Pursuing of the Economic Buyer with Higbee & Riopelle – 065

Wes Higbee is a software consultant from New York. He has been interviewed on the AOV Show before about software consulting, agile development, and customer value. Matt Riopelle is a creative consultant from Austin. He was a guest on the AOV Show previously to discuss the importance of pricing. Wes and Matt practice value pricing in their businesses and frequently teach others how to implement it.

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Defining the Economic Buyer

• What is the economic buyer?
  • Matt – It is someone who has the intent, the authority and the ability to purchase.
  • Wes – It is the person with authority and accountability.
    • Authority means that someone can make the decision to move forward and can get the money.
    • Accountability means that the person is responsible ultimately for the result of the project.
  • Kirk – It is an operational and a financial decision maker, and the same person could be both.
  • Wes – You need to understand why you need to speak to the economic buyer to stick to the rules.

• What is a typical job title for the economic buyer?
  • Wes – Job title is a good way to gauge but do not dismiss someone as not being a buyer, especially in a small company.
  • Sometimes a President or a Vice President in a large company might not have the authority or accountability you would expect.
  • Ask “who will approve the project” to uncover the final buyer.
  • The title can be helpful, but it can be deceptive.
  • In an organization under 50 people, you usually want to talk to the owner.
  • In a large organization, there can be more than one buyer with different titles that have the authority and a budget.
  • Matt – Knowing titles and organizational charts is much more important in outbound sales.
  • For inbound sales, you are usually only one person removed from the final buyer.
  • Listen to the name and titles of others who might be involved.

The Importance of the Economic Buyer

• Why is it important to talk to the economic buyer?
  • Wes worked with the wrong person, only to discover that the decision maker did not have the project on his radar.
  • If he had pressed, he might have been able to get to the person setting the priorities so that he could help with the actual priorities.
  • Kirk – Why is it was in the best interest of the customer for a provider to speak to the economic buyer.
  • Matt – If you are trying to offer the maximum amount of value to the customer, you have to talk to the people to whom it matters the most.
  • If you cannot talk to the people it impacts the most and understand their motivation, then it is a waste of time.
  • If the customer is going to trust you to create value, you cannot effectively do it without talking to the decision maker.
  • Matt said that he would talk to as many people in the organization as possible during the discovery process.
  • If you come in at the wrong place, someone may be able to articulate the value, but that person might not have the authority to help the people who ultimately need help.
  • Kirk – It is a waste of time, energy, effort, resource, etc. if you do not talk to the right person.
  • It is easy to go to an organization with an hourly rate and enter the company at any level.
  • As a result when the organization changes, the customer relationship gets pushed down to lower levels.

• What are some questions to determine if you are talking to the economic buyer?
  • Wes has four questions from Alan Weiss:
    1. Whose idea was this project?
    2. Whose budget will support this?
    3. Who will you turn to for approval?
    4. Who can veto this process?
       • The authority to say no does not mean they can say yes.
  • Matt – Listen for queues in addition to those questions.
  • If someone brings up another person in the organization, then you can ask about that person.
  • Matt – Is this something you would bring up during the first call?
  • Kirk – Simply ask, “Where are you in your decision-making process?”
  • Talking to the wrong person can lead you astray because the objectives you get are not the same as the decision maker.
  • Matt – As you look to provide value, spending time with the right person becomes more crucial.
  • With a small business, you should be able to define the person (economic buyer) within 30 minutes; a larger business might take 15 minutes more.
  • If it takes longer than that, it is probably being resisted.
  • Wes – If you are talking to multiple people, you have a problem.
  • Individuals make a decision, not a committee.

Resistance and the Economic Buyer

• How do you handle resistance to talking to the economic buyer?
  • Kirk – First you need to determine if you are the person who can help them.
  • If the person resists, their reason is usually emotional.
  • With resistance, Wes throws it back to them with a simple “why.”
  • Helping people is not pleasing people.
  • By asking why, rather than answering questions, you can get to the root of what the objection is.
  • Kirk – For example, “Can you tell me why prior experience in your industry is important?”
  • Blair Enns in Win Without Pitching Manifesto says our job is not to convince the customer to work with us, but to see if we are a good fit.
  • You can break the ice with a gatekeeper, but Matt sees these obstacles as red flags.
  • If there is resistance, it is probably not a fit.
  • Trust is important. If it starts with a fight to get to the right person, it is a bad sign.
  • Wes – It is imperative to plow through the gatekeeper to help people.
  • Remember that you might be dealing with one bad apple in an organization. Keep looking for the good apples.
  • If the buyer is not open to conversation, then the company by not be the right fit.
  • You can give people options when you want to talk to someone else to get them talking about when or how rather than “if”.
  • Try to talk to the person making the decision alone.
  • Determine if the gatekeeper perceives you as a threat.
  • If you can get someone to uncover his fears or threats, you can often assuage his issues.
  • Matt – If your position is that you want to make the people you work for look good, it can do a lot for the relationship.

• Should you ask about the budget when talking to the economic buyer?
  • Matt does not have a great answer and has done it both ways.
  • The inherent problem can be how you position yourself.
  • Kirk – It helps to ask about the budget.
  • Wes – Wait for a signal to see if the person is price sensitive before asking about the budget.
  • If someone has not even thought about the budget, he likely has not thought about the true need.
  • Psychologically, when you hear a number, even if it has nothing to do with the conversation, it can anchor the price.
  • Matt is concerned that he might undervalue himself based on their budget.
  • If he exceeds the budget, then it appears as though he has not listened.
  • Value the investment that both parties make in putting together a proposal.
  • Always clarify if the person has no budget at all.
  • There is no basis to talk about a price until the value has been identified.
  • A stated budget is rarely the exact amount of money they have to spend on a project.

• What is the risk of submitting a proposal if you do not talk to the economic buyer?
  • Wes speaks to the perspective of the risk of submitting a proposal if you have not spoken to the buyer.
    • The buyer can be blindsided.
    • The buyer does not care because it is not a priority.
    • You are being hired as a set of hands rather than a brain.
    • The conversation will focus on price rather than value, the further you are from the buyer.
    • 90% of the time you submit a proposal, you will be told no or will not get a response.
  • Matt – Decide if you want to be a proposal writer or if you want to get paid to do the actual work.
  • Work on the problem, not the proposal.
  • You do not want to shock someone with a proposal.
  • Matt speaks to the risk if you get a “yes”, and you have not spoken to the buyer.
    • The project is moving forward without the buy-in from people who will have the most influence on the project.
    • You have been hired to do something that:
      • was not valuable to the company
      • solves the wrong problem
      • solves a surface problem
      • leaves money on the table
      • misses other opportunities, solutions and problems.
  • The risk to the provider is the lack of ROI.
  • The risk to the customer is larger because they are not going to create value to obtain the ROI they want.
  • Hope is not a strategy.
  • Wes – The ultimate damage is done to the customer.
  • The buyer needs to be committed to his success, and you might need to remind him how he said it would look.
  • It is bad for your reputation if you are not doing the work a buyer values – you can get pigeonholed.
  • Scope creep happens when you do not work with the buyer.
  • If your contact leaves, who will continue the project?
  • When you help someone, you have to be on a “mountain” to help bring him “up”.
  • You want to get permission to help someone, so you do not put someone “down.”

About Wes Higbee & Matt Riopelle

• Wes
  • Website: weshigbee.com
  • Twitter: @g0t4
• Matt
  • Website: mattriopelle.com
  • Twitter: @mattriopelle