There are two distinct categories involving buying decisions: the behind-the-scenes issues buyers must manage internally to get stakeholder buy-in for change and for going outside their status quo for a solution and the solution-choice issues.

We are all very familiar with the latter: that’s what sales handles so well. But sales does not handle the former at all:

• we are not there when buyers choose the Buying Decision Team, or the machinations of how they will work together;
• we are not there when the powers that be decide it might actually be time to resolve a problem that has been working well-enough;
• we are not there when internal politics get into gear and people jocky for position in re a new initiative or resolving an historic problem;
• we are not there when the decision is made to either use a familiar provider, or go outside to seek a new one, or do nothing.

To give you some understanding of the order of the steps buyers go through to make the above decisions, think about a time when you decide to purchase a new car, or a new house (or a new something). The very first thing you did was NOT seek out a solution or a vendor. Let’s walk you through the process.

1. consider that maybe, just maybe, your current situation isn’t good enough. Just a thought.
2. take a look around at the ramifications of the existing situation vs what a different solution would do to your status quo.
3. talk with your spouse, kids, friends – your Buying Decision Team. Is the status quo ok for a while longer? What would be important to consider in the decision: money? the time involved in figuring out a new solution? What do you do with the existing solution – keep it? get rid of it? how will you choose – do you need to do some research on the costs of having 2 solutions? And, what will go on with your daily lives when you decide to make a change? Is it a time issue? a money issue? a space issue? What is involved? And what criteria will be used to choose. What about the relationship issues involved? How does each member of the Buying Decision Team get weighted? involved? How do you know when you’ve got the right people in the team? How do you include those you’ve left out?
4. Figure out the costs (time, people, money, resource, political/relationship capital) in change. It’s easier to remain with the current situation – but is the status quo too costly? Is the cost too high to make a change? How do you and your decision team go about assessing your internal costs? And whose needs are weighted higher than others? How will you know when one of the Buying Decision Team members is resisting – and how do you all handle that?
5. Figure out all of the criteria that will have to be met to keep everyone happy. Everyone. Including your bank.
6. Once everyone has agreed to
   a. changing the status quo;
   b. the type of solution;
   c. the criteria that the change/solution must meet;
   d. the roles people will play in a purchase choice and adoption activities,

then it’s time to start researching solution choices and providers, get agreement for action from Buying Decision Team.

And this is where sales takes over. Not before.

OUR CURRENT STEPS MISS THE IMPORTANT DECISION FACTORS

Here is what is happening now — and you’ll see why it doesn’t work. Let’s again assume you’re buying a new car, and let’s assume a car sale is similar to other sales calls (a bit of poetic license, please):

1. car dealer contacts you to see if you need a new car. Invites you down to showroom to see the car, take you to lunch, sit down and chat with you, etc.
2. you have nothing better to do, and the showroom is near your work. You’re thinking of a zippy car for this time in your life. You visit during lunch. You get the whole schpiel – car details, price discussion, a few drinks.
3. you are excited – but you’re not sure if this car will be acceptable to your spouse. You sit down with your spouse to discuss your desire to get a new, zippy car.
4. spouse is not happy. Spouse wants to buy a vacation cottage with that money; you have an arguement. You decide to put it on the table for a few days and think about it.
5. lots of discussion. After three weeks of discussion and no agreement, you and your spouse haven’t gotten further. Your current car is ‘fine’ although with the kids gone you were hoping for something sportier. Your spouse reminds you of the grandkids that now live around the corner. Is there enough money to have two cars?
6. seller calls you. What’s up? Great price for the car if you want it. Want to come back in?

See the problem? We wouldn’t buy the way we sell – why do we think our prospects will? Why do we forget the basic facts about people? Why do we treat a problem/need as if it were an isolated event? Why haven’t we adopted new skills to help buyers manage their off-line, private, personal decisions, in the way we would need to for ourselves?

Why do we forget that just as we discuss decisions with family, our buyers discuss decisions with colleagues, and weigh several types of considerations (internal stability, balance of internal political/relationship/timing factors, maintainance of status quo) before they can even consider a new solution?

We forget that if they had found their situation terribly problematic they would have changed already. We forget that choosing our solution – like choosing the car to purchase – is the last thing that goes on in a buyer’s mind. We forget that sales doesn’t offer a different set of skills to help with the different set of decisions.

Think about it. How will you know when it’s time to add Buying Facilitation™ to your current skill set, and help buyers manage their behind-the-scenes decision issues before you sell? How will you know that learning an entirely new skill would sit comfortably with your current skill set and enhance your success?

Author: Sharon Drew Morgen    Sharon Drew Morgen RSS Feed

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This article originally appeared on Sharon Drew Morgen – Facilitating Success, One Decision At A Time and has been republished with permission.

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CAMBRIDGE – European political leaders may be about to agree to a fiscal plan which, if implemented, could push Europe into a major depression. To understand why, it is useful to compare how European countries responded to downturns in demand before and after they adopted the euro.

Consider how France, for example, would have responded in the 1990’s to a substantial decline in demand for its exports. If there had been no government response, production and employment would have fallen. To prevent this, the Banque de France would have lowered interest rates. In addition, the fall in incomes would have automatically reduced tax revenue and increased various transfer payments. The government might have supplemented these “automatic stabilizers” with new spending or by lowering tax rates, further increasing the fiscal deficit.

In addition, the fall in export demand would have automatically caused the franc’s value to decline relative to other currencies, with lower interest rates producing a further decline. This combination of monetary, fiscal, and exchange-rate changes would have stimulated production and employment, preventing a significant rise in unemployment.

But when France adopted the euro, two of these channels of response were closed off. The franc could no longer decline relative to other eurozone currencies. The interest rate in France – and in all other eurozone countries – is now determined by the European Central Bank, based on demand conditions within the monetary union as a whole. So the only countercyclical policy available to France is fiscal: lower tax revenue and higher spending.

While that response implies a higher budget deficit, automatic fiscal stabilizers are particularly important now that the eurozone countries cannot use monetary policy to stabilize demand. Their lack of monetary tools, together with the absence of exchange-rate adjustment, might also justify some discretionary cyclical tax cuts and spending increases.

Unfortunately, several eurozone countries allowed fiscal deficits to grow in good times, rather than only when demand was weak. In other words, these countries’ national debt grew because of “structural” as well as “cyclical” budget deficits.

Structural budget deficits were facilitated over the past decade by eurozone interest rates’ surprising lack of responsiveness to national differences in fiscal policy and debt levels. Because financial markets failed to recognize distinctions in risk among eurozone countries, interest rates on sovereign bonds did not reflect excessive borrowing. The single currency also meant that the exchange rate could not signal differences in fiscal profligacy.

Greece’s confession in 2010 that it had significantly understated its fiscal deficit was a wake-up call to the financial markets, causing interest rates on sovereign debt to rise substantially in several eurozone countries.

The European Union’s summit in Brussels in early December was intended to prevent such debt accumulation in the future. The heads of member states’ governments agreed in principle to limit future fiscal deficits by seeking constitutional changes in their countries that would ensure balanced budgets. Specifically, they agreed to cap annual “structural” budget deficits at 0.5% of GDP, with penalties imposed on countries whose total fiscal deficits exceeded 3% of GDP – a limit that would include both structural and cyclical deficits, thus effectively limiting cyclical deficits to 3% of GDP.

Negotiators are now working out the details ahead of another meeting of EU government leaders at the end of January, which is supposed to produce specific language and rules for member states to adopt. An important part of the deficit agreement in December is that member states may run cyclical deficits that exceed 0.5% of GDP – an important tool for offsetting declines in demand. And it is unclear whether the penalties for total deficits that exceed 3% of GDP would be painful enough for countries to sacrifice greater countercyclical fiscal stimulus.

The most frightening recent development is a formal complaint by the European Central Bank that the proposed rules are not tough enough. Jorg Asmussen, a key member of the ECB’s executive board, wrote to the negotiators that countries should be allowed to exceed the 0.5%-of-GDP limit for deficits only in times of “natural catastrophes and serious emergency situations” outside the control of governments.

If this language were adopted, it would eliminate automatic cyclical fiscal adjustments, which could easily lead to a downward spiral of demand and a serious depression. If, for example, conditions in the rest of the world caused a decline in demand for French exports, output and employment in France would fall. That would reduce tax revenue and increase transfer payments, easily pushing the fiscal deficit over 0.5% of GDP.

If France must remove that cyclical deficit, it would have to raise taxes and cut spending. That would reduce demand even more, causing a further fall in revenue and a further increase in transfers – and thus a bigger fiscal deficit and calls for further fiscal tightening. It is not clear what would end this downward spiral of fiscal tightening and falling activity.

If implemented, this proposal could produce very high unemployment rates and no route to recovery – in short, a depression. In practice, the policy might be violated, just as the old Stability and Growth Pact was abandoned when France and Germany defied its rules and faced no penalties.

It would be much smarter to focus on the difference between cyclical and structural deficits, and to allow deficits that result from automatic stabilizers. The ECB should be the arbiter of that distinction, publishing estimates of cyclical and structural deficits. That analysis should also recognize the distinction between real (inflation-adjusted) deficits and the nominal deficit increase that would result if higher inflation caused sovereign borrowing costs to rise.

Italy, Spain, and France all have deficits that exceed 3% of GDP. But these are not structural deficits, and financial markets would be better informed and reassured if the ECB indicated the size of the real structural deficits and showed that they are now declining. For investors, that is the essential feature of fiscal solvency.