or buying a product ("personal significance"). Focusing upon these to solve the problem creates long-term loyalty and greater profitability with either segment.

I wrote an article in June about this that might be helpful. You can read it at http://thealphafactor.com/2008/06/

Thanks for a good post.

Kare Anderson

August 14, 2008 1:14 PM

Plus, many times, we can reach more prospective customers in both segments - with the right partners and methods.

This trend towards different kinds of bundling, co-branding, cross-promoting and other kinds of partnering has brought out the best and worst behavior in businesses of all sizes.

Yet, recognizing the time-starved self-image of many potentially lucrative customers, one response is to reach them through businesses they already know and trust, at times and in places that are convenient to them - via partners.

Even and especially in these soft economic times with a loooong tail, this is a way to generate more value and visibility to attract even tiny niche markets.

Ronnie

January 9, 2009 8:40 AM

This is ABSOLUTELY true! It always drove me nuts to see my parents drive for miles to save 50 cents in gas.

My customers actually understand this because the products and services we provide save them the time and resources that they don't have.

They get access to a vault of private label content (i.e. royalty free content) that they can post on their website, blog, or emails without having to slave away at writing, editing and designing it.

It's a huge time saver!

Miles Technologies

January 9, 2009 3:17 PM

"Of course, it isn’t black and white" - For business technology providers, time and money are both relevant factors. A technology solutions provider should be able to help customers use technology in order to save both time and money. - Miles Technologies, www.milestechnologies.com

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What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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