July 28, 2009

'Buyers Are Doing it For Themselves' - The Increasing Independence and Sophistication of Buyers

To borrow from the lyrics of the popular song 'buyers are doing it for themselves.' They are ''standing on their own two feet and...' identifying their requirements, defining the solution, writing the specification and building the business case. All this often takes place before they ever meet a vendor! This reality leave the salesperson looking for a new role in terms of shaping the buying decision.

Buying Has Changed.

For a long time we have noticed a trend with respect to how buying decisions are being made and the implications for the role of the salesperson.

In short, today's major buying decisions are more structured and sophisticated, so too are the business strategies that underpin them.

The present market conditions have intensified this trend, with purchase decisions, involving as little as 20,000 or 30,000 euro, requiring the presentation of a business case that demonstrates not just payback, but also strategic alignment.

The New Complexities of Buying
The public sector is often criticized for wasteful spending and bad buying.

However, tabloid news stories aside, the public sector in the United Kingdom, as well as in other countries, is increasingly applying the best of private sector rigor and sophistication in terms of buying.

No more clearly can this been seen than from the 15 step process laid down for major transportation projects in the UK, as described in the diagram below:
The above process of how the UK allocates money to transport projects offers many lessons for salespeople. So, let us look at it in more detail.

The business case involved in these major schemes - that is projects involving a spend of 20 million plus, must address 5 key areas as follows:

Strategic - how the scheme fits with the regional strategies and priorities, and wider objectives
Financial - Funding sources, financial risk and financial sustainability
Commercial - the strategy for procurement and management of commercial risks
Delivery - how the scheme will be delivered to time and budget, and how successful implementation will be ensured
Appraisal and value for money - the scheme's benefits, including non-monetised benefits, and costs

For each of these areas, specific
criteria are laid out, with the following terms being prominent in terms of the guidelines.

Current situation
Future situation
Actors / stakeholders
Assessment of alternatives
Sensitivity analyses
Consultation & participation
Option Testing
Benefit Cost Ratio (BCR)
Non-monetised impacts
Cost estimate robustness
Project Plan

This is an interesting list of terms which a vendor should cross check against its traditional proposal content.

Buying Is Becoming More Sophisticated.
Every day we see signs of an increasingly sophisticated approach being adopted by buyers. Thankfully a growing number of salespeople are responding to this trend with a correspondingly more sophisticated approach to selling.

However, as salespeople we can often underestimate just how complex our prospect’s buying decision actually is. More fundamentally, we often only see it as a buying decision, rather than a strategic business decision.

The Buying Decision Has Become More Complex.
Taking the first point first, as sales people we often view the buying decision as being focused narrowly on our own solution. That means for example, we do not take account of factors such as:

- The totality of choices available to the prospect organization, including do it in-house, or do nothing.

- The Tradeoffs, priorities, constraints, as well as well as the politics and risk associated with various purchase alternatives.

- The fact that our solution often accounts for only a small element of the total budget, or the total solution, including the fact that the purchase price of our solution often represents only a proportion of the total cost of ownership.

- We often see our solution in isolation of the processes and the people dimensions to their adoption. The degree of change required for success in the prospect’s organization is sometimes forgotten.

The Role of the Sales Person Has Changed.

The salesperson’s traditional role as the conduit of product information has by in large being made redundant.

Why? Because buyers can get volumes of screening type information from a range of other sources that are more objective and less demanding.

As a consequence the sales person has to add value elsewhere. He or she has to aid the buyer in making choices and tradeoffs, in reducing risk and in building confidence regarding the business strategy and its success. That leads us on to the second issue - the business decision.

It is a Business Decision First and a Purchasing Decision Second.
Major purchases are at there core the result of an important strategic business decision. In that way it is the strategy and its associated business objectives that are important, not the purchase per say.

With this in mind, the job of the salesperson is no longer simply to convince the buyer that his or her solution is the best. It is not enough to rattle off unique selling points and competitive advantages over other suppliers. Rather the salesperson’s job is to build the prospect’s confidence that his, or her strategy will be a success and that the seller’s solution is integral to it.

That means writing a proposal, is less important than inputting to the buyer’s business case. Similarly, it means that a trusted advisor is more important than a salesperson.

In Conclusion:
As salespeople let us focus on how our customers and prospects are buying, adapting our approach to reflect the increasing sophisticated nature of their strategy led buying decisions.


swing trading said...

As a buyer, yeah i always do those stuff in order for me to find a very practical item or service that will suit on me and on my budget..

Forex Robot said...

sometimes, we buyers want to do it on our own. we'll call help of the experts when we get stuck and don't know what we're going to do.

and i must admit, a buyers fault sometimes..

Voice T1 said...

buyers really want to see what you offer to them all by themselves... they will only ask for assistance when the time comes that they don't know what to do..

etf trading strategies said...

buyers prefers to do it on their own. even me, i really prefer doing it myself..but when i get stuck..i admit..that is the time i ask for assistance!