The 'Decision Maker' is a Ghost in Capital Equipment Sales

Ed Marsh | Oct 8, 2021

33% of Sellers Delude Themselves

OMG research indicates that while 46% of sellers believe they reach decision makers, only 13% actually do.1

And that 13% is 341%2 more likely to close business.

That makes it sound pretty simple and compelling!

Accountability to a simple BANT approach that emphasizes authority (the decision maker) should be enough to ensure success, right?

Except who is a decision maker?

I've recently had two deals that I personally sold to CEOs suddenly collapse. In both cases I had verbal commitment and mutual agreement to timeline and action steps.

And both deals fell apart. The CEO wasn't the decision maker.

The actual decision maker in one case was a management committee of staff members that rejected the CEOs decision. In the other case, it was a group of private equity investors who spooked the CEO about budgets and expenses.

In these middle-market industrial manufacturers, the decision maker isn't the CEO, at least not all the time, even for the simple high-value/low cost projects we were discussing.

It stands to reason, therefore, that complex capital equipment sales to larger companies (which will impact core company functions including production, quality, etc.) will involve even more diffuse decision maker responsibility. Risk aversion, competing departmental priorities, and consensus management styles make it very difficult to pinpoint a decision maker.

In fact, the concept of decision maker may be an anachronism to business today.

In contemporary complex sales there is a decision function rather than a decision maker.

That's bad....but it gets worse.

Losses to the status quo like those I experienced are increasingly common. In fact, the status quo is a surging competitor.

We hear that described as deals lost to "no decision." But it's bigger than that. In fact there's always a decision. But like the apparition of a decision maker, the decision process is hard to visualize too. And so too often we assume.

I'm finding answers in recent research I've been doing into the intricacies of the complex buying journey for capital equipment.

And that research has revealed some interesting insights into industrial sales.

A Vastly More Complex Buying Journey

We need to start by understanding what "decision" is being made. And it turns out that many times sales teams don't.

Most sales teams think of the decision maker as the person who makes the vendor selection. And that is the ultimate buying journey decision and the natural focus of most sales processes and opportunity qualification criteria. However, it's only the final decision in a series of five.

Let's look at the five decisions along the way.

First is a decision to allocate resources to consider/evaluate a project.

This could be driven by external factors (e.g. a prospect's prospect would require capacity expansion or new capabilities; impending regulatory changes would require compliance investment; or competitive pressures would merit changes) or internal ones (output and quality KPIs are lagging; operating conditions are causing excessive turnover; or plant consolidation or diversification are being considered.)

Capital equipment and enterprise software projects are multi-faceted, and the fact that a topic is raised in a staff - or even board - meeting, doesn't mean it will actually be seriously explored. Someone has to affirmatively own and advocate the decision to do so.

These are often corporate decisions, and regardless of the enthusiasm of the plant engineer/plant manager - the level at which many industrial capital equipment salespeople call and try to create projects - there's no guarantee that it will even be fully considered at the corporate level. Even less likely is that the sales person will have the opportunity to participate, or that the decision maker can be positively identified. 

But...perhaps the idea will get traction and resources will be committed to evaluating the possibility.

Second is a decision to consider a project for capital allocation based on its merits and relative to others. 

Simply deciding to evaluation a project in step one doesn't mean it's submitted for capital. The ensuing evaluation might result in a finding that it's unjustified, too risky, or too early.

Someone has to take responsibility.  From the perspective of a plant manager or division president, requesting capital for one project probably means prioritizing it over others in addition to the reputational risk of making a recommendation that disappoints.

Further, if the capital project is justified on operational savings, then reductions in their approved operating budget are likely to reflect the savings they're committing to.

There are many reasons not to take this step and even more not to proceed further.

This decision function will often be opaque and will involve internal "horse-trading." When the board approves the CEO's capital investment for the year, the CFO knows that the requests will significantly exceed the availability. So an informal process of lobbying and tradeoffs occurs within, and later between divisions, plants, and business functions to even get put forward on the request list. 

Third is a decision to approve capital.

Even after the lobbying and negotiations, only a fraction of the requested projects will be funded.

The decision on capital allocation is often made well beyond the purview of the local project team. 

The simple truth is that the buying team members often won't know when it's being decided, how the decision was made, or why the answer was yes or no.

Remember that fact when your sales person tells you they earnestly asked and were confidently assured that capital is approved for the project.

Fourth is a decision on how the vendor selection will be made.

In enterprise customers, this is probably fairly well defined for products that they buy routinely. But there are many that are unique because of local requirements or new capability requirements. Who will decide how they will decide?

And what is the role of approved vendor certification?

Fifth is vendor selection.

This is the decision that is often reported as not being made. 

And it's understandable in a sense. Decision two (to evaluate) requires that the process for decisions four and five are initiated. In order to decide on whether to allocate capital, there has to be some clarity into details around the required investment and likely return.

So vendor sales people are pulled in to participate in a "project" - except it's just a project idea until there's capital allocated to it.

And when capital isn't forthcoming, it's concluded that the project died without a decision when in fact, there was never a project.

What Can the Industrial Sales Person Impact?

Conventional wisdom and most capital equipment sales models will answer only the fifth decision, with a bit of influence on one and four.

But if you're running a business and are responsible for growing revenue and maintaining the vitality of your company, that would be obviously and profoundly irresponsible to simply accept.

So the proper question is not "which of the steps can you impact", but what you must do to impact all of them.

That's the subject of an upcoming post.


1 - "Overall, 46% of all salespeople are able to get past gatekeepers and reach decision makers - but that's only when we include procurement folks as decision makers.  If we filter the data on salespeople who do not begin with procurement, that number drops to just 13%!"

2 - "Siri might not be able to get you to the decision maker, but using science, ignoring your need to be liked, and getting the timing right will make it 341% more likely that you will close the business."