In today’s highly competitive ‘Information Age’, your target customers are much more in control of the purchasing-process than ever before. From identifying their challenges and priorities, to investigating options and benchmarking solutions – the power is in their hands!
According to research by Corporate Executive Board (CEB) (now Gartner), buyers are on average “57% of the way through their purchasing process” before engaging a supplier. And as the complexity of the decision-making process increases, they’re even further down the process by the time you’re getting involved.
Why? Because firstly, it’s getting easier to find answers online and within social networks. Secondly, your target customers are increasingly sceptical about involving a biased sales person too early in their process.
Source: iStock Photo
What can this mean for your business?
For many, being late to the customer’s purchasing process often means entering a competitive situation where the decision criteria have already been defined. Some suppliers think this is great; an already defined scope of work, a set budget and a clear timeline. Now all they must do is rock up with a standardised “about us” pitch-deck, throw in an aggressively low-priced bid, and pray for the best.
There are several problems with such an outdated approach, which successful sellers are well aware of. Primarily, they recognise that turning up late to the party can significantly reduce their chances of winning a profitable deal. Yes, it’s possible to “disrupt” the customer’s thinking and decision-criteria with careful planning and the right strategy. However, most of those who arrive late will find themselves competing with others on price. And if “successful”, they’re left delivering and servicing a margin-squeezed contract, which is unsustainable.
Our increasingly interconnected society means more competing forces which can shape the profitability of entire industries. With the threat of new entrants, or the ability for customers to easily design solutions to their own problems; your direct competitors are no longer the only threat to your survival.
Your customers are now much more in control because of their ease-of-access to information and knowledge. This increased customer “bargaining power” gives them far greater leverage and higher expectations.
The result? Shrinking average-order-values and rising cost-of-sale, as commoditisation leaves many suppliers having to put more in the sales pipeline just to achieve the same levels of income as before. Without earlier engagement with your customer, your chances of successfully shaping what will ultimately be of value to them (and therefore the profitability of the deal), will be significantly reduced.
If you like a touch of theory, check this video out from professor Michael Porter of Harvard. His famous model for assessing the ‘five forces that shape strategy’, can be a useful way of understanding what could be shaping the profitability of your own industry.
Despite this, many suppliers are paying too much attention to their direct competitors rather than other competing forces that could be at play. In the case of a complex business-to-business (B2B) sale, the most commonly overlooked force is often the customer’s status quo.
The customer’s status quo
So, you’ve managed to gain early access to your customer’s organisation ahead of the competition. You’ve been working with them for several months, have met with various people, and have had numerous discussions and meetings. You’ve drawn up business cases and proposals. Engagement seemed good. But then, for no apparent reason, radio silence. All that time and money spent with nothing to show for it. What the…?
I know, I’ve been there.
The reality is, change for a crazy-busy customer is hard work. Any perceived disruption to their already frantic list of priorities can be enough to stall or derail a potential deal. That can be changes to the level of financial investment needed, the potential time required, to the effort involved in gathering internal support for your solution. What’s more, information and technology is only compounding the problem, as your customers can easily access a global marketplace of possible alternatives. How on earth can anyone navigate the complexities of their decision-making and purchasing processes in this crazy world?
Good question. Now, take a breath. You’ve come this far. So, let’s keep it brief:
1. Know your customer. Today, being a specialist in your products and solutions is a given. However, too many suppliers are still leading with conversations about them, their products and their “unique” capabilities. Whether that’s a direct InMail via LinkedIn, email or a “cold call”, how often have you been contacted where the narrative has no relevance to you? Sometimes, the lucky few who are given access to the customer’s inner circle, blow it at the first meeting with a pitch all about them. No wonder customers are increasingly sceptical about letting you in too early.
So, what do customers expect? Well, from the work that we’ve done so far, we can see that they don’t expect you to know everything about them in advance of engaging, BUT they do expect you to know something about their business, or at least similar companies or organisations within their industry. What are their priorities, who are their competitors, what trends are driving the need for change? How have you helped others and what were the outcomes? It’s about them, their situation and not you (that comes much later).
Like your customer, you too need to leverage technology to regain control and build a solid pipeline. In Tony J. Hughes’ insightful book ‘Combo Prospecting’ (if you’re in professional B2B sales, you need a copy), he recommends a list of digital resources that can be used to help you intelligently monitor what’s happening within your customer’s industry and their organisation. These tools (most of which are free) allow you to “listen” for trigger events that give you legitimate business reasons to engage with your prospective customer. The prerequisite, though? You need to put effort into developing your online personal brand and the starting point is LinkedIn.
2. Engage early. We’ve discussed the challenge of gaining access earlier in the customer’s purchasing-process and have looked at how being late to the party can substantially reduce your chances of success. Although the many people I speak with – from sales people and founders, and leaders of established businesses – can relate to this, the conversation often starts around a lack of potential deals in the sales pipeline. We’ve found this is either because of not driving the activities that will create pipeline, or not leading with the right messaging in the first place (or some combination of these) that will permit access.
The trouble is, being given early access – and before a customer knows they may have a problem – is no picnic. It requires a co-ordinated team effort and an approach which shifts away from a message that focuses on features and benefits of your solution, and towards one which clearly articulates the potential implications of the status quo. Why should the customer change? What and who is going to create the momentum needed within their organisation, and how are you going to help them along the way? What value can be delivered for the customer in the sales engagement itself? If you’ve not done so already, grab yourself a copy of The Challenger Customer: a great resource for understanding how to create the right “commercial insight” that will help your customer build consensus for change within their organisation.
As Tony Robbins once said:
Change happens when the pain of staying the same is greater than the pain of change – Tony Robbins
3. Create momentum. You’ve been permitted early access to your customer’s inner circle, have a deeper understanding of their situation and strategic priorities, have gained their trust, and now the challenge for you is how to help them garner the internal support and momentum needed to make change happen.
As we discussed earlier, the often-hidden competitor which is commonly overlooked by suppliers, is the customer’s “status quo”. The latest research from Gartner, estimates there are now, on average, 6.8 people involved in the customer’s purchasing-process. This often-dysfunctional group can add to the complexity of the decision-making process. Thus, requiring a different approach and one that focuses on guiding your customer through their process (not your sales process).
In Anthony Iannarino’s book ‘The Lost Art of Closing’, and James Muir’s ‘The Perfect Close’, they discuss the need for B2B suppliers to move away from the “always be closing” mindset of the 80’s, and towards one which focuses on winning a series of “micro commitments” to change throughout the customer’s purchasing process. Rather than “closing” being a special combination of manipulative tie-down techniques or an event in the sales process that is sprung upon the unexpectant customer, the approach they discuss is one which focuses on building trust, gaining mutual commitment, and creating the right momentum for change.
And only if it makes sense for your customer and your business to do so.
If you found this article to be of value, please share via your Twitter, LinkedIn, and Facebook network. I encourage you to join the conversation or ask questions, so feel free to add a comment. You’re also welcome to join our growing community for free articles, insights and perspectives delivered straight to your inbox.
Written by: Jonathan Lancaster