The 4 Universal Stages of the Client’s Buying Process
There’s a massive disconnect between where clients spend time in their buying process and where firms spend time in the sale. In this episode, we jump right into the void.
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Jeff McKay: I am so excited to talk about this topic, Jason.
Jason Mlicki: What topic are we talking about?
Jeff McKay: We are talking about your ideas around the buying cycle.
Jason Mlicki: Oh, okay, gotcha. Gotcha.
Jeff McKay: And the work that you’ve done around the four universal stages of the buying cycle. I think buying cycle is such a today word, which I think is a very positive thing, and as you and I know, marketing has just flipped because of the internet, and buyers access to this. One of my favorite numbers comes from Gardner, and everybody has some number like this, that X percent of the buying cycle is completed by the time somebody calls a firm, and it’s all done online. The figure that really jumped out at me, was one that Gardner put out this past year, that 85% of a buyers’ journey will be completed by 2020 with no human interaction. 85% of the buyers’ journey will be completed without any human interaction by 2020. That’s only three years away, I guess two years away when you think about it.
Jason Mlicki: Yeah.
Jeff McKay: With that as a backdrop, jump in.
Jason Mlicki: I think the interesting thing about it, is that whatever number you put on that, what I find interesting about this, since people starting putting numbers on that was … It was as if you had no control over that. You couldn’t control the 85%, that you were sort of a passive bystander in the client’s journey to that moment, and then you should deal with it. Of course, that’s not true, and I don’t think anyone was saying that, but that’s just the way it always came off to me. Just kind of this idea that, “Well, man, they’ve already made up their minds, so you’ve either won the deal or lost the deal.” I think that, to me, that’s the essence of where marketing should be. Right?
Marketing should be about what are you doing in the 85%? What are you gonna do to educate the market on their needs, and present new ground, new ways to solve those needs or problems, and then how are you gonna enable the client to vet you to determine that you are the viable partner? So that, when they start the conversation, and they’ve been through that 85%, that you’re the leader. It’s your deal to lose, or whatever.
When I look at across professional services firms, and I wrote this in one of the posts around this, I just see a lot of firms where their whole revenue generation model doesn’t really kick into action until the moment that a client has defined the problem, and now is searching for the solution provider to solve it. It’s almost as if they don’t want to enter the conversation until that moment occurs, or maybe falsely they believe that they can, in a one-on-one dialogue, shape that conversation still. I think that’s really becoming very hard. I think it’s just clients see your point, the 85%.
Clients don’t want to necessarily have these intimate conversations unless you’re already an esteemed trusted advisor. I think that there’s just a misallocation of resources a lot of times in a lot of firms, and they’ve got a lot of resources tied up in that moment the client initiates the conversation. And if 85% of the decision’s been made, and now you’ve got 85% of your resources in the remaining 15%, how are you gonna win that?
Jeff McKay: I find this fascinating. Go deeper on that. Let’s jump into your kind of conceptual model.
Jason Mlicki: Yeah.
Jeff McKay: Then we can kind of build out from each one of the stages and what’s behind it.
Jason Mlicki: Yeah, so I’ve been thinking about this probably my whole business career, in reality. If I were dialed back, all the way back to when I was in business school 20+ years ago, or 20 years ago, and I was taking consumer decision classes, and service mapping classes, and trying to kind of understand this, I’ve written about it on and off over the years. I don’t but profess to claim I’m an expert on decision making models. I guess I’ve just come down to, it seems to me that there’s this four logical phases, four conceptual phases that a client has to go through to make a hire.
The first phase is really the learning phase. It’s just that constant learning that I think every organization goes to, where you’re just trying to frame issues and problems on the marketplace. Usually, you’ve got a clearly defined problem that you’re trying to … you’re just trying to figure out how to solve, and you’re actively searching for answers to that, so you’re just scanning the marketplace aggressively, proactively trying to figure out how to solve the problem. So you say I have an employee retention problem, and I’m actively looking for answers on how to solve that. Or, you’re scanning big broad issues, and you’re looking at the marketplace, and maybe the big broad issue is, we want to attract more Millennials, and we’re not really sure how. So you’re trying to just get your head wrapped around this big broad issue, or even to step it up to a much bigger issue, maybe you’re thinking about adaptive learning, or some of the technologies that are being used in the hiring process, and how to apply them. So big broad issue.
You’re just trying to learn and understand this. And so the buyer in that stage is really just trying to classify the problem, or understand the issue, and then think about how they think they’re gonna solve it, or how they’re going to pursue the opportunity in the context of their own business.
Then there’s a moment that occurs somewhere in the learning process. I like to say there’s sort of two ways this happens. Path number one, is they start to have a fuzzy answer in their head, and they have a fuzzy picture of their desired future reality. That fuzzy picture has been shaped by the thought leadership they’ve consumed, be it published by an individual firm, or a collection of firms, or by third-party publication, as you and I were chatting about Harvard Business Review, or whatever.
Then there’s a second path they might take, which is where they have a moment of revelation, where they read something, and it’s just so startling to them that it presents the solution in such a way that they’d never thought about it before, and a light bulb goes off. Either way, the next step that the client is taking is into this vetting world, this world of, “Okay, now I’ve either identified a handful of solution providers,” there’s three or four firms, or three or four entities that can help me, and now I’m gonna start vetting them. I’m gonna start diagnosing whether or not this firm, this organization, can solve my problem.”
They’re asking those questions of, “Okay, have they structured a service or a product designed to solve this particular problem? Is there proof that they’ve done it before? Where are the case stories, and what do the case stories tell me about the types of organizations that they help? Who are the people? Who leads this practice? Who leads this service or this practice area, and what is their experience, and what is their depth?”
I would argue that those first two stages, learning and vetting, that they are the 56%, or the 85%, or whatever number you want to put against it. That those are the stages that happen without any human contact with the sellers at this point. So it’s not until they’ve gone through that whole journey, are they gonna maybe pick up the phone and say, Now let’s talk to some of these folks,” more often than not.
Jeff McKay: Yeah. The thing that fascinates me, is cause and effect associated with this. I often wonder, when thinking about marketing strategy, the need for taking a step back. That step back is from your first phase, that learning, right? There’s something that is the catalyst for the learning. In other words, what prompted someone to key in those search terms into Google?
You alluded to some of them, but it seems to me in my experience in business, so many people are just heads down working, working, working, and they are not searching to solve problems that they don’t necessarily know about or have. Talk to me a little bit about your thinking of what happens upstream of the start of this model.
Jason Mlicki: It’s a very interesting question, really interesting comment, too. I mean, I think that … I tend to believe that there’s two ways that people consume thought leadership. Way number one is what you described. It’s that active Google search that says, “I’ve got this problem, and I’m looking for advice on how to solve it,” and it’s very active.
Way number two is passive. I think any good business leader wants to stay current with what’s happening in the marketplace at all times. They have sources of learning where they’re scanning for insights on what is going to affect or disrupt their revenue model in the future, or opportunities to enhance their revenue model in the future, right?
Jeff McKay: Mm-hmm.
Jason Mlicki: They’re scanning, and so for that … If you’re thinking on the web, one of the simplistic models will say is, people sort of scan social media just to look for ideas of what to read, and maybe they use search to actively find solutions. So social is passive, search is active.
I would argue social is not the best place for them to … I think they really probably go learn from trusted third-party publications, Harvard Business Review, maybe select firms that they’ve signed up for newsletters. I see this in our own data streams, right? There’s people that sign up for our marketing newsletter, who’ve read it for years. Have read hundreds, two, three, five hundred articles over the course of years, and have never initiated a conversation with us. I just presume we’re a source of passive learning for them. They read the things that we write, and they say, “Oh, that’s interesting.” It just gets them thinking, it gives them a thought to process.
I guess I don’t necessarily subscribe to the belief that everyone’s heads down. I think that there are moments of revelation where everybody … There’s a period of time where they’re going to step back and lift their head up and look around and say, “Where are we? Let’s take stock of where we’ve been and where we want to go next,” and they’re paying attention to what’s being talked about, or what’s being written about.
Jeff McKay: I think that there’s always this desire on the front-end of the learning, and I really do think it’s important to understand where it’s coming from, because every person in every company is somewhat different, right? Some are driven by a real tangible pain that they waited too long to address or refuse to see, and now they’re in crisis mode. Others are much more proactive, and they see competitive threats, or they’re just always looking for competitive advantages, as you described.
I think different buyers go about looking for those ideas for very different reasons, but I think something happens before people get online and start searching. And I think that’s just my point. I make it because I don’t have an answer. I just am mindful and aware that it exists. And when you and I break the code on that, right?
Jason Mlicki: Yeah, well, yeah, that’s a good point. I think … I guess you could kind of pull this all the way back to the mindsets of the leaders in those organizations the way you’re describing them, right? On the one hand, you have the mindset of the leader that’s sort of always pushing the pedal saying, “What’s next?” Scanning the horizon for opportunities to create more value to grow faster. And then you’ve got the leader that maybe is a little more conservative, that is scanning the horizon looking for threats, and trying to abate risk to their current model. Maybe there’s two models there.
Jason Mlicki: We’ve only been through half the model so …
Jeff McKay: All right, let’s keep going. Onto the third one.
Jason Mlicki: The third and fourth stages, so if you think about this as an arc, a rainbow arc let’s say, the first two stages of course split the left side, and of course then the right side is … the third stage is discussing, which is I think where those conversations start to happen. So, out of the vetting process emerges a handful of firms, or a handful of potential partners that the client says, “We should talk to these folks.” That discussing phase is the act of doing that. It may be informal, it may be casual conversations with just a handful of providers. It might be too formal, meaning that there is a very strict issued RFP with all kinds of legal ramifications to it, that force all kinds expensive resources in order to get the conversations to happen. Or there may be something in between, some kind of RFI that asks for some answers to some questions. But either way, there’s an informal or formal process that emerges for the client, potential client, to engage dialog with the firms that they think can help them.
The fourth and final stage is the actual physical hiring window. That sort of is governed by what comes out of the discussion process. The discussion process says, “Well we wanna work with this firm, now let’s finalize proposals. Let’s negotiate terms and conditions. Let’s talk about schedule start dates, scopes of work, ownership of outcomes, whatever else needs to go into the negotiation process depending on the scale of the investment or the nature of the investment.”
And the thing that I kind of comment on in those last two stages, is if you think about, and I mentioned this at the onset, a lot of professional services firms, they have a lot of resources tied up in those two stages, those stages of discussion and hiring. In fact I’ve seen in a lot of firms, that the whole marketing function really is built to support the things that have to happen in the hiring window. The development of the physical proposal that the client is going to review and approve. But never read, by the way.
Jeff McKay: Thank you for saying that.
Jason Mlicki: And the of course, you know, the execution of the contracts. I tend to see it as a little bit of a misallocation of resources at times. I think the firms kind of put a lot of resources on the back half of this, and it’s sort of logical in a way. You’re putting resources as close to the money as you can, right? So once the client is ready to hire, then that’s when you pull out your resources, right? Except that I think that if the buyer’s decision is really made up in those first two stages, before the conversation occurs, then you’re putting yourself in a situation of disadvantage.
Jeff McKay: But if I’m gonna spend millions of dollars on some kind of technology, and it’s gonna have tentacles into finance, and IT, into sales, a really true kind of complex sale, is that the type of decision that gets made? You know stages one and two?
Jason Mlicki: That’s a great question. I think that it’s very difficult to imagine a reality where you would not apply substitutive resources against one and two in order to make a determination of what your options are. Unless your options are fairly small and binary, right? Like if you’re like, “Hey, we need an enterprise great CRM. Hmm, our options are Sales Force and Dynamics, and maybe something else.” But you’re right, if your options are really limited, then there’s not that much learning or vetting to do, and you’re gonna pretty quickly jump to discussing and hiring. But if your options are broad and varied, and they often are, then you have to find a way to slim down the options that are in front of you. Right?
Jeff McKay: Yes.
Jason Mlicki: If you’re looking for an organizational designing consultant because you think you have a structural problem with your organization, there’s a wide range of options. So I think you’re gonna put a lot more resources against learning and vetting, because to your point, it’s a high risk, high expense scenario. Hence, you’re gonna take the time as a buyer to really make sure that you’ve brought the right potential partners to bear. If you’re a good client. If you’re a bad client, you send a blind RFP to 40 consulting firms and ask them to send you a … to do all the work on your behalf, right?
Jeff McKay: Yes, yes.
Jason Mlicki: And so as the seller, that’s why you run away from those. Because they’re trying to basically shift all the burden of costs to the provider.
Jeff McKay: All right, so Jason, you say there’s kind of four universal stages. The first one is learning. That’s realizing you have a problem or ambition, and you’re looking for help in addressing it. You start looking for help and you find a litany of, depending on your market, of people that could help you, and you need a way to reduce that group down to make a smart decision.
Jason Mlicki: Yep.
Jeff McKay: And then once you’ve kind of vetted those, that’s vetting. And the third one, once you’ve vetted them, is all right, let’s have the human interaction. Let’s go deeper into the detail. Let’s talk. Let’s have a conversation about it. And then the fourth one, after we’ve done that, we have a set of criteria, we have a gut feel, we know who we wanna go with, let’s hire them, and then we get into the nitty gritty of negotiation, working with procurements, and all those formalities that go with forming a relationship. So 56% of the buying decision happens on those first two, learning and vetting. I guess that supposed 44% is spent on the second two. How are firms investing in those four areas, or those two halves in your experience?
Jason Mlicki: I think it depends on the firm. I think as you rightly pointed out, it depends on the nature of the firm and what it is they’re selling. Certainly what I see on the side of architecture and engineering firms, is they probably invest upwards of 90% of their resources on stages three and four. On sort of the discussing and hiring phase. I see a lot of firms that have built very robust proposal management teams whose job it is to produce proposals to submitted requests. Sometimes there are filters on what they’re going to propose on. Saying we’re gonna propose on this but not on that. Other times there aren’t. Other times it’s pretty much just an open call.
However many proposal resources we have, just slam them out there. I think if you look at the fourth stage, that stage of hiring, I would actually argue I think that that stage begins the moment a proposal is issued. So you could argue there still is a bit of competitive window at play there in some firms in some situations, right? Where the client has requested multiple proposals from multiple providers. And they’re still sort of formalizing a decision. That’s not always the case. But with some cases it is.
Jeff McKay: And we probably need to wrap up here. I think the thing that has not changed in professional services, is that this is very human interaction, and people want to be comfortable with the people that they are sharing these most intimate problems or ambitions with. And to the degree that marketing can continue to build awareness and relevance for the firm, and by that I mean credibility, they are fulfilling a very important role. But when we put ourselves in the shoes of the buyer, we wanna make a smart decision. We wanna minimize the risk. We wanna feel good about that decision because we don’t wanna lose our job. We don’t want to fail.
So to the degree we can accomplish that awareness and relevance by helping buyers have direct interaction with the provider, the partner, the expert, whatever that case may be, but not doing it in the old fashioned way that costs utilization time, that doesn’t have a high ROI that’s not scalable. I think that’s probably the sweet spot for us. ‘Cause we get there early, they get to see with whom they’re going to work, and they’re very clear on how they can help, and I think what I heard you say is the earlier you’re involved, the more control you have, and the more you get to shape the solution to solve the issue.
Jason Mlicki: Yeah, I think that’s certainly the goal of thought leadership. If you’re going to compete on ideas, then your goal is to not only provide the solution to the problem that the client has defined, but actually to shape the very nature of the problem in their mind. Which is why thought leadership exists at the farthest left point on this arc, because you’re trying to get the client to redefine the nature of their problem at the earliest stages of their journey. So by the time they enter the conversation with you, their predisposition on what the solution looks like, has been largely defined by your organization, not by another organization.
Jeff McKay: Um-hm, um-hm.
Jason Mlicki: So you’re just much more likely to win the engagement ultimately, ’cause you’ve set the agenda for what’s being bought.
Jeff McKay: That sounds like a good place to end. I love this model. I think you’re definitely onto something, and I think you have a very informed client centric perspective.