Approaching Sales in a Different Way

The ‘Bid-Ask’ Model for a Customer Purchase

A good way of looking at any customer purchase is by analysing it using a Bid-Ask Model, where the customer’s Ask has to be matched with the business’s Bid to result in a transaction (just like a stock market transaction). The customer Ask is the value a customer requires to make a purchase and the business Bid is the value which is offered by the product/service the business is selling. This concept is particularly interesting and useful for early stage companies and startups as these businesses are not or less sure about how potential customers will accept the product/service offered by them.

So the concept seems simple. However, calculating the same is the tricky part. So let me try to define the terms in more detail.

The Customer Ask – This is the value the customer is looking for before buying the product or service. Any value under this value might not be enough for the customer to switch from the current solution he/she is using. To calculate this, we need to start off by identifying the best current product/solution which customers are using. The best way to identify this is by looking at the market shares of various products in your space or by simply asking the customers themselves. In addition, we would also need to calculate an additional factor, i.e. the Spread.

The Spread – The spread is the additional value a customer requires to move to a new solution. This value depends on a lot of factors like

- the type of customers – demographics, buying behaviour

- the particular Industry – essential or non-essential, nascent or mature

- the utility and importance of the product/service in the customer’s life – measuring customer stickiness

So to put it in a formula,

Customer Ask = The Best Current Solution + The Spread

The Business Bid – This is the value the business’s solution offers to its customers.

FOR A SALE, THE BUSINESS BID = THE CUSTOMER ASK

Now that the concept and the terms make more sense, how do we go about calculating the bid-ask for any business? What are the various features which add value to a product and how much value does each hold? Since the customer has to buy the product, she is the right one to ask.

For a startup, asking some potential customers (through family, friends, communities, online groups, social media etc.) to fill a Survey or participate in a Focus Group Discussion would be a good idea. It makes sense to ask potential customers and not existing customers as the latter are already buying your product.

The aim of the above is to get the following:

- attributes important for a customer in a product

- weights for each attribute

- the current best solution which the customer is using

- ratings for the various attributes for this solution

- how important the product is for customers and how open are they to try a new solution

These inputs will then need to be used to calculate the Ask of the customer and also the Bid of your business. 

Marketing Hack – Build Email Lists

An email list is probably the strongest marketing tool a business can have in its marketing repertoire. From the first day itself, a startup must focus on building an email list. Email lists can be created using Gamification. Users can be offered freebies and incentives to induce users to share their email ids.

Email lists are a good marketing tool owing to the following reasons.

One to One – The communication between the business and the customer is personal and one to one.

Higher Engagement & Conversion – Emails can be sent on a regular basis to inform users about latest updates and happenings. This leads to increased engagement with the customer, which eventually results in a higher conversion rate as well.

Marketing Hack – Hit at the Customer’s Emotions

In this ever increasing competitive market, it becomes very difficult for a brand to build and sustain a place in the customer’s mind. Brands are now experimenting with different messages to the customer and one such message which leaves a mark is one which hits out at the customer’s emotions. Connecting emotionally leaves a lasting impact and enhances the brand’s value significantly.

Nivea is a leading brand for skin creams. In Brazil, the company experimented by integrating a Bluetooth beacon in their magazine ads, which could be torn out by parents and made into a wrist band for children. Parents could download an app into their smart-phones which, coupled with the wrist band, could be used to track how far the children would be from their parents when in public places like beaches etc. This sent a message to these parents that Nivea is not just a company selling products to it’s customers, but is one which cares about the customers’ children as well.

Growth Hack – Trend Watching

A good business hack to maintain high growth rates is to keep watching latest trends in the Industry. These trends can include latest developments in product design, marketing strategies, customer expectations and so on. A good startup will keep abreast of the latest trends, identify the ones which are getting good customer adoption and will be flexible in adapting them into the business.

Zara is a leading fashion brand which has scaled tremendously in the past few years. The Spanish retailer is famous for it’s agility in identifying new fashion trends and flexibility in integrating them into it’s own business.

Marketing Hack – Try before you Buy

Sampling or trying a new product before purchasing gives a customer a whole lot of confidence and value for money spent. This is a great way for businesses to get additional visibility and to increase their customer conversion rates as well. Most FMCG companies either offer small satchets of products for free or at a nominal price. This is primarily to make customers try out the product.

An interesting application of this hack was seen by me in a startup based in Gurgaon, India. Fitnessathome is a fitness equipment rental cum sales startup. Customers can take an equipment, say a treadmill, for rent and if they like it, they can purchase it and the rental amounts they have paid will be deducted from the sale price. The startup’s main margin comes through fitness equipment sales and they have seen good results with this ‘try before you buy’ tactic used by them.

Sales Hack – Something Extra

Giving something extra to a customer goes a long way in delighting the customer. To a customer, that little extra something shows that the startup cares and wants to ensure a great experience for him/her.

In Beveragewala, we started sending tea samples with each order. The samples used to be chosen in such a way that they would be complementary to the tea ordered by the customer, so that the customer would have a greater chance of appreciating the sample and the gesture. In our first customer survey, more than 18% of the respondents mentioned about the samples they received.

This shows that a little freebie, which may not cost you much, may leave a big impact on your customers.

Marketing Hack – Retargeting

Following a customer who has shown interest or advertising to 3 new customers, which one would you choose? The first is more likely t o get a result and is called Retargeting.

Retargeting involves being visible continuously to a customer who had shown interest earlier (maybe by spending time on a page or reaching the checkout page etc.). This customer already has a good idea about the product and has invested time in knowing more about it. If the customer requirement is still alive and a startup is able to maintain being visible to the customer, conversion is likely.

All startup marketers should allocate a part of their budget for Retargeting (maybe 30%), the rest being for Advertising & Visibility.

Sales Hack – Customer Reviews

A Customer Review is the best tool to build trust in new customers.

This has been my experience in Beveragewala. We did a customer survey and an interesting result was that a lot of them (63%) said that customer reviews were most important for them in their purchasing decisions. This led us to starting a rewards program for our customers. We incentivized customers to write reviews by offering them reward points, which could be redeemed as cash in their future purchases. 

Reviews help build trust, not only on the product being bought, but also on the platform selling it. Since a business will always be biased about itself, a customer review tends to offer a more unbiased review about the business to new customers.

Sales Hack – Sweets for Change

Sweets and candy companies have come out with a great sales hack for selling their products. This has in fact become very standard in most retail stores here.

When I go to the supermarket to buy something, I select what I need and go to the cashier to make the payment. If I do not have exact change, and there is a little change to be taken back (usually under Rs. 5), more often than not the cashier tends to give me sweets for the same amount. Since the amount is not significant, most people don’t question this. If you look at it collectively, sweet makers must be generating good revenue from this strategy of giving ‘sweets for change’