How to Encourage a Sensible Business Customer to Buy

The concept of ‘knowing a customer’s business better than they do’ neatly encapsu­lates the concept of helping a customer to go about decision-making in a logical manner. There is a huge amount of emotion in any significant buying decision, and we will have to build that into the plan, but it is best to have the emotion sitting on a rock of good common sense.

Let us take as an example a company making a capital investment decision. This could be an IT hardware and software project, new turbines for a power sta­tion or any other investment that is going to give service and add value for a pro­tracted length of time. How do you go about buying such a solution?

A sensible company’s guide to capital investment

At any point in time a company is being offered by its managers and by outsiders many more ideas than it can afford to implement. There is constant pressure for money from product-development managers, designers, information technology groups and others throughout the business. This causes most companies to develop management processes for investment appraisal and project management.

To understand this process, we need to follow the sensible company’s step-by-step guide to capital investment appraisal and implementation.

Step 1 – Establish the objectives of the project within the company’s business strategy

Many projects have as their starting point a strategic objective of the company. Indeed, if you look at the way banks have implemented their IT systems, you will find that they have followed the rule of maintaining competitiveness by keeping abreast of new technology developments. From the seller’s point of view this ‘me too’ strategy is a fortuitous starting point.

It is likely, however, that an overall strategic reason for buying will not be suffi­cient on its own, and managers will have to back it up with a solid tactical or busi­ness case. It is also important that investment projects support the other key busi­ness strategies such as product or marketing strategies. This is the first hurdle over which any proposal must jump. In other words, you must connect the benefits of the products you are selling to these high-level policies. Notice how already we have moved to the customer’s point of view. A benefit is only a benefit if the customer has agreed it to be so.

Step 2 – Involve the management and staff who will have their jobs changed as a result of the project

The only certainty about any capital investment is that the jobs of some people are going to change. Most large organisations are getting better at managing such change. There are, however, still some, along with many smaller businesses, who handle this part of the process at best insufficiently and at worst with a lack of sensitivity. This imperils the success of the project.

Do not confuse this stage with training. It is helping the people involved to understand the benefits of change to their company, their customers and them­selves. Sometimes managers deliberately keep the approaching change secret from staff, only to be mugged by them when the change has to be implemented. I worked with another manager to try to convince a power station manager to tell the unions, as early as possible in the buying cycle, about a new system that would involve them all. We failed, and the strike lasted for three weeks and the settlement cost a fortune.

If a company you are selling to ignores this familiarisation stage in the imple­mentation plan, you can gain competitive edge by helping the customer recognise the need for early warning systems.

Step 3 – Agree the tactical business case including the cost justification

In almost all companies there is a standard method of making a business case and it is vital that people who are going to sell capital goods to them know what that process is. How close the customer allows you to that process depends on your relationship, and how much value the customer believes you can add to the process. If you know the value of the project to the customer, you are obviously in a much stronger position when it comes to negotiating the price.

Step 4 – Establish implementation priorities and controls

During this step in the buying process, the sensible customer puts in the basics of project management. It is crucial at this stage to see the project in its entirety and plan the milestones which allow the business and technical mangers to control the implementation.

The key is to document every action and ensure that all the milestones have easy measurement. It is not enough to state, ‘Test system for user acceptance.’ The salesperson and customer together must describe the tests in detail and agree the measures of user acceptance.

The job of you the seller in this phase of the project plan is to suggest all the activities involved to ensure a successful implementation. Very frequently there are issues the supplier is aware of which may be unknown to the customer.

From previous experience, the supplier can anticipate some pitfalls and prob­lems, and avoid unnecessary surprises. It can be tempting to duck some of these issues and leave customers unaware of something they will probably have to face and solve in the fullness of time. Once again competitive edge is available here. Your pointing out an additional factor unplanned by the potential customer can damage the credibility of your competitor.

It is not possible to overstate the importance of getting this phase right and assisting the prospect to plan the project from the start, right through to successful completion. You can use an assumptive close in working with the prospect on the outline implementation plan by including the placing of the order in the project plan.

Step 5 – Select the exact functionality

This is the part of the project plan that the technical enthusiasts in the customer tend to enjoy. They survey the market for new technologies, study other implemen­tations and talk to lots of suppliers. From these ideas they produce the detailed functionality.

Salespeople are also well aware of the work done at this time. They have two concerns: using time wisely and meeting the customer specification.

Firstly, is the customer using your time wisely or are you wasting valuable sell­ing time? Avoid the pitfall of two technicians, one the salesperson and the other the customer, spending lots of time looking at all the options now and in the future. It’s all very well demonstrating all the possibilities, but if the customer has no commit­ment to doing something at all levels of management who will be involved in the decision, then you are better off elsewhere. I have seen salespeople spend ages with an enthusiast only to find that the decision makers of whether the project happened or not were miles up the organisation.

The second point of concern for salespeople at this stage is to make sure that their products and services can do what the customer requires. From an under­standing of their offerings and of the competitions’, they will try to ensure that any unique elements in their portfolio have a place in the customer requirement.

The end of this stage is the production of a document outlining the exact speci­fication of the technology the prospect wants to buy. You must get involved in this. You will be at a significant disadvantage during the tendering process if your com­petition is helping the customer write the specification.

I well remember in times gone by, a British manufacturer spelt the word for computer storage ‘disc’, while their main American competitor spelt it ‘disk’. Sales people were always eager to see which spelling the prospect chose in the tender document, as this was an indication of where their preference lay.

Step 6 – Select the necessary products and services and their suppliers

Senior management has a number of concerns. The key issue for them is that their managers choose the correct suppliers. This ensures that the project is successful, measured by ‘on time and within budget’. They want the best deal possible, some­times measured by ‘the cheapest’, but in complex projects frequently described as ‘best value for money’.

Another issue is that their managers subject the project to their normal tender­ing procedures. They want to be sure that no-one brings unreasonable pressure on their technicians or buyers which would lead to them selecting a particular supplier and making a mistake.

The board looks at any capital investment project in terms of its relevance to the business and to its main strategies. ‘Is it hitting at the key issues we are facing and assisting with the implementation of our key strategies?’ ‘Is it part of our general direction and will it remain so for the life of the project?’

Then the board worries about organisational change. ‘Does the project demand difficult or uncomfortable changes in organisation?’ ‘Will the project still be relevant and feasible after we have made other planned changes?’ This last issue is made more significant if the buyers and implementation managers of the project are una­ware of the impending change. It’s like bank technicians improving the back office system while the directors are planning to close all the branches.

So, the end of the buying phase comes, you have seen it from the customer’s point of view and, hey presto, you’ve got your order. Well done.

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About the Author: Marie Mayle is a contributor to the MegaHowTo team, writer, and entrepreneur based in California USA. She holds a degree in Business Administration. She loves to write about business and finance issues and how to tackle them.

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