Product Knowledge vs. Customer Savviness

By Steve Nye, eBay Certified Consultant

What makes a great salesman? A great knowledge of the product he’s selling or an understanding of the customer and the sales process?

I used to work at an up-scale jewelry store while attending college. I was a little worried when I first started because I knew nothing about jewelry. But the owner told me, “A great salesman knows how to make the sale with the customer, not with the product.�

I later learned what he meant. Whenever I blabbed on about the four C’s of a diamond, I lost most people, and unfortunately, most sales. On the other hand, whenever I focused on what they wanted and were looking for, I saw an increase in my sales.

Meeting the Needs of the Customer

Making a sale depends on how well you meet the needs and wants of the customer, and not upon how much you know about the product. (Besides, we live in an era of the smartest consumers. Most people have really done their homework on the product before they attempt to make a purchase.)

This principle applies to the eBay marketplace as well. Sure it’s good to sell something you know a lot about, but a little understanding of your customer—customer savviness—can be surprisingly profitable. In this Auctionography I’ll show you how to use HammerTap to learn about your customers buying patterns.

No Need to Wear Funny Looking Pants

I enjoy golfing, but I am nothing close to a golfer. When it comes to knowing good golf clubs and equipment, I am even more of a novice. But just because I don’t know a whole lot about golf, doesn’t mean I can’t sell golf equipment on eBay. If I know something about the customers wants, then I can forego the need to be a Tiger Woods clone.

But how do you know what golfers shopping on eBay are looking for? If I have a source where I can get Ping golf clubs or Nike golf clubs, which ones will sell for a higher profit? How do I build my “customer savviness� for golf shoppers?

The answers to these questions are found using market research. I used HammerTap to research Ping golf clubs and Nike golf clubs. This is what I found.

From the data shown above, we see that Nike golf club sets sell for more than Ping golf club sets. To be exact, on average, you'll get $25.52 more. Whether or not you know anything about golf, you now know you can expect to sell Nike clubs for more.

That was simple. With HammerTap, it took about two minutes to determine how much more we can make on a product than we can get it for. That’s the first hurdle. (See, I told you it’d be simple!)

Let the Numbers Help You

But, we can’t stop there. Now let's figure out how much money you'd get to keep in both cases. Let's say your drop-shipper source for the clubs charges $25 for shipping and handling. Now let's compare profit.

Without knowing anything about golf, we were able to use research to find out what the customers are after. In this case, they are willing to pay more for Nike golf clubs instead of Ping, increased your net profit from $37.36 to $62.88, a whopping 68% increase in profit!

Add a Dash of Business Intelligence

But wait! “What about the Listing Success Rate?� you are asking yourself right? Well, that is a good question and should not be ignored. Let’s go back to our examples of Nike and Ping.

Wow! Ping golf clubs sell more than twice as often as Nike clubs. What does this mean compared to profit? We already know what the customer is willing to pay more for, and now we know what they buy most often, but which one will bring me the greatest profit?

This is where we add in a dash of business intelligence. Still we don’t need a huge background knowledge on golfing, but now we need a little eBay experience added into the mix—something you should have if you are selling on eBay right?

Let me explain. Nike clubs sell about 33% of the time, which means you will need to list your inventory of clubs three times on average. Eventually, all these clubs will sell, but you will have increased your expenses with the re-listing fees.But we are talking about a difference in profit of $25 between Ping and Nike. From our eBay experience, we know it will not cost us anywhere close to $25 to re-list the Nike clubs, so we really won’t be eating into our profit as much as we think.

However, if our profit differences between to two brands of clubs were closer, say $5 difference, then we would want to carefully calculate the re-listing fees for Nike. If these fees were more than $5 on average, then the Ping clubs would be more profitable in the long run.

All Downhill from Here

Now that you know which brand will bring you the most money, you can become even more customer savvy with your research results.

For example, “On which day are most shoppers buying these clubs?� or “Which Listing Type do they prefer?�

For our Nike club you can see that customers prefer a Fixed-Price auction. How do we know this? This type of auction increased both our success rate and our selling price. In other words, more customers were making purchases AND paying more money for this type of listing. You can also see that customers were willing to pay more for Nike golf clubs on Thursday.

The Bottom Line

Through this exercise, we’ve answered questions through research that affect our sales more than if we knew everything about golf clubs. The point—and this is the bottom line—is that knowing what your customer wants is more profitable to your sales than just knowing a lot about the product.

Now I’m not saying that knowing about what you sell doesn’t pay off. Surely you can create more compelling product descriptions and be able to answer customer’s questions more accurately. But that alone is not sufficient.

Now you’ve gained the confidence to venture into a product you may not know a lot about, and for that I wish you good luck!

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