Understanding Users: The Key to Successful Business
Understanding Users: The Key to Successful Business. Every successful business starts with benefiting the users. In the first practical lesson, we will start with “understanding users.” A friend of mine has a child in junior high school. To cultivate the child’s understanding of earning and spending money, he specially asked the child to teach math to a neighbor’s elementary school student. After each class, he paid the child a reward of 10 USD. But soon, my friend found that after receiving the money, the child would spend it on eating and buying things with friends without realizing that the money would run out before the next class. Originally, he wanted to cultivate the child’s awareness of “earning money,” but he learned to spend money recklessly. What should he do?
To solve this “what should I do” problem, we must first understand the essence of this problem. The essence of this problem is that the money you give the child is put into a psychological account called “change.” In most people’s minds, change is used for “spending recklessly.”
We have talked about “psychological accounts.” What is a psychological account? It is when each person mentally categorizes the same money into different accounts. As a business, you must understand how to make users spend money from their richest psychological account.
In this practical lesson, we will analyze which of the user’s “psychological accounts” is the richest.
First, the unexpected income account. People put hard-earned, lucky-won, and unexpected income into different psychological accounts. If you earn 100 USD by writing an article and publishing it, would you use this money to play slot machines? Probably not. But what if you found 100 USD on the street? You might use it to play slot machines. People are always generous with unexpected income, as they say: easy come, easy go.
Second, the emotional attachment account. You want to buy a 500 USD cashmere sweater for yourself but can’t bring yourself to do it. Then your spouse gives it to you as a gift, and you are very happy. Although you know that this money is your joint wealth, you also buy an iPhone for your spouse, and she is also very happy. It feels less painful than if you had both bought something for yourselves with the same amount of money. This is what we often say: love hurts the wallet.
Third, the change account. If you have a 100 USD bill in your pocket, don’t you hesitate to break it? Because once it’s broken, the money will quickly run out. You don’t want to touch the 1,000 USD in your bank account that you plan to use to buy a TV; but the 100 USD in your wallet may be spent without much guilt. Why? Because they are “change.” This is what we often say: people who have holes in their pockets leak money.
So what should my friend do? He can change from giving rewards after each class to giving rewards after every 10 classes. This way, each time the child receives a reward, it is not just a “change” of 10 USD but a significant amount that cannot be spent recklessly.
Understanding users’ psychological accounts is just one aspect of successful business. However, it is an essential aspect that can make or break your business.
According to a study by McKinsey & Company, companies that prioritize customer insights are more likely to experience growth and profitability than those that do not. Understanding customers’ needs and preferences can help companies create products and services that meet their customers’ demands.
One example of a company that prioritizes customer insights is Airbnb. The company’s success is attributed to its ability to understand its customers’ needs and preferences. Airbnb realized that travelers were looking for unique and affordable accommodations rather than traditional hotels. Thus, Airbnb created a platform that connects travelers with local hosts who offer unique and affordable accommodations.
Another example is Amazon. Amazon’s success is attributed to its ability to personalize its customers’ shopping experiences. Amazon uses customer data to recommend products that customers are likely to be interested in based on their browsing and purchase history.
To understand customers’ needs and preferences, companies can use various methods such as customer surveys, focus groups, and data analysis. These methods can help companies collect valuable insights that can help them improve their products and services.
In conclusion, understanding customers’ needs and preferences is crucial for the success of any business. By understanding customers’ psychological accounts, companies can create products and services that meet their customers’ demands and increase profitability. Companies that prioritize customer insights are more likely to experience growth and profitability than those that do not.
It is essential for businesses to invest in understanding their customers and using customer insights to improve their products and services continually. By doing so, businesses can build long-term relationships with their customers and achieve sustainable growth and profitability.
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