The Buy-Sell Hierarchy

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by Miller Heiman

Having an account means having a relationship, and a business relationship, no less than a personal one, can be strongly forged and enduring or as flimsy as a short-lived affair. We present a unique relational model, the concept of the buy-sell hierarchy, to help you create more lasting associations. The hierarchy of buy-sell relationships is divided into five levels; let's start with some general observations.

First, the hierarchy is a visual metaphor for your position with an account, Given what we've said about strategy and position, you can conclude that understanding the level of your business relationship -- that is, knowing where you are in the hierarchy -- is an indispensable piece of account information.

Second, it's not you, but your customer, who decides at what level you're positioned. There's some irony here. We recommend that you "work your way up" the buy-sell hierarchy; yet it's your customer who decides how successfully you do this. The descriptions of each level of the hierarchy refer to the account's assessment of your position.

Third, the levels of the buy-sell hierarchy should be understood not as discrete steps or plateaus, but as positions along a continuum. Your customer will probably have a pretty solid sense of where you're positioned, but it may not be quantifiable: No magic signal will inform him or her that you've just moved from level 2 to level 3_.

Level 1: Commodities

At the first, and lowest, level of business relationships, you are seen as the supplier of a commodity. It's easy to get positioned at this level, but there's no leverage here for establishing long-term relationships. Here's why.

You can sell computer work stations to insurance companies, but if Metropolitan Life thinks your systems are exactly the same as everyone else's, it doesn't matter whether they "really" are or not. It's the inability of the customer to differentiate that defines a product or service as a commodity.

When customers see you as supplying commodities, you have virtually no control over what happens in their accounts, and almost no chance of growing a long-term relationship. If your customers see what you sell as indistinguishable from what your competitors can sell, then your only bargaining chips are availability and low bid. Not a very secure position.

Level 2: Delivering "Good" Products/Services

On the second level of the hierarchy, you're seen as the supplier of "good" products or services -- products, for example, that incorporate state-of-the-art technology, or that meet exacting technical specifications, or that are backed up by great service that's extremely fast or user-friendly. Not just an overnight courier service, but one that guarantees 10 a.m. delivery. Not just a car waiting at the airport, but your name in flashing lights, showing you where it's parked.

Anything that sets you off from the competition, that gets you noticed by your customers as an innovator, can help you establish a second-level relationship. Obviously, this is an improvement. But providing "good product" is still a shaky position.

The reason is simple: competition. You can establish a competitive position with bells and whistles (or faster service, or other add-ons), but you can't maintain it. Unless you've got a patent lock on your distinctive feature or benefit -- and these days, even when you do -- eventually the competition not only catches up but leapfrogs over you, and you're back to selling commodity-style again.

Level 3: Going the Extra Mile

At the third level of the buy-sell hierarchy, your customer sees you as providing not just good product, but good service and support in the bargain. You not only install the new, "good" phone system on time, but you provide users with a training program at no extra charge, and when the system goes down, you debug it. Quickly, professionally, with no excuses.

Going the extra mile in this manner for your customers almost always results in better business, especially in today's service-intensive economy. More and more businesses today are differentiated on the basis of how they treat their customers, not just what they sell them. And the leaders are the companies that do this best.

"Service and support" is fast replacing "features and benefits" as an entry fee for the real players. And this cranks the "minimum acceptable" level up another notch. In what business analyst Paul Hawken calls the "informative economy," suppliers who are unwilling or unable to provide such "extras" as dynamite post sale service are increasingly being squeezed out.

Level 4: The Quantum Leap to Business Issues

On the fourth level, customers perceive your company as providing not just good products and extra service, but help in the actual running of their businesses. When you're positioned here, you understand each account's business problems and objectives almost as well as you do your own. You generate ideas for addressing not just your customers' day-to-day operational needs but their ongoing profitability concerns. You sell products and services that address those concerns. And only those products and services.

This has zero to do with customers becoming your "friends." It's a matter of enlightened self-interest. Help me lower my costs, increase my sales, boost my profit, and you bet I'm going to work with your company. And pay the freight with a smile. That's what value-added business is all about.

Level 5: "Upping" the Organization

At the top level of the buy-sell hierarchy, you go beyond providing your customers with good products, extra service, and help with their bottom-line concerns. You become an ad hoc consultant to their organizations by contributing to their efficiency as organizations.

Take a personal example. Several years ago, during a call on a sales executive in one of our large accounts, it became obvious that he was preoccupied with something else. When we asked him what it was, he said he was having trouble understanding the new management by objectives program that the company had mandated. Since we were well acquainted with MBO programs, we switched the agenda of that call on the spot, spending the hour clarifying his company's new organizational directive. The meeting thus ceased to be a "sales call" and became a consulting session on upper-level concerns. Although we entered his office as salesmen, we left as partners.

It's difficult, we'll admit, to contribute consistently to your account's organizational issues. It's even more difficult to be perceived as doing so. But doing so is almost always worth the effort, because the potential differentiation from your competitors at the top of their hierarchy is tremendous. The fact is that, in spite of the account control that you can exert from the top of the hierarchy, very few companies ever get there -- or even try to. Tradition and intimidation keep all but the most aggressive and innovative players from trying to do more than deliver great service. Result? There is room at the top. For long-term business, it's the only place to aim for.