Why it's important to define the purchase criteria : MarTech Growth Series, Alex Abbott

If you do this successfully you are on your way to significantly improving close rates and maximising deal value.

Introduce this as part of a guided selling path for your sales team, focusing on seller and buyer behaviours and you’ll scale your business.

When I speak with revenue leaders I am hearing a common theme. We don’t have enough pipeline and our close rates are declining. The two things are not mutually exclusive of each other.

Creating new pipeline has been difficult for most to generate consistently, whether direct or via a partner network and it’s getting even harder to generate new opportunities, for a number of reasons, some industry ones include:

Competition is higher than ever before - 240% growth in our industry and a growing list of MarTech companies many of which competing for the same customers.
Sales talent shortage - by the tune of between 3 and 5 open roles for every 1 sales person looking, causing an imbalance between pay and ability.
Outdated outbound demand generation practises - rely on automation and inpatient sales outreach that misses the opportunity to build rapport and relationships.
Buyer switch-off - on average sellers get access to 17% of the buying process and if you’re one of three sellers you’re getting access to just over 5% of the buyer process, forcing sellers to cut corners and fail to align with the buying process.

With a shortage of pipeline it’s difficult to focus on improving pipeline quality as sales reps will want to work on anything they can. Big mistake!

At some point a decision needs to be made to introduce a new approach, one that requires patience and a great deal of discipline to ride out the pain of rebuilding quality pipeline.

Back to defining the purchase criteria.

Why is it important to define the purchase criteria?

The simple answer is, if you don’t someone else will and if they do, they increase their chance of winning significantly.

Defining the purchase criteria is easier said than done. To do it effectively you need solid insight and the ability to teach your buyer a new perspective and this isn’t typically done in one interaction, it takes several interactions where multiple value exchanges have taken place and a level of trust is built.

How difficult depends on two factors, the first is the type of buyer you’re dealing with and the second is what stage of identifying a business problem your buyer is at.

Stage 1:

Business problem not yet identified (most of your territory)

Stage 2:

Business problem identified, and open to exploring further (20-30% of a given territory)

Stage 3:

Business problem identified, capability gap analysis complete and budget is identified (a small percentage of a given territory, as low as 5%)

One of the most difficult times I had convincing someone to change their purchase criteria was after they had already decided what they wanted (Stage 3) and it was largely functionality based as they related specific capabilities they were familiar with and linked them to how they would achieve their commercial objectives.

I recall the very moment they were open to changing their mind, and it was tense. I had flown to Tel Aviv to meet the team for a series of meetings over two days. We had nothing to lose as we either successfully convinced them of the solution that would achieve their commercial objectives sooner, or not. If not then we simply would not win the deal, so it was all about this moment.

Our capabilities only matched 80% of the requirements they were looking for and I was upfront about that, at the same time detailing an alternative solution that would achieve their objectives sooner and provide more flexibility to optimise performance more efficiently over time - it was based on two factors, the rate of automation implementation and the rate of optimisation.

But reaching an agreement required grit and determination. The senior manager in the room was adamant the 20% of the solution we did not have, was the most valuable for them. I challenged this, and presented insight that demonstrated the how each factor would provide more control over revenue generation, their greatest priority.

In order to validate the value I felt I needed to perform a value creation exercise that modelled the revenue uplift, however the senior manager refused and became angry when revisiting the topic through-out the meeting. We spent more time showing use cases in our platform and how each use case supported the rate of automation and optimisation, building confidence that our solution would deliver greater value. After the two days we agreed to stop disagreeing and the senior manager agreed to pursue the discussion with a more open mind.

We closed the deal three months later. That trip to Tel Aviv was the defining moment that led to us winning the deal. Defining the purchase criteria is one of a few high value behaviours that requires a set of skills that can be taught and coached, along with:

Qualifying buyer type
Defining the purchase criteria
Shaping the process to win
Building consensus

This blog post may stimulate more questions than answers, are you focused on defining the purchase criteria to improve your win rates or do you let this milestone slip in the hope you have ability to convince your buyer you’re the one further down the track.