The Myth of the Economic Buyer
I often hear salespeople (pricing and marketing people, too, for that matter) talk about the rise of the economic buyer. It’s the biggest problem salespeople face. That’s not the source of my concern, though. I’m more interested in the misnomer: The term economic buyer isn’t right, for three reasons. First, the term does not qualify the true buyer behavior. Second, it leads companies to train salespeople to only sell value even though, in many cases, selling value doesn’t work. Third, although it does point to the problem salespeople face, it doesn’t get anywhere near a solution. To find the solution, let’s get to three of the customer’s primary approaches to buying.
The first approach is that some customers don’t need value. They don’t need the extra service. They don’t need all the extra features sellers heap on their products so they can adopt a differentiation strategy. These are sophisticated customers who understand what they really want and aren’t going to pay extra for features they don’t need. We call these customers price buyers.
The second type is customers who do want the extra products and services along with the basic product. They are willing to pay for the extras they need. They want sellers who understand their needs and are able to craft both the offering and the message to show how the seller’s value meets those needs. They don’t fall for gimmicks. They want the real deal. And the real deal for a business comes down to dollars that can be realized with reduced costs, more sales, and more profits. In many businesses, these buyers are the supply chain managers. We call them value buyers because they analyze the impact of suppliers’ goods and services to their overall cost structure and select the vendor that provides the best value or return on investment.
The third type is customers who have discovered that if they act like price buyers, they will get high value for low price. They might want elements of value or trusting relationships with suppliers. So even if they want a strategic relationship in which both value and trust are a part of how they do business, they have learned that they get more for less if they do that. We call these customers poker players.
These behaviors are situational. They can be based on economic conditions, competitive conditions, or just sheer skill and knowledge of the buying organization. They can change because a new, more practiced buyer joins the team. They can change in a second without any advance notice. They can change based on how a supplier responds to a customer’s needs. Unfortunately, unless sellers respond properly, they send a critical message to customers that they don’t really understand them, their needs, or the games they play.
The concept of the economic buyer is an abstraction that has little parallel with the real world. It’s a rhetorical device that gives selling organizations a false sense of confidence that they know how to respond to any given sales challenge. Backbone strategy is a more powerful way to conceptualize the selling process and to formulate an appropriate strategy to every selling situation. To be effective in today’s work, salespeople need to learn to assess and properly respond to each of these behaviors. That’s what Backbone strategy does.