Busting the B2B Sales Myth of Decision Makers

Ed Marsh | Oct 12, 2021

Changes in the Capital Equipment Sales Environment

Introduction to SignalsFromTheOP

Guide to episode

  1. Often sales teams and their prospect contacts don't fully understand the buying journey and various decisions that are made independent of the vendor selection.
  2. Decisions not to proceed with projects can happen at a number of points, and often before the vendor selection decision occurs.
  3. Decision-maker is now often replaced with a committee or buying team.
  4. Consensus decisions happen at each of the five decision points.
  5. B2B industrial and capital equipment sales teams can still succeed, but only with more sophisticated approaches.

Transcript follows

Hi, I’m Ed Marsh. Welcome to this episode of Signals from the OP. An OP, or observation post, is a spot out ahead of the lines, beyond the noise and light, which provides early warning of enemy activity. I use that analogy because the goal of these videos is to provide early warning of changes that will impact companies in the industrial manufacturing space.

Today I want to blow up two myths.

First, the myth that 38% of deals end in "no decision."

Second, the myth of the decision-maker.

The Myth of B2B Sales Lost to "No Decision"

Let’s start with some context – it’s clear that if you look at many complex sales pipelines – like the capital equipment companies I primarily consult with – that a lot of deals simply wither and die. They’re not lost to a competitor. And they’re not converted into orders.

But, that doesn’t mean they ended in "no decision." Here’s why.

They just don't know where the "no" decision was made.

Most sales teams look at their projects in the context of a single decision – the vendor selection piece. And it’s true, according to challenger research, that 38% of deals result in no vendor selection. But to use an iceberg analogy, the vendor selection decision is like the small portion that’s visible above the water.

Below the water is a series of four other decisions. So the symptom of no vendor decision is actually the result of a negative decision in one of those. Sometimes it’s a dispositive NO and sometimes it’s simply the absence of a yes. But each of those is a decision, and in the end, projects don’t end with no decision, but rather the salesperson – and often the prospect’s project team – aren’t aware of where or when the decision was made.

What are the decisions?

Series of Five B2B Sales Decisions

Let’s start at the beginning. First, before there’s ever a “project” someone has to decide to invest finite resources (often time initially) in evaluating the opportunity. Putting together a justification/capital request and putting one’s name on a project in a risk-averse world requires a decision. It doesn’t happen passively.

Second, is the decision to request capital. This means thoroughly quantifying the risks of proceeding and not proceeding, evaluating various options, and venturing into the inter and intra-facility and department politics. Deciding to request for one project almost certainly means deciding not to request for another, and if a project is approved based on savings, that may be automatically removed from the operating budget. There’s reputational risk, tradeoffs, and financial implications. In other words, many, many reasons not to decide yes.

Third, is the decision to allocate capital. In a privately held mid-size business that might involve a tradeoff of a business investment vs. college tuition or a vacation house. In situations where other owners – whether public or investors/partners – have a say, it means selecting between projects, each of which is the top priority for the person, team, or department that submitted it. The bottom line is that only a fraction of proposed projects are actually funded – and even when they are, sometimes that’s withdrawn as urgent contingencies arise.

Fourth is the decision of how to select a vendor. In some cases, companies with mature procurement and multiple locations may have standard procedures and approved vendors for certain categories. In other cases decisions may be made in a more ad hoc way – but regardless, someone is deciding how. It’s never a blindfolded dart toss.

Then, finally, the fifth decision is vendor selection. This is tricky because often vendors are consulted during steps one and two. So their inclination is to believe that there’s an active project which will result in a fifth decision. But those early conversations rarely progress that far.

So the bottom line is that a decision is always made – but neither the salesperson nor their deal champion might be privy.

Deals lost to no decision is a myth.

Now let’s turn to the question of the decision-maker?

Decision Maker is an Industrial Sales Anachronism

OMG has some wonderful research showing that while 46% of salespeople think they are talking to a decision-maker, only 13% actually do. And that those who actually do are 341% more effective.

So who is the decision-maker? It used to be a person. A company owner, president, CEO, or GM for large, consequential decisions, or some manager for others.

Today decisions are increasingly made by teams that operate by consensus. Again, challenger research helps here – the size of the vendor selection buying team has grown rapidly and averaged 10.2 in 2018.

That means cross-functional teams with different priorities and preferences. Different departmental needs. And different buying habits. In a remote work world they likely don’t meet in person, and perhaps don’t even “meet” at all – it’s really hard as a salesperson to sell effectively when such a large team only connects fleetingly using asynchronous tools like slack.

It’s further complicated because while there’s almost always someone on the team with the highest corporate seniority, they may not exercise it. They might push budget decisions down, or hesitate to stipulate decisions that they fear might provide easy accountability dodges for others to shrug and say “you told us to do that.”

I challenge you to show me the decision-maker in that situation.

And that’s just the vendor selection decision team.

There are also consensus decisions at each of the other decision points – and even before it.

For instance, the board of directors and CEO will set, collaboratively, the strategic priorities against which capital allocations will be measured. That’s a consensus decision.

Before someone decides Yes in step one, they’ll often try to gather support from others – both direct resource support to assist with the research, but also organizational support for their decision. Risk aversion is a huge piece of each decision and why nos are more prevalent.

Later, local and then regional management teams will often decide by consensus – for instance, a plant manager, plant engineer, plant procurement, and plant operations leaders – which projects they will submit from their locale.

And then as requests come pouring in, a CFO and/or CEO and some type of capital committee will make decisions on which projects to fund. Yet another consensus decision.

In other words, most deal qualification models are woefully inadequate for today’s capital equipment environment. They speak of a decision-maker and a decision. The reality is much more complex.

Complex Capital Equipment Sales and How Companies Can Adapt

No wonder pipelines are so distorted and close rates are so poor.

So it’s a tough situation, but….it’s not desperate. There are some things that capital equipment sales teams can do.

First, companies need to acknowledge the current situation. That means executive sponsorship, changing the language, qualification criteria, and pipelines which are inadequate for the current situation.

Second, they need to focus on helping companies buy – across all five decisions. This means several things:

  • Robust sales enablement. That means content for each decision, each team, and each role/function.
  • Relationship and team selling – top to top, middle to middle, etc. so that there’s engagement with each level and insight into each decision.
  • Develop a sophistication in skills and tools, questions, and technique, to understand the required business outcomes, recommend other considerations, and quantify the cost (actual or opportunity) of failing to proceed
  • Create a cross-functional internal team to support prospects in creating capital requests that will win approval – that means sales will have to learn what forms, justifications, language, and templates are used, and how decisions are made. And then alongside internal colleagues and prospect stakeholders, help to develop that.

Of course, this is work. And it’s also beyond the skills of many salespeople.

So company leaders have two choices – if they can bring in enough orders because of favorable lead times or other competitive factors, they can ignore it and keep doing what’s working well enough. Alternatively, if they realize that circumstances will change and they’ll need to proactively create projects and actually sell deals, then they can suck it up and get started.

The point is this – you can lament the fact that you don’t know why or when you lost deals, or you can set about changing it.

I’m Ed Marsh. Thank you for joining me for this episode of Signals from the OP. If you enjoyed it, please share it and subscribe – either to my YouTube channel EdMarshSpeaks.TV or at the related blog SignalsFromTheOP.com.