This question is used in my sales training to help people think about the business they are in, and what their customers are really buying. The story has evolved over the years.
The history lesson – The Parker Pen Company. Established in 1888, with a focus on providing high quality writing instruments, in the days when Phil’s Finance Thoughts would have been handwritten on paper and posted to you. The pens even came with a lifetime guarantee.
But what are they really selling? By the 1980s the company realized that while it sold pens, the vast majority were not purchased by the writer: they were given as gifts. People rarely buy quality pens for themselves.
My trusty Cross was a gift from my sister in law Christina – I love it, thank you.
By the 1980s Parker were no longer in the pen business, but in the gift business. This changes how and where they are sold, and drives the quality of the packaging.
Today: The darker side of technology and social media. What are we really selling? According to some RSA members, when we use Facebook, Instagram (there’s a long list here – you know who I mean) for free – how come its free. Because we are selling them our attention. That is unbelievably valuable to advertisers. Have a look at the video*.
We call it “my” Facebook page, but it is really Facebook’s: they just let us use it in return for our attention.
Me? I am not selling training. What my clients are buying is understanding, so they can make better decisions.
I hope these thoughts help your understanding of your business, and the business world, a little more.
* https://www.youtube.com/watch?v=PSaybP1UivQ
Buzzwords of the Week – Bonds
Definition – Bonds represent the debts of issuers, such as companies or governments. These debts are sliced up and sold to investors in smaller units – for instance, a £1 million debt issue may be allocated to one-thousand £1,000 bonds. In general, bonds are considered to be more conservative investments than stocks and are more senior to stocks if an issuer declares bankruptcy. Bonds also typically pay regular interest payments to investors, and return the full principal loaned when the bond matures. As a result, bond prices vary inversely with interest rates, falling when rates go up and vice-versa.
Alternate View – when looking at a Balance Sheet, remember these are debt, they must be repaid. They may not be equal: some need to be repaid before others, especially if the business goes bust (maybe I mean “a crystallization event occurs”?) These can be traded, hence the potential investment angle. If you are trading bonds for profit you could be described as an investor, maybe even a gambler. If you hold until the end, you are a lender.