How Do They Buy?
I write constantly about the buying process, understanding how customers buy, how we align our sales process with the customer’s buying process, and how we create value through the whole thing.
However, I realized I’ve overlooked something. It seems so obvious, but I’ve been surprised to see how few sales people understand this–at least early in the sales process. What I’m talking about is, “How do customers buy?” I mean, once they’ve made the decision for you, once you’ve settled on the price (or at least hopefully). What do they have to go through just to issue a purchase order and for you to start shipping product and invoicing them?
I just sat through a review. It was a very complex deal, it represented a significant revenue stream for my client for the next 5 years. The sales person had worked very hard on the deal and appeared to win it. Because of the complexity of the deal, because it was also a product that would be part of a medical device (my client had never done one of these deals before), and all sorts of other things, I asked, “What’s their contracting process, are there special terms and conditions, are there any liability issues, …….?”
I finished, with “What’s the process you have to go through to get a PO?”
The sales person looked at me, you could tell, he was thinking, “Why are you trying to derail my deal with these unimportant issues?” He actually said that–but more politely.
However, the deal was very complex, there were some important lead time issues. If they didn’t get the PO in a very short period of time, they wouldn’t be able to ship the products when the customer wanted, holding up $10′s of millions of the customer’s own production. There were a number of legal. liability, and other issues that had never been addressed.
The sales person kept saying, “All I need is the PO!” But when I asked, does the customer need anything more? When I turned to the EVP of Sales, I asked, “Given the potential legal issues, do you need anything more?”
As much as we dislike it, contracting, becoming an authorized vendor, doing all the paperwork necessary to enable the customer to issue a purchaser order, accept product/services, and issue payments on invoices is critical. It seems like a lot of bureaucratic work–often it is. Sometimes it seems to slow things down–particularly when lawyers have to review contracts and start talking to each other (I’ll stop here, this can fill dozens of posts).
We can’t actually get the order until all the detailed paperwork has been completed–by both the customer and us. Often, this can be very long, confusing, and time consuming. Occasionally, there are things in the contract that can kill deals (in the example I mentioned above, there were a huge number of things around liability, traceability, quality, vendor managed inventories, and others that my client was unaware of and had never done before.)
It’s important that we understand the mechanics of how the customer buys very early in the process. It’s important to understand if there are any paperwork, performance, or contractual issues that may impact our ability to do business–even if the customer chooses us. It’s important we understand the time frames involved in getting this done. If we are shooting for a deadline, we have to build these timeframes into our and the customer process.
The answer to this may seem simple. “Ask the customer!” But we have to be asking the right customer, particularly, if your customer doesn’t go through many of these types of transactions. Too often, the people we are dealing with, the people actually making the decision don’t know! If they don’t buy frequently, they may not know the details of the paperwork, contracts, and so forth. Some years ago, I closed a deal with a CEO of a large organization. Since they were a government contractor, I knew there would be a fairly intimidating contracting process with the client. When I asked the CEO about the process, he shrugged, said, “I really don’t know the details……” Fortunately, his executive assistant knew–she put me in touch with the contracts manager and we got all the detailed stuff done. But the CEO literally did not know their own process.
This is not unusual. Executives, engineers, others may understand how to make a decision, but they don’t know how to get a PO issued. After working so hard to earn the business, it’s terrible to have something like contracts and paperwork slow down or derail the process.
Do you know how your customers actually buy?