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Toronto Police Service demonstration of a lie-detector test in 2002. (J.P. MOCZULSKI/The Globe and Mail)
Toronto Police Service demonstration of a lie-detector test in 2002. (J.P. MOCZULSKI/The Globe and Mail)


Five customer myths that lead to poor decisions Add to ...

Private business owners cannot control or predict economic forces, as I pointed out in an earlier column. What they can control are their own management decisions.

There are five customer myths that drive strategy and decision making that should be carefully evaluated when setting marketing and sales plans. I’m not saying they are uniformly untrue, but they are often untrue and if they are, they lead to dangerous decisions.

Customer myth No. 1: The low price fallacy

I hear from small and medium-sized business (SMB) customers a lot: “We are having trouble competing because customers want the lowest price and our costs are higher.” Maybe, but I doubt it. In North America, 60 per cent of government contracts don’t go to the lowest bidder. In research work we do, we often find two things. First of all, price is one of the attributes most forgotten by customers if they are happy. Second, the perception of low price is more important than the actual price – Walmart, for example, does not always have the lowest price but most customers believe it does and they feel good about shopping there. Consumers want the best value, more often than not, and customer experience and service are still important parts of the equation. The point is to find out how price sensitive your customers actually are.

Customer myth No. 2: The best product fallacy

SMBs often say the best product always wins the day, and I hear it in favourable and unfavourable ways. The problem is that it usually isn’t true. We see this in technology all the time. Four out of five tablets on the market have better specs than the iPad, but the iPad has more than 80 per cent share of the space. Good products that address specific customer issues, that are intuitive or easy to use, and that are very well marketed usually win the day. Sometimes good enough is good enough – check with your customers before over-investing.

Customer myth No. 3: The choice fallacy

Many private businesses are developing and releasing more products than necessary. Not only does this cause all kinds of issues with complexity, cost, and supply chain management, among other things – it often confuses the customer. Curation is in right now. One of the fast-growing U.S. retailers is Trader Joe’s, and one of things it does really well is choice limitation. It understands that customers may say they want 30 kinds of tomato sauce to choose from, but they are actually relieved to have only three choices. Have a hard look at how many orders come from a select few of your offerings. It could save you money and win you sales.

Customer myth No. 4: The engagement fallacy

I hear this frequently: “Our customers want lots of engagement.” Are you sure? Have you asked? We’re polite here in Canada, and maybe your customers say they want a relationship with your brand when they really don’t. Maybe they delete, throw out, or ignore whatever it is you’re offering. In a recent U.S. study, 77 per cent of customers admitted they didn’t want more two-way dialogue or communication, they wanted a deal or to be left alone. Before you invest in a complex and time-intensive engagement strategy, check with your customers. Maybe your discounting policy can be more clever for a fraction of the cost.

Customer myth No. 5: The social media fallacy

Tied closely to No. 4, many of our SMB customers put a lot of eggs in the social-media basket, thinking it will solve all their marketing problems. There are certainly good case studies that show how likes on Facebook translate into incremental sales, but there are also lots of cases where there is no definitive evidence of a correlation between social media results and business results – and it is not the social-media platform’s fault. Understanding the platforms that really matter to your customers, who they are or how they behave on those platforms, and how to think about reaching out to them is the foundation of any good social-media plan.

Ignore the noise and beware the myths.

Mark Healy is a managing partner at  Torque Consulting Group, a division of Satov Consultants, specializing in market entry, product launch and customer insight. Mark is a regular speaker and media contributor, and he is known as much for his penchant for loud socks and a healthy NFL football obsession as he is for his commitment to coaching and developing professionals early in their careers. He is a passionate Queen's Engineering and Ivey Business School grad, a past chair of the Ivey Alumni Association board of directors and currently an advisory board member for Holiday Helpers. Mark lives in Toronto with his wife Charlotte, his daughter Evangeline and their two bulldogs, McDuff and Duke.

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