01608 644144
How Customers Make Capital Investment Purchase Decisions
How to sell high value capital investment products and services to customers has become an increasingly popular sales training subject.
Two significant problems for your customers when making capital investment and high tech purchase decisions are:
The technologies on offer fluctuate widely.
Their development is uncertain and often comes in fits and starts.
As a rule any change between two alternative technologies is, associated with high costs.
Potential suppliers take into consideration the purchasing decision and how the customers finally decides depending on these two factors.
The following conclusions can be drawn from a survey of over 400 managers from different high tech areas:
The more numerous the technological solutions and the faster technology changes, customers will weigh up the more suppliers. Both factors make the customers undecided.
Throughout a four year period the price - performance relationship of selected technological products improved by 2000%. Therefore your customer is persistently searching for the latest, best and most ideal resolution for their system.
Even though your customers may draw on many suppliers because of the high speed of technological change and a great variety of technological solutions, as the previous supplier you have a very good chance of success. Consequently management of existing customers is an essential skill, which is covered on good quality account management sales training courses. Any piece of information your customer receives today can already be out of date by tomorrow. A new supplier who seems perfect today can be out of the picture tomorrow. In these circumstances your customers will have huge difficulty in forming an objective judgment. For that reason they repeatedly decide according to the maxim “at least you know where you are with that!”
The less experience your customers have with your products, the more suppliers they will compare. In situations like these your chances as existing supplier of holding onto the contract, instantly diminish. Prior to making a new purchasing decision, a customer will compensate for the lack of information by an intensive search for information. These are the kind of customer who is more readily convinced by a new supplier than one who already possesses a definite wealth of experience, since, as a rule, these people do not have the option to objectively assess what a new supplier says.
The more your customers concern themselves with the compatibility of a new acquisition with their existing mechanism, and the higher the costs of changing suppliers, the fewer the suppliers they will take into account. Regardless of whether the competition is offering attractive alternatives, you, as the current supplier, have an incredibly good chance of keeping the contract. Reservations about compatibility and costs of changing supplier are caused by high levels of investment in the existing mechanism and also the desire to work with trusted equipment.
Your customers will check out more suppliers, the more important the purchasing decision. Especially when the investment leads to reasonably high running costs and / or is projected to secure an economical benefit for your customer.
The more rigidly formalised your customers’ purchasing decision process is, the fewer suppliers they will take into account. Even if a competitor shows them an interesting offer your chances of getting the contract are fairly good. The free collection of information from the whole market is hindered by the fixed rules and procedures. The employees within the customer’s business who take part in the purchasing decision act as controls on each other and therefore fear nothing more than making the wrong decision. The existing supplier with whom good experiences have already been made, possess crucial advantages in this situation.
The more strongly the purchasing decision is centralised in the customer’s business the more suppliers are taken into account and the slimmer your chances are of getting the contract. Centralisation always means that the purchasing decision is in the hands of a few managers.
As a rule they have little or no experience of your products and make their decisions principally on the basis of bare cost - performance perspectives. Your good reputation as the existing supplier plays a less important role.
Commercial people are taking an increasingly more important role in purchase decisions. Sound financial justification is a must have for any successful capital investment sale. To develop your skills further in order to enhance your performance, attend a good sales training course.
