Understanding How CEOs Buy
Strategies to help you get past the "perched pen syndrome" and get straight to the person who has the power to buy
CEOs take much the same energetic, visionary approach to buying as they do to selling. Whether or not you plan to sell to them directly, it behooves you to understand how they approach buying, as the head of the buying is usually the ultimate "approver" within that organization.
Please understand, I am not talking about finding out how CEOs manage their personal stock portfolios, or about how likely they are to dive headfirst into some new venture capital opportunity. I am talking about learning how CEOs go about buying and selling the goods and services that support their own core business.
Understand, too, that CEOs are unlikely to let the VP of sales or the director of procurement off the hook when it comes to performing their work. But let's be realistic: When the CEO takes on the role of "decision-maker" and/or "approver" of a critical transaction, the whole dynamic changes. The command from the top could be as obvious as "I've got the ball on the Tipton account," or as subtle as "Let me know when you're done with your analysis of the Tipton account--I want to take a look at your recommendations." (In the latter case, the person at the top wants the underling to still feel "empowered" even though, in reality, nothing could be farther from the truth.)
If you're in the business of selling anything--from paper clips to computer chips--you've probably already noticed that it's sometimes mystifyingly difficult to get a midlevel contact's pen to produce a signature on the preverbal dotted line. Things seem to be going well; rapport and information flows; all the signals are right; and then, for reasons that seem to defy elucidation, delays of all sorts come into play when you go for the close.
"We need more information" and "I'll need some additional time to fully examine your final proposal" are two of the most popular (and classically vague) delays. Often, these responses signal an internal shift: The person at the top of the organization has assumed control of the buying process. He or she may well have been involved in a behind-the-scenes way from the get-go and is only now exerting authority, but you were never made privy to this fact.
When is this sort of roadblock most likely to arise, and what can you do about it when it does? There are four classic scenarios for this pattern, which I call the "perched pen syndrome," and for each one you must learn to send the right messages to the CEO, the person who's actually got the power. This month, we'll look at two of the four scenarios.
Situation No. 1: A proposed change of loyalty in any critical source of supply. Company A has been buying a particular (and critical) product or service for more than two years from Company B, and both the sellers and the buyers are happy with the results. Let's face it: Ties have been established. The partnership is working, and it's comfortable, but business loyalty always comes with a price tag. If either organization begins to consider making a switch, the person at the top of each organization will virtually always get involved to make sure that the change will be worth it.
So let's say you're the salesperson trying to change the status quo and win business for your company. Whether it is obvious to you or not, the odds are good that the CEO of the company you're trying to sell to, and the CEO of the current vendor, are both monitoring your selling process closely.
Before too much work goes into the fomulation of the deal, the person representing the selling organization must ask the CEO of the buying organization some variation on this question: "Would you like to know what your loyalty to Company B is costing you?"
This type of question is not for the faint at heart; it is, however, second nature for CEOs who sell. You should be ready to offer a cost-benefit analysis that highlights something you offer that Company B does not. When in doubt, quantify your findings with hard numbers. Be sure your package includes most or all of the benefits that Company A is currently getting from Company B--with a few new elements thrown in to show that you've done your homework. Be prepared for the buying organization not to make the switch. (Hey, it happens.) If possible, position yourself as a partial or backup supplier.
Situation No. 2: A proposed purchase of any product, service or solution that crosses departmental or divisional lines. This is a situation that buying and selling CEOs love to sink their teeth into. Whenever anything has the potential of affecting more than one functional part of any organization, the person at the top is likely to get involved with the transaction. Here again, the CEO's involvement may not be apparent to a casual observer. Regardless, you should count on the target company's top person playing an active role in this buying decision.
If you're a part of the selling organization, you or your CEO must intercept the sales activity, pick up the telephone and make a "call to the top" of the buying organization. This call will compress the sales cycle; it should be made as soon as the selling team has the preliminary analysis done and before any secondary or additional presentation is undertaken. The "business portion" of the selling organization's call to the target company's CEO should sound like this:
"We've completed our initial analysis, and what I suspected is correct. Working together, our teams have uncovered unexpected revenue opportunity (or 'established several ways to eliminate unintentional inefficiencies' or some other benefit). Before we invest any more of our organization's resources, let me ask you something. From what your team knows at this point, could you see yourself becoming one of our customers between now and, say, the end of this fiscal quarter? That would require taking a check out of your check register and signing it over to my organization between now and the end of (next month) to the tune of X dollars." (Then stop talking and wait for a response.)
This is an incredibly effective call, one that speaks the "language of power." If there is a potential sale, your organization will find out about it at this point, and you won't have to wait as long for it as you otherwise would. This call will flush out dead prospects and completely clarify the buyer's intention. Remember, the CEO is almost certainly already involved in this process. Please note: While this call can, in theory, be made by anyone in the selling organization, it is probably most effective when placed by the head of the company or division involved.
Next month, we'll talk about how to handle the other two situations where buying and selling CEOs are likely to get involved on their own initiative.
Anthony Parinello is the author of the bestselling book Selling to VITO, the Very Important Top Officer. For additional information on his speeches and his newest book, CEOs who Sell, call (800) 777-VITO or visit www.sellingtovito.com.
Tony Parinello has become the nation's foremost expert on executive-level selling. He's also the author of the bestselling book bearing the name of his sales training program,Getting to VITO, the Very Important Top Officer, 10 Steps to VITO's Office,as well as the host of Club VITO, a weekly live internet broadcast.