Want vs Need

The terms want and need are often used indiscriminately…which leads to a host of problems both in business and in our personal lives. Let’s explore the reasons why.

Business

Seller perspective

Many businesses position their offerings as something that potential customers need. The result is that they inadvertently subject their offering to price scrutiny.

In a 2009-2012 study I did on pricing, two premium price companies: Apple and Panera outperformed two low-priced strategy companies: Amazon and Walmart in terms of profit growth during a severe post-recession recovery. Apple also outgrew the other three in terms of revenue growth, despite the recession.

On the surface, that seems strange. Many of us would have expected the low-price strategy companies to thrive. Our rationale for that belief is that people would spend forgo discretionary spending, spending on things they want, to have money available for what they need.

The study showed that the opposite was true. People redefined what they needed, then went to low-price strategy companies to minimize their spending on their needs so that they’d have money to spend on what they want.

Buyer perspective

All businesses are buyers as well as sellers. As buyers, companies tend to view what they need solely from an acquisition cost standpoint. They don’t consider the additional operating costs they’ll incur when their vendors supply poor quality materials and regularly miss delivery dates until they become a reality. Nor do they consider the risk of losing good customers over quality and delivery issues. The fact that companies focus heavily on acquisition cost is evidenced by the fact that procurement personnel are often given bonuses for reducing acquisition costs.

Now that we have insights into how indiscriminate use of want and need affects businesses, let’s see what impact they have on our personal lives.

Personal

I was in the audience with a group of business people. The instructions for the icebreaker included stating what you need for your business. Everyone at the table stated what they needed…until it got to me. I said “There are many things I desire, nothing that I need. I never allow anything to elevate to the level of need, for it’s when I feel that I need something that I make poor decisions.”

Immediately, all heads at the table nodded yes. They knew, from experience, that what I said was true…not just in business, but in their personal lives as well. When we feel that we need something, we often feel that need desperately. It’s in that intensity that we make decisions that we later regret. My advice: never allow anything, business or personal, elevate to the level of need. You’ll make better decisions and be much happier with your decisions.

Takeaways

When you train your mind to focus on wants vs needs, you’ll make better decisions…both personally and in your business.

In business, when you market want, you attract people who value highly what you offer. So much so, that they’ll pay a premium price to get it in good times and bad. Indeed, they’ll forgo other spending in difficult economic times to be able to get what you offer.

Make better buying decisions for your business by considering all potential costs instead of just the acquisition cost. Your business will run more smoothly, your company will be more profitable, your customers and employees will be happier and, as a result, both will stay with you long-term.

In your personal life, train your mind out of the habit of thinking that you need something. Allowing something to elevate to the level of need, puts you into emotional decision-making mode. You know from experience that some of the worst decisions you’ve made were made when you were emotional.

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If you’d like the leaders in your organization to learn how to use the numbers more effectively and dramatically improve the productivity of your workforce, contact me to learn more about these resources:

Resources

Making the EXCEPTIONAL Normal program helps you identify and nurture emerging leaders who elevate all around them to higher levels of performance and greater job enjoyment.

Financial Awareness & Strategy program where employees learn to identify opportunities to improve financial results and prioritize these opportunities on the basis of which produces the greatest impact with the least effort. Greater financial awareness = Better decisions.