29 Feb More Decision Makers. Less Decisions
Last year (2018) the average number of people involved in a business purchasing decision rose to 10.2 [Corporate Executive Board research, best known for The Challenger Sale, and now part of Gartner]. This is the highest recorded to date. The change is happening quickly – up from 5.4 in 2014 – and it’s having a massive impact on the enterprise sales & marketing landscape.
The problem with this escalating decision-making group size is the greater the number of decision makers, the lower the likelihood of ANY decision happening. Single decision makers make quick decisions. Two people struggle to see eye-to-eye. Three people improves the likelihood of a decision because one person becomes the arbitrator. But after that, it gets tricky. By the time you have 10 decision makers, you’re in a very complex territory.
As a result, the likelihood of a purchase decision being made has declined to well below 30%. If your organisation typically wins one in four deals versus your competition, your actual opportunity closure rate is less than a third of this figure – around 7-8%. That’s really bad news – cost of sale has spiralled dramatically (up 2.5 times) and deal closure times have increased significantly.
One key issue is the lack of direction during the decision process. As more decision makers join the debate – procurement, finance, legal – so the decision-making process becomes extended and watered down. The more diverse the group, the harder it is to agree. Diverse groups end up choosing to avoid risk and save money – the two outcomes almost all stakeholders find desirable. They achieve this by agreeing to (i) study the problem further, (ii) table the discussion or (iii) buy the cheapest, simplest solution.
None of these are favourable outcomes for enterprise sales & marketers…
To fix this problem we need direction and momentum within the deal. Engaging all the decision-making team is key (and marketing plays a pivotal role here, engaging out-of-reach contacts and sustaining engagement continually), but engaging the C-Suite is vital. If there is no executive sponsorship for the opportunities in your pipeline, you are wasting 70% of your money and time on deals that will never get a decision. The C-Suite has final sign off on 64% of purchase decisions (Google’s B2B Path to Purchase Study). They are, therefore, pivotal for deal momentum as well as securing a final decision.
As we develop our Account-Based Marketing plans, we need to remember that not all decision makers are equal. And the absence of a project sponsor means your closure rate is only a fraction of your win rate. With this in mind, what action can we take to address this challenge?
For Sales, review your deals and ask whether each of these projects has an executive sponsor. If they don’t, work with your contacts to create a business case to secure C-Suite sponsorship for the project.
For Marketing, consider how can support active sales opportunities. Create a C-Suite engagement plan you can activate when a target account becomes active. This is not just Account-Based Marketing; it’s Opportunity-Based Marketing within your Accounts.
I hope this article has stimulated some thoughts and ideas. I welcome your comments. If you’d prefer to message me direct, please connect with me and reference this article.
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Tom WhatleyPosted at 17:14h, 16 June
Thank you! Really appreciate the feedback.