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

By Tony Parinello

Opinions expressed by Entrepreneur contributors are their own.

CEOs take much the same energetic, visionary approach to buyingas they do to selling. Whether or not you plan to sell to themdirectly, 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 CEOsmanage their personal stock portfolios, or about how likely theyare to dive headfirst into some new venture capital opportunity. Iam talking about learning how CEOs go about buying and selling thegoods and services that support their own core business.

Understand, too, that CEOs are unlikely to let the VP of salesor the director of procurement off the hook when it comes toperforming their work. But let's be realistic: When the CEOtakes on the role of "decision-maker" and/or"approver" of a critical transaction, the whole dynamicchanges. The command from the top could be as obvious as"I've got the ball on the Tipton account," or assubtle as "Let me know when you're done with your analysisof the Tipton account--I want to take a look at yourrecommendations." (In the latter case, the person at the topwants the underling to still feel "empowered" eventhough, in reality, nothing could be farther from the truth.)

If you're in the business of selling anything--from paperclips to computer chips--you've probably already noticed thatit's sometimes mystifyingly difficult to get a midlevelcontact's pen to produce a signature on the preverbal dottedline. Things seem to be going well; rapport and information flows;all the signals are right; and then, for reasons that seem to defyelucidation, delays of all sorts come into play when you go for theclose.

"We need more information" and "I'll needsome additional time to fully examine your final proposal" aretwo of the most popular (and classically vague) delays. Often,these responses signal an internal shift: The person at the top ofthe organization has assumed control of the buying process. He orshe may well have been involved in a behind-the-scenes way from theget-go and is only now exerting authority, but you were never madeprivy to this fact.

When is this sort of roadblock most likely to arise, and whatcan you do about it when it does? There are four classic scenariosfor this pattern, which I call the "perched pensyndrome," and for each one you must learn to send the rightmessages 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 proposedchange of loyalty in any critical source of supply. Company A hasbeen buying a particular (and critical) product or service for morethan two years from Company B, and both the sellers and the buyersare happy with the results. Let's face it: Ties have beenestablished. The partnership is working, and it's comfortable,but business loyalty always comes with a price tag. If eitherorganization begins to consider making a switch, the person at thetop of each organization will virtually always get involved to makesure that the change will be worth it.

So let's say you're the salesperson trying to change thestatus quo and win business for your company. Whether it is obviousto you or not, the odds are good that the CEO of the companyyou'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, theperson representing the selling organization must ask the CEO ofthe buying organization some variation on this question:"Would you like to know what your loyalty to Company B iscosting 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 tooffer a cost-benefit analysis that highlights something you offerthat Company B does not. When in doubt, quantify your findings withhard numbers. Be sure your package includes most or all of thebenefits that Company A is currently getting from Company B--with afew new elements thrown in to show that you've done yourhomework. Be prepared for the buying organization not to make theswitch. (Hey, it happens.) If possible, position yourself as apartial or backup supplier.

Situation No. 2: A proposedpurchase of any product, service or solution that crossesdepartmental or divisional lines. This is a situation that buyingand selling CEOs love to sink their teeth into. Whenever anythinghas the potential of affecting more than one functional part of anyorganization, the person at the top is likely to get involved withthe transaction. Here again, the CEO's involvement may not beapparent to a casual observer. Regardless, you should count on thetarget company's top person playing an active role in thisbuying decision.

If you're a part of the selling organization, you or yourCEO must intercept the sales activity, pick up the telephone andmake a "call to the top" of the buying organization. Thiscall will compress the sales cycle; it should be made as soon asthe selling team has the preliminary analysis done and before anysecondary or additional presentation is undertaken. The"business portion" of the selling organization's callto the target company's CEO should sound like this:

"We've completed our initial analysis, and what Isuspected is correct. Working together, our teams have uncoveredunexpected revenue opportunity (or 'established several ways toeliminate unintentional inefficiencies' or some other benefit).Before we invest any more of our organization's resources, letme ask you something. From what your team knows at this point,could you see yourself becoming one of our customers between nowand, say, the end of this fiscal quarter? That would require takinga check out of your check register and signing it over to myorganization between now and the end of (next month) to the tune ofX 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, yourorganization will find out about it at this point, and youwon't have to wait as long for it as you otherwise would. Thiscall will flush out dead prospects and completely clarify thebuyer's intention. Remember, the CEO is almost certainlyalready involved in this process. Please note: While this call can,in theory, be made by anyone in the selling organization, it isprobably most effective when placed by the head of the company ordivision involved.

Next month, we'll talk about how to handle the other twosituations where buying and selling CEOs are likely to get involvedon their own initiative.

Anthony Parinello is the author of the bestselling book Selling to VITO, the Very Important TopOfficer. For additional information on his speeches and hisnewest book, CEOs who Sell, call (800) 777-VITO or visit www.sellingtovito.com.

Tony Parinello

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.

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