A sales rep at a medical equipment company recently told me he lost a deal for an MRI machine, not to another MRI competitor, but to a “parking lot.”
When I asked what he meant, he said the hospital executive he was working with decided they could improve patient throughput, satisfaction and revenue if they spent $1 million updating their parking lot instead of purchasing a new MRI machine. The story demonstrates that when executive stakeholders are involved in purchase decisions, there are many more considerations that enter into the buying process — and far more “competitors” than you might realize.
This raises a critical question concerning business proposals: What does it really take to create the urgency for executive-level buyers to purchase now? I’m talking about decision-makers who might not care about how your solutions work, but want to see how those solutions can drive business value.
The “why now” moment
The moment where executives decide or defer is what I call the “why now” conversation. My company just completed new research aimed at identifying which type of story is most effective at moving executive buyers to act now.
This research has a precursor study we dubbed “executive emotions.” The big takeaway from that simulation? Executives are 70 percent more likely to make a risky decision — like leaving their status quo — when their current situation is framed in terms of what they might lose by not switching instead of what they might gain by undergoing a change. That study demonstrated the impact of loss aversion, a principle important to Prospect Theory, which holds that humans are two to three times more likely to make a change to avoid a loss than to do the same to attain a gain.
This study was the foundation of our next round of research on the “why now” moment. Here’s how we set up the study.
The best “why now” message
My company, Corporate Visions, collaborated with Dr. Nick Lee, a professor of marketing at Warwick Business School in the U.K. The study, conducted online, included 312 executive participants, all with decision-making responsibilities at companies with $100 million or more in annual revenues.
We asked participants to imagine they were executives at a food processing company that packages vegetables. The company has traditionally served vegetable products using large-scale equipment that can process several tons of vegetables per hour, but now wants to break into organic and specialty food production, a promising growth market.
Participants were then split into six different groups, each receiving a different message, or pitch, from a vendor that makes smaller-scale equipment designed for the specialty food market. The pitches included different elements of the following:
- Business issue: External factors and business initiatives
- Loss: Details about your loss to be avoided
- Gain: Details about your potential positive gain
- Unconsidered needs: Introduces an unsuspected threat
- Heavy ROI: Hard numbers with a detailed ROI
- Change story: Business change story with a light ROI
After hearing their respective pitches, participants answered a series of questions designed to assess several areas critical to the “why now” moment in the buyer’s journey (such as confidence, urgency, importance to future growth, and likelihood of purchasing now).
The test condition that was the most effective message across all areas assessed had the following three-part structure:
- Present a business issue rooted in external trends and factors the executive will identify with and connect back to their strategic initiatives;
- Introduce “unconsidered needs” — unforeseen problems, challenges or missed opportunities your prospect has underappreciated or doesn’t yet know about that create flaws or limitations in their current approach;
- Provide a solution story with heavy ROI justification, demonstrating specifically how you can solve the needs in a way that positively influences revenues, cost savings and operating margin.
Importantly, the five other message conditions tested were highly volatile in terms of how they performed across the assessment areas. Only this formula consistently performed the highest against all key questions.
To view the research in full and get an example of the winning “why now” message framework, go to http://cvi.to/WhyNowMoment
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