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Hey folks! Phil Zito here, Phil Zito here and welcome back! In this post, we're going to be tackling the topic of how to discover your customer’s decision-making process. So, I remember back in 2008, how the world seemed to be collapsing. There was a lot of turmoil, people trying to figure out, how exactly to sell stuff. And, you know, things are cyclical. It's just a matter of time until we find ourselves in a situation like that, again.

What I tend to find in our industry is that you're either an owner/salesperson, or you're a contractor/salesperson, and there's a lot of contractor/salespeople out there. I tend to find, and I've seen this on our own team, when folks who traditionally sell to contractors, sell plan and spec projects, and things like that, when they move into selling directly to owners, directly to customers, it's a new world for them. They have to figure out what the decision-making process is.

I've seen it in our own business when I look through our sales pipeline, and our Sales Director will ask, “When is this closing, who’s the buyer,” etc. Most of the time we get good answers. But there are sometimes where, we’ll get told its closing soon and soon is not a closing date. Or we'll be told this is how they buy, and I’ll respond by telling them that is not a buying process. So, really understanding how to discover a buying process is not that difficult, but it is definitely a process, and so we're going to be talking through that today.

Every customer has a decision-making process when it comes to buying your products. Now, when it comes to contracting, it's a fairly easy process, in most cases. I'm not talking about like P3 projects or design-bid-build projects, but on most plan and spec work, you're going to get a set of plans, you're going to get a set of specifications, and you're going to develop a scope. From that, you're going to develop an estimate, and you're going to give your best estimate at what you believe to be the right margin and see if you win the job.

When you're dealing directly with an owner though, you tend to have to navigate a decision-making process. Now what does that look like? So, it depends on how the customer procures.

So, I'm going to use a lot of terms here. I'm going to define these terms for those of you who may or may not be familiar with them, as we move through the posts.

So, procurement is the act of procuring, or buying, a product. That may have everything from having to solicit bids, solicit responses, you may have procurement criteria on how many people you need to evaluate, etc. Once you are past this procurement process though, there is a decision-making process that takes place. That is what we're going to be focused in on today. How do customers make decisions?

Now there is a decision process. There are decision criteria, and then there are decision “biases,” or kind of how people interpret the decision process. That means they may interpret the decision process through data, through testimonials, through feelings, through logic; there's a variety of different things and we'll cover all that. We'll also talk about finding the decision maker.

So, the decision process typically begins with some sort of need, someone first has to determine that they have a need, that they have some form of pain point. There has to be a pain point that can be connected to some sort of business value. Now, in some cases, this could be simply the ego of the owner, in some cases, this could be a direct tie to a financial value, and in other cases, this could be tied to some regulatory compliance, but there has to be a need tied to some sort of business value.

Assuming that exists, then we get into actually paying for this need. So now, you either have a capital budget or you have an operational budget. Understanding budget thresholds and understanding at which point which budget takes precedent is going to help you understand the buying process.

There's going to be a buying process for capital budgets, and there's going to be a buying process for operational budgets. Within those actual budgets themselves, there tend to be thresholds at which the buying process shifts, and/or additional decision makers or influencers get involved in the decision-making process.

Okay, so far, we have procurement, we have a need, we have a need that's driving a budget, and then we have a process associated with that budget. So long term, you're working with a customer, you're identifying a need, and you're influencing a budget, maybe a capital budget or maybe next year's operational budget, and they are going to make a decision based on that. There is still a decision, but that is budgetary influence, which is then driving to a decision process. Then there are also just snap decisions, you know, someone is sitting there, and there's an issue, there's a large enough pain that they are going to make a decision to purchase.

In addition to all of this, swirling around in this entire vortex of decision making, is going to be funding. So, we have budgets that definitely influence the decision-making process, and a way you can offset that budget is by finding ways to bring funds to the discussion.

So, when it comes to a decision-making process, there's several levers that you can pull on to influence. You can make the needs very painful. You can bring money to the table to influence. You can also understand how the buyer measures, whatever metrics they're using to make decisions.

There are typically three phases of the decision-making process:

  1. Agreeing on there being a pain
  2. Evaluating options
  3. Making a decision

So, we assume that we have enough pain, we assume that people have evaluated their options. Now we need to discover the decision-making process. For me, personally, my style is to say:

Me: “Hey, we agree that there's XYZ pain, right?”

Them: “Yes.”

Me: “Okay, we agree that it's costing you XYZ dollars, right?”

Them: “Yes.”

Me: “Okay. How do we make this to where you can buy it? And how will you buy it?”

Then they'll talk through this and may say, “Per our procurement, we have to go through XYZ process.” Or maybe they will say that they evaluate the ROI, which is return on investment, or the internal rate of return. So, we have to understand financial metrics, maybe some qualitative metrics, maybe this is a technology service that we're providing, and now there's cybersecurity metrics.

We have to understand the metrics at which they are evaluating the decision. Then, once we understand the metrics, we have to understand, what is this decision-making process from there? Does the decision get made with you? Does it get made with someone else? Oftentimes, a lot of people will say the decision gets made with them.

I know there's kind of this, “the customer's always lying to you” mentality that tends to exist in sales. I don't think the customer necessarily is intentionally misleading you, at least not all the time, but what I do think can happen is that the customer has a budget in their mind. They're thinking maybe this is going to be $30,000, and based on that budget, they explain the decision-making process, in which they are the decision maker.

So, I like to use this process called bracketing. Bracketing enables you say, “At $10,000, is this process still the same? At $50,000, is this process still the same?” You work your way up to the high end of whatever you're selling. Because the reality is, with a lot of solutions these days, there's like good, better best. So, I may simply sell you a control system, but I also may sell you a control system with analytics. I also may sell you a control system with analytics, and a year worth of support. So, understanding those processes, and how they change based on the volume amount, is important.

Additionally, especially in our day and age, and this is something a lot of people miss, is we have blended sales. We have a sale that is going to hit capital, and then we have a sale that is going to hit the operational budget. So, our sale hits the capital budget. The person's like, “I could spend this much on new controllers, or new air handlers, or whatever.” Then they have the operational budget, which they can use for training, they can use for service, they can use for analytics, so ongoing SAS solutions, and those processes may be different. For example, VP of Operations may be making operational purchases, but VP of Finance may be making the approval for capital purchases. So, understanding that there's different buyer types, and that you have to cover both, that is going to be really important.

So, as we look at this decision-making process, and we start to map it out, we start with, what is the decision criteria? Who is evaluating those criteria? Then, what thresholds of approval do they have? So, we start to understand their threshold is here, so we know we cover that person. Now, if it gets above their threshold, we know we still have to cover that person, because then they typically shift from a decision maker to an influencer. Now we have to find the new decision maker, and we have to make sure that we're covering that person. So, discovering your customer’s decision-making process is not terribly difficult, it's oftentimes just a matter of discussing it with them.

Now, that being said, if this is a public entity, then you have procurement, and you have buyers involved, as well as larger private organizations, or publicly traded organizations. They usually have procurement teams involved that will negotiate the procurement and the decision-making process. So, you need to be cognizant of that as well.

But in a nutshell, as you start to work towards filling your pipe and selling things for the rest of this year, I really encourage you to start understanding your owner market, to start understanding their decision-making process. I have a sneaking suspicion that we're going to see capital budgets contract maybe a bit because the cost of money is going up. As the Fed raises rates, it’s no longer as effective to cheaply borrow money, and so now that we have that potential issue, we need to account for a decrease, potentially, in capital funds that are available to us.

Those operational budgets that are already funded, we can definitely take advantage of those. Now, if we are going after operational budgets, that definitely requires us to be involved in that decision-making process.

Lastly, let’s cover how people make decisions. Okay, so let's say you've moved through the decision-making process, you've got their metrics, you've got them agreeing that they're going to buy, you've identified the right buyer. The last thing that I want you to do is identify how that buyer makes decisions.

Are they a data-based buyer? Do they make decisions based on data? If so, your presentation, your proposal, your scope, should all reference data, and understand what kind of data is important to them. Are they looking at operational-efficiency data? Are they looking at financial data? Are they looking at investment data? What are they looking for, from a data perspective? Present your executive summary, your proposal, your scope letter, your pricing all tied into that theme. Now granted, there's a risk in this if you haven't properly identified the decision maker. If you think that you've got the right decision maker, and you think that they are data driven, when in actuality they're like, testimonial or proof source driven, and you build up an entire proposal and an entire scope letter that is driven based off of data and they are prove-it, they're not going to believe your data. They're going to want you to prove your data, which is going to be like site visits, customer referrals, customer testimonials, etc. So, really need to hammer that down.

Alright, so let's recap. We identify the buying metrics and the pain, and we drive them into the buying cycle. Once they're in the buying cycle, and they come out of that into the proposed phase, they enter into the decision-making process. You understand how they make decisions, and then based on how they make decisions, you use the bracket approach to bracket out, $10,000, $50,000, $100,000 and figure out if they are still the decision maker based on the volume. You figure out what budgets are being utilized to fund this decision, so that you cover both the operational as well as capital budget, if need be. Then you find out the decision maker’s decision style, and you tailor your presentation, your scope letter, your proposal, to how that person makes a decision.

If you implement these couple things right here, you will see an increase in your sales. You will see that you are not being blindsided at the end of the month when your Director of Sales is saying to you, “Hey, where are the sales?” and you're like, “Well, they told me they would buy,” or, “The sale that was estimated to be $50,000 is now $20,000,” because you realize that that person only has a budget for $20,000.

So, by covering this, you're going to avoid those uncomfortable conversations in which you have to explain that you didn't properly qualify, you didn't properly figure out how this person is going to buy, what they're going to buy, when they're going to buy, and what is going to make them and influence them to make a buying decision.

All right, folks, I hope this post helps you out. I really hope you do apply it. If you see some success from it, definitely let us know in the comments.

Thanks a ton and take care.

Phil Zito

Written by Phil Zito

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