Want to negotiate a winning deal? Learn the four basic buyer types and leverage the Customer Experience Pyramid to give yourself the winning edge.
The Customer Experience Pyramid
Companies spend $8.7B annually to improve their customer experience, but they don't always see the results they want. This even occurs when companies develop their process and systems to the point that a customer should have a positive feeling by the end of the transaction/negotiation. Why is it that sometimes CX pays off and other times it doesn’t?
One of my favorite tools for thinking about pricing and deal negotiation is the Customer Experience Pyramid from Outside In, a book by Harry Manning and Kerry Bodine. It simplifies how a customer perceives a company’s products and services by categorizing their emotional connection with the company into three sections.
The idea is that by understanding how a customer perceives the delivery of your product or service, the better equipped you are to offer them the a deal structure that suits them.
Take a look:
- At the base of the pyramid are the customers who buy your products and services because they simply help accomplish their goals.
- At the second level of the pyramid are the customers who buy from you because you make it easy for them to accomplish their goals.
- At the top level, customers value the entire experience they have with your company while accomplishing their goals.
It stands to reason that, in general, the higher on the pyramid your customers’ experiences are, the better your negotiation power. But this may not always be true. Why? Because different buyer types behave in different ways based on their decision criteria. Delivering a great customer experience may not be what your customer is after.
With this in mind, Holden Advisors goes one step further. We coach sales teams to understand four distinct buyer types, who each place varied importance on the value of a strong customer experience. For example, if you have a buyer who primarily makes their decision based on price and is not concerned with a differentiated experience, the level of customer experience will likely have little impact on the negotiation. In this case, the only thing that matters is the price. So, the real trick is knowing your buyer type and focusing on their decision criteria.
The Four Buyer Types
- Relationships Buyers. These are transparent, high-trust buyers who value differentiation and the expertise your company brings to the table. Delivering a strong customer experience will give you an advantage with this buyer type.
- Price Buyers. These buyers tend to understand the current market dynamics and consciously decide they are not interested in differentiation. They often know exactly what they want, and their goal is to get the best price for the commoditized product or service. Therefore, you stand to gain little to no advantage in ascending to the top of the pyramid.
- Value Buyers. These buyers often have a high level of expertise in your product or service. As a result, they are more likely to switch vendors when they stand to gain more value from someone else’s offering. Given this, if your relationship is at the top of the pyramid and it contributes to the total value of your product or service, you will have more leverage when negotiating with a value buyer.
- Poker players are the wild card when considering the impact that customer experience provides in a negotiation. The key here is to try and understand which of the other 3 buyer types they REALLY are and play your hand accordingly.
Here’s an example
Imagine you are a company that sells computer network routing systems. Most of your customers are big businesses with IT departments. Those IT departments know what they are looking for, and they know what it should cost. So, if you deliver the right product at the right price, they’ll buy. These customers are Price Buyers. The customer experience doesn’t matter to them because they are searching for the lowest price that meets their requirements.
On the other hand, you might be a company who sells network routing systems to small businesses with no IT department. They know they need something to connect their computers, but they have no idea what it costs to purchase or implement. So, they’ll look to your expertise to provide the best solution and welcome the added customer experience to make the implementation as easy as possible. These are Relationship Buyers.
As you can see, it doesn’t necessarily pay to ascend the customer experience pyramid unless your customer needs you to.
Determining Your Customers’ Buyer Type
We’d love to teach you how to successfully identify your customer buyer type and give you negotiation strategies to match your goals. Learn more about Negotiating with Backbone.