CHAPTER 4
The Critical Buying Path
From its mouth near Dinar, the Great Menderes River snakes its way throughout southwestern Turkey for approximately 363 miles until it empties itself into the Aegean Sea near the ancient port of Miletus. As the crow flies, it spans a distance of approximately 180 miles. The ancient name for this river was Maiandros (Maeander) and is the root of our word meander. Aerial photos of this river illustrate the circuitous route it travels. Some salespeople would argue that many customers follow a similar path when they attempt to satisfy their needs.
Some buyers have simple needs; others have complex needs. Some buyers paradoxically treat simple needs as complex, while other buyers treat complex needs as simple. Understanding the buyer’s needs is important to determine if your solution is the right fit. Understanding how buyers engage their needs and make buying decisions is vital for how you frame your message and communicate your value.
This chapter offers you a different way to study and approach the buyer’s needs. Teaching buyers how to make better long-term buying decisions benefits both buyers and sellers.
At the end of this chapter, you will be able to:
• Discuss the importance of understanding your customer’s journey
• Describe your buyer’s decision-making style
• Explain a major obstacle to good buying decisions
• Define the full scope of the buyer’s needs
• Discuss the buyer’s Critical Buying Path
• Identify benchmark steps along this path
• Assess your value vis-à-vis the buyer’s needs
• Frame a compelling value story about your impact on the buyer’s world
THE NEED TO UNDERSTAND YOUR BUYER’S JOURNEY
A thorough understanding of the buyer’s needs is the first step you take on your Critical Sales Path. In our study of 254 B2B salespeople, we asked them about the challenges they face in getting new business. One-in-five said that understanding the buyer’s needs was a challenge. The inference is that 80 percent feel they understand the buyer’s needs. That sounds optimistic, but it flies in the face of our meta-analysis of customer research. Approximately three-in-four customers feel that salespeople do not understand their needs or buying process. One study found that only one-in-five salespeople truly understand the customer’s needs. We can infer from this that either salespeople underestimate the importance of understanding the buyer’s needs or this is a blind spot for salespeople. Either way, buyers see a bigger problem here than salespeople perceive. There is another consideration that has an impact on the customer’s buying decision: How many buyers really understand their needs?
Your understanding of the buyers’ world—their needs, wants, desires, operating environment, decision making, and the full impact of their decisions—can help you identify where you can add meaningful value, communicate this value effectively, and deliver a value-added solution.
BUYING PARADIGMS
How buyers perceive their needs tells you how they will evaluate your solution. Understanding their buying paradigms—the way they view their needs and make buying decisions—determines how you proceed with the sale. Do they see their needs as simple or complex? Do they want a long-term solution or a short-term fix? Some buyers are willing to do a deep dive exploration of their needs, while others are content with swimming at the surface. For some buyers, emotion trumps reason, while other buyers try to make purely rational buying decisions. In some organizations, conflicting agendas and egos complicate the process. Power-base distribution often dictates whether they will make a logistics, financial, or technical decision. With all these pressures, buyers generally choose one of two buying paradigms: they either satisfice or maximize.
Satisfice
Nobel Laureate Herbert Simon, psychologist and economist, introduced the term satisfice to describe a decision-making style that opts for an outcome that is merely good enough.1 It is a combination of satisfy and suffice. Those who satisfice choose adequacy over optimal solutions. Part of Simon’s argument for satisficing is that we lack adequate cognitive resources to predict with sufficient precision and reliability the probability of outcomes of complex decisions. In other words, people can’t possibly know everything they need to know to make these types of decisions. Other reasons people satisfice are that they lack information, time, money, or the will to make complex decisions. They simplify and choose expediency and sufficiency.
The outcome of satisficing is that buyers dumb down their needs and value-strip the options they are evaluating. For salespeople, this means buyers simply look at price. They ask these types of questions: “What can we live with?” “What minimum standards can we accept?” “What’s the cheapest way to fix this problem?” Implicit in each of these questions is the answer for the value-added salesperson: you must help them sophisticate, not complicate, the decision process. Cognitive psychologists may argue that our perceptual filters are designed to screen out the noise so we can get to the heart of the matter. Complex decision variables are not noise. They are relevant because they affect the outcome, which translates into value. To sophisticate the decision process means to teach buyers to maximize.
Maximize
To maximize is to opt for the best possible outcome. It answers these questions: “What is the best way to approach this situation?” “What is our ideal outcome?” “What is our best-case scenario?” Maximizers choose potential over good enough.
Maximizing involves weighing all decision variables along a timeline that extends well into the future. These input variables include needs that are synergistic, connected, and whole. This is an important training point for Value-Added Selling. While some buyers may dumb down or isolate their needs, to maximize they must view them holistically because they are more interdependent than independent. Encouraging buyers to consider all their needs, think long term, and dream about ideal outcomes is a good first step on this royal road you travel to provide value-added solutions.
SILOS ARE A MAJOR OBSTACLE TO GOOD BUYING DECISIONS
In 1971, Walt Kelly published his famous Pogo cartoon “We have met the enemy and he is us.” At times, humans are their own worst enemies. Years ago, an attendee in one of our seminars asked, “Whose customer is it? I’m in operations. Is it my customer, the sales force’s customer, or our customer?” This rhetorical question required only a smile of acknowledgment.
A silo is a tall cylinder that is used to store material and safeguard its contents from outside elements. Organizational silos are similar in that they isolate their members from other people. They are called turf wars, power struggles, sibling rivalries, family feuds, political infighting, and so on. Silos are classic us-versus-them battles, and they are as old as Cain and Abel. Silos exist when one group of employees views another group of employees as separate, or worse, as the enemy.
Silos exist in organizations when one group is alienated or isolated from other groups. Consequently, they do not communicate. These silos can be functional, divisional, or geographic. Functional silos exist when one department operates as a separate entity, independent of other departments. Silos reflect a failure of systems in organizations. Each silo has a separate focus and operates independently.
Engineering and finance have different organizational functions. One works with technology and the other with money. When departments fail to communicate, it widens this chasm. When purchasing fails to communicate with engineering or production or operations, it is as if purchasing is buying for itself instead of for another entity.
Divisional silos exist when different groups within the company pursue different markets, operating as quasi-separate companies. Divisional silos are complicated by the fact that they also contain functional silos within these separate divisions. A purchasing group for one division is different and separate from the purchasing group in another division. Even though these divisions may serve related markets in the same industry, they still operate independently of each other. Many times, they are unaware of what other divisions do or whom they should contact with questions or opportunities.
Geographic silos exist when groups are separated by space. The corporate office is in one city, and the branches are in other cities. Purchasing for a large global corporation may be centralized in one location, and those who use the product work somewhere else. This is a problem when purchasing responds to supply requisitions but never talks to the people in the field who request and work the product.
Offices located in different cities are separate organizations. These agencies understand the organization’s needs as they are spelled out in the requisition. They may know what they need but not why they need it. For example, the Houston office purchases for a mine in Wyoming, and there is little physical contact between the two. From a procurement perspective, consolidating purchasing in one location may sound like a great way to leverage purchasing dollars, but at what cost to efficiency and effectiveness? These silos create supplier issues as well, as salespeople attempt to penetrate these accounts to meet with all levels of decision makers and influencers.
Some silos are benign. They exist simply because two separate units fail to communicate. Others silos are malignant because one unit may passively or even actively sabotage another unit. Withholding information is different from lobbing hand grenades over the cubicle walls separating units, but it is still sabotage.
Silos exist because management allows them to exist. Some executives like management by conflict. They create competitive environments where departments compete for precious resources. Some managers allow silos to exist because they are in denial: “We don’t have that problem in our company.” Yes, they do. If an organization has more than one layer of management, more than one department, and a fuzzy mission, it has silos. Silos also exist because mid-level managers focus more on winning turf battles than creating value for customers.
The second reason silos exist is because management does not communicate clearly and often its commitment to serving customers. Companies have one mission—to create value for customers, which in turn allows them to extract value from those customers. Anything other than that is a distraction. Silos are distractions. Companies cannot create value for customers or for the company when team members are more interested in creating a position for themselves than value for the team.
Turf wars are so common that a company is an anomaly if it does not have them. The American Management Association surveyed top executives and found that 83 percent of them had silos in their companies, and 97 percent of them believed that silos were hurting their organizations.2 Companies have silos, especially when they think they do not.
IndustryWeek magazine found that silos are the top obstacle to growth.3 Companies cannot win battles against the competition when their employees waste energy battling each other. In fact, a smart competitor only needs to watch these turf battles send business the competitor’s way. Just as negativism is a complete waste of a perfectly good imagination, organizational silos are a waste of a perfectly good competitive spirit. With all of the competition organizations face, do they really need competitors inside their own walls? Silos kill competitiveness.
Silos are honest-to-goodness profit piranhas. Inefficiencies, mistakes, and miscommunications chew away at the bottom line. The indirect cost of missed opportunities is forgone value that can never be recaptured. Silos lead to employee disengagement, which Gallup estimates costs U.S. businesses between $450 and $550 billion annually. Companies do not have that kind of money to waste. Silos unleash a chain of viral negative consequences that will kill business.4
Silos lead to employee and customer dissatisfaction. Unhappy employees create unhappy customers. Silos breed mistrust, suspicion, and frustration. Good employees leave. Customers run for the exits, as they feel like the neglected child of dysfunctional parents. Silos destroy operational efficiency. IBM found that employees spend 25 percent of their time seeking information that someone in the company already has discovered.5 Too bad they do not communicate.
Sales is not the enemy. Operations is not the enemy. IT is not the enemy. Management is not the enemy. Customer service is not the enemy. The credit department is not the enemy. HR is not the enemy. If you are a distributor, your factories are not the enemy. Purchasing is not the enemy. Customer silos make it difficult for salespeople to navigate the decision process. We cover this more fully in Chapter 27 on selling to multiple decision makers.
As a salesperson, you can work with customers whose organizations are siloed. Get connected. Talk to employees at all levels in the organization. Ask questions that call into play the broad needs of their organization—purchasing needs, manufacturing needs, technical support needs, administrative needs, and so on. Advise one department what you are doing with other departments. Arrange for task-force meetings that include multiple disciplines. When discussing your solution, include an impact statement of how your solution creates value for other departments. Be clear that your solution is a total solution for their organization. Encourage cross-functional communication between your company and the customer’s organization.
Value-Added Selling has always been a team sport. The sales force may sell the first experience with your company, but it is the total experience that brings customers back. Salespeople can promise only what operations delivers. The whole organization must embrace this mission to create value for customers; otherwise, you will have silos in your organization. Silos are barriers for Value-Added Selling; they obstruct you from getting full value for your investment.
Abraham Lincoln said, “A house divided against itself cannot stand.” Though his reference was more serious than organizational turf battles, his words are a poignant reminder of the dangers of infighting.
THE FULL SCOPE OF BUYERS’ NEEDS
Buyers have a choice of how they want to view their needs. They can view them as impact area needs or process needs. These impact areas include things like logistics needs, IT and technical needs, training needs, service and support needs, administration needs, financial needs, operations and manufacturing needs, and sales and marketing needs. Your solution may have an impact on any or all of these areas. Purchasing needs to shore up the logistics of a transaction, while manufacturing is more concerned with how well a solution performs in the system, and sales and marketing is more concerned with how that solution makes it easier to take to their markets.
The compartmentalizing of needs by function, department, or location contributes to the problem of silos. Process needs are more linear, fluid, and sequential. This approach to needs helps companies avoid silos. This process-oriented view of needs provides us with the model for the Critical Buying Path.
THE CRITICAL BUYING PATH
In 1985, Michael Porter wrote in his book Competitive Advantage, “Competitive advantage cannot be understood by looking at a firm as a whole. It stems from . . . many discrete activities. . . . Every firm is a collection of activities that are performed to design, produce, market, deliver, and support its product. All of these activities can be represented using a value chain.” He was describing a process of inbound and outbound activities in which companies engage to create value. He was building on an idea that was taking root to view an organization’s value creation as a dynamic process. At about this same time, supply chain management gained popularity because of the technology available to coordinate logistics. Toward the end of the 1990s, customer journey mapping gained popularity as a way to understand the customer experience. We began our work on the Critical Buying Path when it became obvious to us that salespeople needed a comprehensive understanding of the buyer’s cradle-to-grave needs in order to contribute maximum value to the relationship.
The Critical Buying Path (CBP) is the sequence of steps buyers go through from need to satisfaction. More specifically, it is the sequence of steps buyers go through from the moment a need exists (not surfaces) up to and including reordering or disposing of a product you haven’t even sold them yet. When Tom first introduced this concept in his 1993 book Value-Added Sales Management, he defined it as a “buying and usage process.” Today’s definition is broader because we have witnessed how companies have enlarged the concept to add value at every step along this path.
Think of the CBP as a process of complete need satisfaction. It is bigger and broader than the buyer’s supply chain; it is a supply chain on steroids. Supply chains typically satisfy logistics needs for buyers. The scope of the CBP includes all ways you can add meaningful value.
In addition to being a sequence of events and a process that flows toward complete need satisfaction, the CBP is a cradle-to-grave flow of interconnected activities, needs, and solutions. To interrupt the flow—as by satisficing—robs the buyer of the opportunity to achieve something great. Sequence, process, and flow describe something that is ongoing—a continuous relationship with a supplier versus a transaction-based relationship.
Your buyers have a CBP whether they know it or not. Even the most commodity-minded price shoppers have a CBP if they would slow down the decision making and consider the possibility. The CBP encourages buyers to view their needs as dynamic and evolving. This suggests your Value-Added Selling strategy: help buyers understand the full scope of their needs; then they can appreciate the impact of your value-added solution. Buyers who embrace this concept make better long-term buying decisions and maximize the value they receive from their supply partners. The CBP turns a satisficer into a maximizer. As buyers thoroughly understand their needs, it is more difficult for them to value-strip your solution and reduce the buying decision to price only.
As you study the buyer’s CBP you develop a broader and deeper understanding of his needs. You become customer focused as you begin to see your solution as value received, not just value added. You engage the buyer more in the process; you stretch his time horizon; you enlarge the discussion from core-commodity, logistic needs to total needs; and you ensure all influencers get their say. By understanding the buyer’s CBP, you will see a model emerge for assessing your value added and a framework to communicate your value and differentiate your solution.
The CBP has three stages or categories of needs: Presale Planning, Acquisition/Transition, and Postsale Usage. Within each of these three stages or broad categories of needs are subcategories of needs that are steps along the CBP. The more of these steps you identify, the greater the possibility of your adding meaningful value.
Presale Planning
The Presale Planning stage begins the moment a need exists. The buyer may be aware or unaware that he or she has a need. Early account penetration can help you uncover this need and shape the decision process to favor your solution. The buyer’s dominant need during this stage is for information. Our buyer survey found that buyers’ need for information is an opportunity area for salespeople to add value. These are just a few of the questions a buyer might ask in this stage:
• What do we need?
• Why do we need it?
• What’s available and from whom?
• Which is the best alternative and why?
You may discover that subcategories of needs—the steps along the CBP—include things like studying (conducting an internal needs assessment, forecasting, establishing buying criteria like solution parameters and budgets), sourcing (meeting with potential suppliers, observing product demonstrations, testing, and requesting proposals) and selecting (committee meetings and deciding). The specific activities for this stage depend on the buyer and her needs. It can vary from one buyer to another.
Acquisition/Transition
The Acquisition/Transition stage begins when the bid is awarded, contract signed, or order placed. It includes everything that the buyer must do to prepare to use or transform the product into value. The buyer’s dominant need during this stage is for smooth, seamless, and painless transitions to your solution.
As in the Presale Planning stage, there are subcategories of needs or steps along the CBP. They may include things like placing orders, preparing people and facilities, and receiving and redistributing goods. Just like the Presale Planning stage, the specific activities or category of needs depends on the customer. Some may have several preparatory activities they must conduct; others may simply wait for the goods.
Postsale Usage
The Postsale Usage stage begins when the customer transforms your solution into value and extends into the future for complete need satisfaction. The buyer’s dominant needs at this point are maximum performance and economy.
As in the previous two stages, there are subcategories of needs or steps along the CBP. They may include activities like using your product, reselling your product, getting service and repair, receiving technical support, reordering parts, and even disposing of your product once it no longer meets their needs.
See Figure 4.1 for an illustration of how the CBP flows from need to satisfaction, including sample benchmark activities along the path. This path will change from customer to customer, even though some customer segments will have similar paths.
FIGURE 4.1 Sample Critical Buying Path
HOW TO USE THE CRITICAL BUYING PATH IN VALUE-ADDED SELLING
Using the CBP is one of the most customer-oriented approaches to selling. Your role changes as the buyer’s needs evolve along the path. We cover this more deeply in Chapter 5, “The Value-Added Selling Process.” From diagnostician, to promoter, to supporter, to satisfaction specialist, your role evolves parallel to the evolution of customer needs.
In the early phases of the sale, the Presale Planning stage, you ask the buyer to share with you her decision process: “Would you walk me through your project start to finish?” “Please tell me about your approval and decision process?” “Who will be affected by this buying decision?” “What does a long-term success look like for this project?” The purpose of these types of questions is to get buyers talking about the steps they will go through in studying their needs, deciding who they want to work with, using your product, and extracting the most value they can from their supply partners. Simply, you want the buyer to detail the steps along her CBP.
Armed with that information, there are a number of things you can do. First, as you lay out the buyer’s activities along the path, ask these questions: “How do we bring value to the customer at each step along the path?” “Are there things we do that add cost but no value along this path?” “Are there things we should be doing to add value along this path?” This internal audit of your value added exposes the efficacy of your solution. You may need to make some changes.
Second, you can ask buyers what they would like to see you do at each step along the path to bring them meaningful value.
Third, the CBP provides you an infrastructure to present your value-added solution. You can lay out on paper or demonstrate with a visual aid how your company supports the buyer at each step along the path, “Ms. Buyer, in our early meetings you described for me the path you will travel to satisfy your needs. Each of those benchmark steps gives us the opportunity to demonstrate how our value added has a real impact on your business. For example . . .” At this point, you would begin your chronology of value as it relates to the buyer’s CBP.
Your ability and willingness to frame your value added within this customer-focused context is a key differentiator strategy. As others are selling products, you are demonstrating a comprehensive value delivery system that supports the buyer at every critical step along her path. You have sophisticated, not complicated, the process. You have demonstrated your customer-value focus. You have proven your long-term worth to the buyer. Now it is time to turn this buyer into a customer.
Fourth, the CBP provides you with a way to determine and document your value-added impact throughout the Postsale Usage stage. This provides topical discussion points for your follow-up sales calls. In Part II, you will learn about the importance of this defensive selling activity.
VALUE-ADDED SELLING REVIEW AND ACTION ITEMS
1. Buyers and sellers must have an in-depth understanding of the buyer’s needs, wants, and desires and the context in which buyers make their buying decisions. This enables both to design a value-added solution.
2. Myriad forces influence buying decisions: objective buying criteria, emotions, egos, and so on. Buyers make two types of buying decisions: they satisfice, opting for something that is merely good enough, or they maximize, seeking the best way to solve a problem. To sell your value added, you must help buyers get into the maximize mindset.
3. A major obstacle when making value-oriented buying decisions is organizational silos. Salespeople help buyers tear down silos when the salesperson becomes a conduit that feeds valuable information to all parties.
4. Buyers needs are complex and interconnected. To satisfy all these needs, they go through a sequence of events from the moment a need exists through complete satisfaction. This is called the Critical Buying Path.
5. Your understanding of this CBP helps you understand value added as value received. This is customer-oriented selling at its best. Armed with this information, you can present a compelling argument for why your solution is the value-added solution for this buyer. It also gives you a way to check on the efficacy of your value creation.