Who Do You Want To Do Business With?

Christopher Carfi—Cerado, Inc.
Member

Posted 19-Jul-2004 08:29 PM
While doing some research over the weekend on buyer-seller interactions, I came across a fascinating site called DiverseNation. At first glance, DiverseNation is just another online classifieds directory. But a further look finds something completely different.

What's different is that the classified listings themselves are shunted off to the side, almost appearing to be an afterthought in the site design. What is front and center is the ability to choose what type of business you want to engage with, based on religion, ethnicity, or gender of ownership.

Whoa. Why don't we add "political affiliation" to the list while we're at it and go for the quadfecta of taboo cocktail party conversation?

DiverseNation as a website itself is not going to set the world on fire (a quick perusal through the classifieds shows only one listing), but the model is fascinating. Instead of making the primary search based on the product or service that is desired, DiverseNation seems to be saying that who you might want to do business with is at least as important as the type of business you need to do. This is a radical idea.

There is, of course, the well-worn saw of the "old boys network" and that "birds of a feather flock together." But there's something different here. Instead of talking about it in hushed tones near the water cooler, or brushing it off, it's being presented head-on. Is this a unique occurrence? Or is this the beginning of a trend?

Graham Hill
Guru
Member

Posted 20-Jul-2004 04:24 AM
Christopher

I don't know about you, but personally, I prefer to buy from people that I have bought from before, from people who others have recommended to me based upon their own experiences, or from people who have rock-solid reputations in the market. Occasionally, I take a punt on an unknown company, but only if there is a reason to do so.

However, I do try and support people in my local community, but they usually fulfil one of the above criteria. And if they don't deliver, they are never used again.

And I don't thaink I more rational, conservative or risk averse in my buying behaviour than most others.

Buying for politically motivated reasons is a free right in any advanced democracy, but will automatically reduce your economic choices and thus will tend (over time) to reduce the quality, or increase the price of whatever you buy. (And it has absolutely nothing to do with diversity, which is blind to all of the factors the website mentions.) Making this trade-off is up to the individual.

Perhaps this is one of those curious, politically-correct, American things! I can't see it catching on elsewhere!

Graham Hill
Independent Management Consultant

Christopher Carfi—Cerado, Inc.
Member

Posted 20-Jul-2004 09:19 AM
The interesting thing to me was that the site was driven as much by affiliation—group membership—as it was by product or service.

In this case, a vendor who knows the shibboleth has an advantage over one who does not.

To your preference to "try and support people in my local community"...what if you were, say, living in Canada for a customer project and there were two equally qualified grocers in the neighborhood. Now let's say one of them shared a strong group affiliation with you. Maybe the grocer was from your home town.

Would you be more likely to give that grocer the benefit of the doubt, even if someone had recommended the other grocer?

Christopher Carfi
www.cerado.com

Graham Hill
Guru
Member

Posted 21-Jul-2004 01:59 AM
Christopher

If I were looking for a grocer, and faced with a choice of one from my home town (in rural Lincolnshire, England) and one recommended by friends I trusted, I would probably try out both to see which one offered the best experience (the right products, excellent service and good value for money). The one that offered the best experience, had the fewest snafus and maybe, even tryed to delight me with little surprises, would win my business hands down.

The decision would be made by a mixture of warm, fuzzy gut feel and cold, hard shopping logic, with the greater emphasis on gut feel.

That doesn't mean that I wouldn't buy odd things from the other grocer if the need arose, just that it wouldn't be my main grocer. At the end of the day, affiliations are less important than delivering the goods.

This is a critical finding from loyalty programmes in general. They universally don't work if the product or service underpinning the programme doesn't deliver against its competitors. But providing they do deliver, customers will use more than one programme for different purchases. And what is an affiliation programme other than another sort of loyalty programme?

Graham Hill
Independent Management Consultant

Christopher Carfi—Cerado, Inc.
Member

Posted 21-Jul-2004 07:45 AM
Graham

I (mostly) agree with your point stating that if a product doesn't deliver against its competitors, it won't be successful. But I would not say that is an absolute.

It would seem to me that once a product is "good enough" (let's say, within 80% of the capabilities of the "best-in-class"), then in many cases the "gut feel" factors start to kick into play. I believe some of Jim Barnes's research brings this up. It also seems that affiliation is a strong contributor to gut feel. If a customer finds out that his sales representative has congurence with him on a number of dimensions (not only hometown, but maybe they went to the same university, have similar interests, know some of the same people, etc.) then perhaps that affiliation may start to become more and more of a factor, especially if representatives from the other competitors do not share those same affiliations.

In other words, if a customer is given the choice to purchase a best-in-class product from someone he dislikes vs. the choice to purchase a "good enough" product from someone with whom that customer shares a strong affinity, which way will that customer go over time?

Christopher Carfi
www.cerado.com

Graham Hill
Guru
Member

Posted 23-Jul-2004 01:12 AM
Christopher

As you quite rightly suggest, in the world of the customer, there are very few absolutes.

Your point about the customer experience being good enough is generally right. Upon starting to trade with a new grocer, we carry with us a mental model of what we expect to experience, largely based upon our experiences with similar shops in the past. Providing the grocery experience as a whole passes a 'minimum expected' hurdle and there are no catastrophic failures during the initial experience (e.g. the basics not being in stock, outrageous prices or particularly rude checkout staff), the experience will be satisfactory and the grocer will continue to be used. Most of this decisioning will be non-consciously carried out.

The power of affiliation is an additional factor in this decision process. Perhaps the best way to look at is is through using the Kano model. Affiliation is an 'excitement factor', one that doesn't detract from the experience if it is absent but can provide an edge if it is present. But generally, the grocer will still have to cross the minumum expected hurdle on threshold and performance factors to be acceptable at all.

(Use this link to the University of Calgary if you want a 3-page intro to the Kano model... http://www.ucalgary.ca/~design/engg251/First%20Year%20Files/kano.pdf )

This of course assumes that affiliation is not particularly important as a factor. Some affiliations can easily overide all other factors, particularly life affiliations such as religion.

Graham Hill
Independent Management Consultant

Danny Khow
Member

Posted 04-Aug-2004 07:25 AM

If my wife was doing the Grocery, it'll be the one offerring the cheapest price for the commodities.
If it was anyone else doing the grocery, it'll be the nearest one with the least hassle...
Its groceries for heaven's sake..

Graham Hill
Guru
Member

Posted 06-Aug-2004 03:29 AM
Danny

Your wife may buy purely on price and you may buy based on accessibility, but these are only a range of factors that shoppers use. Even for groceries.

There is considerable research into where people buy and how they buy when they get there. And it shows that they often behave very differently.

For example, Tesco's segmentation model (presented at the Customer Think European Conference earlier this year) showed clearly that although price and accessibility are important factors for some customers, there are many other factors involved in individual choice.

And for example, research by Ackerman & Tellis into cultural differences in how people shop showed marked differences between Chinese and American shoppers in where they shopped, how they bought, what they bought and how they interacted with other shoppers.

The marketing saw that I have always used is that I do not assume that others behave either the same as myself, or differently.

Graham Hill
Independent CRM Consultant