Sales Strategy for Strategic and Non-Strategic Purchases

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If you are stressing the value of your offering, but just cannot seem to convert your prospect, you might misunderstand what type of purchasing decision your prospect is making.  Even if you understand what type of buyer you are working with, prepare thoroughly and conduct an effective meeting, everything can stall if you do not understand what type of purchase your buyer is making.  The Harvard Business review published an article in their 2017 summer edition exploring this topic.  They found that salespeople often make mistakes that cost them the sale, simply because they do not know how to differentiate between a strategic and non-strategic decision.  In a business to business setting, strategic purchases are completely different than non-strategic, and you must adjust your sales strategy accordingly.

What is a strategic purchase?

A company makes a strategic purchase to add value to their existing customers and differentiate themselves.  Before making a strategic purchase, the buyer conducts ample research and analysis.  This is often a pain-staking decision that will keep them awake at night.  In a strategic purchase, your prospect will gladly pay a higher price for the product or service if it is the right fit.  The customer views this purchase as essential to their strategy in the marketplace, so price is less important than the value of the product or service.  For example, a company who sells an online service will carefully consider their software purchase, because the user experience will differentiate them from their competition.

Sales strategy for strategic purchases

Focus on value-based selling to make an effective presentation.  Ask them about their top initiatives this year and explore how you can integrate your offerings with your prospect’s priorities.  Get your prospect talking early and often so they will tell you what they want to hear.  Listen to their concerns and find out how your product or service can meet their specific needs.  Demonstrate that you are aligned with their goals and how your offering will help differentiate the client from their competition.  Provide more value than competing offerings which compensate for your price.  Try to move the conversation from “Do you want to do business with me?” to “We offer a wide array of resources; let’s discuss how you can leverage the resources we provide.”

What is a non-strategic purchase?

Value based selling is ineffective if a purchase is not strategic.  A non-strategic buyer is not focused on the features of the product or service, so it will not do any good to stress the value of each one.  These purchases are not critical to the customer’s strategy or position in the marketplace.  Because they are not differentiated, decisions come down to a few basic features and price point.  Non-strategic purchases do not require extensive research or extreme vetting.  Purchasing managers make these decisions quickly and efficiently; for example, a manufacturing facility that needs to purchase 10,000 OSHA compliant safety hats.

 Sales strategy for non-strategic purchases

If your buyer is purchasing a non-strategic product or service, use tie-breaker selling.  Salespeople often make the mistake of lowering their price with the hope of closing the sale.  Remember, the purchasing manager has likely eliminated vendors who do not fit their price constraints or meet their basic needs, so offering a price reduction is often counter intuitive.  Lowering your price as an incentive to close can have unexpected ramifications:

  1. Studies have shown that people distrust “too good to be true” pricing.  Also, purchasing managers do not always choose the lowest price.  If they did, companies would replace them with software that could choose the lowest price.
  2. You may open up a bidding war as your prospect goes back to other vendors and gives them a chance to lower their price. This extends the sales process and creates more work for the purchasing manager.  After everyone has lowered their price, your prospect will still want to know why they should go with you.

The most effective sales strategy in a tiebreaker situation is to offer a justifier.  A justifier is an added bonus that adds obvious value to your prospect.  The justifier will demonstrate the purchasing manager’s contribution to the business and ultimately make them look good to their superior.  Justifiers are creative ways that your organization can add value to meet a specific need.  It is important to note that a justifier should not require any analysis because the value is self-evident.  For example, your organization could offer to host semi-annual OSHA safety training in addition to the 10,000 safety hats for the manufacturing client.  This justifier adds obvious value that does not require any analysis.

How to find justifiers

There are several ways to uncover justifiers:

  1. Research before your meeting by calling common connections, checking out the prospect’s website, and looking for any more information in news articles.  You might find out that they just launched a new safety initiative, won an award for reducing pollution, or launched a new HRIS platform.  Any of these might present an opportunity for you to offer a justifier that will help them achieve their goals.
  2. Get your prospect talking by asking strategic questions.  Ask about their struggles and offer ideas on how your organization can make a difference.
  3. Review how things are going with your current clients on a regular timeline that makes sense for the situation (quarterly, semi-annually, etc.).  You might uncover new problems you can solve, thereby adding new justifiers which will ensure that your client remains a loyal customer.

 

Remember that your competition eventually catches on to the justifiers you offer, so you should constantly cultivate new justifiers.  Adjust your sales strategy according to the type of decision your purchaser is making, then according to the type of buyer you are dealing with.  Prepare thoroughly, follow these tips for an effective meeting, and finish strong with a sound follow up plan!  Happy hunting out there!

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Source:  Anderson, J., Narus, J., Wouters, M.  “Tiebreaker Selling:  How Non-Strategic Suppliers Can Help Customers Solve Problems.”  Harvard Business Review.  Summer, 2017.

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