In answering the customer/compelling reason to buy question (covered in depth in other articles in this section), understanding the buying motives of each of the involved individuals is very important. Individual motives may vary considerably from the apparent or openly stated motive and will vary between participants in the sale. As discussed in the article in this collection, “It’s All About Feelings,” individuals will often be very analytical in reviewing purchase choices. However, if the purchase will directly impact them, the decision most likely will be heavily influenced or even dominated by their personal feelings. However, for senior managers in an organization, their company buying motives can be rank ordered as listed below. Note that the list is not phrased as the motive for you to sell. Instead it is phrased as to why the customer will buy. The purchase can provide…
- Unforecasted revenue from prospects in new market segments
- Unforecasted revenue from new prospects or unanticipated add-on sales
- Revenue from prospects included in the forecast
- Revenue at much higher margins than typical sales
- Increased market share by securing revenue from prospects that were previously aligned with a competitor
- Reduced costs, hopefully within the measurement period
- Compliance with government mandates
- Personal or company enhanced status or recognition
Combining a number of these factors would be the dream situation, in which the purchase of your product or service would be, “an unforecasted sale in a new market that expands the overall market size and the company’s share with significantly higher margins and reduced costs that are realized within the accounting period!” Carry the dream scenario a bit farther by adding, “while meeting the new government requirements and receiving a positive response throughout the industry.” Please contact me when your sales stars perfectly align as just described!
Coming back to reality, below are a few summary comments about each of the eight motives listed above.
- Unforecasted revenue from prospects in new market segment
Finding customers in new unanticipated market segments further validates your solution and may indicate that it has far more potential that initially assumed. It also expands the market and, therefore, your share, which is always better than increasing market share by reducing a competitor’s position. Essentially, obtain a bigger piece of the bigger pie.
- Unforecasted revenue from new prospects or unanticipated add-ons
Revenue from unanticipated sources that you were not pursuing is always a welcome surprise. It is important to understand how these prospects made the decision without your “help.” Perhaps it was from some past customer or industry expert recommendations. Perhaps it was from a marketing campaign. Perhaps it was from the customer’s dissatisfaction with another supplier. It is important to find out why. Ask the customer directly.
- Revenue from prospects included in the forecast
These sales are “a sigh of relief” sales in that they were forecasted and part of the overall plan and did not get derailed by some unforeseen circumstances. In any event, celebrate the victory and thank the customer.
- Revenue at much higher margins than typical sales
This is usually a rare occurrence for stable products and markets. Usually, there is a better explanation than being at the right place at the right time. Carefully understand the situation; was it a one-time perturbation in the universe, a result of unusual market demand and limited supply, or perhaps a naïve customer?
- Increased market share by securing revenue from prospects that were previously aligned with a competitor
Everyone enjoys winning. Similarly, everyone hates losing. If you have received sales and a competitor has lost, plan on them renewing their efforts to make up for the loss and become more aggressive in the future. Remember Isaac Newton’s Law: “For every action, there is an equal and opposite reaction.” Victories can be very temporary.
- Reduced costs, hopefully within the measurement period
Although reducing costs is always welcome, in most instances cost reduction involves spending time or money to implement the reduction. Flash cuts, in which an old system or procedure is switched to the new system or procedure, are very rare. In most cases, duplicate energy must be expended during the transition. It might be retraining, parallel operation, or building inventory until the new system is up to capacity or other similar issues. Unfortunately, today, especially in the public markets, there is extraordinary pressure to perform or exceed at expected profit levels for each reporting period; typically quarterly. A major expenditure that extends over the measurement period may be viewed as the prudent thing to do, but a person may feel that their replacement will reap the rewards of the long term success while they were punished for the short term miss.
- Compliance with government mandates
From our earliest childhood memories to today, none of us enjoy being told what to do, even if we are told it is good for us. Companies, facing government mandates, most often feel the same way and may delay complying until the last possible moment or seek extensions. There may be valid reasons for the delay or it may just be a frustrated, knee jerk reaction. Even after biting the bullet and agreeing to comply, the purchase of the equipment or service necessary to comply may carry a negative stigma that can hamper its use, expansion, or your reputation as a supplier. The company may even blame you for their unilateral compliance difficulties.
- Personal or company enhanced status or recognition
Politics and positioning are an everyday occurrence in our personal and professional lives. This is not meant to be a negative or judgmental statement. All of us are constantly trying to convince others to embrace our ideas and desires. Decisions to purchase products or services may be made solely based on these considerations. That is OK, but we prepared for a rapid shift in direction that can undo the most sure thing. It happens all the time.
Remember, in any organization there are far more individuals empowered to say “no” than are empowered to say “yes”. Further, a “yes” can be converted far faster and with less effort to a “no” than the other way around. Carefully considering each individual’s buying motive and their level of commitment to it will significantly improve your ability to plan and forecast. You must temper the eight “logical” business motives listed above with the feelings of each decision-making participant.
