The Alpha lesson in the last presidential election was that Obama won simply because he was the only candidate with a vision.  Only insiders knew what it really was (and, as we have discovered, most people would not have liked it if they did understand it), but that didn’t matter, because his competitor had none.

So, here we go again.

Look… in case any candidates are reading this, here’s what an Alpha really looks like:

An Alpha has a positive vision that redefines what things can look like in the future. That’s true in business AND in politics.  It is a vision that people want to follow, because it encapsulates what people aspire to be or to be part of.  And the Alpha is confidently willing to share that vision. He doesn’t have to tear down anyone else, because his vision carries him.

Question: How did Ronald Reagan, an actor then governor of California, become the president who turned around a dying America in the midst of a double-digit inflation recession where gasoline was being rationed and you bought something the moment you decided you might need it, because you probably could not afford it a year from then?

Answer: He had a vision for what America could be that was both inspiring and empowering, and he shared that unashamedly with America.

He wasn’t vicious in his campaign.  He did call out liars, but he generated his following by leading with a vision, not by attacking.

Right now, only Ron Paul consistently returns to his vision and confidently states it no matter what animosity he faces.  That is undoubtedly his greatest strength and the source of his popularity.  He can’t win, because his foreign policy stance will undoubtedly derail his chances for president.  But until there is another candidate willing to stand upon a truly conservative vision, he will continue to pull significant numbers.

So what would an Alpha candidate do right now? Alpha rule #2:  Stop “competing.”  Competition is not leading.  People want to follow someone who knows the path to where they want to go.  Stop slamming each other and start defining a path to prosperity and success.  Then state it with confidence.  Details are not all that important, as Obama proved resoundingly.  People want to know that the destination is a place they want to arrive.  Describe that destination with clarity, and, if it is the place they want to be, people will want to go along.

There has never been an opportunity like this to clearly define the difference between a path of socialism and real capitalism (not the socialistic version of capitalism that we have seen over the past four decades where a select few – including our elected officials – take what they can get and leave behind the people who actually created that wealth).

Now is the time.  Both Rush Limbaugh and Glenn Beck have repeatedly noted that all it takes is clarity and confidence.

So, is there a real Alpha out there?

Reagan did it.  Can any of these candidates?  Please?

Wes Ball is author of The Alpha Factor.  He is also president and founder of The Ball Group, a strategic innovation and new market development company who works with large and mid-sized companies to create self-sustaining growth.  You can reach Wes at w.ball@ballgroup.com.

Last year, hundreds of aspiring Alphas told me how they were able to use the Alpha model to discover how to make themselves the competitor that everyone else feared.

I look forward to hearing how you accomplish the same thing.

Happy New Alpha Year!

Wes Ball, President

“Go Ahead… Dominate Your World.”

The answer is in “concept” innovation, and the results are typically greater than product improvement innovation… both short-term and long-term.  Here’s why…

Concept innovation is innovating the concept of what people are buying so they aspire to own or use your product or service. In Alpha terminology, it is redefining your category in terms of a higher level of personal experience or fulfillment a customer can get buying from you.  That means, they feel better about themselves and they believe others also see them as better than they were before they purchased or used your product.

To some, this may sound too superficial, because they are limited in their experience of such “innovation” as being clever phrases or pandering to base human desires (sex, material wealth, power, etc).  Successful concept innovation, however, is much, much deeper than that, and its ramifications go to the core emotional and functional needs a person desires to fulfill.

As I cover in The Alpha Factor (Westlyn Publishing, 2008), the most influential brands in the world have this trait in common.  The real secret to their success is and has been in their concept innovation.  They are not all the largest in their respective categories, but they are the most profitable and the most influential in driving and managing customer decisions.

For instance, Apple was using this principle for decades before it finally became the Alpha in the personal computing industry, driving competitors to follow their lead in technological innovation and customer experience.  To own an Apple made you part of a cult of passionate “believers.”  Apple owners were evangelists for the experience of owning an Apple product.  That made customers of non-Apple products envious to the point that an anti-Apple movement even started amongst persons who perceived themselves as more technologically savvy and who could manipulate the weaknesses of DOS-based PC products.

Apple remains my favorite Alpha company, because it still completely “owns” the customer experience people aspire to receive… and they do it in a way that allows them to ask far more for their product than competitors can demand.

Ben and Jerry’s ice cream is another.  Although no longer the Alpha they were even a decade ago, Ben and Jerry’s ice cream accomplished much the same thing.  Yes, they innovated by adding more “stuff” to their ice cream, but that product improvement was only successful because they created a new concept for ice cream eating that people aspired to experience.  For instance, my research in the ice cream category back in the mid- and late 1990s showed that 80+% of persons who claimed they “only” bought whatever ice cream was on sale actually regularly purchased Ben and Jerry’s ice cream for themselves.  They just hid it from the rest of the family.  That’s an immense level of influence created, and it is why almost every other ice cream brand began to copy B&J’s product approach.

On a smaller level, I worked with a small regional bank that was already doing a great job with customer service.  They had among the most competitive rates around. They only had two branches, so they could not compete with “regular” banks on convenience – the most common criteria for picking a bank.  The concept innovation we discovered would be most successful for them was to change the focus of what they sold from bank services to “personal financial success.”  We created a “Personal Success” club.  We defined services that would make this bank the go-to bank for almost anything that would help their target audience feel that they could take charge of their personal financial future.

The result was more than $1 million in new deposits in the first week and dramatic growth in number of customers defining the bank as their “primary” bank.  The bank only had to do a small amount of internal work to pay off the concept so that customers actually felt that the inherent promise of the concept was fulfilled.  But the results were more than almost any new product development process could have generated for them.  Best of all, they did not even have to open one additional branch to accomplish that growth.

Although I have facilitated plenty of new product innovation, seldom have I seen that investment pay off as well or as quickly as concept innovation consistently does.

Concept innovation doesn’t cost much to accomplish.  But the return on investment is immense, if it uses the Alpha model to innovate to fulfill a person’s experiential needs, as well as his practical product function needs.

I know many companies have tried some version of “concept innovation.”  Some with success.  Some without.

Have you seen this work?  Or have you seen it fail, and, if so, why do you think it failed?  I would love to hear your experiences.

Wes Ball is president and founder of The Ball Group, a strategic innovation and new market development company.  He is also author of The Alpha Factor – a revolutionary new look at what really creates self-sustaining success and market dominance. He can be reached at www.ballgroup.com or www.thealphafactor.com.

The problem is that too many small businesses are trying to act like big businesses, so they effectively kill their ability to grow right now.

Here’s what big businesses are doing that every small business should avoid…

1.  Frightening their employees

Go into any larger corporation and you will find terrified employees. They are barely productive and (even worse) they are fearful of suggesting anything that might not meet with immediate approval from their managers.  And, if you are over 50 years old and not on the “fast-track” to the top, you know the laser targeting system is seeking you out.  Most wonder what day it will be when they find they have been terminated or “eased out” for nothing they have done other than to make someone higher up unhappy.

Small and medium-sized businesses have the advantage of being able to encourage and nurture employees in ways larger businesses have long forgotten.  They can be more flexible in how they work with employees.  They can say encouraging things to employees that larger companies would be terrified to say to theirs (for fear that the employee will start to demand more).  Also, because managers in smaller companies are more visible to top management, they can be held more responsible for encouraging employees to perform better than in large corporations where mid-level managers are often allowed to create their own hidden “kingdoms.”

2.  Playing games with their employees’ money

There is a rule in life:  Don’t mess with people’s money. You can get away with a lot of things, but playing games with people’s income stream is not one of them.  Even if the employee doesn’t rebel immediately, you will pay the price sooner or later.

All too many larger companies are finding ways of redistributing costs to employees or otherwise lowering effective income.  Historically, one of the few benefits of working for a larger company was a reliable income stream.  That has disappeared in large part.  From what I have seen, there is even less security of a reliable income stream at a larger company than in a mid-sized company these days.

Smaller companies should never fall into the trap of trying to make up for lack of company marketing by taking it out of the pockets of employees… especially by basing changes upon anything other than performance. 

Most people would rather work for a smaller company with a friendlier work environment, more contact with upper management, and more trust that their performance will earn them the rewards they deserve. Don’t give up that advantage.

3.  Not investing in building market influence

Big businesses (for the most part) are not investing in increasing their market influence right now.  Most CEOs are so focused upon keeping costs under control to create attractive short-term bottom line results for shareholders that they are not even thinking about expanding their market influence efforts.

In most markets, small and medium-sized business thrives only with regular, creative marketing and influence-building. In tough times, that is even more true.  The advantage is that people have money, and those people want to spend it with businesses who will cater to their self-satisfaction and personal significance (two critical parts of the “Alpha Factor” model).

Those with a lot of money are looking for ways to spend it, because more and more are fearful that coming inflation will take away their buying power.

Those with little money are a bit more fearful, but they are still willing to spend (and spend much more) for things they need from businesses who make them feel good about themselves and make them feel that other people feel good about them, as well.

While smaller companies are still dependent upon the vagaries of the marketplace, they actually have far more means to increase revenues during tough times than larger businesses do.  They are closer to the customer, so they have more opportunities to increase their influence.

Conclusion:

Small businesses can grow significantly during tough times like these. What makes that happen is 1) encouraging and nurturing employees, 2) helping employees see the path to some level of reliability in their income stream, and 3) investing wisely and creatively in influence-building activities, products or services, and marketing.

Question:

What have you seen done by small and medium-sized businesses recently that has helped them increase their influence in the marketplace?

Wes Ball in author of “The Alpha Factor – a revolutionary new look at what really creates self-sustaining success.” He has helped companies ranging in size from the Fortune 100 to small local businesses create dramatic, sustainable growth without discounting.  He is also founder of The Alpha Business Academy which is specifically designed to help small and medium-sized businesses grow dramatically even during this tough economy. Wes can be reached by email at w.ball@ballgroup.com.

Many persons watching us wonder how we can do that.  It looks as though we are selling essentially the same thing as most of our competitors, yet we get between 50% and 100% more for it.  So, here’s the secret…

We are working our tails off to get there.  We have made sure we understand exactly what people REALLY want to buy in our category (not the “things” they want to buy, but rather the “experience” they want before, during, and after the sale), and we have made sure we are not only providing those things, but also helping them discover how critical it is for their own personal satisfaction and fulfillment that they get nothing less than that.

Sound familiar?  It should.  It’s the Alpha model.

Has this been easy?  Absolutely not.  The most difficult thing has been getting everyone on the team to understand and buy into this model.  Actual delivery and communications have been been relatively easy.  Getting everyone to understand that this is not about them, but rather about the customer’s experience, has been the real battle.

What makes this even better is that this company is in what most people consider to be a “commodity” industry.  Actually, most companies are… not because what they sell is actually a commodity, but rather because they and all of their competitors have allowed purchasers to believe that it is.  They have allowed people to believe that it’s easy to deliver what you deliver and that what everyone in your category sells is essentially the same.

That is never true.  At the core level, the real defining difference between you and your competitors has to be you.  If they buy from anyone else, they don’t get YOU.  That can (and should) mean not just you individually, but your company, your installers, your service people, your telephone people, your customer service reps, your salespersons, your packaging,… everything and everyone in your company.  Why? Because each has been created or trained to represent the pinnacle of what can be had by buying something in your category.

When someone buys from your company, the should be buying something they never thought they would be able to get:

1. freedom from worry about they quality of the product, its installation, training to use it, and/or its performance,
2. comfort in knowing that if anything goes wrong (or if you don’t achieve expected results), you will be there to make it absolutely right, and
3. fulfillment in knowing that others will wonder how they were smart enough to find the best possible option out of all the not quite good enough options.

It’s not the economy that’s holding you back.  It’s you and how you run your company and approach the marketplace.  If you aren’t using the Alpha model to sell in this economy, then you are losing thousands or millions of dollars every day.

Special Limited-time Offer

If that’s you and you are tired of blaming the economy or price-sensitive customers on your poor performance, here’s a special offer:  give me a call or email me, and I will personally send you a free article on how you can turn that around in the next 60 days. No charge.  No commitment.  Just real, immediately usable answers that will change the way you run your business (or sell customers) so that you can be selling at higher prices, getting more completely satisfied customers, and reaping greater profits than ever before.

I’ve hidden this offer deep in this post, because I only want to help people who are willing to work for it.  It’s never easy to become the Alpha, but this special article will allow you to understand how to immediately put your company on the track to becoming an Alpha.  Contact me today, because I have only printed a limited quantity of this special article.  Once they run out, I won’t reprint it again.

Wes Ball is president of The Ball Group.  He is also author of The Alpha Factor, available here or through on-line bookstores.  Wes speaks around the country to large groups of business owners and managers who want to start growing their sales and profit sustainably without discounting or promotion… no matter what the economy is doing.  You can reach Wes at 717.627.0405 or through his email at w.ball@ballgroup.com.

Financial incentives are the best motivator for behavior you want the least, such as self-serving attitudes, destructive greed, and internal competition that demotivates other employees. If you want an employee who has low loyalty, makes other employees distrust each other (and the company), and will try to leverage you continually for more money for doing less work, then financial incentives are great.  The truth is that employees who work for you despite a lack of special financial incentives that are designed to motivate specific behavior are more loyal, more focused upon the good of the company overall, and more supportive of other employees.  In short, they are great team players… something that almost every company says they want to hire.

So, what motivates the type of employee you want better than money?  Sadly, they are the very things that most companies are loath to give: trust, empowerment, and appreciation.

Ask almost any corporate employee what they hate the most about their job (and would desperately like to change jobs to get), and they will most often answer with things like, “trust, personal empowerment, and appreciation for work well done.”  Interestingly, despite this overwhelming unmet need, if asked what they want the most, they will most often answer, “more money.”

Why the disconnect between what they say they want and what they would change jobs to get?  It’s something I have seen in market research thousands of times.  People will say they want something that is far different from what they would give almost anything to get, because they don’t think they can get it or they don’t believe the person asking would give it to them.  So they answer with something they believe the questioner will understand and accept.

As an employer, I have always been amazed to discover that the employees that have provided the lowest return on investment have typically been those demanding the most money and the most financial incentives for things that will grow the company.  The best employees have typically been ones who want a chance to prove themselves and who are less concerned about short-term financial incentives than long-term growth potential.

My advice:  Forget the financial incentives except as “appreciation.”  Focus upon making employees feel more trusted by including top performing ones in strategic planning and other long-range planning activities or problem-solving.  Invest in employees who show potential or who demonstrate the “right” attitudes” with training and by giving them special opportunities to prove themselves.

You will find that everyone on your team is more motivated and more more focused upon the things you really need from employees.

If you have examples of this at work in your company, I would love to hear about them.  It’s about time that corporate managers realize that negative motivation and weak financial incentives won’t work, but showing more respect, trust, and appreciation to employees will.

Wes Ball is the author of The Alpha Factor.  Although he spent the last 20+ years growing companies ranging from the Fortune 100 to small local companies, he is focusing almost exclusively upon medium-sized businesses who he believes have the most potential to rejuvenate our economy and to become tomorrow’s market leaders.  You can reach Wes at 717.799.3395 or w.ball@ballgroup.com.

You can bet that Steve Jobs is not whipping his team at Apple to create more value or quality.  No, he is entreating them to discover what people really want to buy and how they can provide that in a way that will make new customers pay almost anything to get it.

What’s wrong with “Value” or “Quality?”  Just about everything that makes a company capable of dominating its markets and becoming an Alpha (or even gaining some of the benefits of being an aspiring Alpha).

“Value” is undefinable in useful terms.  It is fine in concept as a final outcome that can be recognized in a product’s sales. But do you or your employees know what it really means to customers in your industry who are evaluating your products?  Can you or your employees define “value” from your customers’ perspective that doesn’t include the word “price?”  The problem is that “value” in its traditional definition means far too many different things to far too many people.  And the rule is: If you can’t precisely define what it is, you can’t hope to create it.

“Quality” on the other hand means nothing, if it is not what a customer wants to buy; and in most industries quality has not proven itself to be the critical factor people wish to buy.  Even more devastating is the fact that the pursuit of quality is a process that limits variance or change.  Typically this is applied in the manufacturing process, but it is all too often carried over into the “value-creation” process, as well.  The result is that predictability and efficiency become more important than the flexibility and creation of greater potential that has to be at the core of every Alpha company (or company that desires to become an Alpha).

So, what’s the alternative to using the word “value?” Start focusing upon discovering and defining what people wish they could be buying.  The best way to discover that is by understanding what experience people wish they could have, when they buy and use products sold in your category.  People don’t buy products for the product’s sake, except in survival situations.  And they REALLY don’t buy “price” (no matter what you have heard throughout your life).  They buy an anticipated experience and a set of internalized feelings about themselves.  The product is only the functional conduit that can deliver that experience or set of feelings.  (If you are new to the Alpha model concept, then you need to read The Alpha Factor in order to understand how these are the core elements of innovation that drive predictable, self-sustaining growth.)

Turning “quality” into “growth potential” also requires changing your perception of how customers buy.  Limiting variance is fine in manufacturing, but customers don’t like limitations or lack of change.  The marketplace thrives and feeds itself upon change… in products, attitudes, perceived needs, and behaviors.  The company that locks itself into limiting change in its approach to the marketplace is dead before its starts.

The Alpha company (or the aspiring Alpha) focuses upon understanding the core experiences and feelings customers desire and then drives change that constantly focuses potential customers on the next change.  When Apple introduces a new product, it only feeds the desire to know what the next new product might be.  When MacDonald’s introduces a new menu item, customers try to guess what the new trend being set is and what might be next.  What makes these work is that customers recognize a logic behind each new introduction that is a continuance of the constant striving toward delivering better and better experiences and self-feelings.  The Alpha “owns” this process, while competitors can only copy or try weakly to compete against it.

Make your New Year’s resolution now.

Drop the word “value” from your company’s vocabulary. Instead, start discovering what people wish they could be buying (in terms of experience and feelings about themselves).  Then discover how you can fulfill those desires with the “things” you offer in the marketplace.  The result will be far greater “value” perception that can demand much higher prices for longer periods of time with greater control over competitors.

Drop the word “quality” from your concept of innovation. Focus upon driving change.  Create a process for constantly delivering the next logical step in fulfilling the experiences and self-feelings your potential customers want.  The result will be an increase in your control over the market and greater profit than you could ever have expected before.

My wish for you is that 2010 will be the most profitable year you have ever had.

Want to learn more about how you can apply the Alpha model to your company, so you can create more profitable, more dominating innovation?  You can get in touch with me either through the website at www.thealphafactor.com or by emailing me directly at w.ball@ballgroup.com.  I would be happy to talk with you further about how you can make yourself into an Alpha and sustainably grow your profits and sales.

What is Alpha innovation?  It is the process of discovering what people really want to buy both in function and in ego-satisfaction, how they want to buy that, and then providing that to them.

Truth is, almost any company in almost any industry could be growing right now, no matter what the economy seems to be doing or what prospective customers believe about their futures.  There are real needs among all customer groups.  You just need to understand better how to discover what they want to buy and how they want to have it presented to them.

I’m not going to take you through the entire Alpha Factor model, which provides you with the template for finding such growth opportunities.  But I will share the core tool that will determine whether or not you even have a chance to become an Alpha.  I will also share three steps to making yourself more capable of becoming an Alpha.

The #1 secret to creating sustainable growth in any economy at any time is to create a “culture of research” in your organization. All Alpha companies use market research to define growth opportunities.  So do many non-Alpha companies. Understanding the difference between effective research that leads to (and sustains) Alpha dominance and typical non-effective research is key to making your organization self-sustainingly successful.

• Step #1:  Start by recognizing and believing that you don’t have all the answers… no matter how long you’ve been in the business.

The biggest barrier to becoming an effective “learning” organization is the self-delusion that you know how your market works.  Here is the truth:  you may know how it has worked in the past; but you have little or no idea what tomorrow is going to look like.  I know, that’s hard to hear.  But here’s why it is true: tomorrow will be created by someone you don’t know, using information and insights you don’t know.  That is how industries are revolutionized and real sustainable, disruptive innovation comes about.

If you can recognize and admit your own inability to think beyond what you currently know, then you have a chance to really find new answers.  I have been doing innovation-focused research for more than two and a half decades, and I still am surprised at what I discover in our research that neither I nor my clients knew or, in many cases, even guessed.  Customer needs and expectations are constantly changing, adapting, and being transferred from one part of their lives to another.  What was a critical driving factor last year may have little impact after new expectations are created.  Those new expectations could have come from the efforts of a competitor or from a completely unrelated area of the customer’s life.

You will only discover these new insights by constantly listening to people who may someday buy what you wish to sell.  You won’t discover these insights from within your company’s walls.  They aren’t going to be found in a conference room.  Your employees don’t know.  Your suppliers don’t know.  Your distributors don’t know.  The answers are outside.

The next time you have a meeting to figure out what to do, call off the meeting and go outside.  Talk to prospective customers.

• Step #2:  Learn how to really listen

I don’t just mean to stop talking; rather you also need to eliminate the self-talk that convinces you that you understand what prospective customers are saying or meaning.  Most market researchers (and their clients) hear through their own filter of how they believe decisions are made, which is often far different than how their target customers actually make decisions.  I am continually amazed that most research into drivers of buying decisions still comes up with function or price factors rather than the self-image factors that truly drive decisions.

When you think you understand what prospective customers are saying and why they say it, make them explain it to you so clearly that you can repeat it back to them in different words and they agree that you understand. Then go further and prove that both you and these potential customers understand how they make decisions by suggesting different ways someone could address the things they described until you hear them agreeing that you really have it.

But don’t stop even there.  Go beyond that to understand what the next step might be in the continuum of needs and expectations.  No one ever stops at the current needs or expectations described.  They will always change those needs and expectations over time.  While you can’t always define what will change as a result of another marketer’s efforts or changes in the economy, you can better understand where these customers think they are going with their expectations and what the logical end result might be.  Understanding this can provide far greater insights into longer-term strategic considerations.

• Step #3:  Stop ignoring your greatest source for more profitable new growth

This is one that always amazes me.  Most companies spend far too much money talking to current customers.  The real growth opportunity is among those persons who currently won’t buy from you.

Non-customers who are either buying from a competitor or who don’t buy at all (but have the potential to buy) are the fastest way to create dramatic new growth.  In fact, the most spectacular growth I’ve ever seen always comes from attracting completely new customers.  And when using the Alpha model to drive higher expectations that in turn drives higher price leverage, profit also skyrockets.

The huge trend toward driving “organic” growth by major marketers has even further blinded most companies to the opportunity avaialbe by talking to non-customers.  Even a company with 30% share of customers has a pool of 70% of the market as potential.  Even eliminating the 10% (approximate) of people who say they are committed to buying low price (even though I have proven many times that most of them are lying), there is obviously a monstrous potential for almost any company to grow.

I am always surprised that I have to convince a marketer who wants to grow to include non-customers in our market research. Yet, it is typically from those non-customers that we discover the biggest opportunities for creating new growth strategies.

So, can you grow now?  Absolutely.  Can you do it by sitting in your offices? No.  Can you do it by listening to your self-talk.  No.  Can you do it “organically?”  Probably not.  Use the Alpha model to understand what people really want to buy, how they want to buy it, and how you can address those opportunities.  You will find yourself leading the way out of this recession… no matter what the rest of the economy is doing.

Get your copy of The Alpha Factor at www.thealphafactor.com. Visit www.ballgroup.com and discover research toold you can use to apply the Alpha model to your business to grow right now.

GO AHEAD… DOMINATE YOUR WORLD!

Big surprise, huh?  Yet you would believe this was revolutionary new thinking, if you look at what most of the marketplace is doing.

Most businesses are creating their own personal recessions right now that will follow them for years. Discounting (because they think they need to in order to survive) is killing their futures more certainly than any government policies can.  The cost to overcome this “devaluing” that they are creating for themselves will far outweigh any possible gain they think they might have generated during the last year.

Creating “value” has been the subject of conversation around boardroom tables for decades.  Sadly, in most cases, that conversation gets no deeper than adding more “features” or adjusting price for a product or service that really needs to be rethought.  Consumers and corporate buyers are more interested than ever in value, but their definition of that term is being modified to demand more Alpha-style fulfillment than our economy has experienced in a long time.  As consumers feel more pressed and corporate buyers feel more threatened with lack of job security, both are looking for more evidence that they are not just OK, but also  valued.

Here are two critical things Alphas know about creating value that will drive growth (or limit loss) in any economy:

• You have to understand who assesses the value of your product, and
• Discounting is the quickest way to increase your pain rather than decrease it.

Sound simplistic?  Then why is it that well over 90% of all companies get these two things incredibly wrong.  Even those who start off handling these correctly and build both market share and Alpha influence eventually fall into the trap of incorrectly assessing value and believing that discounting can save them from decline.  We are seeing it all too clearly right now throughout the marketplace.

• Critical fact #1:  VALUE is in the eye of the beholder (that’s the customer)
  

“Value” is an estimate by a potential customer of how much he thinks he will gain by purchasing what you offer minus the “pain” he thinks he will experience in purchasing it.  This “gain” vs. “pain” formula is critical to understanding how to strategically make your product or service more attractive.  The potential customer is making critical judgments about what you sell vs. what they want to improve in their lives.

Psychologists have long held that people typically act either to move away from pain or to move toward gain.  It is the individual’s perception of what creates pain or gain that really comes into play in creating strategic differentiation and market growth.  Without this understanding, you don’t have a prayer of selling “value.”

• Critical fact #2:  the “beholder” is not you

More important to remember is that this pain vs. gain “valuation” is done by the prospective customer, not you.

Businesses of all sizes are notoriously guilty of thinking that they know what customers want.  Sadly, that self-assessment is almost always proven to be false.

This only gets worse during tough economic times.  As cash flow and profitability are pressed, the pain at the corporate level gets translated into movement away from strategic sanity and toward self-destructive tactics that actually work against the company.  More pressure is placed in panic upon “making the sale” with little regard to how what is being sold can become more attractive in ways that mean something to the customer.

What means something to the customer is often far different than what means something to the marketer.  As customers move away from pain and toward gain, they make many assessments and judgments.  On the “pain” side is certainly monetary cost, but there are also many other factors, including how hard it is to get it, how hard it will be to work with the people selling it, etc.  Monetary cost only becomes a real factor when the buyer doesn’t have money and can’t get it.

Luckily, we are still in an economy where that is not a significant factor.  Most companies and consumers are more careful about spending in order to preserve what they have, but most have money to spend on the things they believe they really want, need, and will fulfill core ego needs.

We all know that if we were to discover that we have a fatal, but curable disease, we would find a way to pay for the cure, even if we did not have medical insurance.  In much the same way, we will find a way to get the things that overcome even less critical needs.  To a lesser extent, we will find a way to fund the purchase of something that increases our self-image and self-perceived value to others.  In the Alpha model, these ego-satisfaction needs are referred to as “Self-Satisfaction” and “Personal Significance.”  After these are satisfied, other monies available might be used to buy other things.

So, here’s where the conflict comes in:  most marketers make their assessments of what customers will buy based upon THEIR avoidance of pain and desire for gain.

There is little real understanding among the typical corporate marketer (other than Alphas and emerging Alphas) about what people really want to buy.  The result is that they try to create more value by adding features, adding amounts included, and/or lowering price to “increase” value.  The trouble is that customers just want to satisfy the basic functional need with something that also fulfills their all but insatiable need for self-satisfaction and personal significance.  Features, amounts, and pricing do little to address those emotional, self-perception needs in ways that cannot easily be overcome by a competitor who recognizes real buyer needs.

If you want to increase value, you have to really understand more than the functional needs being addressed.  You also have to understand the core emotional needs customers want to fulfill with almost anything they buy.

• Critical fact #3:  DISCOUNTING is almost all pain and little gain

Why do most marketers fall into the trap of price reduction as a means to “increase value?”

It’s easy, even if it is self-destructive.  It certainly doesn’t take much creative, strategic thinking to suggest discounting.  It’s also what most salespersons have been brainwashed into believing by buyers who manipulate them.

Price only becomes a factor when all other things are equal OR when the buyer thinks he can get away with demanding a lower price.  So, the typical marketer gets lots of feedback about how they need to lower their price, simply because they have not differentiated themselves in ways that mean anything to real customers.

The problem is not just a matter of poor marketing; it is also a matter of bad business management.  Profit is the lifeblood of a company.  Without it, the company fails.  People lose their jobs.  Suppliers feel the pain.  The economy falters.  More companies fail.  And a death spiral begins.

A drop in price of just 5% across the board can mean a drop in profit for the company of anywhere from 10% to 50% depending upon the benchmark net profit.  In order to compensate for that drop in profitability, drastic cuts must be made on the cost side.  On the contrary, minor changes can create value that could drive prices upward by 10% to 25%.  In many cases, I have seen minor changes in value perception generate value increases of 30% to 100%, which drives even greater sales growth (which only increases net profit further).

I know.  It’s easy to say, but much harder to do.  That’s only true if you hold to the premise that price is a critical factor in creating value.  Eliminate discounting from your vocabulary, focus upon self-satisfaction and personal significance fulfillment for your customers, and it is amazing what changes will be wrought by your salespeople, your marketing team, and even your administrative team.

People naturally want to sell and buy real value.  Forget your old perceptions of value, and you will be shocked at what your people and your company can do.

Wes Ball is president and founder of The Ball Group, a strategic innovation and growth creation company.  He is also author of The Alpha Factor – a revolutionary new look at what really creates market dominance and self-sustaining growth.  Find out how you can use the Alpha model to create dramatic, sustainable growth for your company no matter what the economy is doing by calling Wes directly at 717.627.0405 or email him at w.ball@ballgroup.com.