The Buying Cycle

1. The Buying Cycle

2. I have established a few principles and theories for the buying cycle. Do not over analyze! The Buying Cycle “You can’t have an effect on something you do not understand” - Dr. Michael Welsh

3. Football Analogy I played defensive tackle in High School What’s was going on in their huddle Corporate Playbook (Buying Criteria) You’ll never know the play or if they are using an audible It is out of your control! The Buying Cycle

4. It is important to understand the official org chart but it does not tell you about the power base. You must find the hierarchy or mystical/political power base It is usually unclear, barely visible and often not discussed The Corporate Food Chain

5. All corporations can be broken down into 4 groups of people they operate w/o boundaries & titles High Title High Influence High Title Not So High Influence Not So High Title High Influence Not So High Title Not So High Influence The Corporate Food Chain Do not confuse Influence (power) vs. Authority (title)

6. High Title / High Influence C-Level, VPs, Directors, Dept. Heads Their title gives them authority Their influence gives them power You may not meet or see in buying cycle but their veto power is undeniable All corporations can be broken down into 4 groups of people they operate w/o boundaries & titles The Corporate Food Chain

7. High Title / Not So High Influence Bottom feeder level in the food chain Low power in unpublished political power structure VP of Human Resources The Corporate Food Chain

8. Not So High Title / High Influence Loyal soldiers of high title / high influence Delegation and support system “I really don’t make the final decision” “I’m not the decision maker” Their influence & approval is often a critical factor The Corporate Food Chain

9. The Not So’s / Not So’s Useful in sales cycle Usually willing to share their knowledge about the organization Can guide you toward the people you need to be in front of Be aware of your efforts with these people and their positive reception – not true progress Source of Information – only! The Corporate Food Chain

10. The Buying Cycle We will never see their playbook but if we can understand the opponents players, positions and formations, we are certainly more prepared to play the game “The fastest way to succeed is to look as if you’re playing by someone else’s rules, while quietly playing by your own” - Michael Konda

11. The Buying Cycle It is an absolute must to identify the champion and to work with him or her more than with anyone else in the organization! Without the champion’s support You are in trouble! “No one wants advice – only corroboration” - John Steinbeck

12. The Corporate Food Chain Never Lose Alone Committees are formed for one reason … No one wants to lose alone – Safety in numbers!

13. The Corporate Food Chain • If an evaluation or purchasing committee is • established, we have three choices: • Ignore it • Fight it • Embrace it • The prospect with now see you are a solution • rather than a vendor. • Turn a negative into a positive by helping the committee establish criteria, timelines and methods of evaluation Your best option

14. The Corporate Food Chain When working with a committee, you need to remove your sales hat and put on your “I’m a valuable consultant” hat. You need to treat a committee like a little corporation - apply the 4 categories to the individuals on the committee You often do not win because of your service rather a result of your influence in establishing criteria “Capitalism needs to function like a game of tug-of-war. Two opposing sides need to continually struggle for dominance, but at no time can either side be permitted to walk away with the rope.” - Pete Holiday

15. a Stage 1Awakening The Buying Cycle: Awakening

16. The Buying Cycle: Stage 1 – Awakening Stage 1: The Awakening When a corporation realizes they have a problem and they need to find a solution Dissatisfaction with existing methods, systems, services or vendors Most of the time you need to create or inspire the awakening “It is good to shut up sometimes.” - Brandon Chaney

17. The Buying Cycle: Stage 1 – Awakening Stage 1: The Awakening (cont.) During an awakening, your words should be in the form of a question. Ask Questions Vs. Statement or Giving Opinions “You can tell whether a man is clever by his answers. You can tell whether a man is wise by his questions” - Naguib Mahfouz

18. a Stage 2Due Diligence a Stage 1 Awakening The Buying Cycle: Due Diligence

19. The Buying Cycle: Stage 2 – Due Diligence • Due diligence stage can be divided into 3 phases • Phase 1: • Price of Services Vs. Cost of Ownership • Reaffirm awakening • Second guess themselves for final time • Weigh financial considerations Vs. moving forward or not • Money, budgets & profits will be considered, but so will soft costs like turnover, job satisfaction, work load and discontent. • If you see a committee starting to form = customer is in due diligence phase.

20. The Buying Cycle: Stage 2 – Due Diligence Phase 2: Enter the Competition Who released the flood gates? The prospect will proceed to evaluate all options Unfortunately – your competition is an option If you were around during the awakening & your competition was not, you have an advantage – the opposite is true. “Never lose a battle that’s important and never win a battle which is unimportant” - Dr. Michael Welsh

21. The Buying Cycle: Stage 2 – Due Diligence Phase 3: Survive to fight another day You can feel helpless during the due diligence phase The deal is rarely won by doing the right things but often lost by doing the wrong things Realize you are not pursuing victory during the due diligence stage. You are trying to maintain survival and stay in the ball game. “Knowledge speaks but wisdom listens” - Jimi Hendrix

22. The Buying Cycle: Stage 2 – Due Diligence Phase 3: Survive to fight another day (cont.) Many sales professionals are fatally wounded during the due diligence stage. They commit unwilling suicide through premature presentation (PP) or not recognizing the due diligence stage has started With PP, they provide unpaid consulting & give the prospect valuable information prematurely which can be used against them. Hold back cards for the next stage

23. The Buying Cycle: Stage 2 – Due Diligence • Working the stage: • Recognize the prospect is in Stage 2 • This stage is the perfect opportunity to: • Determine the food chain • Begin to work and develop the food chain • Identify the champion • Establish a working relationship with the champion • Embrace the formation of committees as you may be able to assist in establishing buying criteria “Sometimes the best presentation you’ll ever make is the one you never had to make” - Brandon Chaney

24. a Stage 3Appraisal a Stage 2Due Diligence a Stage 1Awakening The Buying Cycle: Appraisal

25. The Buying Cycle: Stage 3 – Appraisal • Once the prospect has obtained competitive alternatives – the buying cycle moves to the appraisal stage. • Last minute fears and concerns could • arise which can block or delay decision • Discussions with competitors can re-open • Survivors of stage 2 move on and • differentiation starts • Prospect enters this stage hoping for: • Perfect outcome • Clear-cut winner • Supplier with flawless solution • Supplier that eliminates any and all risks which could fall into the buyer’s lap

26. The Buying Cycle: Stage 3 – Appraisal • How prospects reach a decision? • Identifying differences: • (Compare our solution with competitors - 30,000 foot level) • Price • Quality • Part performance & reference • Delivery date (meeting) • Implementation points • Importance of differences: • (Will apply assessment criteria to differences, drill down into the details and address ramifications & worst case scenarios) • How realistic is the worst case? • What is the chance of it really happening? • If it does happen, how catastrophic is it? Prioritizing Differences: (Rank differences and rank them in importance and strength & weaknesses)

27. The Buying Cycle: Stage 3 – Appraisal Champion is in his element! Have a pulse on the champion in Stage 3 This is his stomping ground Not so’s, not so’s can be invaluable for information feedback Get the pulse!

28. The Buying Cycle: Stage 3 – Appraisal If they say it, they mean it! Stalls and objections are real There is a big difference between stalls and objections which are real and can prevent or kill a deal vs. merely negotiation tactics in disguise. “The definition of selling is getting your price for your products & services. Negotiating is when you give up something for something else in return. Salespeople often give up something for nothing in return- that’s neither selling or negotiations. I call it bending over” - Brandon Chaney

29. The Buying Cycle: Stage 3 – Appraisal Land mines Stalls and objections, real or unreal are conventional warfare Unknown stalls and objections are land mines: You cannot affect what you do not understand You cannot change what you do not know “Courage is not the absence of fear but rather the judgment that something else is more important than fear” - Ambrose Redmoon

30. The Buying Cycle: Stage 3 – Appraisal Land Mines – Story Time! Smaller CLEC (NetFortris) vs. Big Guys (SBC/AT&T) Awakening, Due Diligence & Appraisal Name recognition was biggest fear, but never addressed. “Always address your biggest fear because it is usually like the elephant in the room which everyone sees but no one is talking about” - Brandon Chaney

31. a Stage 4Negotiation/Execution a Stage 3Appraisal a Stage 2Due Diligence a Stage 1Awakening The Buying Cycle: Appraisal

32. The Buying Cycle: Stage 4 - Negotiation/Execution Stage 4 is the “close” Stage 3 revolves around big issues Stage 4 centers around small issues that the buyer will try to make you believe are large issues Salespeople commonly make the mistake of giving in on all the small little issues just to get the deal done. These small issues add up! “A verbal contract is not worth the paper it’s written on” - Sam Goldwyn

33. The Buying Cycle: Stage 4 - Negotiation/Execution • If you give in and get nothing in return for concessions, • Two bad things happen: • The buyer thinks = maybe I should have asked for more • The buyer is trained then to ask for more in the future “Let us never negotiate out of fear, but let us never fear to negotiate” - John Fitzgerald Kennedy

34. The Buying Cycle: Stage 4 - Negotiation/Execution • Principles of Negotiations: • Handle your business issues without emotion • clouds your judgment and causes frustration • Avoid becoming a casualty • if you give up more than you or your company is comfortable with you create scars – deflate your self worth • It is what it is • deal with the reality and not should of, could of’s • Don’t worry about what you cannot control • focus on the real stalls and objections during negotiations - perception vs. reality can get cloudy • Never become a hostage • call bluffs when objections are not real – draw the line “You got to know when to hold’em, know when to fold’em, know when to walk away and know when to run” - Kenny Rogers

35. The Buying Cycle: Stage 4 - Negotiation/Execution • Negotiating Tactics • The Flinch: • Conveyed through body language or look of disbelief • The Take Away: • Imply that you want to take away a concession you have already given them – stop the asking • Offer Options: • Give choices of concessions – like 2 of 5 only • Higher Authority: • Defer to boss – not within your power and you will never get approval • Let’s Pretend: • “I concede this issue, what happens next?” If it does not move you closer to a close then do not concede.

36. The Buying Cycle: Stage 4 - Negotiation/Execution • Negotiating Tactics (Cont.) • The End Of The World As We Know It: • Show them you have the strength to walk away = usually both parties have a great deal to lose if the negotiations fail in Stage 4 • Truth Detector: • Flattery or humor at the right time can help uncover how • firm the prospect is on an issue and where the line can • really be drawn • Standard Practice: • “This is not standard practice.” Few people like to break • laws – this will wear on the prospect • Home Field Advantage: • Make them come to you. It will show their commitment • and subconsciously reinforce their commitment.

37. The Buying Cycle: Stage 4 - Negotiation/Execution • Negotiating Tactics (Cont.) • Never Be Outnumbered: • If so, always use “Higher Authority” or “Standard Practice” tactics “The object of war is not to die for your country, but to make the other die for his” - General George S. Patton

38. a Stage 4Negotiation/Execution a Stage 3Appraisal a Stage 2Due Diligence a Stage 1Awakening The Buying Cycle: The 4 Stages

39. The Buying Cycle: The 4 Stages in Review • Stage 1 (Awakening) • Compelling Issues During Stage 1 • There is a problem. • How big is it? • Action must be taken to solve problem • Signs That Stage 1 is over • The prospect accepts & acknowledges the severity of the problem. • Actions are being put in motion to solve problem • Common Strategic Mistakes in Stage 1 • Failure to investigate and fully understand the problem • Making PP or offering solutions prematurely

40. The Buying Cycle: The 4 Stages in Review Stage 2 (Due Diligence) Compelling Issues During Stage 2 What purchasing criteria should be established What committees should be formed Which vendors should be given the opportunity to compete Signs That Stage 2 is over Decisions mechanisms are in place Some the competition has been eliminated Common Strategic Mistakes in Stage 2 Failure to uncover decision criteria Failure to work the food chain Failure to identify or influence the champion

41. The Buying Cycle: The 4 Stages in Review • Stage 3 (Appraisal) • Compelling Issues During Stage 3 • What are the risks of moving forward • Identifying differences • Prioritizing differences • Signs That Stage 3 is over • Large issues have been resolved • Real stalls and objections have been satisfied • Common Strategic Mistakes in Stage 3 • Ignoring your biggest fears • Assuming victory • Not staying in close contact with the champion

42. The Buying Cycle: The 4 Stages in Review • Stage 4 (Negotiation/Execution) • Compelling Issues During Stage 4 • Let’s get everything that not nailed down • Establish timeline • Set delivery dates • Signs That Stage 4 is over • Negotiations stop • Committees sit idle • Focus is not on delivery or implementation • Common Strategic Mistakes in Stage 4 • Becoming complacent • Not being as available • Making excessive concessions to get the deal done

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