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 further from the truth.)
The “perched pen” syndrome
If you’re in the business of selling anything — from paper clips to computer chips — you’ve probably already noticed that it is sometimes mystifyingly difficult to get a mid-level 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 #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 that 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. If you’re not comfortable posing this question, get the head of your own company involved, and make sure he or she poses it directly to the CEO of the target company. 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 #2: A proposed purchase of any product, service or solution that crosses departmental or divisional lines.
This is 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 presentations 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: 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. If you are a salesperson, get help from the highest-ranking person you can track down. Show him or her this article. Encourage him or her to place this call exactly as outlined here. (Use language that’s comfortable, but hit all the key points addressed above, and keep the call direct and to the point.)
Say the Magic Word (Revenue) to Win Attention from CEOs
Let’s continue our exploration of when and how CEOs involve themselves in the buying process – often without salespeople even knowing about it. (By the way, if you missed last month’s column, Are You Selling to the CEO without Knowing It?, it’s a must-read – you’ll need it to make the most of what follows in this month’s article.
There are a number of classic scenarios for this pattern of silent CEO involvement that stops the sales process in its tracks for no apparent reason; I call this cycle the “perched pen” syndrome. For each of the scenarios, you must learn to send the right messages to the CEO, the person who actually has the power, whether it looks like he or she is involved or not. Last month, we looked at two such scenarios; this month, we’ll look at one that belongs in a class by itself.
Situation #3: The potential exists for dramatically increasing revenue — either by exploiting new markets or by increasing the loyalty of existing customers.
We’ll look at new revenue generation first.
Un-exploited and Under-exploited Markets
If there is one area of opportunity that instantly earns “top-of-mind” status for every selling and buying organization’s leader, it is the prospect of acquiring new revenue from a new market. New-market revenue has a way of taking on particularly high priority when the competition is fiercer than usual, or (in a publicly owned company) when a board meeting is somewhere on the horizon. Revenue from previously untapped markets or market segments is rightly associated, among CEOs, with increased brand recognition and competitive dominance — key indicators that the person at the top is doing the job and doing it well.
If you’re a salesperson, you’ll find that, when a big deal in a new market is on the line, the CEO who sells is highly likely to get involved in some way. He or she will often make a subtle (or not-so-subtle) effort to reel the business in personally. The CEO of the buying organization, on the other hand, may assume the position of the “approver” of the procurement transaction if the sale represents the establishment of a strategically important new partnership.
Count on it. Top officers will be quick to pick up the telephone and make the “top-to-top” call when new revenue from new markets is at stake. There is some good news for salespeople on this score. The kind of call I’m talking about is such a common occurrence, and CEOs are so used to playing both the selling and buying roles, that salespeople who learn to sound like CEOs can learn to move the process forward at the top level. The same goes for salespeople who have access to high officials within their own companies, and can persuade them to make the appropriate calls.
In other words: If there is one idea a CEO hasn’t heard of before that seems to relate credibly to revenue generation in new markets, that CEO will listen to the idea. And by the way, if you’re product or service is so new that you don’t have any customers yet, the very best place to find an “early adopter” in any buying organization is at the CEO level.
You must make your appeal in terms of cracking an under-exploited market and note, that you (or someone else in your organization) must make this appeal to the CEO. Why? It’s the CEO’s responsibility to explore every single new idea that has to do with untapped or under-tapped markets. It’s the CEO’s responsibility to “look around corners” and see market opportunities that no one else has identified yet. If you address that responsibility, you will hear from the CEO or someone he or she trusts, and you can trust that he or she will carefully monitor the relationship from that point forward.
If you’re enlisting the aid of your own CEO in reaching out to the CEO of a target, make absolutely sure that he or she calls the CEO with the offer, and not anyone else in the organization! If the appeal is made to anybody else within the organization, your sales cycle will drag on endlessly as all the CYA (Cover Your Anatomy) specialists gather all the “facts” under the sun before making a “recommendation” to some higher-up. Why jump through all the hoops? Why waste weeks, months, or even years on reference accounts, testimonials, demos and financial extrapolations when you or someone within your company can place a call to the top?
The Base of Current Customers
Another “hot button” has to do with current customers. Winning and keeping their loyalty is extremely important to CEOs.
The customer base is an asset CEOs will do virtually anything to protect! Existing customers are the equivalent of the legendary goose that has the ability to lay the golden egg. In this case, the “golden egg” is the precious high-margin, add-on business that comes like a reward from existing customers. It’s often said that it’s nine times more costly to get a new customer than it is to grow an existing one. That’s why CEOs on both sides of the buying equation are likely to get involved – overtly or covertly – in any initiative they believe will affect customer loyalty.
CEO’s will go to great lengths to secure the loyalty of every existing customer; initiatives range from expensive golf tournaments to “touch-points” via questionnaires and flattering interviews in company newsletters. Consider, what might follow if you or your company’s CEO were to leave a phone message along the following lines:
A word of caution: If what you sell has a chance of being perceived as adversely affecting customer loyalty by a CEO, don’t be surprised if a mysterious pause in the buying process ensues. The best way to get around this problem? Get the two “approvers” – your CEO and the target company’s CEO – together for a face-to-face or telephone meeting to discuss the matter. This won’t guarantee success, of course, but it will speed up your sales process and get you a clear answer.
Anthony Parinello is the author of the best selling book Selling to VITO: The Very Important Top Officer. For additional information on his Sales Success Kits and speeches and his newest book, Think and Sell like a CEO call 1-800-777-VITO or visit http://www.sellingtovito.com
