You are pitching your product to a potential client. The person across the table loves it. They nod at every feature. They say it will change their workflow forever. You leave the meeting feeling incredible.
Then you never hear from them again.
This happens constantly to founders. It usually happens because you spent all your time selling to a user rather than the person who actually controls the bank account.
This person is the Economic Buyer.
Who Holds the Purse Strings
#The Economic Buyer is the individual within a prospect’s organization who has the authority to release funds. They control the budget. They have the final “yes” or “no” say on a purchase.
While others in the company might influence the decision, the Economic Buyer focuses on the bottom line. They are less concerned with how a button clicks and more concerned with the return on investment.
They ask specific questions.
- Does this save us money?
- Does this make us money?
- What happens if we do nothing?
In early stage startups, this might be the CEO. In larger enterprises, it could be a VP, a department head, or the CFO.
Economic Buyer vs. User Buyer
#It is vital to distinguish between these two roles to avoid a false sense of security in your sales pipeline.
The User Buyer is the person who will actually use your software or product every day. They care about ease of use, technical specs, and specific features. They feel the pain of the problem you are solving most acutely.
The Economic Buyer cares about the business impact of that problem.
Sometimes these are the same person. If you sell to solopreneurs or very small businesses, the user is the payer. However, as you move upmarket or sell B2B, these roles usually split.
You might have a marketing manager (User) who loves your tool, but the CMO (Economic Buyer) needs to sign off. If you only convince the manager, you have not made a sale yet. You have only found a fan.
Navigating the Sale
#How do you know if you are talking to the right person? You have to ask.
Founders often feel awkward discussing money or authority early in a conversation. You must get over this. You need to verify if the person you are speaking with can actually buy what you are selling.
Ask questions that surface the decision making process.
- Who else needs to see this before we move forward?
- Is there a budget allocated for a solution like this?
- Who signs the contract?
If your contact cannot answer these, they are not the Economic Buyer.
Your goal is not always to bypass the user. You often need the user to become a champion who sells your product internally. But you must equip that user with the business case, not just the technical case, so they can convince the Economic Buyer.
Unknowns in the Process
#Every organization buys differently. You have to investigate the specific dynamics of each prospect.
Is the Economic Buyer focused on growth or risk mitigation right now? We often assume they want growth, but in a downturn, they might only spend on compliance or security.
You also need to figure out their discretionary limit. Can a middle manager sign off on $5,000 without asking the CFO? If your price is $4,900, your sales cycle might be weeks. If it is $5,100, it might be months.
Understanding who signs the check prevents you from wasting time on deals that will never close.