Understand your customers’ buying process

If you want to be a bad product manager, assume that if you build a great product, getting people to buy it will not be a problem. Just figure out what needs there are in the market, design a product that meets those needs, and the money will just roll in.

If you want to be a good product manager, understand your customers’ buying process and factor that in to the overall design of your product. Yes, you must have a good product in order to succeed, but a good product alone will not lead to sales success. Without understanding the process which your customers go through to evaluate and buy a product, you may be missing crucial elements in the product or in surrounding elements — everything from sales channels to product support — which will impact potential revenue.

  • What budget is used to fund purchase of the product? Understanding where the money comes from within an organization is important because the budget for that area may be shrinking. For example, you may develop a fantastic service to help companies organize and optimize their in-person training, but if budgets for in-person training is being cut across the board, you’ll be facing an uphill battle no matter how good your offering is.
  • Whose approval is needed for the purchase? Depending on the type of product, and the amount that the product will cost, there may be other individuals who need to approve the purchase. For companies, it is standard that a manager has a certain level of signing authority, above which the individual will need to seek his or her manager’s approval. You may have designed a product which will improve the effectiveness of a company’s marketing efforts, but the price point may be such that it requires approval by higher levels of management. Those higher levels of management may have different priorities, questions, and timelines for approving such a purchase, so understanding those approval levels and their implication is essential to build your overall value proposition.
  • Does the purchaser have a different set of criteria than the user? Products for children are classic examples of this. Toddlers never purchase their own toys — and the purchasers (most likely parents or relatives) will have different criteria than their young users. Parents may look for criteria like durability, materials used, age appropriateness, and even country of manufacture; children may focus more on colors, shape, familiar characters, or unintended uses. (One can imagine an inner monologue of “I like this toy car because it’s black and it would let me pretend that I’m talking on a cell phone just like daddy.”) Purchase criteria need to be factored into the design, development, and marketing of a product to ensure that all elements of the product strategy align with the factors which will influence purchase.
  • Are the purchasers used to making this type of a purchase? Addressing an unmet need of a customer segment who has been ignored is a ripe opportunity for product success, though it presents new challenges in executing a sale of a type which may have no precedent. Maybe you have software that will help a company with their financial reporting obligations. The users of this software and the decision to purchase may come from a Finance Department, which may have no experience evaluating this type of software. Or, you may be selling a product which is a large capital expenditure to a group which is used to deciding on smaller operational expenses, and they may be paralyzed by the prospect of a large initial investment, regardless of its long-term benefits.
  • Are there other decision-makers which need to be included? Many companies traditionally have grown by selling the same products to more of the same customers, and also selling new “similar” products to those same customers as well. As products branch out to new groups within existing customers or entirely new customer groups, there may be new stakeholders for which there needs to be accounting. Imagine you are a product manager at a software company which traditionally has provided products to allow individuals with an organization to perform statistical analysis. If you now plan on launching an product to facilitate enterprise data mining of customer information, there may be a whole new set of individuals involved in the purchase process — those focusing on legal, security, and privacy — whom were never a part of the purchase decision for your other products.

There are a multitude of different factors which need to be accounted for when creating a product and setting it up for success. Identifying unmet market needs and meeting them is a crucial part of successful product management, but if the overall purchase process is not understood and accounted for, all of the great work which went in to developing an innovative product will be all for naught.

11 thoughts on “Understand your customers’ buying process

  1. Jeff – It continues to amaze me that organizations often believe the buying process is embedded in the sales process.

    As you state, “Understanding where the money comes from within an organization is important.” Product management and product marketing often misses there’s a “pecking order” or percentage of value for IT and personal buyers.

    In an Information Technology market, the buyer is looking at infrastructure, its management and the applications that bring value to the company and limit chaos and manual processes.

    Having knowledge of the Buying Value Chain, is critical. Just because you want to sell to the CxO, doesn’t mean your product has a high enough value in the “pecking order” of importance to matter.

    On the consumer side, it would be interesting to hear from other readers as to what they’ve learned.

    Nice Job!


  2. Ah, Jeff Lash, what a foine article you’ve written there. Building products that are easy to buy? It’s a lesson I remember every time I have to walk the long winding path to the cash register at Borders!

  3. Jeff,
    Thanks for the article! I’m new to the world of product management and your blog has been very helpful to me in understanding how to deal with the issues we face.
    Keep it up!

  4. Jeff, I completely understand the pointers you have thrown light on. However, I would like to know more about what should be the product design strategy when you have a big target market where your target customers have DIFFERENT buying pattern?

  5. I red your artical, It is very usefull, for someone who is looking for job, It will help me in answering some questions ,which facing me in my career.

  6. hello. i need some reports and articles about product manager, marketing etc. If you have something, please send it to me.

  7. Hi Jeff,

    I agree that the customer buying process needs to be factored into the product design. In your experience, how often do you see the customer buying process be ignored when developing the product?

  8. Hi Jeff,
    Good to read your words. I just start to learn product management and I searched the keywords product manager on Google. Your website ranks third. WOW!

  9. Jeff, could you please send me some reading materials in Internet product management by email? Thank you very much!

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