Before you or I, or one of our customers, can buy anything, there are at least four things that have to be considered, and four decisions that have to be made. Sometimes, one person makes all four of these, but in medium to large businesses it’s not unusual to see three or four different people, and maybe even a committee or two, that have some influence in the outcome of these four decisions. Every big decision involves, at least, these four smaller decisions, and each of these four may contain three, or eight, or thirteen components of their own.
1. Action: ‘Do We Have to Buy Something Now?’
Individuals sometimes buy things because they want to, but companies-who are constantly concerned with controlling and minimizing costs-usually only buy things when they have to. Even if they determine they have to buy something in order to achieve a goal or fix a problem, they will often put it off until it becomes absolutely necessary. It’s not procrastination. It’s the reality of limited resources and unlimited opportunities, and the process of valuation and prioritization, which we discussed in What Customers Think About.
If I could have kept on cooking steaks on my old barbecue grill, without burning my knuckles or catching my shirt on fire, I would not have taken the action to replace it. I even tried to ignore it for a while. Only when I realized I could not go on without the risk of blowing myself up did I decide I had to do something about it.
2. Course: ‘What Should We Buy?’
There is always more than one way to solve a problem or pursue a goal. Once a buyer determines that taking action is a priority, the next logical question is ‘What course of action should we take?’ If deciding on a course of action involves more than one person, there will always be conflicting views, conflicting agendas, and differences of opinion involved.
Once my grill died, my options were to
- quit eating steak and hamburgers,
- cook them on the stove,
- replace the element,
- replace the whole grill, or
- invest in a grill-top range.
I quickly narrowed it down to numbers four or five as being the only two options I was willing to accept.
3. Resources: ‘Do We Have the Resources to Buy?’
Before a buyer can buy something, they must have-or be able to get- the money to buy it. Good business managers also look carefully to make sure they have the resources, in terms of time and manpower, to actually implement and utilize what they buy before they buy it.
The reason I chose option four over five was not the money. It was more an issue of Time Value and Simplicity Value. I just didn’t feel like ordering the range, finding someone to install it, scheduling the installation, and waiting a few weeks to get results. For me, it was just less hassle to go buy a new grill.
4. Source: ‘Who Should We Buy From?’
If a company determines that they have to buy something now, they know what they need to buy, and they have the resources to buy it and put it to use, they still need a source to buy from that can deliver what they need in a timely manner.
I naturally defaulted to my ‘incumbent vendor,’ the store that sold me the last grill, but when that didn’t work out, my preferred choice became the next-closest store that sold grills. Once I did locate a new source, I decided to settle for one of the grills in stock. I wasn’t willing to wait a week to order one, or run around to three other stores to try to find just the right model or to save a few bucks. I just bought one that was available.
These four decisions are interrelated, like the pieces of a jigsaw puzzle, and to get a complete picture of the overall buying process, we have to understand them all. One of these decisions really can’t happen without the other. If taking action to solve a business problem is paramount, but a company doesn’t have the resources to buy, then they can’t very well take action. Likewise, if they have the resources to buy, and a great source to buy from, but no urgency to take action or no consequence if they don’t, they’ll probably put off buying for a while. All four decisions must be made in favor of buying before a buyer is ready to buy.
In a perfect textbook case of a buying process, these four decisions would happen in little airtight compartments, where one decision was completed before the next one began. Unfortunately, this never happens, and probably never will. But if we are going to stand a chance of understanding our customer’s buying process, we have to start under- standing how these four decisions are made, both in theory and in practice.