Looking for a few good metrics.

• Author: Hall, Robert
• Position: Marketing Solutions

Dad, now don't freak out." It was after midnight and my youngest daughter, who is in college 600 miles from home, was on the phone. "There has been a wreck in my car." As my brain booted up from a deep sleep, I remembered she was away from school for the weekend visiting a friend in Chicago. "I had a friend drive me to the airport. I let her use my car for the weekend, and she had a wreck. She is OK, but the car is a mess, maybe totaled. Dad, the police told her that if the car that hit her had been six inches closer to the driver door, she would probably have been killed."

After we both recovered from our scare, we eventually found ourselves in the market to replace her car. Since we agreed that a new car was not an option, I thought sure she would angle for a used BMW. I was surprised to see how the wreck impacted her thinking. She wanted a Volvo. She had researched cars very thoroughly, and safety was now her number one priority.

She was convinced Volvo was the "safest" car she could find, and yet she wanted to make sure it was a good business decision. I was surprised again at how she stated her case. I was expecting a straightforward comparison--something like the purchase price of the Volvo is less than the BMW but more than the Audi.

"Dad, the Volvo is less expensive to own than the BMW or the Audi."

"Less expensive to own?" I asked.

"Yeah, if you look at the cost to purchase, plus the cost to insure, plus the fuel costs, plus average maintenance costs, according to Edmunds.com the Volvo is several hundred dollars less expensive to operate."

Now in reality the differences were small. What surprised me is that she and her friends she had consulted were looking at the total cost to own. Certainly it was the car that most appealed to her, based on a newly found appreciation for safety. Yet when she performed the math on the "financial" decision, she used a metric that more fully tells the story than just purchase price.

What is meaningful cost or value?

Why did she land on a metric like "cost to own" as the best indicator of value? I believe one of the factors is a growing skepticism on the part of consumers regarding purchase "price" as the most meaningful reflection of cost or value. Like corporations that realize many of their historical metrics are falling to guide them to the best decisions, many consumers are becoming increasingly aware of costs--like shipping, hidden fees, poor service, unanticipated maintenance and low resale...