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Know How Your Market Buys Or Forever Negotiate On Price

Written by: Linda Mattacks

Article Overview: You need to identify who the Buying Decision Maker is because, no matter how good the offer, it’s wasted if it is made to the wrong individual. Whilst it may normally be fairly obvious in consumer sales, it sometimes takes more digging to establish the right M.A.N. in business to business. This is the person with the Money, Authority and Need. But it doesn’t stop there…

Know How Your Market Buys Or Forever Negotiate On Price

A typical Business-to-Business buying model will be made up of a Gatekeeper, User, Initiator, Influencer, Purchaser and Decision Maker.

There are many elements that dictate the size, shape and complexity of the Decision Making Unit of the Buying Model but in general the main ones are:

****The size of the company
****The Return On Investment (as well as the initial cost of the purchase to the company)
****The importance of the purchase to the company and potential ramifications throughout it as a result of the purchase

Company size:

Typically, the smaller the company the more roles each individual will assume, the larger the company the more levels there will be and the more structured the roles will be, with strict limitations on individual responsibility and authority. And even within small companies, zero employee and micro businesses, any company will usually have at least one layer of ‘padding’ between you and direct access to the Decision Maker, even an independent consultant or sole practitioner, in the form of a domestic partner.

Return On Investment:

The price of your product(s) or service may be important in terms of who does the buying within the prospect company, but it is definitely NOT what they will buy on.

They will compare your prices against the income (and/or savings) it can achieve for them in a defined period of time. This is their Return On Investment (ROI).

For example - if your product costs $7000 and your competitor's $5500 for a fairly similar product then you might think that you have no chance.

BUT - if there is just ONE feature of your product that will bring in or save a little more than your competitor - say $1250 rather than their $1100 a month, then, although it will take a few months longer for your product to pay for itself - in a 3 year period your customer would be nearly £4,000 better off. Your product has a superior ROI in a three-year period.

Importance of purchase:

The more impact the purchase of your product or service will make on the prospect company, the higher up the organisation you need to aim.

You may well need to ultimately deal with the owner or Managing Director together with the Initiator, Influencer, Financial Director and User. And each of these will view your offer from the perspective of the needs of his or her role within the company.

Many sales people, especially those in technical sales, believe that the role of owner/ senior management/ board level directors is pretty much to rubber stamp the purchase. Consequently they direct their sales efforts lower down the line right from the start, little realising that by so doing they are reducing their offering to a commodity, one that at owner or board level can be:
****Accepted or rejected
****Subject to haggling over price
****Held up to be checked against competitive offers

Use your common sense but, in the majority of cases, you can never really aim too high when initially approaching a company you hope to do business with – the PA to the Managing Director/ CEO is usually a mine of information.

It is much easier to go to the top and then be passed down the ladder to a ‘lesser’ individual than it is to start off lower down the chain of command and be passed upwards to a more authoritative one.

Happy prospecting!

Linda

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Article Tags: Business to Business buying, Initiator Influencer Financial Director, product costs, Return On Investment



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