independent

Sunday 20 April 2014

Use your head and heart when buying or selling

Although organisations are increasingly structured and sophisticated in their buying, for as long as people are involved in making decisions there will inevitably be an element of human fallibility and risk in terms of how decisions are made.

This fallibility has important implications for sales and revenue performance in 2013.

We all think we are logical, rational and analytical in how we behave. After all, as adults we are both educated and intelligent. As trained and experienced managers, we are especially logical when it comes to our business decisions.

Psychologists would, however, disagree and point to a whole lot of research to back up their argument.

Procurement professionals in particular would argue that they are purely logical and rational in their decision-making. They will argue that procurement is the science of removing the bias from business decision-making.

Not only are professional buyers trained to make rational buying decisions, they have the procurement processes, systems, policies and procedures to guard against the decisions making weaknesses of their colleagues.

However, some of that could be hubris on the part of the professional buyer, because according to scientists the perfectly rational decision is an illusion.

This is the age of the Utilitarian or Economic buyer and the Cost-Benefit Analysis. However, most buying decisions are still made by people, thankfully, and not computers. That means they are subject to the foibles of human decision-making.

No buying decision is 100pc rational or analytical. Factors such as emotion, intuition, personal risk, or impulse will have inevitable impact on the decision – it is just a question of whether the impact on the decision amounts to 1pc, 5pc or 10pc. That is simply the nature of human decision-making – what scientists call 'bounded rationality'. So what has all this got to do with sales success?

Confident buying decisions must intuitively feel right for the buyer. It is not enough that the cost-benefit analysis shows the right numbers and all the information has been evaluated thoroughly.

Unless it 'feels right', a confident decision won't materialise and the buyer is at risk of prevarication. Even though the analysis says 'yes', the buyer's instinct, or intuition may say 'no'.

Bounded rationality is more likely to be in evidence when the buyer is in a hurry, is making a new decision, or is under stress. Also, it can be evidenced when there is a high level of risk associated with decisions, or the decision is taking place in an environment that is politically charged.

Complexity

Salespeople know that risk and politics, in particular, introduce an element of uncertainty and complexity into the sale. It is no coincidence that these variables are heavily informed by intuition, instinct and feeling.

Bounded rationality has implications for any business wanting to win more business – it means that selling is not just about the spreadsheet, or the cost-benefit analysis. The salesperson must address both the emotional and the logical elements of the purchase.

In addition to explaining the product features and benefits, running the numbers and building the business case to buy, the seller must seek to capture the buyer's imagination and appeal to the buyer's personal, as well as professional emotions.

The imagination is key to answering the 'what if' and 'why' questions that we all ask ourselves. It is key to forecasting benefits, predicting performance and planning for change.

As sellers we must help the buyer to envision the future success of their business with our solutions.

It is our job to help the buyer vividly imagine increased personal and professional success, whether that means more sales, more savings or any other goals. If the buyer can't imagine your solution in their business, sales will be slow to grow.

In 2013, we will continue to be confronted by increasingly hard-nosed buyers who want to talk numbers, we may be tempted to overlook the role of buyer attitudes and instincts and get straight down to the cost-benefit analysis.

To win more business we will all need to balance the emotional and the logical elements of the purchase decision.

John O'Gorman is a leading global figure on selling to professional buyers. He is a director of sales consulting and training company; The ASG Group - www.theasggroup.com

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