Two Purchase Stories
A home owner bought something completely unexpected, something they weren’t thinking about buying even a week ago. While they had been spending weeks looking at the market for bigger houses, they bought two pairs of high-quality headphones to watch TV late at night.
Why?
A higher up at a company ended up spending way more than their budget on off-the-shelf software from a large company, instead of working within their budget and hire another developer to customize the home-built version.
Why?
It’s tempting to think every purchase is a mystery. “There’s no point trying to understand buyers.”
But as we’ll see with these two purchases, there’s a predictable thread when you play the stories through.
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The home owner had been feeling the pain of having too small a house, now that the second child was born. The home owner and their spouse really needed some time together, but the sleep patterns were so delicate. A small noise would wake up the three-year-old, and there was no chance to watch a movie to relax.
“Let’s get a bigger house. We could have the bedrooms further away from the TV. This house is too small.” “But the market is so high right now”.
Looking at the search history for this couple, you’d be thinking “surely they’ll be buying a house soon.”
But instead, something else happened. One of them had an idea. “How about we get some headphones?” “But we’re going to look dorky, side-by-side.” “Yeah but maybe it doesn’t matter.”
The headphones were bought on a whim? No, it was a deliberate decision after weeks of struggle about the house seeming too small. $500 for headphones beats thousands in mortgage payments over several years. The decision came quick. The headphones bought weren’t really in competition with cheaper alternatives. They were in competition with a bigger house. For that price saving, they bought the best-looking set, to match the TV when cradled into their chargers, and to look a little less dorky, together.
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The higher up at the non-governmental agency had been dealing with a bit of a gridlock problem. Costs were high, and performance felt capped. No matter what new option was explored, the employees would come up with valid reasons to defend the status quo. It was the nature of the organization’s mission. Such a drag. So it’s no surprise that he had an eye on a bigger position somewhere else.
When talk of the slow pace of development for the in-house software tool came up, there was no way it was going to feel different. The news was predictable: “We need another dev position for the in-house tool.”
The meeting over, he dials up an acquaintance at another company. “Hey. What’s that enterprise software you bought earlier this year.” “What was the price again?”
Weeks of phone calls and negotiations, the higher up decides to go with an external software tool and decides to focus the team on the migration. “But it costs 3 times the price”, the employees protest, “and we’ll be dragging our feet with delays and bug fixes”.
But the higher up had made up his mind. He manages in risks, and the first risk is the risk to his reputation. Employees will always be dissatisfied with his decisions, but with a move like this, he’s putting in exercise for the kind of decision he’d make at the next job. It’ll be a rough few months, but he’ll be able to say he reduced the risks to the company by outsourcing a cost centre. And he’ll get the next job because “those are the moves you make at that level.”
To the employees, this made no sense. Three times the price! The budget for the home-built tool was never in competition with the price of the off-the-shelf product. It was in competition with his other career advancement options.
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These stories highlight trends in buyer behaviour, for better or worse.
It turns out a lot of home owners choose products that compete with the risks of buying a bigger house.
It turns out executives sign big purchase deals for careers reasons.
It turns out a higher price doesn’t always stop the purchase.
