From previous articles, we focused on identifying the customer, what we can do for them, and the overall process on how they would find, analyze and buy our product. We’ve iterated our high level design with the customer, quantified the value created, and defined our competitive position.
Now we want to focus on how to sell to our customer so we need some additional information. It’s time to take a deeper dive into how our customer makes a decision (DMP) to purchase and who is involved in the process (DMU).
Understanding the Decision Making Process and Unit
The DMP is the decision making process and the DMU is the decision making unit. Understanding the DMU can help determine how to develop, position, and market our product or service. Understanding the DMP will help us determine the business model, pricing framework, and cost of customer acquisition.
The customer’s decision making unit can be very complex with many participants involved in the purchasing process including:
- Champion – Wants the end user to purchase of the product
- End User – Actually uses the product to create value
- Primary economic buyer – Primary decision maker signing off on spending the money
- Primary and Secondary Influencers – Subject matter experience, can influence the others
- Person with Veto Power – Anyone that can stop the purchase such as higher level management, a home owners association, regulatory entities, bargaining units, or unions.
- Purchasing Department – Trying to drive prices down even after agreement
- Compliance Officer – Legal and regulatory compliance
For example, think about something as simple as the purchase of a cell phone for your child. How many of the above DMU participants are involved in the process? It will be critical for the end user to gain value from the product, but there are a number of other people that could be involved in the decision to purchase the product. Customer intimacy will be required to know who is part of the DMU and how they will influence the decision to purchase.
“Your target customer almost surely has a decision-making group of more than one person.“
– Bill Aulet, Disciplined Entrepreneurship: 24 Steps to a Successful Startup
Key Questions to Ask
Can you identify the DMU participants for your target customer and the influence they have in the purchase process? Which ones will you need to interact with to develop your product or solution?
How about marketing your product, selling and installing your product? Is the DMU the same for all end users and next 10 customers in your beachhead market? If not, what needs to change? Remember, in a startup mode you want to sell to a single beachhead market that buys a similar product, with a similar sales process, and generates strong word of mouth in a tightly knit group. So it will be important that customers in your beachhead market have a similar DMU and DMP.
What is the decision making process that the customer goes through to make a purchase? Can you map out the exact process? Who are the key DMU players and influencers for each step in the process? Who are you selling to at each stage? What are their budget authority levels? What is the process for approval? How much time does it take to complete each step? How long does it take to go through the complete process? Can you eliminate or speed up individual steps?
Knowledge about the customer’s DMP shows that you understand their buying cycle, can identify hidden obstacles and deal breakers, and that you recognize the impact this information has on your business model, pricing framework, and cost of customer acquisition.
Bringing it all Together
Selling to the customer can be a complex undertaking with multiple players and many steps involved in the process. Understanding the customer’s decision making unit (DMU) and decision making process (DMP) will provide critical information for product development, competitive positioning and marketing strategies, and financial decisions including business model, pricing framework, and costs of customer acquisition.
Mike McCausland
Founder and CEO, Leadership Institute For Entrepreneurs
