Day 04 - Business: Innovation

How Technology Is Changing the Way the World Buys…Everything

CREATED BY
Tim Hamilton
Founder of Praxent

Think back to the last time you made a large purchase—as a consumer or on behalf of a business. Your experience was probably characterized by stress and at least a few of these familiar rituals:

  • Waiting for a sales representative to receive your contact form and get back to you, and then scheduling and joining a call (where you inevitably had to repeat your information again to verify your identity!)
  • Reviewing proposals and legal contracts
  • Combing through pricing and contracts to find any hidden fees
  • Building spreadsheets to compare costs and benefits of various providers
  • Negotiating fees, placing offers and haggling prices
  • Being pressured into a bundled purchase

 

A Better Way

As a customer, if you were offered the chance to avoid all of this trouble for the same or better results, wouldn’t you take it? In your business, why not be the hero who makes all the stress go away—maybe even boosting employee efficiency or winning more customers in the process?

For any business in any industry, there lies a gap between where customers are as they consider a purchase, and where they want to be after the purchase. Clunky sales processes make it harder to close that gap and cause inevitable sources of friction for the customer.

8 Sources of Friction that Make the Buying Process Difficult for Customers

  1. Time: The process is too slow or time consuming.
  2. Distance: Customers are required to travel to a physical location.
  3. Financial: When sales are costly and complicated, customers bear the cost at the end of the day—especially when resellers are involved.
  4. Bundled offers: Customers must put up with buying products or services they don’t want in order to get what they do want.
  5. Negative emotion: The sales process causes anxiety, stress, fear or mistrust as customers are forced to deal with the proverbial “car salesman.”
  6. Hard work: Businesses only partially help customers progress toward desired value. The rest of the work falls on the customer.
  7. Relational friction: Company policies or processes create relational tension between the company and its customers.
  8. Reliance on a human: Customers must navigate the nuances of a personal relationship with someone from a business (who may simply be having a bad day) in order to get the value they seek. This may involve waiting for sales representatives or having to explain a need multiple times to different agents before finding a solution.

The more challenges a customer faces in making a purchase, the less likely they are to follow through on that purchase, purchase again or refer other customers. Businesses that find a way to ease friction for customers will rise to the top of their respective industries.

3 Companies Showing Us How It Can Be Done

For businesses relying on traditionally complex sales processes, digital technology is the key to removing friction from sales and gaining a competitive edge.

Take Carvana, for example. To remove friction caused by time and distance, Carvana replaced:

  • Physical used-car dealerships with a virtual dealership that delivers cars.
  • The act of traveling to a car dealership and walking the lot in search of the right car with an inventory database that customers can search digitally.

The company also removed relational friction, negative emotion, reliance on a human and financial burden by replacing:

  • Manual price quotes and stressful person-to-person haggling with instantaneous appraisals and one-click purchases via the website.
  • Large teams of sales agents with automated processes, reducing cost for both businesses and customers.
  • Costly physical dealerships where fewer customers pay higher prices with delivery service and a low-overhead, virtual dealership where more customers pay lower prices.

 

Finally, Carvana removed hard work by offering online financing. Customers who use Carvana don’t have to make trips or calls to their bank.

Carvana’s real estate counterparts are Zillow and the up-and-coming Bungalo Homes.  Under the old real estate model, prospective home buyers or sellers relied on real estate agents for information and were required to coordinate calendars in order to view homes, sign paperwork and arrange their loans.

Today, however, customers have direct access to insider knowledge through various digital platforms. Bungalo takes it a step further, allowing customers to schedule their own private tours, secure mortgages, submit no-haggle offers and close on homes—entirely online.

Digitize or Die

Even now, as you read this article, digital technology is changing the way companies and consumers buy and sell…everything. The trend toward digital technology continues to gain momentum. Even so, Carvana, Zillow and Bungalo remain exceptions among thousands of other businesses still operating under outdated models.

Businesses that continue to rely on cumbersome, expensive sales processes that burden their customers will inevitably lose out to those who invent ways of removing friction from the buying process.

Additional posts on innovation:

Who should adopt AI marketing
10 Ways to take back digital identity
The disruptive power of convenience
How to Successfully Use a Podcast for Business Growth
How To Unleash Sustainable Innovation That Matters
Wonder podcast by Entreprenuers’ Organization featuring Mike Jones:
The Science of the Start Up
Q&A with Dr. Karl Blanks, Winner of the Queen’s Award for Enterprise for Innovation
3 QuestionsThat Will Inspire Innovation
Being an Entrepreneur Means Learning Through the Ups and Downs of Business

Tim Hamilton
Founder of Praxent
By Tim Hamilton, an EO Austin member and founder of Praxent, a custom software and web app development firm listed on the 2018 Inc. 5000 list of the fastest-growing companies in the US for the second year in a row.

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