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How Will You Justify This To Your Management?

by David Brock on January 8th, 2015

Too often, our customers focus on price, consequently we focus on price—after all we want to be responsive to our customers.

But there are all sorts of problems our customers have when they focus on price.  We tend to worry about it — after all, we want to minimize the amount of discounting we provide.  But our customers face huge challenges by just focusing on price.

The biggest is, when they have made a decision, they have to go to management for approval.  The first question they will be challenged with is, “Why should we spend this money?”

Ugh!

Here they are, they’ve gone through their buying process.  They’ve invested in all sorts of time and effort into evaluating alternatives, going through confusing pitch after confusing pitch.  They’ve finally made a decision, they’ve gone through the final negotiations, they’ve made a decision.

Now they submit a req.  They need to get approval from their management, perhaps from a capital approval group, perhaps to a group of finance folks.

They are confronted with the question, “Why should we spend this money?”  (By the way, it’s management’s moral obligation to always ask this question.)

Even if there is money in the budget, they will be challenged with that question, “Why should we spend this money?”  After all, management can always choose to spend that budgeted money on something else–or not to spend it at all.

Sometimes, our customers are somewhat prepared, “I need it…..”  “We need to upgrade….”  “We need to change…..”  “We need to stay competitive…”  “It will improve our efficiency….”

They are part way on the path to the answer, but we still aren’t making management happy, they say, “Why should we spend this money?”

If our customers can’t answer this question, satisfying whoever is asking it, they won’t get approval to move forward.  As a result, we see, “No decision made.”  We’re frustrated, we thought we had the deal.  The customer is frustrated, they wanted to buy.

When management poses the question, “Why should we spend this money,” as they are obligated to do, what they are really asking is, “What are we going to achieve in making this investment?”

The answer to this question will vary–it may be to drive revenue, improve quality, reduce expense, avoid a future problem, support growth.  The answer may require a complete business case with ROI, it may be as simple as, “this is the problem this purchase eliminates is….”

If we are to be effective, then we have to make sure our customers are effective.  We have to challenge them, ideally as early in their buying process as possible.  “How are you going to justify this decision to management?”  We have to help them answer the question, we have to help prepare them to satisfy their management’s need to understand, we have to help them sell to their management.

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