A rolling snowball gathers more snow

The ACD of buying behaviour

Many organisations that we work with struggle as their customers often prevaricate when it comes to simply saying yes we will go ahead and buy what you have proposed. Although not the preferred answer, even a no would be acceptable because it is at least certain. What none of us likes is the uncertainty of will they won’t they.

Understanding what happens in someone’s mind when considering whether or not to buy can help the seller both to understand why there might be a delay in the decision and more usefully what can be done to minimise or eradicate that delay. The three main stages in a buying process are Awareness, Consideration and Decision. The solution to eradicate or at least minimise delayed decisions can be found in the earlier stages of awareness and consideration. Waiting until the prospect has entered the decision phase to influence how it might proceed is too late and the seller has, in the main, become a passenger in the process. That said, many “purchasers” don’t have a process for making the decision so there is nothing obvious the seller can do to apply influence.

By the way; I am of course fully aware that the majority of people reading this wear both hats; sellers and buyers and understand the ACD of buying behaviour can benefit all.

Looking at the three stages and what happens in them gives a valuable insight to what sellers can do to influence buying behaviour. The messages in the article are designed to be of equal use regardless of which hat you may be wearing; seller or buyer – no one wants to waste time prevaricating over a decision any more than they would wish to wait for that decision.

Awareness

This is the point or, more likely, series of events that makes a prospect aware that they have a problem that may need to be solved. Imagine; you have had an occasional mystery noise from the car but ignored it. Then there comes the rainy night when it won’t start but eventually it does, then it does it again, then it runs badly in hot weather. Eventually you will conclude that this series of issues might just be clustering together into a real problem. You are now aware.

The above scenario is common in a domestic setting but there is another more common scenario in the business world. As business leaders and other decision makers typically have a multitude of competing issues to consider, the process of issues “clustering” to create an actual problem may take quite some time. This is where the role of a sales person or account manager can provide a valuable service to the prospective buyer. The sales person who understands the industry that the prospective buyer is in will be familiar with the typical issue and problems of that industry so can play a valuable part in raising awareness and in many cases before the problem stage is reached.

Consideration

LI Choice
This will include; can I ignore it or must I fix it, when does it need to be fixed by, can I fix it myself, how much will it cost to fix/ignore, how will I finance it, what impact will the decision have on the business? There will be many other factors especially when making complex business decisions or potentially costly personal ones.

We have written in previous articles about the research which suggests that a “buyer”, especially for a complex or bespoke solution, will on average be 57% of the way through the buying journey before they engage with potential suppliers. We have also publicised another piece of research that found some 75% of new business orders go to suppliers who engage before the potential buyer has reached the 25% mark in their buying journey. We have drawn a number of conclusions from these two sets of findings:

  • The supplier who engages early will be in pole position to win more of the available business
  • The suppliers who wait for the buyer to engage them will be left fighting against pre-conceived ideas, or just fighting over the crumbs and in most cases will need to compromise on price and margin to win the work
  • The buyer who engages early benefits from the suppliers’ knowledge and experience to inform the process of consideration
  • The buyer who engages with suppliers late in the process may fail to get the optimum solution as the engagement process typically focuses on price not value. Critically, they may also address only symptoms and miss the root cause leading to new symptoms popping up. (the operation was successful, but the patient died)

Most cases of prevaricating buyers are found in late engagement scenarios. This is bad for both sides; the buyer is delaying solving the problem which often causes waste (time, money and other resources) and the seller does not have a clear picture of future revenue as the sales forecast cannot be relied upon.

Decision

Hopefully this won’t offend too many of our readers but most people are poor at decision making. The cause is the lack of a systematic process for evaluating and selecting a solution. That process should mainly focus on clinical matters such as; performance, reliability, quality, service levels, etc. It is also natural that the process will include an element of emotion as the decision maker will be concerned about the consequences of making a mistake and this leads to risk aversion behaviour driven by fear, uncertainty and doubt.

A common mistake made by both sellers and buyers is to try to mitigate the risk by doing a financial deal. How odd – “I am uncertain about your offer but if you make it cheaper I will go ahead”. Who is kidding who!? How can a lower price suddenly make a risky purchase acceptable? Similarly, how can a lower price make something that was not ideal for the job at a higher price an acceptable option?

The decision process is always smoother and more predictable, for both parties, when the initial engagement point occurs early in the buying cycle. One key reason is this gives more time for the parties to work together which means more time to test the potential relationship; principles, ethics, capability, delivery mentality, etc. It also allows time for the seller to meet and understand everyone who will be involved in the decision and for the parties to work out a mutually acceptable decision making process.

Another important factor in decision making arising from early engagement is that it gives suppliers time to understand the real problem, not just the symptoms, which in turn enables them to offer the correct solution. Some of the more cynical amongst us might consider this allows the suppliers to have too much influence over the thinking of the buyer to which I would say the buyer always has the ultimate sanction – “NO!”

In summary:

  • Engage early – this is good for both seller and buyer but is more likely to be driven by sellers.
  • Engage widely – both sides need to meet all key people who will be involved in the delivery and operation of the solution as part of the process of deciding the best fit for a successful implementation.
  • For the buyer – choose your preferred supplier before starting to look at solutions; someone that understands your problem and empathises with its impact on your business. A key reason leading to delayed or failed decisions stems from confusing the selection of the supplier with the decision over the product or solution. The initial effort should focus on building the working relationship including how and when a decision will be made.
  • For the seller – decide who you want as your customers and proactively approach them. By all means accept introductions and referrals but beware of compromising your market strategy – you don’t have to say yes to everything!
  • Once the parties have agreed they wish to work together then they can focus jointly on designing and building the solution. This can now be done from a position of mutual trust and interest which is the best way to get the optimum solution while controlling the risks.

Get the ACD right and the decision will flow naturally from the process with a contract close behind!

Do you use compelling events to drive sales decisions?

Previously we have written a number of articles about an issue that is currently a problem in many business sectors and that is prospects who delay making decisions, or become un-contactable, once a proposal or quotation has been submitted. This can happen in any type of businesses but seems to be hitting those selling B2B the hardest.

The solutions that we have proposed in the past focus mainly on changing how the process of engagement is conducted from the very first point of contact with a new potential customer. Whilst this is the only effective way to bring about a long-term and permanent solution the use of ‘compelling events’ will in some cases help to move an opportunity that has become stuck.

The most common compelling events involve the use of time or money to get the prospect to “act now”. While both have a place they are often used in a very unsubtle way which risks doing more harm than good. So, in this article we have provided some tips as to how this powerful tool can be used to unstick some deals and if applied rigorously to new opportunities it will help to avoid the sales pipeline log-jams of the future. This will help you to gain some certainty about if, when and how a prospect will make a decision and in some cases whether they will make that decision in your favour.

Viewed as a buyer

For suppliers to understand how to use compelling events to smooth decision making it is necessary to first understand decision making through the eyes of the potential customer.

A compelling event is quite simple in concept; it is something that prompts the prospect to make a decision. At a high level decision making falls into two main areas; to satisfy a need or to satisfy a want, for example, you need to insure your car and your house but although people say “we need a holiday” this is in fact a want driven decision.  Need based decisions are driven by the head while wants are driven by the heart. However, in most cases, there will be a mix of head and heart even though one will dominate.

So, taking the insurance need above, if your insurance expires at midnight tonight you must make a decision during business hours today; time becomes the compelling event. If however money is the compelling event, early research will be required; to obtain several quotes and then drill down into the detail to make the final decision. When getting down to the fine detail of the similar quotes the heart may start to play a part in the decision making as you choose between known and less well known providers and their ‘specials’.

The holiday is mainly about satisfying a want so is driven by the heart but as you close in on the final choice, money will become a factor and the head will get involved.

While the examples above could apply to a business they are more typically personal buying examples.  A common business issue requiring a decision could be about a new website; do you need or want a new website?

  • If the website is delivering less and less good enquiries and it is a key route to market for you then you need a new website.
  • If the website is still functioning well but you feel it is looking a little dated then you may want to replace it.

Note the hard fact of falling levels of enquiries = need whereas “feeling” that the website looks dated = want; head and heart.

Viewed from the seller’s point of view

Simplistically this is a mirror image of the buyer’s view point and the concept really is quite simple. Find out what really matters to the buyer, satisfy it and it will increase your chances of getting an order when you want it to happen. The point to emphasise here is what matters to the buyer? Sellers make offers that they hope will be compelling but all too often the offer is driven by the seller’s need rather than the buyer’s. “If you buy by X date we will give you an extra 5% discount.”  The seller wants the order by X date but does it matter to the buyer?  Will 5% incentivise them to make a decision now when they do not really need what you are selling at this precise point in time?

The problem here is that the inducement is focused on the monetary aspects of the transaction and will have the effect of destroying any work that has been done to build interest in the value of what is being offered.  Even if the decision is delayed for another two or three months the supplier may still feel obliged to give the extra 5% but they have not gained what they needed; an order now!

Useful examples of compelling events

Time: most effective when you know what matters to the buyer and this should be established as early as possible in the engagement process.  This gives you the opportunity to discuss timing with them as a part of the complete negotiation and they might agree to a timescale to suit you. Calling them today looking for an order by the end of the month can only ever look desperate.

Could you resist the opportunity?

Could you resist the opportunity?

Time can be useful in a number of ways:

  • If you genuinely have limited stock “buy now while stocks last” can work.
  • If what you provide is seasonal then timing is important.  No point taking an order so late that the Christmas cards get to the shop on Christmas Eve!
  • If what you are selling will save them money, has a safety implication or could prevent an expensive problem occurring then the sooner they have it the better.
  • If you can provide a solution to accommodate an impending regulatory or legislative change, they have a limited window in which to decide.
  • If you know they are running out of stock they have a real need to make a decision.
  • If you know their current supplier contract is up for renewal, regardless of how happy with that supplier they claim to be, this is a great time for you to propose your solution.

Money: most commonly used through a discount offer but as with time, calling a few days before the end of the month and offering a discount for a decision is transparent and looks desperate.  If you do offer a discount it must be tied to something that you need or want and if it does not happen you must withdraw the discount offer – I know you won’t want to but you must!

Money can be very useful to create a compelling event:

  • If you are able to demonstrate through, for example, the RoI that will be gained by buying your proposed solution then the buyer will have some tangible evidence as to the value of what you will deliver.  If what you sell reduces energy costs then the sooner they have it the more they can save.
  • If you genuinely have a price increase coming along in the new year you should share this with the buyer as they may wish to buy ahead to save money.
  • Discount can be useful in some businesses but in others it will have little effect; but beware as there is always the risk that it can damage your brand and also any case you might have built up based on the value of what you do.

Problems: Understanding the problems your prospect has will provide the raw material for building your case around a compelling event.

  • If the company has breached a regulation such as Health and Safety and what you provide would have prevented this breach they will be interested.
  • If buying your solution now will help them defend their case with the H&S Executive they will be interested.
  • If the business has lost money due to a production failure that your solution would have prevented they will be interested.
  • If the company is suffering high levels of staff turnover, and you can help them reduce this, they will be interested.

It is important to note that the examples above are generic as this will be read by people from a cross-section of business and industries types.  This technique is at its most powerful when used by a supplier who really knows what makes their industry tick and what really keeps their customers awake at night.

The other thing to bear in mind is that the supplier must take the actions to create the feeling of ‘compulsion’ in the prospect.  A useful technique for this is the SPIN® approach to selling.  In effect SPIN® is a specific application of the structured questioning approach where the mnemonic stands for Situation, Problem, Implication and Need-payoff.  By asking the sequenced questions you will be exploring the situation the prospect is wrestling with, help them define the associated problem, help them to realise the implications of not resolving the problem and finally you demonstrate the value you will deliver by satisfying the need.

Within the above process; around the ‘P‘ and ‘I‘ stages, you will be able to demonstrate your industry knowledge and perhaps even introduce new ideas they had not considered that will make working with you even more compelling; you are an extra brain on their problem!

Thank you for reading this, but don’t let those queries slip away unanswered, or for a deeper discussion on researching your prospect to create compelling events, feel free to get in touch.

(Photo:   Kakakrokodil, Flickr)

Article produced for Talk Business News November edition

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Methodology & Process for short selling cycles

© Garsya | Dreamstime.comHere we look at the topic of Sales Processes and Methodologies in the context of businesses that have relatively short selling cycles involving a small number of touch points with the prospect. Typically this also involves comparatively straight forward propositions (products and services); the basic nature of the product or service offering is consistent, requiring sizing and configuration rather than customisation for instance. We are looking primarily at the B-2-B environment but the concepts could equally apply in certain retail environments.

Examples of businesses with short selling cycles might include; those selling to the domestic market within peoples’ homes such as home improvements and renewal energy solutions. In the B-2-B sector it might be companies who sell business and office services & products; printing & stationary solutions, photocopiers, accounting, legal and HR services. Other examples might be open training courses or IT break/fix support.

Methodology

Today there are so many options available to us when considering routes to market we all have to be very careful to choose the right mix and blend to deliver the optimum result and hence the best return for the time and money invested.

For companies with relatively straight forward propositions and short selling cycles the go-to-market strategy might, for example, be a combination of; trade shows, selective networking by senior people, LinkedIn activity by marketing, inbound enquiries to the website, and referrals. Whichever route, identification of the USPs which distinguish you from your competitors will be key.

One of the earliest attempts to formalise an approach to marketing may be the most suited in this scenario – AIDA; attention, interest, desire & action. Although over 100 years old, this simple formula still holds true and is a valuable guide when planning your go-to-market strategy.

For the prospecting cycle, SPIN® (situation, problem, implication, need) may be well suited to planning and conducting the meetings or discussions with prospects as it provides a method for structured questioning.

What should your Sales & Selling Processes cover?

Regardless of the size and complexity, or not, of a set of processes they all follow certain fundamental principles.

  • Taken together your sales and selling processes must define a complete set of contiguous steps which take you from first identification of a suspect through to completion of a sales bid (win or lose). Look at it as a roadmap for a journey, where each step must have an exit route which leads you safely to the next step.
  • The backbone of any selling process is qualification and quantification to enable the person engaged in selling to analyse a new prospect or a new opportunity in a systematic way, understanding the relationship required by the DMU and DMP and leading to a calculated judgement of the likelihood of the prospect becoming a customer (qualification) and the likelihood of an individual opportunity leading to winning profitable work (quantification).
  • If the nature of your business means you need to actively manage the relationship with your customers after a deal has been done, your processes need to ensure a smooth transition from selling to delivery and account management mode such that the on-going management of the relationship satisfies your needs, meets your standards and delights your customers. This would be a typical scenario if your proposition involves the delivery of an on-going service or projects over a period of time.
  • At each step of the process you need a proper hand-off especially if different people are involved at different stages along the way. These are the procedures or rules which govern the process. One of the most common causes of apparently good opportunities suddenly turning negative is failure to complete each step and/or failure to brief thoroughly when passing from step to step.

In summary; your processes should create a complete set of fully integrated steps and include the rules to get you successfully from step one to the end or to help you understand at an interim point that the journey should be abandoned.

Model for a simple process

The easiest way to illustrate this is to consider a real business scenario;

  • The business sells a product plus on-going service cover which is used by small engineering firms to reduce waste at the production stage.
  • The DMU typically consists of one to three people (business owner or MD, finance person and production manager)
  • Your approach to market will have been defined in your methodology (example provided earlier). The output will be suspects; people who appear to have the potential to become customers but on occasions closer investigation qualifies them out; too big or small, already got a competitive solution, no budget, etc.
  • What you now do is follow up with these suspects by the phone, as appropriate arrange an appointment to meet them or arrange a demonstration and then you either get the order or not.

Having established this simple scenario you can design the key steps of your selling process; CADO (Conversations, Appointments, Demonstrations, Orders).

The rules for completing the “CA” steps will be contained in your qualification process and your quantification process will define the rules for the “DO” steps. Taken together this provides a smooth and continuous journey.

As you apply CADO to your business you will start to build up valuable information about conversion ratios between steps so, for example, you may find that 100 conversations leads to 30 appointments which lead to 15 demonstrations which produces 5 new orders. You can now use the 100:30:15:5 ratio to plan and manage your marketing and selling efforts and you can also use the ratios to inform your sales forecasting process.

If your business plan means you need to win 5 orders per quarter then you know you need 100 new conversations per quarter. This in turn will tell you how much effort you need to put in to your marketing activities.

Measuring and managing conversion ratios between critical steps in the sales and selling process provides a very valuable KPI as it helps to make the future order and therefore revenue position more predictable.

Successfully implementing processes

Reviewing what we said last month here are a few simple rules:

  • Ensure the introduction of a sales and selling process can be demonstrated to deliver value to the business.
  • The processes should be based on capturing what already works well so you need to engage the people already doing the job and use them to help define best practice; what works and what doesn’t work. This will help them to understand and accept the process when it is rolled out.
  • Ensure the processes become embedded in the whole organisation – make this the one and only way that business is conducted. When new people join they will need to be inducted into your approach to business as well as understanding your products and services.
  • Periodically re-visit your processes to ensure they still fit your business and more importantly the way your market is working, taking particular note of trends in customers’ demands and competitive activity.

Selling tools

Two of the most useful selling tools are qualification and quantification. The basic principle is to create a “profile” of an ideal potential customer or an ideal business opportunity that you would like to win. Once the profiles are established you equip the sales people with a series of structured questions which enable them to assess each prospect and each opportunity against the profile to see how good the fit is.

Qualification and quantification tell you two key things; should you invest your effort and if so what is the most effective way to invest that effort to get a satisfactory outcome. Qualify early, qualify hard and most importantly re-qualify frequently throughout the selling cycle; don’t be shy to say no as soon as your qualification assessment tell you the likelihood of them becoming a customer is diminishing.

If you are going to implement a supporting software solution, having decided what you need your processes to deliver, explore the market to find the best fit with Total Cost of Ownership in mind and then adapt it to suit your specific needs. Don’t adapt your business needs to suit limitations of a packaged solution. The key here is the word “needs”.

CRM is a useful tool although it is most useful to those engaged in marketing and sales rather than selling. The people involved in selling need a contact management system but do not typically need the other things that a powerful CRM can deliver.

In the model above we introduced the idea of CADO and conversion ratios. So, a useful sales tool would facilitate measuring the numbers and actual conversions between stages thus providing valuable management information for reliable sales forecasting.

The arrival of powerful mobile devices such as tablet computers means the sales people can have selling tools easily available when meeting prospects and customers. For example, if what you sell requires an upfront capital investment then the prospect will be interested to understand the financial position and will want to know what the Return on Investment (RoI) will look like. Equipping the sales person with a RoI calculator on a tablet computer means they can enter the actual figures in front of the prospect gaining agreement that what they are entering is correct and in this way the prospect becomes more engaged and will be more likely to feel a sense of ownership for the resultant financial illustration.

How the Customer decides

Last month we defined a number of terms we will be using through this series of articles. Two additional terms are Decision Making Unit (DMU) and Decision Making Process (DMP).

“It is better to listen in order to understand than to listen in order to reply.” ~Unknown

“It is better to listen in order to understand than to listen in order to reply.” ~Unknown

The DMU identifies all of the people who will be involved in making the decision whether to buy what you are selling. The DMU includes people who are not directly involved in the decision, but who influence it because their opinion is sought and respected.

The DMP defines the steps, stages and processes the prospect uses when making a decision on a new purchase. Examples will include their rules for selecting potential suppliers, what form of response they expect from you; written proposal, response to their tender document, presentation, references, etc., how they will create a short-list, how they will make the final decision, and what criteria will be used in making that decision.

A basic rule if you want your selling efforts to be as productive and effective as possible;  ensure you understand the DMP and that you get to know the DMU at an early stage in the engagement with new prospects.

Be aware; anyone you contact at a new prospect could be a part of the DMU or may be a respected influencer.

New Year: New Broom?

Be SMART with your resolutions.

Be SMART with your resolutions.

Although not my habit I know a lot of people like to make New Year resolutions so I thought I would start this newsletter around this theme.

How was 2012 for you?  I have asked a lot of people this question in recent weeks and almost all of them said something like; tough, tight, difficult, delayed, etc.  I found it interesting to hear business people, almost universally, admitting that things have been tough where their normal habit would be to put a positive shine on whatever had really happened.  So, it seems that there is now a general acceptance that the prevailing economic climate is the new normal – none of us like it but we have to accept it.

On asking additional questions I found a number of common themes and three particularly interested me:

  • A common complaint was that after what appeared to be a positive first meeting, where the prospect expressed apparent interest in the solution being discussed, nothing then happened. No response to follow up calls and no follow-on meeting. The supplier may have sent a proposal or quotation but still could not get a response.
  • Many people also reported having a sales pipeline full of great prospects but none were making decisions.
  • The buying process used by most prospects has become convoluted and drawn out.

These points interested me partly because they are real show-stoppers for anyone in B2B selling and hence are really important to solve which is why I have chosen as the main topics for this newsletter; handling objections and influencing prospects’ decision making.

A thought for you to kick-start your year – “If you keep doing what you have always done you will keep getting what you have always got”.  We have referred to this well-known quote on a number of occasions and we repeat it here as it could be the reason people are not making decisions, not getting back to you or the buying process they are using seems convoluted to you.

One quick example; if you have sent a proposal because that is what you have always done when the prospect reaches “Stage-X” in your selling process you need to ask yourself whether this is still (if it ever was) the right thing to do.  Perhaps prospects now expect something different from suppliers and therefore your proposal may fit your selling cycle but it does not fit their buying cycle.  You need to understand what the prospect expects; content, timing and sequence.

So for those whose resolution is to go on the offensive and drag yourself out of the gloom, read on

Influencing the prospect’s decision making process

The first thing to consider is whether the prospect actually has a process for decision making. When they get your proposal or quotation what will they do to systematically make a decision and to make the right decision when choosing between different suppliers’ proposals. This pre-supposes that receiving a proposal is a part of their buying process.

“It is better to listen in order to understand than to listen in order to reply.” ~Unknown

“It is better to listen in order to understand than to listen in order to reply.” ~Unknown

If you want to influence the decision making process you need first to understand it. At a very early stage in the sales engagement cycle you need to find out how they will make the decision, what you need to provide, how and when, and anything else you need to do to make it easy for them to evaluate what you are offering.

To expand on this a little:

  • In many cases today decisions are made by a number of people, we call this the decision making unit (DMU).  The people that make up the DMU will wear a number of different hats such as; user, influencer, decision maker and budget holder.  You need to know who these people are and engage with all of them as early as possible.
  • What you need to provide will be determined by the individual when you meet them.  By way of an example; if you are supplying a piece of equipment to a factory the DMU is likely to include such functions as; engineers, health & safety, facilities manager, general manager and finance director.  Each will have a different need in terms of the information they want from you; finance may want a RoI justification, H&S will want certificates and other relevant information and so on.
  • Now you know the people, the hats they wear in the buying process and what they will want to see, you need to establish what format they want the information in and what critical timings they want you to meet.
  • You need to understand the specific process they will use and key timings.  If the actual decision will be made at a steering committee meeting that is held every quarter it is obvious what you need to do.

Once you understand the people in the DMU, their relative power and interests, and the process they will use, you must tailor your selling process to mirror their decision making process.

If the prospect does not have an established decision making process you need, ideally at the first meeting and certainly before you expend significant effort, to agree on a process that will suit them, and that they are willing to commit to actually making a decision at a specific point in time.  Document this and send it to them and anyone else they have identified as being involved in the decision. From this point the process is the same as that above except you are likely to be driving the process harder than they will.

If you have sent proposals but received no decisions or feedback it may well be because you sent the proposal at an identified point in your selling process but that it was not relevant to their decision making process.  You need to go back and ask them tough questions like; did you actually want what we proposed and if so when and how will you make the decision?  This will be tough because you will have to accept that some will not turn into new business but at least you will know where you stand.