Buyers come in all types. From the bargain-hunting first-time buyer who doesn’t consider the value your services bring over time to the strategic relationship buyer that values you for being you. Problem is, how do you tell buyer types apart?
Understanding your buyers is important at all stages of the client relationship. In the early phase, when you define your market, understanding your buyer helps you design your marketing efforts to be most effective. Later on, as leads turn to prospects, it’s important to understand which prospects you want to invest your time in or which ones you can simply write off.
Based on my conversations and interviews, many freelancers and agencies simply seem to attract the wrong crowd. The buyers that eventually approach them just aren’t a good fit for various reasons.
Let’s look at why that happens.
Some Buyers Are Purchasing Your Services for the Wrong Reasons
If a buyer’s decision to engage a consultant is based on faulty reasoning or the wrong information, their expectations will be unrealistic. But this is also to be expected. After all, you are, in the role of the consultant, the one with the know-how.
Some Buyers Have an Unrealistic Idea of What the Outcome Will Be
Most engagements require giving and taking. You as the consultant bring specialist and expert knowledge and insights from other organizations you have consulted with. Your client is the expert regarding their company and its needs. You and your client need to combine your knowledge to get results.
Consultants need to bring humility and cannot assume they already know the solution, despite having worked for similar companies. Likewise, the client needs to be humble in return and pay attention to the expertise the consultant brings. If things go well, they engage in a mutually respectful conversation and collaboration.
Many Buyers Cannot or Fail to See any Reason to Value the Outcome
Most buyers have no idea what the financial value of a successful agency, client or freelancer engagement is. As a result, they will value tenders based on gut feeling alone.
You might think “So what? We aren’t rational beings anyway.” You’re right. We aren’t as rational as we think so decisions are usually based on feelings. But facts can influence those feelings.
In the absence of facts, emotions play a critical role. To the uninformed buyer, the smallest details will shape their decisions. From how coffee is served to how someone presented themselves.
The Four General Buyer Types
Depending on why a buyer has contacted you, their idea of desirable outcome and its perceived value, they can be divided into four buyer types.
- Price buyers
- Convenience buyers
- Value buyers
- Relationship buyers
Let’s have a peek at each of buyer types and what distinguishes them.
In the book Implementing Value-Pricing (paid link) by Ron Baker, you can find the following chart of the four buyer types. I’ve redrawn and modified it somewhat to better fit the audience of this blog.
Price Buyers are Bargain-Hunters Who Care For Nothing But Price
Just like people storm to the closeout sale at the department store, price buyers only care for one thing: price.
According to Baker, they make up 5-15 percent of the clients of a professional services firm. Since they only care price, they’re not very loyal and will abandon you as soon as someone offers a (in their view) better deal.
These clients should be offered a bare-bones version of your offering. You will find countless examples of how this can be done. Apple sold the iPod Shuffle, which didn’t let you choose which song to play, to its most price-sensitive buyers. Limiting services available is another way to reduce value. Taxi companies use “surge pricing” as a way to handle price elasticity and sell to the cheapest buyers. Self-service is another way to cost-effectively serve price buyers.
The only reason you want to keep these clients is that you have no better clients, you’re contractually bound or you hope to eventually turn them into one of the other types of clients.
Convenience Buyers Are Willing to Pay Extra to Get What They Need When They Need It
If money is the primary concern of value buyers, then for convenience buyers it’s time. As we discussed in the article about “nuclear events,” price sensitivity can be very low if matters are urgent. Since they’re mostly driven to find who can solve their problems the fastest, they’re not very loyal but highly profitable.
Focusing on convenience buyers isn’t a bad strategy but it has risks. Just like lightning strikes, there’s a degree of randomness as to when they happen. However, seen over a ten year period, the average number of strikes is pretty much the same.
Value Buyers Shop Around But Consider All the Value Offered When Comparing Prices
These are the buyers who diligently compare all the offers available and make an informed choice. Often to the chagrin of everyone around them who’s constantly consulted: “Buyer: Should I buy A or B? Friend: Buy B. Buyer: Why B? A has this new feature which I might need. Friend: Never mind…”
If someone has ever presented you with a spreadsheet of buying options and rated them using categories of value or features, then you know a value buyer. Thanks to their inquisitive buying style, they are fair buyers as they will consider all the benefits of working with you over another firm and strive to make an informed choice. If you’re the best option, they will pick you.
However, should your competitor start marketing themselves specifically to companies of their type and offering competitive value, there’s a real risk they take them up on the offer.
Relationship Buyers Will Stick With You Even in Stormy Waters
These buyers value working with you for who you are and how you do things. They appreciate your unique services and culture. They value feeling valued and they’re willing to pay extra to count themselves among your clients.
If you take care of your relationship buyers, they will take care of you and stay around even when things go bad. The downside is that it can be hard to keep these buyers are your business grows. You will need to rotate staff off projects and accounts and hire new people to manage client services.
I’ve talked to many agencies that have lost relationship clients as they have grown. The clients being used to the type of service that only a small shop can give or the personal service of a specific project manager or account person.
Using Buyer Types to Manage Clients Better
I’m sure you’ve already started thinking about your existing clients in terms of price, convenience, value and relationship buyers.
A useful exercise can be to compile that information in a spreadsheet or tag the clients in your CRM (customer relationship management) system.
This is important since what type of buyer they are influences how you manage the relationship. By considering their type, you can get better at meeting their expectations. You can even design specific programs, processes or actions based on buyer typing.
All that works for the clients you already know. But what about prospective clients?
6 Discerning Questions that Help You Determine What Type of Buyer Your Prospect Is
You may want to make buyer type identification a step in your prospect qualification process. The best way to determine a prospect’s type is to ask questions and listen carefully. Here are some example questions that reveal important clues regarding buyer type and behavior. It’s important you weave them into a conversation and don’t make it feel like an interrogation.
Remember that it’s rarely meaningful to ask someone to speculate. It’s better to ask about things they know and then draw your own conclusions.
- Why did you choose to contact us? This tells you whether the price was a determining factor.
- What other companies did you consider? Which ones did you contact? Which ones did you decide not to contact and why? This will reveal whether price or value matters. Also, it tells you what the client considers important.
- What are your options besides engaging us to work on this? This will tell you about the value of having the problem solved. It will also reveal something about whether this is a one-off engagement or whether they want to work with you over time.
- What is your timeframe for this? This gives a clue as to the urgency and will help you glean whether they’re a convenience buyer.
Finally, present a project you’ve done along with the price marked up 20%. Focus on their reaction. If they seem immediately taken back, follow up. If they ask questions pertaining to what the project involved and what was included, consider it a good sign.
Conclusion: Understanding Buyer Types Makes You a Better Marketer and Salesperson
While buyer types might feel somewhat generic and shoe-horned, they are a useful way to think about clients. It’s wise to consider buyer types as early as when you define your marketing strategy. Done right, considering buyer types can help reduce the risk that the people who approach you are of the type you want to work with, and not the ones you’d rather avoid.