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116: Three Buyers
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Hey, 👋 Scott from The Sales Mastermind here. Today’s edition only takes 3 minutes. Every business has three distinct buyer groups, depending on its stage. Today we’ll cover:
Storytime In 2010, I was in Sydney and saw a talk by a prominent business builder. He talked about three different types of buyers every founder needs to be thinking about:
One of the other panellists that day sold a headband with speakers specifically for runners to listen to music during their run (pre-airpod days). Their three buyers were:
Another real-life example could be an end-to-end video production agency (like my old flatmate’s business).
Three Buyers To go further on the idea about the three buyers, every business needs to think about:
You’ll notice I only mentioned those who will buy from you. I didn’t mention all stakeholders. That is because your product must first appeal to economic buyers as defined by Miller-Heiman’s Strategic Selling Framework: The Economic Buyer is the person who can commit funds to a purchase. They can say yes when everybody else says no and say no when everybody else says yes. They sometimes delegate buying authority for purchases under a set dollar amount. Only after that do we care about appealing to other stakeholders - especially those who use or interact with your product but have limited influence on the buying decision. Customer Buyers Without paying customers, whatever you’re doing is simply an expensive hobby, cosplaying as a business. And at the beginning of a business, all you need is paying customers - bonus points for customers who pay enough to cover both the cost of delivery AND a little more to turn a profit. Ultimately, at every stage of business, you’re chasing customers, and long-term sustainability comes from serving your chosen customers better than anyone else can or is willing to. But customers will only buy a limited number of your products or services. And a healthy business wants any given customer to contribute only a fraction of their revenue, or face systemic risk and sleepless nights. Partner Buyers Typically, you’ll want to start focusing on partners when the business is through the first valley of death, but before exiting the second valley of death. In practice, this means after the business is profitable enough to support the wages of all individual contributors, but not yet profitable enough to support all needed departmental leaders. Partners are those individuals or businesses who can either buy 100+ products from you or facilitate introductions to many, many customers. The first type of partner is a reseller or distributor who takes your product, adds some value, and sells it directly to their customers. Let’s call these VARs - value-added resellers. VARs are great because they pay you directly and, when done right, will buy lots and lots from you. And they carry some of the risk if it goes wrong. The other type of partner introduces you to many customers, and you are still responsible for selling to them. Let’s call these Introduction Partners (IPs). Appealing to both VARs and IPs is very similar to the Customer Buyers - having a great offer that your competitors can’t, or won’t, match. Acquirers Lastly, and most simply of all, we have acquirers, the business that will buy your business. Unlike customers and partners, acquirers only care about your offer or product to the extent it makes the business more profitable or defensible. Making a business appealing to acquirers typically takes 1-2 financial years, involves underinvesting in areas like R&D, and playing (legal) financial games to present a brighter financial picture than would otherwise exist. That’s why the decision to sell a business is a slow burn and requires true professionals to present it in the right light. Which buyer is next on your list to appeal to? Until next week, PS Did someone forward you this email, and it seems like something you want more of: Link to subscribe​ PPS You can find the back catalogue here, all 110+ newsletters: https://thesalesmastermind.kit.com/​ |
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I help founders who sell, but aren't "sales"people. Are you open to one hyper actionable sales tip per week, useful for your very next sales meeting and consumable in 4 minutes or less?
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