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12 min read

SBA 336: Discovering Your Customer's Decision Making Process

By Phil Zito on May 6, 2022 4:28:58 PM

Topics: Podcasts

In this episode, we discuss how to discover your customer's decision making process.

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Phil Zito 0:00
This is the smart buildings Academy podcast with Phil Zito episode 336. Hey folks, Phil Zito here, and welcome to episode 336 of the smart buildings Academy podcast. In this episode, we're going to be tackling the topic of how to discover your customers decision making process. So I remember back in 2008, how the world seemed to be collapsing. And there was a lot of turmoil, people trying to figure out, how exactly do I go and sell stuff. And,

Phil Zito 0:37
you know, things are cyclical. It's just a matter of time until we find ourselves in a situation like that, again, where we're trying to figure out, how do we sell stuff. And what I tend to find in our industry is that you're either an owner, salesperson, or you're a contractor, salesperson. And there's a lot of contractor salespeople out there. And I tend to find, and I've seen this on our own team, when folks who traditionally sell to contractors and sell plan and spec projects and things like that, when they move into selling to directly to owners directly to customers. It's a new world for them, because they have to figure out what the decision making processes. And I've seen it in our own business when I go and I look through our sales pipeline, and, you know, our sales director will ask or all ask, like, when is this closing? Who's the buyer etc. And most of the time we get good answers. But there's some times where, you know, we'll get answers where it's closing soon and soon is not a closing date. Or we'll get this is how they buy. And I'm like that is not a buying process. So really understanding how to discover a buying process is not that difficult, but it is definitely a process. And so we're going to be talking through that today. In our episode. As always, everything that we discussed will be available at podcasts at smart buildings academy.com Ford slash 336. Once again, that is podcasts that smart buildings academy.com four slash 336. If you find this content helpful, definitely like and subscribe if you're watching it on YouTube. Subscribe and Comment if you are listening to it on iTunes or some other platform. That is how you can help expand the reach and share this with one to two people. That would be awesome. All right. So every customer has a decision making process when it comes to buying your products. Now, when it comes to contracting, it's a fairly easy process. In most cases, I'm not talking about like p3 projects or design bid build projects. But on most plan and spec work, you know, you're going to get a set of plans, you're going to get a set of specifications, and you're going to develop a scope. From that you're going to develop an estimate from that. And you're going to give your best estimate at what you believe to be the right margin and see if you win the job. When you're dealing directly with an owner though you tend to have to go and negotiate or navigate rather a decision making process. Now what does that look like? So it depends on how the customer procures so I'm going to use a lot of terms here. I'm going to define these terms for those of you who may or may not be familiar with them, as we move through the episodes. So procurement is the act of procuring or buying a product and that may have everything from having to solicit bids solicit responses, you may have procurement criteria on how many people you need to evaluate, etc. Once you are past this procurement process, though there is a decision making process that takes place. And that is what we're going to be focused in on today. How do customers make decisions? Now there is a decision process. There's decision criteria, and then there are decision I would like to call them like not biases. But but maybe so kind of how people interpret the decision process. And that means they may interpret the decision process through data. They may interpret it through testimonials through feelings. They may interpret it through logic, there's a variety of different things and we'll talk about that and we'll also talk about finding the decision maker so the decision process it typically begins ends with some sort of need write, someone first has to go and determine that they have a need that they have some form of pain point, which I believe next Friday's episode is going to be about pain points. So we're not really going to hammer pain points here. But there has to be a pain point that can be connected to some sort of business value. Now, in some cases, this could be simply the ego of the owner. And other cases, this could be a direct tie to a financial value. In other cases, this could be tied to like some regulatory compliance. But there has to be a need tied to some sort of business value. Assuming that that exists, then we get into actually paying for this need. So now, you know, you either have a capital budget or you have an operational budget. So understanding budget thresholds and understanding at which point which budget takes precedent is going to help you understand the buying process, because there's going to be a buying process for capital budgets. And there's going to be a buying process for operational budgets. And within those actual budgets themselves, there tend to be thresholds at which the buying process shifts, and or additional decision makers or influencers, get involved in the decision making process. Okay, so you're with me so far, so far, we have procurement, we have a need, we have a need that's driving a budget. And then we have a process associated with that budget. So long term, you know, you're working with a customer, you're identifying a need, and you're influencing a budget, maybe a capital budget, or maybe next year's operational budget, and they are going to make a decision based on that they're still decision. But that is budgetary influence, which is then driving to a decision process, then there is also just snap decisions, you know, someone is sitting there, and there's an issue, there's a large enough pain that they are going to go and make a decision to purchase. In addition to all of this swirling around in this entire vortex of decision making, is going to be funding. So right we have budgets that definitely influences the decision making process. And a way you can offset that budget is by finding ways to bring funds to the discussion. So when it comes to a decision making process, there's several levers that you can pull on to influence, right, you can make the needs very painful. You can go and bring money to the table to go and influence. You can also understand how the buyer measures whatever metrics they're using to make decisions. There's typically three phases of the decision making process, going and agreeing on there being a pain, going and evaluating options, and then making a decision. Okay, so like I said, pain is next week, we'll talk about evaluating options. In a future episode. Today, we're just gonna focus on making a decision. So we assume that we have enough pain, we assume that people have evaluated their options. Now we need to discover the decision making process. For me, personally, my style is to say, hey, we agree that there's XYZ pain, right? Yes. Okay, we

Phil Zito 8:18
agree that it's costing you XYZ dollars, right? Yes. Okay. How do we make this to where you can buy it? And how will you buy it? And then they'll talk through, they'll be like, Okay, well, per our procurement, we have to go through XYZ process. Or maybe they say that we evaluate the ROI or the which is return on investment, or the internal rate of return. Right? So we have to understand financial metrics, maybe some just qualitative metrics, maybe this is a technology service that we're serving, are providing. And now there's cybersecurity metrics, we have to understand the metrics at which they are evaluating the decision. Then once we understand the metrics, we have to understand, okay, what is this decision making process from there? Does it make does the decision get made with you? Does it get made with someone else? And oftentimes, a lot of people will say the decision gets made with them. And I know there's kind of this the customer's always lying to you mentality that tends to exist in sales. I don't think the customer necessarily is intentionally misleading you, at least not all the time. But what I do think can happen is that the customer has a budget in their mind, they're thinking maybe this is going to be $30,000. And based on that budget, they explained the decision making process in which they are the decision maker, so I like to use this process called bracketing. And what bracketing enables you to do is you say, all right at $10,000 Is this process still the Same at $50,000 Is this process still the same, and you work your way up to the high end of whatever you're selling. Because the reality is with a lot of solutions these days, there's kinda like good, better best. So I may simply go and sell you a control system. But I also may sell you a control system with analytics, I also may sell you a control system with analytics, and a year worth of support. And so understanding those processes, and how they change based on the volume amount is important. Additionally, especially in our day and age, and this is something a lot of people mess, is we have blended sales, we have a sale that is going to hit capital, and then we have a sale that is going to hit the operational budget. So our sale hits the capital budget, right. So the person's like, Hey, I could spend this much on new controllers, or new air handlers or whatever. And then they have the operational budget, which they can use for training, they can use for service they can use for analytics, so ongoing SAS solutions, and those processes may be different. You know, for example, VP of operations may be making operational purchases, but VP of Finance may be making the approval for capital purchases. And so understanding that there's different buyer types that you have to cover both, that is going to be really important. So as we look at this decision making process, and we start to map it out, right, we start with what is the decision criteria? Who is evaluating that criteria? And then what thresholds of approval do they have? So we start to say, okay, their threshold is here. And so we know we cover that person. Now, if it gets above their threshold, we know we still have to cover that person, because then they typically shift from a decision maker to an influencer. And now we have to find the new decision maker, and we have to make sure that we're covering that person. So going and discovering your customers decision making process is not terribly difficult, it's oftentimes just a matter of discussing it with them. Now, that being said, if this is a public entity, then you have procurement, and you have buyers involved, as well as larger capital organization or larger private organizations, or publicly traded organizations, they usually have procurement teams involved that will negotiate the procurement and the decision making process. So you need to be cognizant of that as well. But in a nutshell, as you start to work towards filling your pipe and selling things for the rest of this year, I really encourage you to start understanding your owner market to start understanding their decision making process, I have a sneaking suspicion that we're going to see capital budgets contract maybe a bit because the cost of money is going up, as the Fed raises rates is no longer as effective to cheaply borrow money. And so now that we have that potential issue, we need to go and account for a decrease potentially in capital funds that are available to us. But those operational budgets that are already funded, we can definitely take advantage of those. Now, if

Phil Zito 13:15
we are going after operational budgets, that definitely requires us to go and be involved in that decision making process. Alright, so to summarize this rather short episode, what you want to do is discover how Oh, last thing I gotta cover is how people make decisions. Okay, so let's say you've moved through the decision making process, you've got their metrics, you've got them agreeing that they're going to buy, you've identified the right buyer. The last thing that I want you to do is identify how that buyer makes decisions. Are they a data based buyer? Do they make decisions based on data? If so, your presentation, your proposal, your scope, should all reference data and understand what kind of data is important to them? Are they looking at operational efficiency data? Are they looking at financial data? Are they looking at investment data? What are they looking for, from a data perspective, and present, your executive summary, your proposal, your scope letter, your pricing should all tie to that theme. Now granted, there's a risk in this if you haven't properly identified the decision maker, and you think that you've got the right decision maker, and you think that they are data driven, when in actuality they're like, prove it driven, right, their testimonial or proof source driven, and you go and you build up an entire proposal and an entire scope letter that is driven based off of data and they are prove it. They're not going to believe your data. They're going to want you to prove your data which is going to be like site visits, customer referrals, customer testimonials, etc. So really need to hammer that down. Alright, so let's recap. We identify the buying metrics and the pain, and we drive them into the buying cycle. Once they're in the buying cycle, and they come out of that right into the proposed phase, or whatever your phases, they enter into the decision making process, you understand how they make decisions, and then based on how they make decisions, you go and use the ratchet phase or the bracket phase bracket approach to bracket out, you know, 10,000 50,000 100,000 figure out if they are still the decision maker based on the volume, you figure out what budgets are being utilized to fund this decision, so that you cover both the operational as well as capital budget if need be. And then you find out the decision makers decision style, and you tailor your presentation, your scope, letter, your proposal, everything tailored to how that person makes a decision. If you implement these couple things right here, you will see an increase in your sales, you will see that you are not being blindsided at the end of the month when your director of sales is saying to you, hey, where are the sales and you're like, well, they told me they would buy, or, you know, the sale that was estimated to be $50,000 is now $20,000. Because you realize that that person only has budget per few for $20,000. So by covering this, you're going to avoid those uncomfortable conversations in which you have to explain that you didn't properly qualify, you didn't properly go and figure out how this person is going to buy and what they're going to buy and when they're going to buy and what is going to make them and influence them to make a buying decision. All right, folks, I hope this episode helps you out. I really hope you do apply it. If you see some success from it, definitely let us know in the comments. And if you have any ideas on your own, of how to discover your customers decision making process, then I encourage you to go into the comments. And let us know as always everything will be available at podcasts at smart buildings academy.com Ford slash 336 Once again, that is podcasts that smart buildings academy.com Ford slash 336. I encourage you to go there and like and subscribe, and comment. Those are the best things you could do here on YouTube, or wherever you happen to be listening and or watching and or reading this content. Thanks so much for being here and I look forward to seeing you next Monday. Take care

Phil Zito

Written by Phil Zito

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