TFS 345: Who is The Economic Buyer of Your Services?
In this episode of The Freelancers Show, Erik Dietrich explains the term economic buyer and how it can affect freelancers and business owners. An economic buyer is the person within an organization who has the authority to purchase something. Knowing who your economic buyer is will affect how you market your product, for freelancers, this includes labor or services.
Starting with the most desirable, Erik lists the main types of buyers’ situations. The first is the autonomous buyer situation. A lone buyer makes the decision about purchasing a product. Erik shares the example of a manager taking the team out for lunch. They didn’t have to consult anyone and decided to do that on their own.
The next situation and the second most desirable after the autonomous buyer situation is the buyer and research assistant/influencer. For this situation, Erik uses the example of the CIO or director of engineering choosing the new IDE for a new project. They may not care about the finer details or don’t have the technical know-how or time to do the research, so the pick someone to do the leg work and allow them to advise them on the purchase.
The next situation is the buyer committee. In this situation, the committee debates the purchase and will eventually make the purchasing decision. Erik shares an example of an organization overhauling its website and wanting to get a CMS and starting a blog for marketing purposes. This involves IT and Marketing and has multiple paths to choose from.
The last and least desirable situation is the system/algorithm. The example Erik shares is the hiring process for a large organization. An interview is held by someone who has little or no authority in hiring, they are there to play their part in the system. The actual buyer would be the CIO or VP of engineering, who would sign your checks. They can’t be involved directly so they delegate to someone who delegates to someone else, leaving standing orders to fill a specific number of positions. The developer hired is as Erik puts it of no valuable than a stapler to an office manager, they are replaceable.
Erik explains the more you can talk directly to the buyer the more advantageous the situation is. He goes over examples of different types of economic buyers. The economic buyer you deal with will vary based on the size of the organization, the larger the organization the more vertically distributed the economic buyers get. The highest authority starts at the top and slowly trickles down, the economic buyers you deal with have varying names and degrees of authority.
Next, Erik explains what difference this all makes from a sales and marketing perspective. With a system/algorithm it is very difficult as each process differs, so marketing to a system takes a lot of effort and time for each organization. With a buyers committee, it is possible to train yourself to address rooms full of people and maintain more control over the process. Buyers and research assistant/influencer situation is even easier with only two people to convince. The best situation is dealing directly with the buyer, with only one person to get to know and convince.
Erik gives advice on how to go from appealing to the whims of a system to working directly with the economic buyers. First, he suggests switching things up and marketing to smaller organizations that don’t have a system. Doing this could help you the credibility needed to work directly with economic buyers higher up in a larger organization.
Another way is by looking at the four-step problem-solving solution. This is where you diagnose a problem, prescribe a therapy, apply the therapy and finally, reapply the therapy. Start by looking at your context in the solution, most likely you are applying therapy. Knowing this you can work your way backward and find the diagnoses. The diagnoses made by the economic buyer can help you understand what the buyer cares about.
Another suggestion he gives is working your way up the value chain, working through each level of economic buyer, finding what the next level cares about and marketing towards them. Or, he suggests selling smaller offerings that will change up your economic buyers. Finally, he explains the first step to any of this is by thinking about who your economic buyer is, get your wheels turning on how to reach those people. Just doing this will help you market more efficiently which will lead to more work and help you be better in what you do.
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What is an economic buyer?
An economic buyer is the person within an organization who has the authority to purchase something
What is the most desirable economic buyer situation?
The autonomous buyer
What is the least desirable economic buyer situation?
What is the first step to reaching your economic buyers?
Think about who your economic buyers are.