h + d = l
February 14, 2008
By Tim Guetschow
The title of this article is my business philosophy in a clever algebraic expression. Honesty + Desirable product = Long term relationship. I explained it briefly on my website, and thought that it might be a good idea to expand on it here. I’ll discuss each part of the equation.
Honesty
I suppose we should define the word “Honesty.” At this point, many writers would say “Webster’s dictionary defines honesty as….” For the sake of time, I’m going a different route. Tim Guetschow defines honesty as: (1) Telling the truth. (2) Not intending to deceive.
This is the first thing I believe is essential for any business, and any person for that matter; to be honest and truthful in all dealings, in every relationship. Yes, there is the question of what to say when your wife asks “Does this make me look fat?” Since this article is about my business philosophy, and not my marriage philosophy, I won’t use up your time with an explanation of the fool-proof answer to that question.
“So, honesty and truthfulness in all dealings?” Yes, in all dealings, even in sales and marketing, which I realize is one of the hardest areas in which to practice this virtue. “Isn’t that going to hurt your sales?” That depends. Are you offering a product or service that people actually want, or has a real benefit? This leads to the next part of the equation.
Desirable Product
It should be obvious to most that, if there is no market demand for your product or service, you have no business. But there is kind of a gray area. What if there is only a little market demand? What if you wish there was more? Sadly, many people, even a few used car salesmen, have figured out that they can create a little more market demand if they are less than honest–or so it seems.
But are they really creating more market demand? Yes. This demand, however, is not for their product. It is for the imaginary product that they describe to the prospective customer. Beside being wrong, this is also bad business. “But doesn’t this earn you more money, which is the goal of business?” Yes and no. And making money at all costs should not be the goal of any business. This leads to the third part of the equation.
Long Term Relationship
Let me explain my “yes and no” answer. If you want to make a quick buck, looking only to the short term, then yes, dishonesty is effective. If, on the other hand, you want to establish and maintain a long term relationship with your customers, honesty is more effective, and you may even want to take it a step further by leaving out a few desirable details that the customer will be pleasantly surprised to discover after the purchase.
“But wouldn’t you make more sales per pitch if you left out a few undesirable details and explained other details in a more favorable light?” Yes, you probably would. But how disappointed do you want your customer to be after the purchase? I would bet the chances are much greater that a customer will purchase again if there were no unpleasant surprises after the purchase. Not only that, but probably more importantly, they will likely tell others how happy they are with their latest purchase and refer them to you, and even if you do have to pitch to this referral, it will likely be an easier sell.
“But what if being truthful with the prospect lowers my sales? Or worse, cuts my sales to zero?” Again, you may get less sales per pitch by increasing your honesty, but you will get more repeat business and more referrals. And if honesty defeats your best sales efforts, I would venture to say that you either need a new product, you need to drastically lower your price, or you REALLY need to work on your salesmanship.
So there you have it; my business philosophy explained. I’d love to tell you that this philosophy has earned me millions, but that wouldn’t be very honest of me.
