Complex Or Simple Buying Process
Over the past few months, I’ve been reviewing a lot of my thinking about business to business buying and selling processes, and how we achieve success in both. I’m not sure I’ve changed any of my position, but perhaps clarified some of my thinking. Hope you don’t mind my “thinking aloud.”
First, probably some definitions are in order, so we are at least on the same page.
When I refer to the complex buying process, or the complex selling process, it’s typically one involving many people in the decision-making process, typically a consensus driven decision by the “5.4” or however many you think are involved. It’s a process that involves aligning disparate agenda’s, personal goals, and issues among the team. The issues or problems customers are seeking to address are typically more complex, maybe only because of the impact on the organization. For example, selecting a CRM system is basically not complex–flip a coin, any will do the job–but implementation, integration, utilization, process re-engineering make the decision-making process more complex. It may carry higher risk, at least a perceived by the buyers. It may or may not be a “high value purchase.” (That is the purchase can be $1,ooo’s and up.) Usually, the sales cycles are longer, typically months to years.
When I refer to a simple buying process, it is typically one that involves very few decision makers–usually just one. There may be other people involved, but typically an individual makes a decision. The risk is usually smaller. For example, you face a pissed off customer, not a customer who has lost their job as a result of the decision or whose business may have suffered because of the decision. Implementation issues, change management issues are pretty small, buying cycles are usually short–several meetings over days/weeks. Transaction values tend to be less than those in complex buying situations–but it’s a matter of context. Since these typically focus on the individual or a small group, the magnitude of the transaction may be smaller than an enterprise purchase. But the dollar values can range from $100’s up. (For example, a friend recently bought a corporate jet (actually replaced an older one). While it was a multimillion transaction, the buying process was very simple.
Some people refer to these simple buying processes as “transactional,” or “commoditized.” I don’t like using these words–more because the examples used are seldom really “transactional” or “commoditized” examples. (e.g. selection of RF shielding for a smartphone, selection of specific bulk chemicals).
I, also, don’t believe we can segment these based on the type of product or solution the customer is buying. The same product can be the focus of a simple or complex buying process. Buying a year subscription to 1 seat of a CRM system, is a very different process than an enterprise considering a year subscription to 2000 seats of the same CRM system. (which is the very issue many maturing SaaS companies face.).
The simple buying/selling process is a volume and velocity focused process. You make money simply by getting more people to say “Yes,” quickly. It’s easier to templatize and formularize this process. It’s very well known and has been studied for millennia. It’s a model targeted primarily to B2C. The B2B incarnation of this is simply business buyers looking after their own personal or department’s interests. Buyers are interested in getting their jobs done, they have little concern about how the person at the desk facing them gets their job done—though they may later advocate by bragging about the cool new thing they bought.
Developing value is different in these sales situations. Typically, the funding will come out of some individual or department’s budget. While sales people may argue productivity, the decisions probably focus on “simplifying my too complex life, help me do my job better.” Pricing becomes more important in these sales. (not that it isn’t important in any sale.)
The skills critical to success in selling in simple buying processes are dramatically different than those for complex process. The ability to handle volumes of leads, quickly is critical. The ability to determine, are you a customer for my product, within minutes is critical. The ability to guide the customer through their buying process in as fast a time as possible, with as few touches is critical. The ability to abandon a deal, moving to the next one when something gets stuck is critical. While quality of engagement is important, volume and velocity are critical—there are always another 100, or 1000 to call.
From a sales management point of view, metrics become pretty easy and pretty predictable. Because volume and velocity is high, historical run rates, trend analysis provide great insight to sales growth. Challenges are hiring, onboarding, and making sure there are the right scripts/content for the sales people to use.
Scaling over the long term becomes a challenge. If 3 people are required to drive $1M, 30 drive $10M and so on. Over time, cost of selling becomes an issue, as the company scales. Most of the time, as long as the buying process is still a simple process, the goal of sales execs is to migrate more of the process to the web. But since the process in so predictable and formularized, much of it can be automated. It can be moved to web/ecommerce. The ideal is to move 100% to the web, eliminating the need for sales people. When we read about “the death of sales people,” it is largely sales people in this category that are most threatened.
The complex buying/selling process presents very different challenges. These challenges actually have less to do with the product/service being sold, or even the transaction value. Even commoditized products are involved in complex buying/sales processes. The challenges have more to do with the customer; getting them committed to change, getting their project organized, aligning diverse interests/priorities/agendas, managing risk, facilitating the buying process, justifying the investments. It’s because these solutions impact so many parts of the organization, and the number of people involved (directly or indirectly) that drive the complexity in the buying selling process.
The skills needed for sales people to be successful in helping customers, are very different than those required in simple sales processes. The sales deployment models are also very different, often requiring specialists, partners, and other unique skills for success.
Sometimes, things that used to be characterized by simple buying/selling can shift and become complex buying/selling. For example, many of the SaaS companies now moving into enterprise sales are seeing this shift. This shift has profound impacts to the sales organizations. Since the skills and capabilities are very different for each process, an organization involved in this shift may face huge changes in the people, processes, tools needed for success.
Sometimes, situations that have been characterized as complex buying/selling shift and become simple. As decision risks, become smaller or more easily managed, the process can become a simple process. Again, organizations going through these changes see profound shifts in the requirements for their sales teams. People who had been good in managing complex situations are not as good at managing the simple processes.
Sales executives have to constantly be tuned to the dynamics of their businesses, understanding how things are changing and making sure they have the right skills, systems, tools, capabilities to support their customers buying process–whether simple, complex, or both.
For a free peek at Sales Manager Survival Guide, click the picture or link. You’ll get the Table of Contents, Foreword, and 2 free Chapters. Free Sample