This final stage in the buying process is about balancing the risk and reward.
It is here that the decision is made.
Lets reflect on the process to date. Stage 1 of the process is about understanding the needs of the organisation and the reasons why change will create value (the Why Buy?) . In stage 2 (the Solution? ) the buyer is interested in how to solve the identified problem or realise the opportunity. Here they decide their course of action and will often request proposals from a shortlist of possible providers.
Here in the Why You? stage, the traditional buying will commence. Buyer choice is often between a number of ‘compliant’ suppliers who can all do it. So what makes the difference?
For some organisation this is where they will engage with the buyer for the first time. In situations like these the opportunity for differentiation and value creation is limited. After all, the buyer has already worked out their challenges (either themselves of with the help of one of your competitors) and their desired solution which makes stage 3 engagement essentially a commodity purchase. For those who have been engaged in a more consultative engagement earlier in the process the opportunity has been there to influence requirements in your favour.
As technology and networking increase the awareness of buyers it is increasingly difficult to break in to stages 1 and 2 in the buying process so it is vital that a clear proposition reflects a good understanding of stage 3 requirements.
1. Supplier Assessment
From proposals recieved the buyer will assess the potential of each supplier. In many B2B situations a formal set of evaluation criteria will be used to “score” the proposals in a structured manner. Included in the criteria are a broad mix of issues related to technical, cultural, behavioural, commercial, functional and regulatory aspects of the decision. The more you understand these the easier it will be to articulate your value in the buyers terms.
The buyers goal is to identify suppliers that are compliant with the needs of the organisation and complete initial due diligence on their suitability. Often at this stage there will be a few possible suppliers who are all able to provide a suitable solution at a similar cost.
Therefore a major point of differentiation is the level of perceived risk associated with each supplier. When i was in my early sales career there was a saying “you never get fired for buying IBM!” and this was based on this very point. IBM were perceived to be a safe buying decision at that time and risks associated with the product performance, commercial terms, company solvency, senior management support, service and maintenance were all minimised. This offered intangible value for the buyer.
Buyers will consider the following question : “what does this mean for my professional reputation if this recommendation goes wrong?” Whilst some suppliers may offer “cheap” it is often a balance of Reward (Benefits-costs) with this risk which will sway the final decision. That said, if the supply risk is comparable between suppliers it will often come down to the pricing.
2. Negotiate Terms
The buyer role will now seek to maximise the benefit for their organisation and negotiate more favourable terms with one (or sometimes more) preferred bidder. Negotiation techniques will focus on improving the benefits or reducing the price they pay. Early engagement in the buying cycle will help you understand the true value proposition here and provide a strong basis of negotiation. Otherwise expect a hard ride from professional buyers often rewarded on negotiated savings.
3. Decision/Supplier Choice
Once the negotiation is complete buyers will follow an internal approval process. Often teams of people (certainly for major procurements) will discuss and agree the recommendation from the buying team. They will reassure themselves that the procurement risks are not too high and that they have negotiated the best deal possible for their situation.
Here you have the opportunity to deliver your promises. Focus on clear communication throughout implementation and reinforce positively the buying decision that the buyer has made. Ensure that the service and support arrangements are in place for excellent delivery and once completed turn your attention to account development.
How else can you create value for this buyer?