John O' Gorman

Buyers Have Funnels Too!

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Sales people are not the only ones who have funnels, buyers have them too!  I will let the IT Director of a large multi-national explain: ‘Last year we had 300 million worth of projects for consideration across the organisation, but only a budget of 100 million.   That meant we were faced with some very hard choices and they were choices between projects and even departments, not choices between suppliers.’ It is a classic funnel scenario, lots of projects and proposals go in at the top, but only a small proportion emerge successfully at the bottom, in terms of sanctioned expenditure, approved budgets and signed purchase orders.  Clearly, buyers have funnels too!

Why The Buying Funnel Matters To Sellers

What are the implications of the buyer funnel?  Well, salespeople know to their cost that many projects never get ‘off the ground’ and they know that projects can fall even at the last hurdle.  At the core of understanding why decisions get scrapped and stalled, is the issue of the buyer’s own funnel and the rules that govern it. As a seller it can be easy to overlook the fact that the real competition is not another supplier, but another project.  This simple reality has fundamental implications however. Principle among them is that the business case is more important than the competitive advantage of one supplier over another. When the salesperson recognizes this sea-change, he, or she makes the transition from selling, to helping the buyer to buy (or more precisely to helping the buyer to get the purchase sanctioned).

The Challenge of Gaining Project Approval

The challenge of gaining project approval is one faced by buyer and seller alike.    For example, buyer-managers must sell their projects internally if they are to succeed, making them salespeople in their own right.  This is demonstrated in the Director, description of how project decisions are made: ‘With such a large portfolio of projects chasing such limited funds for investment, the choices, trade-offs and compromises were difficult. We had to make a calculated decision as to which projects would survive and which ones would not.’ ‘Now each project had its merits and its proponents, however, the internal process in our company requires that major project decisions at board level based on the business case submitted.’ ‘There is an element of politics involved in what projects get support, however this has diminished greatly over recent years.  Several projects in which I had invested a lot of time and effort, and which I really wanted to see happen, did not get approval at the board.  The board has its own agenda.’ ‘The business case is king and its preparation demands rigorous analysis and preparation a cross functional team.  You have to have people on side with your project, but you also have to have the numbers backing it up.’ ‘There will of course be many stages through which a project must progress in order to be presented for final board sign-off.  This makes sense all there is no point in spending months and months planning a project that is never going to get approved.’

Applying Sales Funnel Principles To The Buying Funnel

The experience that salespeople have in terms of managing the sales funnel, can be useful in respect of shaping the buyer’s funnel too:

  • Know what is in the funnel, what are the various competing projects, trade-offs and alternatives facing the buyer given budget and resource constraints
  • Know where each project is at in the funnel – know the stage of development / progression of the project
  • Know the process for progressing projects through the funnel – be clear on the steps, the people involved, the decision-making criteria, etc. for the buying decision
  • Be realistic in evaluating the likelihood of success – be objective in measuring the project against the criteria set and help to build a compelling business case
  • Don’t waste time on projects that are unlikely to succeed – the best salesperson won’t get a purchase sanctioned if the project does not have backing, as well as a compelling business case.

So, sellers imagine your sales funnel, with lots of sales opportunities in it.  Then think of each of those opportunities as being within a funnel of its own, that is the buyer funnel.  Then when you review your pipeline and all the opportunities in it, you will be adopting a more 3 dimensional view of the buyer tradeoffs and choices likely to impact on your sales success.

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