There is a genuine concept of being “willing” to pay more, and thus genuine “Customer Surplus.” I am willing to pay more for Anker products (power strips and chargers) because they’re extremely high-quality; I don’t even notice if there’s a competing product that is 20% cheaper. I’m loyal even though there is neither lock-in nor recurring revenue. People pay more for TOMS2 and Patagonia3 products because of the authentic missions of the companies. People routinely pay more for coffee that has a fair and sustainable supply-chain, because they’re truly willing to pay more to have a positive impact on the world, not just to consume the product.
Indeed, genuine “willingness” creates the best, most durable, most profitable businesses. Consumers not only pay more, they’re happy to pay more, creating profit margin. They become evangelists, driving efficient growth. The company is resilient to competition, because consumers are buying for reasons other than “features” and “price.” The world becomes a better place, transcending a zero-sum game of winners and losers.
Love Mission: the joy of supporting a change that’s bigger than all of us, or a community or movement you want to see flourish Reciprocity: when the company gives before taking, or gives more than it takes, or provides exceptional customer service Exceptional design: a joy to use, a product that seems to genuinely care about your experience Exceptional quality: the pleasure and relief generated by reliability Personal identification: leveraging the company’s brand as visible component of your own personal brand Culture: supporting an organization that treats employees and vendors well4 Community: a welcoming space where members learn and teach, support each other, create personal connections, grow their career or business, be part of a tribe Ecosystem: wherein all members make more money or gain more prestige than had they not been part of the group
Utility Cheap: even if quality and functionality is low, it’s better than not having the product Integrations: providing functionality while also more difficult to switch vendors System-of-record: being the official place for important data, making it risky and expensive to switch vendors Training: invested in having trained an organization, making it expensive and disruptive to switch vendors Market-share Leader: the social-proof of selecting the market-leader is a reason to buy Location: coffee inside the airport is more expensive than on the street corner Convenience: groceries delivered to your doorstep are substantially more expensive than getting them yourself Unique functionality: a capability that no competitor can match is a sensible criterium for a purchase decision On-board experience: data shows that ease and reciprocity results in higher WTP Familiarity: having used a product or a workflow paradigm for years, it is the comfortable way to work
Coercion Contract lock-in: retaining your business through paperwork rather than by choice Data lock-in: retaining your business by holding your data hostage rather than by choice Effective monopoly: being the only feasible option6 Effective price-fixing: breaking the so-called “free market” Middle-man: placing yourself in the middle of a transaction, increasing consumer price while decreasing supplier’s profit (appalling example). Bundle-stuffing: combining many things the customer doesn’t want with the few they do want, to charge more in total7 Scale Anti-Pricing: raising prices once an installation is at-scale, knowing that although an alternative might be more effective, more desirable, and cheaper, the one-time cost of switching is incredibly high Predatory Pricing: using lower-than-cost pricing to destroy competitors and ward off investors (funded by another business unit like Amazon does or by VCs as companies like Uber did), then increase prices once the competitive market has been decimated and customers have no choice. Patents: abusing a system meant to temporarily protect inventions to block normal competition. Corporate policy: once a product is written into a company’s formal policy (site-wide license or the only approved vendor for some application), that product “wins” even if every user hates it Government fiat or regulation8
Love creates inexpensive, non-linear growth, because your customers are your allies.
Utility helps grow existing customers, and is neutral-to-positive on attracting new ones.
Coercion causes your customers to be allied with competitors; they’re internally-motived to leave, so they will.
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